The rise of omnichannel operations has redefined the landscape, placing new demands on the roles of VP of Supply Chain, VP of Store Operations, and Directors of Omnichannel Operations. The introduction and expansion of same-day delivery services have particularly spotlighted the intricate balance between customer expectations and operational feasibilities. This article delves into the nuances of how orders are picked and packed in stores across different fulfillment options—pickup in store, same-day delivery, and ship to customer—and the strategic pivots required to meet these demands without compromising efficiency.
The Evolution of Customer Expectations
The changing consumer sentiment is clear – they expect not just availability, but immediacy. Same-day delivery has transitioned from a luxury to a standard expectation, pushing retailers to adapt swiftly. This demand for speed places a magnified lens on the picking and packing processes in stores, and many brands still struggle with operationalizing this flow. The challenge for VPs of Supply Chain and Store Operations, alongside Directors of Omnichannel Operations, is not merely to meet these expectations but to do so in a way that is scalable and sustainable without adding undue labor cost to the equation.
Pickup in Store: The Balancing Act
For pickup in store options, the process often involves a tight integration of the front-end ordering system and middle of house POS and Order-Management technologies. For BOPIS, the stores must allocate resources efficiently to ensure that online orders do not disrupt in-store customer experiences – this is where the ‘rub’ is for most retailers. Often this means dedicated staff must swiftly pick and pack orders without compromising the service provided to in-store shoppers however many stores, especially in the middle market, run a “1 and 1” labor model. This labor model means there are two people in the stores typically – a manager and an associate.
So the question is, if the expectation is every store does BOPIS then how do you ‘stretch’ the labor model to ensure the pickup is ready in the standard 2-hr window? Balancing this aspect of BOPIS is hard if you’re not the size of Target or Best-Buy where the labor is typically dedicated to store fulfillment operations vs. most stores are designated models. In designated models, the stores often have a harder time keeping up with the BOPIS flows and meeting the SLA’s for picking, and this manifest back to the omnichannel operations team in terms of customer sentiment (in the NPS scores, if they are captured even if customer cancels order) and often can be seen in the voice-of-customer (VOC) feedback as well. The solution here is nuanced based on the volumes of BOPIS and types of products, but the important thing to start with is a clear operational dashboard showing the SLA’s at the stores and by region, denoting which are designated vs. dedicated and what labor model they have.
With that dashboard, the labor model discussion becomes much clearer and the store operations team can be held accountable to the metrics, which is to their benefit given 30% of the time a BOPIS order leads to an add-on purchase, typically where customer buys an additional 33% more of their initial cart total. However…. if you view Same-Day Delivery as BOPIS, then the problem gets even worse.
Same-Day Delivery: Speed vs. Sustainability
If BOPIS alone wasn’t hard enough, same-day delivery amplifies the complexity of this operation. Stores must now consider not just the picking and packing cut-off times but also the logistics of delivery within a constrained timeframe. Most third-party delivery solutions don’t sit around waiting for orders to come in and then send delivery drivers one off to each. Operationally, it’s better for the deliveries to be done in a ‘milk-run’ style (just as Amazon does) – so volume of orders for same-day delivery and having a clear strategy around POC’ng this in specific markets where there is an actual need is even more important.
Also, most companies don’t think of this, but there are both environmental and economic sustainability aspects of same-day delivery. While customers relish the convenience, the operational toll on stores and the environment is non-negligible. The question for leaders in supply chain and operations is how to innovate within this space to reduce carbon footprints while still meeting consumer demands.
I envision a move to a more centralized fulfillment center model where potentially more than one brand ‘forward deploys’ inventory to localized hubs, or will we witness the rise of AI-driven logistics solutions that optimize delivery routes in real-time?
Ship to Customer: The Long Game
Compared to in-store pickup and same-day delivery, shipping to the customer allows for a slightly longer lead time but introduces its own set of challenges. Here, the focus shifts towards optimizing the packing process for safety and efficiency, ensuring that products are not damaged in transit and that shipping costs are kept in check. For VPs and Directors overseeing these operations, the challenge is in forecasting demand to balance inventory levels and labor capacity appropriately, minimizing the risk of stockouts or excess inventory, which can both erode profit margins. Also, sub-optimal pick/pack processes can even further erode overall margin.
Perficient often advises in this space and encourages organizations not to over-engineer the process around store pick-pack. Rather than ‘light up’ every store to fulfill, it sometimes makes more sense to start with a smaller set of store that are better equipped in terms of capital and staffing to focus on picking orders. Typically, these stores have larger amounts of inventory, bigger backrooms and are in a better position (space-wise) to pick and pack without disrupting the floor-room inventory.
Operational Agility: Meeting Demand Where It Lives
Across all these fulfillment options, the underlying theme is operational agility. The ability of a store to flex its operations based on the volume of orders coming in is critical. This agility is not just about staffing levels but also about the technological infrastructure that supports order processing, inventory management, and logistics.
Provocatively, the future of retail may demand a radical rethinking of how physical stores are designed and operated. Stores might evolve into hybrid spaces that serve both as traditional retail environments and as localized fulfillment centers. This evolution could redefine the role of the store in the retail ecosystem, shifting from a point of sale to a critical node in a complex omnichannel network.
Conclusion
For VPs of Supply Chain, VPs of Store Operations, and Directors of Omnichannel Operations, the challenge is clear: how to balance the scale of operations with the agility needed to meet today’s consumer expectations. The answer lies in a combination of innovative technology, sustainable practices, and a deep understanding of the ever-evolving retail landscape. As we move forward, the ability to adapt and innovate will not just be a competitive advantage but a necessity for survival in the high-stakes world of retail.
Building resilient, flexible operations that can pivot as quickly as consumer demands do, ensuring that the journey from click to customer is as seamless as it is swift.
Want to learn more about how Perficient can help? Reach out to us below or connect with me over LinkedIn to start a conversation. https://www.linkedin.com/in/zachzalowitz/
