- A leading Commerce Boston based workwear retailer wanted to leverage their store inventory and reduce the dependence on Drop-Ship from Vendors.
- Sterlite was already tasked with upgrading their Oracle Commerce platform from 10.2 with some proprietary accelerators to a 11.2 platform without any custom accelerators.
- WorkNGear uses a legacy Order Management, POS and warehouse management solution that is not flexible and extending it to support ShipFromStore was found to be costly and time-consuming.
- Sterlite’s OFS solution has fit in very snugly between their Oracle Commerce and legacy Order Management applications to provide a simple, yet powerful solution to manage decision making for shipping ‘Web Order’ from stores, enabling the store executives with an intuitive front-end for handling ShipFromStore as well as InStore orders and a robust back-end to integrate with their existing systems.
What is ShipFromStore?
- Ship-from-store puts physical retailers on par with online ones; customers order from an online storefront and then their orders are fulfilled by the nearest store in the chain.
- Instead of the customers picking up the order later at the store, the products are delivered directly to them from the store.
- This is different from the traditional models of Drop-Ship and Stock & Ship models.
Note: ShipFromStore is neither InStore Pickup nor ShipToStore. It is a different Paradigm.
What is Drop Ship?
- Drop shipping is a supply chain management method in which the retailer does not keep goods in stock but instead transfers customer orders and shipment details to either the manufacturer, another retailer, or a wholesaler, who then ships the goods directly to the customer.
- As in retail businesses, the majority of retailers make their profit on the difference between the wholesale and retail price, but some retailers earn an agreed percentage of the sales in commission, paid by the wholesaler to the retailer.
- Simply put: When drop shipping, you do not purchase the products wholesale and physically store the items as traditional retailers often do. Instead you purchase the products individually after an order has been placed on your website. The product is then shipped directly to the end consumer by your supplier, on your behalf, without you ever physically “owning” or storing the item.
What is Inventory Model aka Stock and Ship?
- The tried-and-true retail method is to order an item from the manufacturer or distributor and keep it in stock until you receive an order.
- Many retailers who are able to purchase in bulk do so as bulk orders are generally sold to retailers at a discounted price. Discounted bulk rates can provide the retailer with higher profit margins once their inventory has sold.
ShipFromStore – A Deep Dive
- For retailers that sell the same merchandise from brick & mortar stores as well as online, shipping online orders from stores makes sense.
- Running out of hot items can mean ending promotions early or disappointing customers by cancelling their orders, neither of which is a good idea during the stressful and crucial holiday season.
- Yet expanding ship-from-store is not as simple as it sounds at first.
- Instead of duplicating the inventory in the e-commerce warehouse, the discounter can ship the most common colors and sizes of, say, a sweater from its stores while offering extended sizes and more colors online only.
- By shipping the popular colors from stores, the chain makes room for the extended colors and sizes in its warehouse.
- With ship-from-store, retailers can turn their brick & mortar stores into fulfilment centers so consumers can receive orders from the closest location instead of a central warehouse.
- The benefits of the method include faster delivery and access to a larger product assortment.
- Retailers can implement this method without having to disrupt the customer-facing aspects of the brand experience.
- No changes need to be made to the store layout, purchasing process or e Commerce site appearance. Therefore, the consumer shopping experience is enhanced through all channels without the consumer even knowing it.
Advantages of ShipFromStore
- Faster shipping to the customer, at lower cost.
- Putting inventory closer to customers gets products in their hands faster, allowing for single-zone ground delivery, which reduces transportation cost. “Retailers have the flexibility to offer free shipping when an item can be fulfilled from a local store,” he says.
- Reduced markdowns.
- Improved visibility into excess inventory across all stores can preserve margins and avoid costly markdowns. Improved asset utilization. Using a ship-from-store strategy increases inventory turnover and helps retailers maintain less inventory overall.
Challenges in Embracing ShipFromStore
- Inventory visibility:
- System-wide inventory visibility is an essential ingredient. Having a view of inventory across all stores as accurate as possible is the key.
- Store capability:
- Choosing the right stores in your network is equally critical. The selected stores must be having spare space as well as the depth of inventory necessary to avoid stock outs.
- Make sure they have the technology in place to have orders pushed to them for fulfillment, and can get product to the customer in a timely way.
- Training issues:
- Getting stores up to speed in fulfillment takes time and training. You need an approach to pick, pack and ship that is simple and easy to learn, especially given part-time staffing and high staff turnover rates at many retail stores.
Technology Impediments to Implement ShipFromStore
- Most of the Oracle Commerce retailers who are using the Oracle Commerce framework to design their customer-facing application would be using some Order management solution to handle drop-ship orders to vendors.
- These order management applications would be either part of a larger ERP/SCM system or a legacy product.
- Hence developing/extending those applications to support a ShipFromStore model is either too costly or too much time-consuming.
Traditional Drop-ship from Vendors
Sterlite’s Unique ShipFromStore Solution
- Sterlite OFS module – built on top of ATG Fulfillment Framework of the Oracle Commerce suite.
- Acts as a middle man between the eCommerce Application and the ERP application to handle ShipFromStore decisions.
- Allocates incoming drop-ship orders to stores that have the necessary stock based on complex algorithms that would ensure that the store(s) selected are based on the least shipping cost calculations.
- Leverages Endeca’s geo-spatial search to select the stores nearest to the customer’s shipping address.
- Provides user-credential based dashboard for the store executives to login and work with both Instore-Pickup orders as well as handle ShipFromStore orders.
- Dashboard provides both visual as well as audio cues to alert the executives of the arrival of a new Instore pickup or a ShipFromStore order.
- Ability for the users to handle one stores or multiple stores.
- Integrated with bar-code scanner OOTB to scan, add & validate the ordered SKUs.
- Provides ability for the store executives to either accept or cancel the assigned order either fully or partially.
- Configurable hops to determine the next matching store to handle the order in case the first selected store rejects the order.
- If no stores available to handle the order, then order can be configured to be sent to the existing ERP/order management application in a transparent manner.
- Integration with Tax Engines and payment gateways for handling capture calls.
- Can be run as part of the CSC instance or AUX instance
Advantages of our ShipFromStore Solution
- Existing Oracle Commerce customers can leverage their current licenses.
- Built on top of the enterprise class Framework.
- No need to customize/extend the existing ERP/legacy order management solutions.
- Ability for the store executive to handle InStore-Pickup as well as ShipFromStore.
- Seamless Integration with Shipping systems like FedEx/UPS.
- Intuitive dashboards with search/filter options.
- Simple but intuitive screens enables Store executives to handle orders with very minimal training
- Ability for multi-store managers to handle multiple stores from a single dashboard.
Work N Gear: A ShipFromStore Case Study
- Currently on Oracle Commerce 11.2 and on a legacy ERP (Raymark)
- Approximately 40 stores in 11 states
- 1 distribution center, located in the Boston area
- Since Go Live, roughly 30-35% of shipped orders have utilized ShipFromStore vs. Shipping from the warehouse or distributor
- ShipFromStore orders give them more than 30% savings in the Shipping costs, since Vendors usually charge a flat rate for shipping.
- Now, they are able to run ‘Free Shipping’ discounts more often to drive sales.
- Store inventory being turned over faster by a corresponding percentage.
Bottom Line: ShipFromStore has yielded tangible results in a very short time.
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