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Retailers use optimization to improve in-store fulfillment and keep customers satisfied
June 11, 2017
Omnichannel shoppers have been disrupting retailers for years, and its likely to top the industry’s agenda of challenges for years to come. But optimization, an omnichannel analytics technology, can help harness the positives of omnichannel retailing and minimize showrooming.
Consider this everyday retail dilemma: E-commerce sales are growing, but in-store sales volumes are declining. Customers still enjoy browsing in brick-and-mortar locations, but they buy items with a mobile device a few hours later. It’s this showrooming behavior that leads to complexities such as maintaining adequate inventory and staffing levels to support in-store traffic while sales decline.
I'm feeling a bit overwhelmed this year by all the challenges modern omnichannel retailers face in order to survive. Showrooming is one of those challenges, and I wanted to cover a few possible solutions here as well.
Enter in-store fulfillment
Some retailers address showrooming by transitioning to in-store fulfillment rather than relying on large, centralized distribution centers for online, catalog and call center orders. That strategy works. Sort of.
In-store fulfillment allows customers to see and touch products at their preferred store before they buy. The challenge lies in burdensome shipping costs because multiple items in a customer’s order may have to be shipped in from different locations. For example, a customer’s blouse may come from store No. 1, the skirt may come from store No. 2, and accessories may come from store No. 3, increasing the retailer’s shipping fees and the number of times the customer has to visit the store to complete the entire transaction.
Optimization makes the most of omnichannel retailing
Optimization can overcome legacy fulfillment mechanisms like “if-then” business rules. It can also allow retailers to use their data and take multiple factors into consideration to select the best available scenario. In the case of in-store fulfillment, these factors might include the locations with the largest number of items in the purchase order, the geographic distance to the shipping address, and the amount of inventory for each item within the order.
As you can see, optimization allows retailers to have the best of all possible worlds: They can select the best fulfillment strategy to increase top-line sales, improve profitability by cutting shipping costs, and enhance a customer’s experience with their brand.