Insights / Perspective / Digital supply chain and fulfilment integration
PerspectiveStore pickup and ship from store
Using stores as fulfilment points can speed delivery and put stock to better use, but only when stock accuracy is high, routing rules are clear and store teams are trained.
Retailers with physical stores own something pure online sellers do not: stock sitting close to customers. Using those stores as fulfilment points, for click-and-collect or for shipping online orders directly, can shorten delivery times, reduce markdowns on slow-moving stock and bring online shoppers through the door.
It is an attractive idea, and many retailers have rushed into it. The results have been mixed. Where it works, stores become an integral part of the online operation. Where it does not, staff spend hours searching for items that are not there, orders are cancelled and in-store customers wait while colleagues pack parcels in the back room. The difference is not the idea. It is the groundwork.
What stores add to fulfilment
The case for store fulfilment rests on proximity and stock use. An order shipped from a store near the customer can arrive faster and more cheaply than one shipped from a distant warehouse. Click-and-collect lets customers pick up the same day, often without paying for delivery. And stock that is not selling in one store can be sold online to a customer elsewhere, rather than marked down at the end of the season.
There is a footfall benefit too. Customers collecting orders often buy something else while they are in store. For many retailers, that is reason enough to make collection easy and pleasant.
Not every store suits every role. A large store with a stockroom and a loading area may be ideal for shipping online orders. A small city-centre shop with no back-of-house space may handle collections well but struggle to pack parcels. Treat store fulfilment as a portfolio decision, assigning roles store by store rather than switching every location on at once.
Fix accuracy first
Store fulfilment depends entirely on knowing what is on the shelf. Warehouse stock records are usually accurate, because warehouses are designed for controlled movement. Store stock is harder. Items are moved by customers, misplaced, stolen, damaged or sold without being scanned correctly. A system that says three units are in store may be right, or the real figure may be zero.
If stores are asked to fulfil orders against inaccurate stock, the consequences are immediate. Staff search for items that are not there, orders are cancelled or rerouted late, and customers who were promised collection today are disappointed. Before expanding store fulfilment, measure stock accuracy in stores honestly through cycle counts, and invest in improving it where it falls short. Common measures include more frequent counts of high-risk lines, better processes for receiving deliveries and handling returns, and, for some retailers, item-level RFID tagging.
Start with a buffer
While accuracy improves, make only part of each store’s stock available for online orders, holding back a safety buffer of one or two units per line. Reduce the buffer as accuracy improves and cancellation rates fall.
Set clear rules
When an online order comes in, the system must decide where to fulfil it: a warehouse, a store near the customer or a store with surplus stock. Those decisions should follow explicit rules, agreed by operations, ecommerce and store leadership, rather than being left to default software settings.
- Which stores can fulfil online orders, and for which product categories?
- When does an order go to a store rather than the warehouse: always for click-and-collect, or for delivery only above a certain distance or when the warehouse is out of stock?
- How many orders per day can each store handle without affecting in-store service?
- What happens when a store cannot find an item: how quickly is the order rerouted, and who tells the customer?
- How are stores credited for online sales they fulfil?
The last question matters more than it seems. If store teams are measured only on till sales, fulfilling online orders is extra work with no recognition. Many retailers credit fulfilling stores with a share of the online sale, which aligns incentives quickly.
Rules also need reviewing. Patterns of demand change with seasons and promotions, and a routing rule that worked in spring may overload certain stores before Christmas. Review store workloads and cancellation rates monthly, and adjust capacity limits and routing priorities accordingly.
Train store teams
Picking, packing and handing over online orders are different skills from serving customers and merchandising. They need defined routines, appropriate space and protected time. A store expected to fulfil online orders “when it is quiet” will miss deadlines on busy days, which are exactly when online demand is highest.
Give stores simple tools: a handheld device or app that shows orders to pick, guides colleagues to the right location and confirms each item by scanning. Define packing standards and supply the right materials. Set up a clear, welcoming collection point with short waiting times. And train teams on what to do when things go wrong, from missing items to customers arriving before their order is ready.
We paused the rollout for two months to fix stock accuracy in our pilot stores. When we restarted, cancellations were a fraction of what they had been, and store teams actually wanted to take part.
Omnichannel director, specialist retail client
How to begin
Start with a pilot of a few stores with good stock accuracy, enough space and supportive managers. Begin with click-and-collect, which is simpler than shipping, and add ship-from-store later. Measure order cancellation rates, time to ready for collection, add-on sales from collecting customers and any effect on in-store service. Expand only when those measures are stable, store by store, fixing stock accuracy in each before it goes live.
Source: Intelliversal analysis.
