Store inventory accuracy issues and Same Day Delivery. How can one help the other?
The last few years have driven dramatic changes in how OMNI channel retailers think about fulfillment. Having BOPIS (Buy Online Pickup in Store), Curbside options, and 2-3 day shipping from fulfillment centers is no longer good enough. And now that same day and next day local delivery options are everywhere, industry analysts point out that retailers have had the weapon (their stores) they needed to compete with Amazon all along. These faster delivery options seem poised to capitalize on that.
But as McKinsey and others have pointed out, store-based fulfillment comes with many challenges. Store inventory accuracy- or the lack thereof - has been one of the most common challenges cited by retailers for not expanding their store fulfillment footprint. In reality, many retailers today still have store-based fill rates hovering near 80%. When the inventory isn't there, it usually results in a lost sale or cancellation. In fact, many retailers are not even turning on the Same Day delivery because of their current BOPIS execution levels. Therefore, even though the innovation in last mile efficiency, speed, and availability has been breathtaking, the hard truth remains that it's all for naught if you don't have the inventory or an accurate picture of your local inventory.
Advances in RFID, computer vision, and automation have made progress in this massive problem. At Nextuple, we applaud the hard work retailers have put into shoring this gap. We have also developed a new concept of connecting stores in a metro market. We are confident our solution can take retailers even further in filling more orders from close to the customer and better utilizing the in-market inventory.
Here's our solution: If you could serve up a pool of inventory to execute against a promise vs. a single location, it logically follows that a retailer has more inventory available, which could improve their fill rate and inventory availability.
The connected store pool unlocks new Omni fulfillment use-cases and works like this:
Use Case # 1: Buy Online Pickup in Store(BOPIS) Fill Rate optimization:
A BOPIS order is sourced to consumers' preferred store.
A no pick is sent back to sourcing for pool evaluation to see what alternative stores could provide next day delivery. The sourcing also gives preference to stores that already have
Next Day (or even same day) orders to build density. Once confirmed at another store, the customer is given the opportunity for next day or same day delivery instead of BOPIS cancellation.
As an alternative, sourcing could look to find another store closest to the consumer and secure pick confirmation there, offering a different pickup location.
Taking it a step further, the original store could be offered as a pickup location a day later (tomorrow vs. today) by creating a middle mile transfer to move product through an in-market sortation hub.
Use Case # 2: Same Day Enablement (SD)
Same day orders are sourced to a location in the pool considering location to consumer AND existing orders to build pickup density.
Successful picks are staged for final mile delivery. No picks are pushed back to the pool to find alternate locations that can fulfill it.
Same day no picks are offered as next-day opportunities to the consumer once inventory can be confirmed in the pool.
Use Case #3: Next Day Enablement / Optimization (ND)
Next day orders are sourced to a location in the pool considering location to consumer AND existing orders to build pickup density
Successful picks are staged for carrier pick up. No picks are pushed back to the pool to find alternate locations that can fulfill it.
Once inventory is confirmed, the promise is kept as next day
Middle mile infrastructure moves all day next orders to an in-market sortation hub to build route density for the carrier.
Now, the three experiences (BOPIS, SD, ND) start to work together to improve all outcomes when we add in pooling. Next Day and Same Day options help solve BOPIS fill rate issues. Same day gets enabled as a service because of the pool coverage and any same day fill rate issues are solved by Next day deliveries from elsewhere in the pool. And Next day becomes yet another low-cost option by building density for a carrier.
Now retailers can finally get more serious about using stores as the strategic local fulfillment asset they have conceived all along. They can then make a bigger bet to allocate more inventory into the market, which only improves the route density and sustainability of the last mile.
At Nextuple, we've developed products that unlock these and many other benefits. We're looking to partner with retailers to finally level the playing field. We're excited to onboard retailers serious about unleashing local fulfillment at scale.
Come learn more at Nextuple.com.