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Turn Your Struggling Retail Store Into an Online Order Fulfillment Center

by Danny Ing, Founder and CIO
Under the normal run of things, having stock sitting there, waiting for cash-and-carry customers is good if your warehouse is fully stocked with products. But when unexpected global events occur, as with the COVID-19 pandemic, supply chains become interrupted and stock comes to a standstill.

Brick-and-mortar stores may have products that no one in their geographic area wants. Someone elsewhere may want something they can’t find near them. Now that retail stores have been forced to close their doors, if you have physical retail locations, you can make lemonade out of these lemons by repurposing them as mini fulfillment depots.

The Location Advantage of Retail Stores

Customer demand spurred the integration of in-store and online shopping well before the events of the last few weeks unfolded. Over the last handful years, the omnichannel approach became popular with retailers using their own store locations to fulfill online orders, and I believe that this trend will continue. With the shift toward using small-format stores as showroomsthe store-as-fulfillment center may soon eclipse stores that just sell at the POS.

Retail stores have one big thing going for them: They are almost certainly in a good location, close to your customer base. This shortens logistics for you, which benefits you from a cost perspective and your customer in terms of satisfaction, with a shorter delivery time and reduced likelihood of lost or damaged goods in transit. 

But before you can use your retail stores as fulfillment centers, you’ll need to perform a quick check on your inventory management software’s capabilities. Here’s a check list of operations your inventory management system must be able to perform.

Adding Retail Stock to Online Stock Availability

The first thing you need to be able to do is to add stock located at one or many of your stores to the quantity available to be sold via online channels. Most inventory systems manage inventory for retail stores or can access the inventory numbers of each store. Not all stores will be resourced as mini depots, however, so add only the ones that have the potential to operate as laid out below.

One of the hidden benefits of adding retail stock to online stock is the ability to move items that didn’t sell well in certain stores, usually because of the demographic makeup of the surrounding areas. Opening your inventory up to the whole world makes items that were previously undesirable in their home locations available to people who may be looking for exactly that item, previously tucked away in a corner of your store.

Order Routing and Order Splitting

When orders are downloaded from your online channels, they need to be routed to either the closest location or a location with sufficient stock to fill the order. Orders should be routed to warehouses first, until stock is depleted, then routed to the nearest retail store with sufficient inventory. Although retail stores can function as mini depots, because warehouses are specialists in online fulfillment, it’s best that they handle the bulk of your orders, with retail stores acting as the last line of defense.

Because it’s not uncommon that no one location can fulfill an entire order, the ability to split orders by location is critical. That is, for each order, each location receives only the items it needs to fulfill. The other requirement is the ability to update your online channel when each partial order has shipped. Most online channels have this capability but some don’t, so check your current system.

Fulfillment and Shipping Integration

One unique aspect of retail stores you should consider is the in-store customer. There’s nothing stopping a person in store from buying an item that was just ordered online, so time is of the essence when routing online orders to a retail store. As soon as an online order comes in, the retail store associate must pick that order before a shopper in the store buys any of those items.

It is also common that the store may not actually have the item in stock, even though the system says it does. The store must then be able to adjust that stock to prevent any future orders for that item from being routed there. The ability to assign orders to another store either manually or automatically is critical.

When it comes to getting orders out the door, each store generally requires its own shipping account because each one is a different pick location. To book a delivery, each store needs the ability to push its orders to a shipping system like ShipStation or Starshipit. Having a shipping label printer is ideal, but using an A4 printer and sticking shipping labels onto packages also works just fine.

“Pickup at Store” Considerations

Implementing a click-and-collect workflow has its complications and may not even be possible in all scenarios. The main requirement is the ability of your online platform to select a store to pick up from. But marketplaces such as Amazon do not allow this while many eCommerce systems aren’t able to display stores for pickup.

If pickup at store is available, the next requirement is the ability to transfer items to that store in the event that the store doesn’t have sufficient stock to fulfill the order. This is rather complex. Many inventory systems are not able to do this automatically, so manual work is required in most cases.

The last piece of required functionality is informing the customer of when to pick up their order. Once again, this isn’t usually built into most systems, so check with your inventory software provider.

Cin7 now has the ability to send specific emails based on order stage. If an order has been set to “Fully Picked,” the Cin7 platform can send an email notifying the customer to pick up their order.

The Future: Flexible, Automated Omnichannel

While no one can predict the future—especially not now—certain trends are becoming all too apparent. A shift toward online commerce may not be new, but the most important aspect of this movement is still taking shape, particularly as the business landscape undergoes rapid and unprecedented change. As supply chains break down and until they fully recover, the flexibility to adapt and and operate along the omnichannel continuum will be the difference between businesses that live to fight another day and businesses that don’t.

Workflow automation ensures that all channels work closely together, ultimately providing the level of customer service needed to compete in an ever-evolving and uncertain market where customers still want what they want, how and when they want it.

Pandemic or not, customers want faster shipments at a lower cost, thanks to the “new normal” set by Amazon Prime. To achieve this, inventory must be located closer to the customer. Shipping from a handful of strategically placed distribution centers may be more efficient, but it simply isn’t agile enough to satisfy the demands of today’s consumer.

Using retail stores as mini fulfillment centers is a cost-effective way to quickly expand your distribution network and minimize any losses from slow brick-and-mortar sales.