The Wall Street Journal noted that the move is not without risks. "Picking" at store-level is usually a lot more expensive than picking in distribution centers, though we will note true additional costs can be muted by having store employees grab merchandise in "down time", though most retailers are experimenting with different store fulfillment models and processes.
For example, the WSJ article said that picking and fulfillment at a Macy's store in Paramus, New Jersey indicated both the promise and the challenges of this approach.
Macy's Manager Dealing with E-Fulfillment Orders at New Jersey
Source: Wall Street Journal
"In the store's back recesses, Macy's converted an area where it once took telephone orders into a dimly-lit, makeshift packing area. There employees packed handbags, kitchen appliances and shoes into cardboard Macy's boxes. By noon or so, employees filled some 400 boxes, which were then put into plastic bags awaiting afternoon pickup," the article said. "By 2:30 pm, 100 more orders had come to the store, totaling $5,091 in sales. Danya El Zein, director of store fulfillment, scoured the sales floor for a white Michael Kors purse for a customer in Bowie, Md., and a Fossil wallet for a customer in California."
Macy's employees find, for example, that identifying specific colors for a given SKU on the store floor can be challenging. Unlike a distribution center, there is no defined location fora given color on the store floor, and the actual markings on the tag may not use the same word for the color. Wow.
The article notes that Macy's rival Nordstrom was one of the first retailers to fill on-line orders with goods shipped from its stores, beginning the practice in 2009. Nordstrom now ships from all 117 of its full-line outlets.
Last holiday season, Toys R Us kicked off its own program in all 800 of its Toys R Us and Babies R Us stores.
"We're able to sell more without having to buy more inventory," said Jamie Nordstrom, president of Nordstrom's online operation. Mr. Nordstrom said shipping from stores has cut the level of markdowns and improved margins, and has sped up the rate the rate at which the chain turns over its inventory.
One complexity with this kind of approach is which channel gets credit for the sale: is it the on-line channel or the store that ships it? Toys R Us counts the orders as online revenue. Macy's says it is still sorting that out.
"We are struggling with compensation across the company, like any other omni-channel retailer is," Mr. Sachse told the WSJ.
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