Decades ago a customer could call their local grocery store and order the goods they wanted, for either pick up at the store or for home delivery. This option for order fulfillment had been adopted by some in the intervening decades. However this Micro Fulfillment has only become a more pervasive and dominant option due to the pandemic, which has shut down or restricted traditional retail in store selling.
Ship from store and Pick up in store last mile delivery options have been understood for some time but there have been reasons, pre-pandemic, which have inhibited their adoption.
Let’s explore in store Micro Fulfillment in more depth.
With the overwhelming tsunami of Amazon’s presence descending on virtually every kind of retail business it has been important for businesses to look for every possible to compete against this behemoth.
Amazon has Distribution Centres everywhere, enabling it to provide a same day delivery service offering in most major urban centres. Next day delivery is available to even broader geographic circles.
So in order to compete against Amazon companies need to offer some equivalent capability, a unique offering, or some other Blue Ocean strategy. Most companies can not emulate the Distribution Centre footprint that Amazon has in place. But brick and mortar retailers do have a capability that they can leverage to their advantage, and that is the physical footprint of their retail stores.
It was in this environment that I found myself when I was in retail. The domineering presence of Amazon loomed large. They had more Distribution Centres geographically dispersed than we ever could. They were going to market with rapid delivery options which were going to be impossible for us to match with a limited, centralized Distribution Centre infrastructure. We needed a competitive Last Mile Delivery strategy?
In thinking about how we were going to compete in this situation I considered that we had over 250 brick and mortar stores across the country. While they didn’t have the endless aisle inventory that the Distribution Centre had, any given store did have stock on site which typically covered 80-90% of the typical demand of any given customer. That broad footprint and inventory coverage was actually better than anything Amazon could offer if we could only leverage that structure.
If we could go to market with a Ship from Store, or Pick up in Store, service offering, we could deliver anywhere faster than Amazon for the vast majority of our product offering. Stores already had the processes and systems to receive, store, and disburse goods. We only needed to tie the stores to our online order management system. This could be a profound go to market game changer for us.
I presented the situation and the strategy to the Executive team, inclusive of the CEO and the Head of Retail Operations. I expected the solution to be widely accepted with its intuitive advantages to fight our competition. But the response I got was quite the opposite. The Head of Retail Operations was skeptical at best, and the CEO acquiesced.
They were concerned with the amount of additional workload placed on the in store personnel. Their supposition was that the added workload would result in higher costs and workload strain at the busiest times of the day. As opposed to looking at how to make it work their short-sightedness stopped the strategy dead in its tracks.
As time went on Amazon continued to expanded its Distribution Centre based creating a competitive gap that the company was powerless to overcome without this strategy. That is, until the pandemic.
Like many companies, with pandemic induced lockdowns and closures, the company was forced to take action. If it wanted to keep its stores at all in this environment it had to leverage that capability. It quickly set up the Ship from Store capability, the Pickup in Store, and Curbside Pickup. Necessity, actually survival, snapped the company out of its inertia and antiquated thinking.
This new offering has not only allowed much of the company to remain viable, it has allowed the company to meet customer needs with a new, enhanced service offering, that has made it much more competitive than it has been in many, many years.
Micro Fulfillment Considerations and Next Steps
The short sightedness from the Retail Executives served to block change that would have been in the interest of the company. It would have given them a huge advantage over their competition and driven growth and profitability.
But like many changes and innovations there are those who will resist change despite the projected benefits. You must deal with this head on and not back down from this adverse response. Whether their concerns are real, perceived, or fabricated, they must be understood, addressed, and flattened.
So what are the concerns that must be addressed in order to establish a viable and well function in store Micro Fulfillment operation:
- Seamless system connectivity between the order management system and the in store order fulfillment system
- Workload levels and planning coupled with staffing solutions and procedures
- Business process robustness and training
- Customer friendly order pick up capabilities (eg. online notification, curb side pick up signage, in store pick up lockers, etc.)
- Financial management system, tracking and reporting
- Employee workload prioritization and incentives
- Customer experience training
- Inventory placement to support increased in store orders including rapid replenishment mechanisms
- Forecasting and planning optimization taking into account traditional and online in store order demand and fulfillment
- Pricing, discounts, and sale synchronization between in store and online channels
All of these items are real concerns to be addressed. Failure to handle these issues correctly will lead to disastrous results and damaging, irreversible customer experiences.
On top of that the blockers and naysayers can come out in full force. There is no alternative but to address their concerns, whether rational or not, because they can stop your project in its tracks and jeopardize the survival of your company.
Change Leadership coupled with a commensurate change management work stream are an essential part of successfully introducing a Micro Fulfillment solution into your retail channels.