As e-commerce continues to grow within overall retail sales in the United States, so too will adoption of fulfillment solutions like buy online, pick up in store (BOPIS) and buy online, ship from store (BOSS).
Eighty-five percent of North American retailers have ranked growing and enhancing digital commerce as a top business priority for 2021, according to a survey by Retail Consulting Partners (RCP), followed by expanding and enhancing customer experience (67%) and improving/optimizing supply chains (52%). As part of the customer experience, more than half of respondents said they plan to add or expand delivery and/or pickup services.
At the same time, because there has been a considerable decline in foot traffic, many brick-and-mortar retailers are focusing more on digital aspects, too. Best Buy Co., for example, reported a digital sales increase of 90% during the fourth quarter of 2020, while foot traffic in its stores declined 15%.
The electronics retailer altered its fulfillment strategy last year by turning a quarter of its stores into hubs meant to handle more online volume. At the end of the fourth quarter, 35% of Best Buy stores had switched to the hub model. Those 340 stores handled 70% of ship-from-store orders.
Similarly, Walmart Inc. has partnered with robotics firm Fabric to build automated fulfillment centers in its stores. Other big-box retailers are expected to follow Walmart’s lead.
All of this is meant to speed up last-mile delivery for consumers, and it’s a competitive advantage over e-commerce players that have few — if any — physical locations.
For example, 90% of Americans live within 10 miles of a Walmart store, according to the retailer. By utilizing its assets, Walmart is able to offer a number of last-mile options to its consumers — an advantage over its biggest competitor, Amazon.com Inc.
Meanwhile, Amazon is answering back by building 1,000 new U.S. delivery hubs, a move that would bring products closer to consumers and help ensure quicker shipments. It also ships and offers pickups from Whole Foods Market, a grocery store chain it acquired in 2017.
Technology is a requirement to achieve these new fulfillment capabilities. Retailers need to be able to link their last mile to their middle mile, and have real-time visibility into inventory, tracking and management capabilities.
Those not investing are already falling behind. Last year, total retail sales increased 3.4% while e-commerce sales increased 32.4% (representing 14% of total retail sales, up from 11% in 2019).
Retail sales this year are expected to grow up to 8.2%, according to the National Retail Federation, while e-commerce sales could increase up to 23%.
Melissa Runge is vice president of analytical solutions at Transportation Insight.
Timely, incisive articles delivered directly to your inbox.