Are you worried about stocking your shelves before a potential port shutdown? You’re not alone. The monthly Global Port Tracker report (produced by Hackett Associates on behalf of the National Retail Federation) shows record-setting import volume in September and October. The speculation: retailers have been importing early to avoid disruption.
Todd Lough—Director of MKM’s Store Delivery in Ohio, Pennsylvania, and West Virginia—works to keep his customers at ease, assuring them their product will arrive exactly when planned so they don’t have to worry about that part of their business. They shouldn’t have to worry about distribution. By collaborating with the upper management of his clients, as well as their store managers, he’s able to oversee the entire process, from shipment to delivery. That’s why he encourages prospective customers to tour his site and to see the equipment and processes, so they can have full confidence in MKM’s ability.
This year, there are six fewer days between Thanksgiving and Christmas—the peak time for shopping—and the sales you normally expect to make are condensed into a smaller period of time. Retail stores will be competing to capture every sale possible in a shorter selling season. Retailers will still want to keep their stock lean, but it’ll be trickier trying to maintain the correct inventory without being able to predict, exactly, when they’ll need certain product.
Say you stock inventory in order to meet the increased demand, but even these sell out. So begins the back-and-forth of ordering more, ordering too much, again and again. Instead, pooled distribution can reduce your shipping costs and will help you manage inventory so that you can be flexible during this year’s unusual shopping season.
Pooled Distribution Reduces Shipping Costs
By using pooled distribution to stock retail stores, you reduce the amount of costs that would come from having to ship directly from the manufacturers to each store or to ship from your distribution center by an LTL or parcel carrier. By having your inventory flow through a distribution hub close to your retail stores, you can quickly and cheaply deliver products on a dependable and consistent schedule. And if your product is being delivered on the same routes as other retailers nearby your combined volumes create economies of scale, saving on fuel costs and handling costs as well.
Better Planning and Customer Service
With pooled distribution, delivery dates and times are controlled completely by the retailer. This allows retailers to staff accordingly; this means inventory gets replenished on store shelves quickly. If an item that a customer wants isn’t on the shelves, customer service associates knows exactly when the store will be expecting more, meaning no guess work for the customer.
Closer Deliveries Mean Quicker Deliveries
Not only do you save on shipping and fuel costs with pooled distribution, but you also reduce shipping time. Neither you nor your consumers have the flexibility to wait for product to arrive. The holiday season is busy enough already, and now, with six fewer days, consumers will want to get to the store and purchase what they need right away. So it’s essential that you replenish your stores quickly and effectively. With pooled distribution you can do exactly, by saving time in transit with the elimination of multiple sort and transfer stops to get product to your stores faster.
Shopping Trends Vary Depending on Geography
Economic, social, and geographic differences between one location and the next can influence what products are purchased and how much product each stores sells. For many retailers, not every store in their network will fit into a pooled distribution model, but by using a blend of parcel, LTL, and pool carriers there may be an opportunity to uncover efficiency gains in your distribution network.
How many customers have entered your store, checked out a product, and then left? Here’s what might be happening: they see a product online that they like, but they need to see it in-person. Next, after looking at the product, they return home to order the size/style/color they liked at the store, only at a cheaper price, away from the store.
Web sales are fine, as long as they’re buying from you.
But you lose sales if customers order from a different company. Instead, how can you capitalize on a customer in your store, wanting a product they’ve seen online? Why should they be loyal to your store, your company? Here’s how:
In-store coupons can reduce the price of a product a small amount and still garner you a sale. Here’s why: customers like to leave a store with product in-hand. They don’t want to wait. So if you can find the mean between your original price and a price they might find online, you can grab the sale. Offer coupons to get to this purchasing price.
When trying to direct customers to web sales, offer them an exclusive coupon to purchase from your website.
You offer warranties on your product that online stores can’t offer. Let your customers know this. With web traffic and physical traffic, make it known that, yes, online stores might be able to offer you a cheaper product, but you won’t have the same warranties as buying from the company. So let them know about web warranties, as well as the in-store warranties.
Customers don’t want to wait. So ensure them that you can deliver product to them faster than anyone else. That’s why a solid distribution company is imperative. You might not have the size, color, or style they’re looking for online, but assure them that you can have that product delivered sooner than anyone else.
You’re building loyalty with these methods. You’re not only keeping the sales in your store or website, but you’re building a community that customers will return to again and again, because they value the service and advice from trusted, physical stores. Sure, they might end up buying from your website and not your store, but they’ve kept the business within your company. They value you.
One of the major (and perhaps most obvious) differences in retail stores and e-commerce websites are the store associates. They play a key role in helping customers find what they’re looking for. This doesn’t have to stop with retail stores, though. If you have both retail stores as well as an online store, it’s important that store associates can help customers order any items that aren’t necessarily in the store but are available online. The more seamless the process is, the better the customer’s experience, and the more likely the customer will be to buy from your store loyally.
It might not be Shakespearean, but “regional or centralized fulfillment model?” is certainly an important question for any medium- to large-sized retailer. There are benefits to each model (including saved money), but examining your business can tell you exactly which model is right for you. But before you choose your fulfillment model, you must investigate three primary areas of your business.
Store delivery can be broken down into two distinct categories: e-commerce orders delivered to the retail outlet and store inventory traditionally delivered by a pool carrier. With the growth of e-commerce and many brick and mortar retailers selling online, the popularity of in-store pickup is growing. And though consumers generally opt for this method to take advantage of free or reduced-cost shipping, it presents some real challenges for the retailers, mostly in terms of inventory control.
There’s a lot of good to be had from omni-channel distribution, but it also comes with a lot of challenges. As businesses move to make the customer experience seamless across the storefront, web, and mobile apps, many are learning that there’s a lot more that goes into a satisfying customer experience than they may have thought. Fulfilling orders based on location is a great idea, and gets the item to a customer more quickly, but fulfillment like that requires a lot of logistics. There are pros and cons to omni-channel distribution, but there are ways to make the most of it.
Shipping from stores can have benefits when all forces align, but what is the impact of subpar performance? The likelihood of a delayed shipment from the store is far greater than from a DC, and not by the fault of the associates. For example, merchandise is frequently moved by shoppers, shoplifting will cause inaccurate inventory, negotiating later parcel pick-up will be more difficult at the store level, and shipping systems need to be installed and integrated at the store level. What is in place at the store to (1) help the associate locate misplaced merchandise (2) Notify customers - in a timely manner - that the item they ordered is not available (3) process order as filled in the system, deduct it from store inventory, notify customer an order has shipped and (4) ensure shipping materials are adequately stocked at each store?
To add to that when making in-store merchandise available online, a customer could order 5 different items and receive shipments from up to 5 different locations. What business rules can be systematically implemented to reduce or eliminate these occurrences?