Will Ship From Store Neutralize Amazon?

A growing number of retailers, including heavyweight chains Best Buy, Dick’s Sporting Goods, Gap, Macy’s, Nordstrom and Walmart, are using stores as mini distribution centers to fulfill online orders. The idea is that "ship from store" allows retailers to be more responsive to customer needs while cutting costs in the process. In the end, the chains believe they’ll gain a competitive advantage over Amazon.com and others as a result.
"Some people talk about Amazon with their 100 distribution centers, God bless them. We have 2,600 distribution centers," Glenn Murphy, CEO of Gap, Inc., told USA Today. The company began shipping online orders from its Banana Republic, Gap and Old Navy locations in 2012.
In a March RetailWire poll, 65 percent of respondents said ship from store would give bricks and clicks retailers a meaningful competitive advantage over pure play e-tailers in the next three to five years.
Matt Nemer, a retail industry analyst at Wells Fargo Securities, told USA Today that ship from store "is the most important thing that will change physical retailers over the next five years."
- Will Stores Become Warehouses in the Omnichannel Future? – RetailWire
- Retail stores become shipping hubs to battle Amazon – USA Today
- Will Walmart Win the E-Commerce Battle? – RetailWire
- Best Buy Stores to Serve as Mini DCs – RetailWire
Do you agree or disagree that ship from store “is the most important thing that will change physical retailers over the next five years?” Do you see this trend significantly cutting into Amazon’s business?
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26 Comments on "Will Ship From Store Neutralize Amazon?"
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Not even close to the most important thing. For shoppers, this is irrelevant. They want the right product at the right price in the right amount of time. From reading these articles, it’s unclear that any of these have an advantage over Amazon.
My jury’s out on this one. I use Amazon a lot because no single retailer could have the variety and SKU count that Amazon has. I also like the product ratings, which of course I take with at least a dash of salt.
For basic commodity drugstore needs, for example, I use CVS or Walgreens’ online stores, but if I’m not sure about exactly which product I want, and need to do a bit of research, Amazon still is my best bet. Can’t give any statistics, but I would guess I’m not alone.
I agree that the “ship from store” concept is a leap forward for brick-and-mortar retailers, in the sense that they will be able to leverage their inventory and expenses more effectively. But customers who visit their local department or big-box store will have the same expectations about customer service standards as before – along with the ability to “touch and feel” the goods. Brick-and-mortar stores need to ensure that they do not starve customer-centered payroll while managing the logistics of turning themselves into mini-fulfillment centers.
In the meantime, Amazon still has huge competitive advantages in breadth of assortment and pricing that no single brick-and-mortar store can compete against. And it continues to develop new “store within a store” concepts to target emerging growth opportunities – so I wouldn’t lose sleep over the Amazon outlook anytime soon.
Ship from store is great if: 1) It speeds delivery to consumers, and 2) Stores have the inventories on hand to fulfill the orders.
My local Gap stores tend to have thin inventories. I don’t see how they would be able to fulfill a meaningful quantity of orders. Combine that with Gap’s inconsistent pricing (between online and in-store), and the result could be a consumer nightmare.
Amazon has succeeded because it ships quickly and has a wide variety of items in stock. I don’t think ship from store is a threat.
I find this a bit humorous. Essentially, retail has been asleep at the wheel, ignoring e-commerce in its early days, then getting nervous about it, and then trying to play catch up. Amazon saw the future and built a distribution juggernaut and now some brands think that it’s a quantity battle – that is, having more points of distribution means that they can be more effective. I think those retailers making such an assumption have a loaded gun pointed at their feet.
To believe that the implied process: web site, to internal inventory control system, to local store manager, to local store staff, who then pick, pack, and label items for home delivery is going to be reliable and effective against companies that (now) have many years of multimillion dollar investments and process iterations, is once again, the retailer’s folly.
Not necessarily “the most important thing.” Not by a long shot.
Let’s face it, it’s a volume issue. If suddenly any individual Gap unit had the majority of its orders shipped to home, it would be, at a minimum, disruptive and, at worst, paralyzing.
There’s all the question of the cost of the service. When all costs, goods and services are fully loaded, Amazon and other e-tailers may still offer a better deal to shoppers.
True, it does solve the immediate gratification problem … or does it? If I won’t wait for Amazon to deliver something, why will I wait for the Gap? The counter will go something like, “Customers will be able to access the brands they like!” But … er … can’t most customers do that now?
Five years takes us out to 2018 and I think by then physical retailing will have to come up with something a tad more interesting to survive. And, as far as Amazon goes, I don’t think it will notice.
Ship from store isn’t the most important change from a consumer point of view. My concern is that the merch could be shopworn when shipped to the customer. That’s never something an Amazon customer faces.
Another case of management confusion.
With the arguable exception of club stores, which are essentially just the last node of a distribution chain, there is little or no outbound distribution capability nor expertise in a typical retail store.
As my UPS distribution center manager son will quickly tell you, proximity to the ultimate delivery point only advantages physical delivery costs (gas). Everything else is driven by handling efficiency and accuracy. Somehow I don’t see the Gap store manager equaling a UPS DC manager in shipping skills.
What I love about the ship from store option for brick and mortar is it allows retailers to move inventory from stores that might be overstocked or not from a store that is under-stocked.
