It’s no longer a question of whether retailers should offer ultrafast delivery; it’s how best to do it. Same-day and next-day delivery are the new industry standard that Amazon.com and other market leaders have set. Now, many omnichannel retailers are adopting the practice of buy online, deliver from store (BODFS) as a powerful strategy for staying competitive in the last mile.
According to the National Retail Federation, more than half of retailers currently offer, or plan to offer, ship-from-store capabilities. That number will only grow — and fast — and retailers don’t want to be left playing catch-up.
Fortunately, it’s possible to integrate BODFS without spending a fortune on fixed assets. Delivery can be outsourced to ultrafast providers’ own infrastructure. And while modified store layouts might be required in some cases, omnichannel retailers already have the necessary brick-and-mortar infrastructure.
Stores as Fulfillment Centers
Good old-fashioned storefronts are such a strong weapon in the modern last-mile delivery war because the key to faster fulfillment is getting inventory as close to customers as possible.
Moving inventory to the smallest unit of fulfillment in a retail network is the most reliable way to reduce last-mile delivery costs, while increasing the speed of order arrival. (In many cases, the smallest unit is a retail store.)
If, for example, a retailer has a warehouse in only one part of a state but has storefronts across the state, it makes sense to put more inventory in those stores and then make deliveries from them to nearby metro and rural areas.
When it comes to fulfillment centers, the BODFS model often gives omnichannel retailers an edge over online-only retailers. That’s because brick-and-click retailers already have the bricks. The Bureau of Labor Statistics counted more than a million retail establishments in the U.S. in 2020. So many omnichannel retailers don’t need to build new regional and local fulfillment centers; they can simply repurpose the store locations they already have.
The National Retail Federation reported that there were twice as many U.S. store openings as closings in 2021. That surprised a lot of people who thought the COVID-19 pandemic would take a permanent toll on brick-and-mortar store numbers. Even though e-commerce has grown by more than 70% over the past three years, physical locations remain pivotal, with many online orders being fulfilled by stores.
When an omnichannel retailer starts using physical stores as fulfillment centers, it’s important to move the right stock there, in the right quantities. Consumer demand for certain products is constantly changing, and some stores have more shelf and backroom storage space than others.
Some retailers’ in-store and online customers might also want different sorts of items. Those stores will need to find the right balance between having the necessary stock on hand to fill online orders while still leaving enough floor space for whatever in-store customers are looking for. If a customer walks into your bedding store to try lying down on a particular mattress, they’ll leave disappointed if you instead only have comforters and sheet sets for online orders.
Last Mile, But Not Least
Placing the right inventory throughout the store network is just the first step to successfully implementing a BODFS strategy for same-day and scheduled delivery. To ensure that customers will receive their online orders on time, retailers also need a fleet of last-mile delivery vehicles.
Often, retailers don’t have their own vehicles and drivers because an in-house fleet requires a significant ongoing investment. Even retailers that do might find that they’re not always suitable for what needs to be delivered. Moreover, in-house fleets can’t always flex to meet spikes in demand. Another option is outsourcing deliveries to traditional truck and courier companies, but often those providers aren’t the most flexible, fastest or cost-effective solution either.
Many retailers find that the best last-mile solution for BODFS is ultrafast crowdsourced delivery — a network of independent drivers using their own vehicles. Leading crowdsourcing platforms offer same-day delivery up to 100 miles from a store. Whereas many ultrafast delivery options are limited to dense urban urbans, crowdsourced delivery can also reach suburbs, exurbs and even rural areas.
Crowdsourced delivery offers retailers nearly unlimited capacity, without penalty. That’s a big deal for retailers, especially smaller ones, because it means there are no caps on their ability to keep selling. Crowdsourcing is also suitable for large, heavy and odd-shaped items, which are traditionally challenging for retailers because they can be costly to ship and have long delivery timelines. The best crowdsourced providers have upfront, transparent pricing for big-and-bulky deliveries, based on size and distance, not weight.
Start Small, Then Scale
Launching BODFS with ultrafast delivery doesn’t need to be difficult, but it does require retailers to rethink some of their operations. That’s why larger retailers should consider a pilot program in just a few markets, to perfect a store-based fulfillment model that can then be rolled out to the entire customer base.
Store personnel will need to be trained in how to handle BODFS-related inventory processes, and protocols will need to be established for who will pick, prepare and stage BODFS items for delivery. If a retailer will be working with a new delivery provider, collaboration will also be needed on the back end. Many retailers will want to fully integrate with their provider’s application programming interface (API) right from the start, so that pickup and delivery data will go directly to the provider and its drivers.
In addition to helping retailers make a smoother transition to BODFS, a regional pilot program creates opportunities for market research. Retailers can use the initial launch to test how changes in their offering, such as price and delivery speed, impact consumer demand.
Dennis Moon is head of operations at Roadie.
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