The two, most basic necessities for retail success are inventory and shipping. If you don’t have the product and/or can’t get it to the customer in a timely manner, you will lose business. Nevertheless, the average retailer misses out on 20 percent of sales - the equivalent of £27,000 per day for a £50 million retailer – for these very issues…issues they could solve by implementing omnichannel fulfilment.
At Radial, we looked across our 50+ global brands and retailers utilising our Radial Ship from Store omnichannel fulfilment tool. The results showed an average increase of 20% in eCommerce revenue for these organisations. Implementing our Ship-from-Shore tool enabled the retailers to use their stores as mini-distribution centres, utilise local inventory to fulfil online orders, and source products from the most efficient locations. These actions helped the companies maximise inventory across their online and in-store channels, which boosted sales, eliminated markdowns, and reduced delivery costs and times.
“How?” you may ask…
1) Sell more with the same stock
Each year retailers face the challenge of balancing out-of-stocks against overstocks. Excess inventory hurts bottom line profits due to the inevitable end-of-season markdowns, but turning away good sales because products are not available in the right place also negatively impacts the bottom line. With more than $2.0 billion in sales going through the Radial omnichannel fulfilment tool each year, our clients benefit from a 20 percent uplift in online sales fulfilled by using in-store stock; these are sales that otherwise would have been lost due to products out-of-stock in the warehouse.
Urban Outfitters – fulfilled $23 million (USD) in online sales in a single quarter by utilising instore inventory. Of that inventory, they estimated over half would otherwise have been out of stock. The effect was an $11 million upsurge in their business.
The effect also continues beyond the initial sale. When items are in stock and sales are fulfilled satisfactorily, customers show their gratitude through loyalty, which translates into additional sales.
2) Reduce markdowns
Ship from Store users also see a direct benefit from improved sell-through rates by optimising inventory turn across their stores’ portfolios. By removing stock silos from your overall inventory, you remove the need to over-stock a central warehouse, so you effectively sell more with the same stock. Because you don’t have as much dormant stock, markdowns and the margin sacrifices they yield are less likely. As a result, our clients saw an average margin improvement of 30 percent on items nearing markdown.
GameStop, the video game and electronics retailer, grew their online inventory pool from 6,000 to nearly 18,000 items. By enabling online customers to view on-shelf inventory, GameStop increased by one-fifth its sales that were not in the warehouse. The boost in sales also enabled the retailer to make significant reductions to markdown levels for ageing items.
See Ship from Store in action here
3) Optimise the last mile delivery distance
The last mile delivery cost remains one of the most sizeable lines on the fulfilment balance sheet. Turning your stores into mini distribution centres moves you closer to the consumer. Not only does this allow you to reach your customers quicker and cheaper than before, but also opens the gate for you to offer benefits to the consumer such as local delivery courier and one-hour delivery operations around major towns and cities.
For international retailers, the shorter proximity multiplies the advantage even further when compared to centralising warehouse stock. Utilising their local in-country stores, European premium sports apparel retailer Peak Performance delivered an average improvement of 1-2 days in shipping time and a 14 percent reduction in shipping costs to customers in Sweden and Denmark.
4) The Omnichannel Enabler
The biggest obstacle many retailers must overcome to enable store fulfilment – whether it’s “Click and Collect”, in-store pickup or Ship from Store – is in-store inventory accuracy. Through the combination of safety stock rules, best chance order allocation routing, and order re-routing, we enable Ship from Store fulfilment successfully even with far from perfect inventory accuracy, but that, too, will improve. The same tools that enable successful Ship from Store fulfilment also improve stock accuracy levels automatically. The greater levels of inventory accuracy are a prerequisite to enabling additional omnichannel fulfilment options such as in-store reservation, that rely on greater levels of inventory accuracy.
Only 90 days away from your Omnichannel advantage
As the leading provider of Store Fulfilment technologies, we at Radial provide the training and expertise honed by hands-on partnerships with retailers, which gets your operations and inventory moving. With fast and easy deployment, you can go confidently from idea to implementation in less than 90 days—the fastest in the industry.