Few of our partners have more first-hand experience with omnichannel fulfillment and ship-from-store than Mark Fuentes. As the Senior Vice President of Information Technology and CIO at PFSweb, he advises global brands on how to manage their inventory distribution, transportation and reverse logistics. But Mark has personal experience too. His family runs a personal care brand in Dallas, Texas, and he experienced first-hand how an event like the Covid-19 pandemic can disrupt business as usual. We spoke to Mark about how to leverage under-utilized and closed stores as Distribution Centers and what that means for brands—including his own.
What is the benefit to the retailer of ship-from-store?
It allows a store to ship more volume, especially now. Things have completely switched. Before Covid, distribution centers supported the retail channel. Now it’s the opposite. The retail channel is supporting the fulfillment channel.
What do you see as the biggest challenges of launching a ship-from-store program?
The challenge is that store operations are not like your typical Distribution Center. Most store employees are not prepared for volume fulfillment. They typically work with customers where sales take place on the spot. Associates are not prepared for the processes that go into picking, packing and shipping products.
Then why offer ship-from-store?
So they can scale their fulfillment capabilities and support their operations by leveraging inventory that’s in a retail store. Even though the store has diminished sales volume, they can still use that store to fulfill omnichannel orders. Which matters now more than ever.
Is there a benefit to the consumer?
Absolutely. Ship-from-store solutions enhance consumer satisfaction through inventory accuracy and speed of delivery. This means customers can get what they want, when they want it.
Tell us about your experience as a retailer.
So six years ago, I bought a book on how to make soap for my oldest son. It was a gift. He wanted to be an entrepreneur, so we formulated our soap and then made candles and lotions. At the farmer’s market where we debuted, we made a few hundred dollars. Flash forward and now White Rock Soap Gallery has 2,300 UPCs, four stores in the Dallas area, and we ship nationwide.
What happened to your business when Covid hit?
It was a disaster. We were forced to close all of the stores and furlough our employees. Then, like all retailers, we had to figure out how to cover our rent. So we decided to offer free shipping nationwide and local delivery. We blasted our 10,000 followers and within 30 minutes the orders started coming in. We emptied out three of the four stores. It went so well that we’ve been able to rehire our 17 employees and we’re making product again.
How were you able to pivot so quickly?
We used a PFS product called RetailConnect. It’s designed to allow SMB retailers to support activities like ship-from-store and buy online pickup in store (BOPIS) without putting a strain on store operations. One of the challenges retailers face today is that for most packages, you have to train a store associate to actually pick the correct carrier or method to get it to the customer. We’ve automated that process so you don’t have to train store associates. And we’ve simplified the label printing process. RetailConnect hooks into eCommerce solutions like Shopify or whatever order management system the retailer uses. The goal of RetailConnect was to allow retailers to launch and be able to start processing orders within 15 minutes. It worked!
Given many retailers and brands are closing stores like you did, do you feel ship-from-store will continue to be a priority over the next 12-24 months?
The rules of fulfillment have completely changed and that’s not going to go away anytime soon. Retailers have to change how they’re prioritizing where inventory goes. For example, do you send it to distribution centers or send it to stores? A lot of retailers are closing stores or reducing their store footprint. They’re going to have to become more focused on how they leverage labor hours to do more than just retail.
Lately we’ve seen a lot of media coverage about ‘Dark Stores’. What is driving the recent interest in Dark Stores?
I think they can give you a fulfillment presence across the country, which you can leverage for quicker delivery, especially since Amazon has set the bar whereby people now expect instant gratification through either same day or next day delivery. And if you can’t get out of your rental agreement, you have to do something. Especially if you have a nice location that you don’t want to give up. How do you keep it there and ride it through? Shipping from dark stores is one solution.
In your experience, what does a successful ship-from-store program look like?
Inventory accuracy is paramount. That begins the process. As you go through the routing process that determines where an order should go—a distribution center across the country or a nearby location—if you don’t have accurate inventory it delays shipments or you split shipments so costs go up. Accurate inventory is at the heart of it all.
How does a retailer get started with this?
The first step is to establish good store operational procedures. The more decisions store staff have to make on the fly the more complicated it becomes. You need to provide an easy way to answer questions. How should I package this? How should I ship it? And packaging is very important. You want to make sure items are packaged in a way that they don’t get damaged.
You also have to establish how packages get picked up by carriers. Establish cutoff times. Or actually deliver packages. There’s a lot of demand at the moment for local delivery, especially in the local 3-5 mile radius as this provides an Amazon-like experience.
Are you seeing more retailers use their store staff for local delivery?
Well, local couriers are very expensive. So for retailers that don’t own the brand, they just don’t have the room in their margins to support local courier delivery. For those who are buying wholesale, couriers take too much of their margin. That just doesn’t pay the bills, especially if you’re doing a lot of local delivery. And in the case of my own family business, about 30% of our volume is actually local delivery.
If you consider that every local delivery charge can be $10-$15, that money saved alone can cover another individual working in your store. So by doing your own delivery you can keep another person working for you and keep another store operational.
Do all ship-from-store rollouts look the same? If not, what are some of the different approaches you’ve seen retailers and brands take to rolling it out?
Most start by selecting one or two pilot stores. This is a really good process because you can validate store procedures and make sure integrations are working correctly before you roll out to the rest of the stores. Once it’s operational, you can scale.
If they don’t already have an in-store pickup program in place, that typically follows quickly. And now we’re seeing a lot of people want to minimize their time in stores, so there is more curbside pickup.
What advice do you have for retailers and brands that are looking to roll out ship-from-store for the first time?
Start slow. Make it a phased rollout. If there are multiple stores, simplify the rules for fulfillment. As you’re setting up fulfillment rules in your Distributed Order Management (DOM) system, really think about what rules and priorities you want to use to drive where the orders go. If your scenario gets so complicated that you can’t put it down on paper, that makes it hard to define success and ensure you can actually support a ship-from-store operation. That’s where everything comes to a screeching halt.
At PFS, when we roll these out we often write a lot of custom rules, but by the time they’re rolled out the operational aspect has changed since the beginning of the project. Then we have to rewrite the code. So it’s better to go live with something simple, understand how it’s being adopted operationally, then go ahead and iterate on it.