For a fast supply chain, Target is betting on in-store fulfillment

Supply Chain Dive –  Retailers are putting physical stores at the center of e-commerce fulfillment and delivery, but the strategy requires a careful balance.

In the modern retail world, a store isn’t just a store. Many retailers are starting to use some of their stores as mini distribution centers, as consumers demand faster fulfillment for online orders. Shipping online orders from brick-and-mortar locations not only increases customer options and speed, it can also offer big cost reductions for retailers.

“Retailers are looking for ways to meet those expectations created by the Amazons of the world,” Jeffrey Neville, Senior Vice President and eCommerce and Digital Marketing Lead at Boston Retail Partners, told Supply Chain Dive.

But as retailers move to ship more items from their stores, they’ll have to strike a careful balance in their use of space, inventory and staff. Using stores as fulfillment centers can come with many challenges, and even the largest retailers are still refining their processes.

The growth of mini distribution centers

It has often been more efficient to consolidate and ship from large distribution centers, but competitive pressures and the availability of physical space has encouraged many retailers to change the equation, Greg Conner, Vice President of Global Sales at Bastian Solutions, told Supply Chain Dive.

“Having all these nodes and physical retail stores has been their magic pill on how to compete with others like Amazon and pure e-commerce players,” Conner said.

Amazon’s move to more rapid fulfillment in recent years has created greater expectations for consumers, and 88% of shoppers say they would now pay for same-day delivery or faster, according to a survey by PwC. Nearly 80% of logistics companies also say they expect to provide same-day delivery by 2023, according to a recent study by Zebra Technologies.

Despite the frequent headlines about the demise of brick-and-mortar retail, physical locations are as relevant as ever. 42% of retailers now say faster delivery of online orders is their top customer-facing priority, and many use stores to achieve that goal, according to a recent survey from the National Retail Federation. Large retailers such as Walmart, Home Depot, Best Buy and Dick’s Sporting Goods are now using many stores as mini distribution centers and shipping and fulfilling orders directly from stores.

Likewise, Amazon’s acquisition of Whole Foods in 2017 was partly to gain a physical footprint. And in July 2019, the company started offering in-store pickup at Rite Aid locations and accepting returns at Kohl’s.

Read the full article: For a fast supply chain, Target is betting on in-store fulfillment

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