Many retailers have transformed their brick and mortar stores into miniature DC’s (Distribution Centers)
Traditional Distribution and the Changing Landscape
The retail industry has undergone a shift in how retailers operate their businesses. Customers now want products faster and at a lower rate than ever before. The traditional distribution landscape typically involved order fulfillment from a single distribution center. With today’s demand for faster delivery of products, this model is problematic. How do retailers provide the rapid delivery customers demand while utilizing infrastructure already in place? With hundreds of brick and mortar stores nationwide, retailers have been able to effectively leverage these stores to ship directly to the customer.
Reduction of Costs
Single fulfillment centers have become problematic since orders are being shipped cross-country, which takes time and money. Today, retailers are effectively using stockroom space in stores across the country to fulfill online orders. This increases inventory turnover and reduces carrying costs since e-commerce orders and in store sales are being pulled from the same stock. These online orders can then be routed to customers from a store nearest to them, saving organizations on shipping costs as well.
Improvement of Lead Times
Today’s consumer has now come to expect deliveries at a faster rate than ever before. he industry norm has become two-day delivery with over 89% of consumers classifying two days as rapid delivery. Some organizations even offer two-hour delivery to customers. Today, a staggering 25% of shoppers would abandon their order if same-day delivery was not an option. Retailers need to provide the services their customers demand to flourish. Effectively transforming stores into miniature DC’s puts inventory closer to customers, and allows for faster delivery.
The Future of Retail Distribution
Overall, today’s retail consumers are demanding their products faster than ever and at a lower cost. Effectively transforming stores into miniature distribution centers provides retailers with the ability to reduce both shipping and carrying costs, as well as the ability to improve lead times for deliveries. Uniform visibility of inventory allows for ease in allocating products from online orders and shipping them from stores closest to the customers.