Winning Customers with a Variety of Fulfillment Options

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Posted Mar 12, 2018 6:24:00 AM by Steve Smith & filed under retail logistics, retail customer engagement

Offering the right selection of fulfillment options is an important strategic decision for any retailer.

More and more businesses are discovering competitive advantages in providing the fulfillment methods their customers want. In this post, we’ll identify the major types of fulfillment, why customers want those options, and how you as a retailer can provide them.

Traditional Fulfillment Methods

Shoppers used to have a much more limited range of options when it came to receiving their purchased products. These included:

  • Purchase products in-store and take them home
  • Purchase products in-store and ship them somewhere else at their own expense
  • Mail or phone orders shipped to a given address

And that was about it. Let’s look at each of those options and how they’ve evolved with the internet and other current technologies.

In-store purchases

This is the most common fulfillment option where a customer buys a product in-store and takes it home.

On the surface, this might seem like the cheapest of all the fulfillment options because the transaction is completed all at once. There is no post-sale shipping or order processing required.

But underneath all that are the inherent costs of keeping your retail store stocked. In truth, the retail store model is one of the most expensive businesses to run, with warehousing, distribution, merchandising, and labor costs at every step eating away at your profits.

So why do brick-and-mortar retailers still thrive? It’s called immediacy. Customers still prefer to hold products in their hands and take them home rather than wait for a delivery. They’re just less willing to pay for the privilege, as we noted in our retrospective of the 2018 holiday shopping season.

While modern technology is enabling more and more remote and online shopping models, it’s also offering solutions that make brick-and-mortar retailers more profitable and efficient. Options like real-time inventory and auto-replenishment reduce a store’s out-of-stocks while at the same time minimizing storage space and costs.

So until the immediacy “problem” is solved – an event which is nowhere on the horizon – in-store purchases are likely to remain the most popular form of shopping.

Purchasing in-store and shipping it yourself

This is the dinosaur of fulfillment options. Except for holidays and special occasions, no one wants to send personal packages anymore. Why? Because the cost of shipping packages has skyrocketed for the general public recently… to the point where the postage for a care package to a homesick college student starts around $20 and goes up from there.

Commercial shipping rates are much more favorable, however. This is just one of the reasons why customers are looking for retailers to meet their needs with multiple fulfillment options – they can’t afford to send or re-send packages on their own dime, so they’re looking for the retailers to do it for them.

Phone and mail order deliveries

These options have mostly been replaced by online shopping, but there are several reasons why companies still offer them:

  • Not everyone has mobile or internet connectivity. Even in the United States, internet penetration hovers around 89% as of June, 2017 according to Internet World Stats. That leaves a significant portion of our 326 million population without access, whether by location or by choice.
  • Some people prefer shopping from a paper catalog over browsing an internet site.
  • Some people want to give their order to a real person and be able to ask questions like they can over the phone. Online chat apps are already closing the gap here, while AI chat bots could soon be almost indistinguishable from human interactions.

Modern Fulfillment Options

While many of the following options have been around for quite some time, the advent of cloud-based computing has made them both easier to implement and more in-demand from customers.

Some of the additional fulfillment options expected today are:

  • Pickup at another store
  • Ship from another store
  • Hold for pickup later
  • Pickup by a third party

According to Zebra Technologies' 2017 Global Shopper Study, 64% of shoppers say they prefer ship-to-home for their online orders. The fact that this percentage is not even close to 100% shows the need for other fulfillment options. Some of these reasons are:

  • They don't live in secure locations
  • Their mail service is not reliable
  • They don't have a place to receive packages and would need to pick it up elsewhere anyway
  • It's a gift and/or they don't want other household members to see it arrive

Because there are so many valid reasons why some customers avoid shipping to their homes, alternate fulfillment options allow businesses to capture sales they might otherwise miss.

These options are made easier with modern technologies such as omnichannel distribution, where every store location can fulfill orders as if it were a warehouse. When real-time inventory systems accurately display the stock levels at each location, the flexible fulfillment options customers want are finally within reach.

Pickup at another store

There are several important reasons to allow customers to pick up their purchases at another store. First and foremost is solving the out-of-stock issue. If one location doesn’t have a product in stock but another nearby location does, many customers are willing to make that trip. This saves a sale for the retailer while offering a convenient solution for the customer.

Pickups at another store can satisfy the immediacy factor with customers getting their hands on the product today, or it can provide a convenience factor by allowing them to pick it up at a more opportune time (within a reasonable time frame, of course).

15% of shoppers in the Zebra study said they’ve chosen to pickup products at another location as their best choice.

Ship from another store

Shipping from another store also provides many benefits for customer and retailer alike. There are two versions of this: shipping from that store to a home address, and the ship-to-store option.

Sometimes, especially with a seasonal or clearance item, both the store and the warehouse might be out of stock, but another store might have it. If your inventory systems offer real-time reliability, you can sell the product to the customer and have the remote location ship it directly to them. Or, if the customer prefers, have them ship it to another store for pickup.

34% of shoppers in the Zebra study indicated they've selected ship-to-store options when making their fulfillment choices.

Hold for pickup later

This option is helpful for large items, of course, but also for customers who want to make sure they obtain a product but don’t want to take possession of it right now. This could be the case for mall shoppers, for shoppers who want to come back with another vehicle, or for holiday shoppers who want to pick up a gift when their current shopping companion is not around. You do want to win the holidays, right?

Pickup by a third party

This option is growing ever more popular as parcel rates continue to climb. Instead of paying to ship a product to someone else, why not buy it at your location and let the recipient of your purchase pick up the product at theirs? This is an easy win-win, especially during the holidays, but it requires a certain flexibility that’s not present in most legacy inventory systems.

Enhance Your Fulfillment Options Now

If you’re still stuck in the traditional fulfillment options, or you haven’t yet taken advantage of all the options modern cloud-based technologies are capable of, DecisionPoint is ready to help.

Our real-time warehouse management systems and mobile solutions will prepare you to offer any and all of these game-changing fulfillment options to your customers. To learn more about these solutions and how we can help you provide them, contact us today.

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