What do Macy’s, Toys“R”Us, Walmart and Gap have in common? All have them have begun expanding into the world of ship-from-store. Now brick-and-mortar businesses are using their stores to fulfill online orders to meet the ever increasing expectations of their customers.

One of the early adopters was Best Buy. In an attempt to fight back against what’s called “showrooming” (people checking out products in their stores and then buying online) the electronics superstore introduced its ship-from-store strategy in late 2013.

“What Best Buy and other brick-and-mortar retailers are doing is turning their stores into mini-warehouses, fulfilling web orders from some of them directly. It’s a way to leverage the inventory in those stores. This is especially important as larger players move inventory closer to consumers by building more and more distribution centers spread across the United States. When Best Buy uses their brick-and-mortar stores as mini-warehouses, it brings more inventory even closer to their consumers,” say Kirk Godby, president of the Customized Logistics and Delivery Association.

The idea is that retailers don't want to frustrate online shoppers by making them wait for out-of-stock merchandise to be replenished from a warehouse, especially if the ordered product is sitting on a store shelf somewhere and a local provider can deliver it quickly.

It’s a trend that could be good news for many involved in the supply chain, especially those in the customized logistics and delivery sector. With its emphasis on delivering online orders to the customer faster by making use of the stock in its stores, Best Buy and others may just have found a way to beat the larger players at their own game.

Best Buy’s Ship-from-Store strategy began paying off during the 2013 holiday shopping season. Starting in the second quarter of 2013, Best Buy began fulfilling web orders from 50 of its more than 1,500 U.S. stores. Initially, Best Buy was much slower at delivering orders, but that changed over the holidays when some customers received their Best Buy orders in less than three days.

Wal-Mart has a similar program. It started out by fulfilling web orders from 35 of its stores, and plans on adding more. Others joining the ship-from-store movement are Urban Outfitters Inc., The Finish Line Inc. and The Jones Group Inc. (which operates the Nine West brand of stores). These retailers use a variety of carriers to deliver items to the consumer from their stores. Some use national couriers. Others use a network of regional providers.

Godby sees this as a positive development, pointing out that retailers, shippers and manufacturers are all trying to get their products to their customers faster and cheaper. “The ship-from-store idea shows this idea is taking root, opening up a huge opportunity for local delivery companies. Members of our industry can be the resource that will help these retailers as they look for ways to get their goods to the consumers faster and faster,” he says.

In the end, Godby forecasts that other retailers will join the Best Buys, Walmarts and Gaps of the world in using ship-from-store to get a jump on their online competitors. “Retailers know they are being measured against each other by how quickly they can get their items to the customer. Everyone’s looking for ways to expedite the delivery time."

Question: What about customer response? How likely are customers to want to pay more for quicker delivery?

Godby: I know customers like the option to choose same-day. When customers buy online right now, they certainly have that choice. But, will they be willing to pay for same-day? I think some will. Amazon gets it. It’s one of the options they present to their customers, and several CLDA members already provide that service for them.

What’s encouraging about retailers looking at the Ship-from-Store option coupled with a same-day delivery option is that they are recognizing that shortened delivery time is their advantage. Our members can make the most of that advantage.

Question: Why are customized logistics and delivery companies so important to making this work?

Godby: It’s what we do. It’s what we’ve always done. Our members are nimble and used to providing same-day service. It’s no different than any other job where we get the request for a two-hour delivery. It’s the perfect marriage – we live in the same-day world and these retailers want to deliver faster and faster. They want to get to the same-day service level and we’re the people to do it.

Question: What are our members going to have to do to respond to this challenge?

Godby: From an operations standpoint, they don’t have to do anything. They already do it. The challenge is with the technology. I’m not implying our members don’t know how to leverage technology. They do. You can’t succeed in this business without harnessing technology. But, they all do it in their own way. There are several industry platforms and many proprietary platforms out there that our members use to allow customers to place, track and verify delivery. But that’s the issue. There is such a fragmented use of different platforms. There isn’t one platform that would allow a retailer to roll out a program across the country to mobilize CLDA members with ease. In a perfect world, Best Buy would dump a 1000-piece order in Texas and the orders would go directly into the correct local delivery company’s software systems. There’s going to have to be a national platform where delivery providers can receive the orders, update them and issue PODs if we want to be a part of this development in the supply chain.

There are three ways I can see this happening:
• National Supply Chain Network – This would be a national web portal platform that all e-retailers could use to submit orders and delivery companies could use to receive the jobs and get them updated. Right now a number of tech companies are working on this.
• Retailer-specific portals – These would be through individual retailers that would have their own portals for approved delivery providers to receive, update and confirm delivery of jobs.
• Direct integration – This would be a technology platform that would provide a direct link between the specific retailers and their network of the same-day delivery providers they use. Integrating with several of the major technology providers who serve our industry would be a great first step.

Question: Clearly, Ship-from-Store represents a new approach to fulfilling online orders. What do you expect it to mean for CLDA members?

Godby: Our industry is in a great position to take advantage of this trend. There are tremendous growth opportunities for same-day logistics and delivery companies to become a part of this new supply chain strategy. Companies like Best Buy and Wal-Mart have stores all over the country and there are CLDA members in all of their locations. The members of our industry can help fulfill these orders same-day. Why? Because they are local and this is what they’ve always done. We have the same-day and on-demand experience. Now, we need to find a way to harness technology that will help us play a key role in this escalating trend.