Flexible Fulfillment: The Hot, New Trend in Retail, Finally!
Published July 11, 2012 ShareThe recent buzz surrounding Lowe’s and Macy’s moves to flexible fulfillment has everyone around the office pretty excited. Why? For one, they are talking about a business model that Shopatron has been offering retail chains for years. For another, it’s a clear indicator of the trend toward “no boundaries” shopping (what some are calling omni-channel commerce or agile commerce) we talked about at the end of 2011.
Although Shopatron has been promoting the benefits of flexible fulfillment for years, it is a new religion for large, mainstream retail chains—in addition to Macy’s and Lowes, Nordstrom and Toys R Us have recently seen the light.
With flexible fulfillment in place, inventory from all stores and warehouses becomes available both in-store and online. Previously, an online shopper might find the item/size they want out of stock on the store website, even though that item is sitting on the shelf of a nearby store. The result: a lost sale and an unhappy customer, plus a store bogged down by inventory it can’t move.
Flexible fulfillment erases the problem. Not only is the customer able to purchase the item they want (and often receive it even quicker than if it was shipped from a warehouse located across the country), but the store can now also sell through slow moving inventory at full price.
The Macy’s and Lowes move to flexible fulfillment comes at a time when retail businesses are looking for ways to reduce overhead and raise profits to help them compete with new challenges coming from online retailers like Amazon. Being able to fulfill online orders from any store or distribution center allows multi-channel retailers to not only provide better customer service, but also capture more sales and sell through stock more efficiently and with less discounting. Macy’s has plans to start by using 290 of its 800 stores as fulfillment centers.
The rise of this fulfillment model is also a result of the growth of online shopping. According to a study by Retail Systems Research LLC, by 2015, the number of retailers that earn 10-24% of their sales online will rise to 41%. As online sales began to account for more of retail chains’ business, selling out of certain items online while those same items sit on shelves, only to be marked down, is an issue that begged to be resolved.
Lowes credits flexible fulfillment with opening up $1 billion worth of new inventory to their online shopping channel (inventory that might have been otherwise discounted) and also reducing delivery times for online orders to two days.
As happens, technology created a new problem—multiple sales channels—and now it is offering a solution—unifying those channels. Flexible fulfillment is the first step toward more efficient inventory management and better customer service.
Sometimes it’s hard to be ahead of a trend. It may be frustrating when you are talking about a great idea and no one gets it. But when the trend arrives and people finally see the light, it is gratifying. Shopatron has been helping branded manufacturers and retailers, like Sport Chalet, succeed with flexible fulfillment for years. Now that the big, slow-moving guys have got the religion, everyone wants a piece of this great idea. Hallelujah!