Example: A customer buys a pair of jeans size 32 and they live in Scottsdale, AZ. GAP has 3 stores within 40 miles of the customer’s home address. Two of the stores have 2 pairs of jeans size 32. The 3rd store has 7. Now GAP can send the size 32 from the store with 7 which provides them a way to move inventory without putting the item on clearance.
The more retailers can blur the lines between distribution channels (the way customers shop) the better. Customers want what they want when they want it. They don’t care if they are in store, online or using their mobile phone. Make it easy and seamless and you win.
It is not the most interesting thing. Visibility into inventory to know which products are where, what demand is at each store, and what impact a shipment from a specific store will have on out-of-stocks, and decisions about which distribution point should be used to fulfill an order is extremely complicated. Doing this well to get products to consumers in a timely manner without creating out-of-stocks is critical to meet both levels of consumer demand. This level of inventory insight and decision making will surely result in other, even more interesting, changes in the future.
It’s one facet of the problem. Convenience is really the issue, but convenience is not just time to delivery, it’s also ease of shopping (online or in-store), breadth of assortment, price/offers, customer engagement, confidence in the brand, and then time to use. People looking for silver bullets should recognize that it takes more than one bullet to fill a gun.
Ship from store is a good move. But to think it will curb the advantage Amazon already has established ,one has to be living in a fool’s paradise. There will be some advantages such as lowering inventory in overstocked stores.
I am an Amazon shopper. They make it easy to part with my money and I can count on when I will have the order delivered. Brick & Mortar needs to concentrate more on getting customer service in place.
I agree it is an exciting proposition but it is all in the execution. Please check in here to read about my very interesting Google Express Shopping experience.
Ship from store will hardly “neutralize” Amazon, however, it will help some stronger retail chains remain competitive in the era of the Incredible Dissolving Store.
Chain-wide, omni-channel inventory visibility is one of the keys to making this work. In the best version of this, each store becomes a portal for product information, physical goods and value-added services. The customer chooses how to interact and obtain product according to their needs on each occasion – in-person, online or at home or office.
To accommodate this, I foresee over-sized big box and department stores tightening up their inventories and showroom space, while allocating more backroom for product handling, pack and ship functions.
Ship from store is a disaster in the making. It is completely contrary to the purpose of a store. Amazon has a business model to get the right product to their shopper at the right price and do it quickly. From the top to the operators in the warehouses, every person is geared to meet the company’s objectives. What do we tell the associates in the stores their job is? And even if we were to give each store a “manager” for online orders, can that manager ever be as competent as the operators in an Amazon warehouse?
With regard to inventory, this exacerbates the problem rather than facilitates good inventory utilization. It is already difficult to have the correct inventory balance in 2,600 locations without an additional variable. The retailers are going in the wrong direction. They should fill in-store orders from the direct-to-consumer warehouses. That would create considerably better inventory utilization than the opposite.
I don’t think that ship from store “is the most important thing that will change physical retailers…” All the retailers are doing is trying to recapture a few sales. They should stop trying to match Amazon.com and come up with their own unique value proposition that will make a customer want to do business with them.
There are three components of retail:
1. Meeting of minds – the heart of the sale, or selling.
2. Delivery of the goods.
3. Exchange of money.
Every bricks and mortar store is more or less operated as a neighborhood warehouse, where shoppers can serve themselves by selling to themselves what they want (#1) and stock-pick from the store/warehouse (#2) and pay at the checkout (#3), the battle for retail space requires EVERY retailer to give careful attention to EACH of these three, distinctly, leveraging whatever possible strength they have.
Amazon is moving delivery closer to the customer, and is holding the high card in efficiency of #1. #3 is not yet making a huge difference from retailer to retailer, although we did discuss “Kroger loses some wait,” sometime ago at RetailWire.
Every retailer should understand very well their own assets relative to each of these three functions, distinctly. They should also understand how their two MAJOR competitors, Amazon and Walmart are managing each. Then either up your game, pray, or retire!
We just did a study of over 2,500 people across the US on digital/retail integration (DRI) and the single most favored feature was what we call BOPIS (buy online, pick up in store).
If that plays out and stores become pick up centers AND great brand experiences, the assumption will be correct. Of course, we have a ways to go for “great experiences,” but BOPIS will start that ball rolling.
Who knows with channels after channels today and what’s on the drawing board for tomorrow as to the most important change. What we do know is they will change.
Cutting into Amazon’s business is a tough run. Amazon is so far ahead in the game and no one expects them to spend the next five yeas sitting on the bench.
Ship from store is fundamentally a cost play. The real benefit that Amazon has is a combination of Amazon Prime and the ability to personalize the customer experience and thereby create a barrier to exit. Simply put, Amazon provides what you need as an individual and then gets it to you quickly and economically.
Ship from store ignores customer experience, which is understandable, since most big box retailers suffer from poor performance in that area.
The most important thing that will change physical retailers over the next five years is not ship from store. Rather, it is (a) the influence of online behavior on offline purchases and (b) the role of mobile in (a).
43% of U.S. retail sales are web-influenced, according to a cross-channel shopping study by Forrester. This amounts to nearly $2T, compared to the $200B value of ecommerce estimated by Comscore. So online influence is 10X the size of ecommerce, and ship from store is a small segment of a small segment.
According to a study released in August by Local Corp, product research behavior is accelerating rapidly on smartphones, far outstripping desktop and tablet.
The most common activities among mobile users in store are looking for coupons, comparing products on Amazon, and looking up ratings and reviews. These are low lying fruit for retailer websites to step in and solve shopper problems.