5 Best Ways to Ship Products for Online Stores
There is no need to tell retailers that online shopping is a growing trend. Certainly, we all know it. Today, it is an important part of running a retail business. In this world of online shopping ‘how to ship products for online stores’ is an important question. But, this question goes beyond procedural tactics. Yes, sizes and weights matter. The ‘how to’ of shipping your products, shipping services, and shipping charges are all important. But equally important are the strategies used to ship products for online stores. Focusing on these strategies, there are five common methods to ship products for online stores. What follows is a description of each, with a few pros and cons to consider.
How to Ship Products for Online Stores
OrderDynamics’ recent research shows that 99% of e-commerce websites are offering free shipping. To sell products online means shipping costs and shipping rates are all the retailers' problem. Therefore, running an online business means shipping charges, and the overall logistics behind it, are a cost of retailing. In part, it helps explain why ship-from-DC (Distribution Centers) is the simplest solution and the most common one.
Today, to ship products for online stores, most retailers ship directly from their distribution centers. It lets them centralize picking, packing, and shipping resources. Additionally, some warehouses are extremely well automated to make the job fast and very efficient. There may even be greater shipping options, given that many carriers prefer bulk pickup locations.
Challenging the ship-from-DC model is the fact that most customer orders must travel far to their destinations. Certainly, in the last mile of delivery, distance counts. The further a package must travel, the greater the shipping costs. It specifically becomes a major tradeoff if a retailer only has one or two warehouses. Shipping items across 3,000 km (1,864 miles) is expensive, for example.
2. Ship-From-3PL | Ship-From-Dropshipper
First, there is a difference between a 3PL (third party logistics) and a dropshipper. A 3PL will pick, pack and aggregate products from various different brands, and categories, in its warehouse. This inventory is often owned by the retailer. It then slaps a shipping label on the package and sends it via post or courier. A dropshipper might be a brand or manufacturer. They offer shipping services, but only for their brand or product set. This means multi-brand retailers that sell online may have two or more dropship – shipments for multi-line customer orders.
There are many more nuanced and subtle differences between 3PL and the dropshipper. However, the description captures the heart of the difference.
Either of these options can save retailers time and fixed costs. A speedy order management system (OMS) sends shopping cart order details to the 3PL in real time. The retailer then does not need to maintain their own costly warehouse. Nor does it need to be concerned about staffing levels, and maintenance.
Is the 3PL & Dropshipper the Golden Answer?
Of course, there is no free ride here. Expect a monthly service fee and a surcharge for each order shipped. Although these are additional costs, this model makes sense for a small retailer who ships products for online stores. In essence, it outsources the order fulfillment.
As online orders grow, retailers may use 3PL and the dropship model strategically. At some average order volume point, it makes sense for the retailer to use their own resources for fulfillment. However, even for these merchants, they may opt to keep the 3PL or the dropshipper for the long tail items. In other words, there are some items that don’t sell in high volume. But orders still come in, occasionally. A retailer may choose to warehouse high volume, high-velocity items, and use dropship for the rest. In these cases, the retailer needs to ensure that their OMS can integrate with the service provider.
For online retailers with a physical brick-and-mortar presence, ship-from-store is a great option. It is a growing trend among retailers to use their stores as fulfillment centers. Undoubtedly, it makes sense. This type of strategy leverage the retailer’s physical assets to fulfill online shopping orders. Since physical stores are closer to customers than the typical DC, it also reduces shipping costs. This is specifically true when an OMS optimizes the location from which to ship the goods.
Why Ship Products for Online Stores – From Physical Stores?
Ship-from-store (physical) is a popular method to ship products for online stores because it uses a retailer’s existing assets. It engages the entire organization. This means a store’s inventory is used to fulfill online business sales. In this sense, store inventory turnover is higher. Consequently, the retailer's store inventory is kept fresh. We also see a reduction in the pressure to markdown inventory. After all, if inventory turnover is higher, the store can simply NOT refresh on end-of-season merchandise. That means there will be fewer end-of-season goods that need ‘on-sale’ discounts.
To make the story sweeter, provide commission for stores on online shopping orders for each region. If in-store salespeople have an incentive to sell online goods, they will. So, when a customer is in the store and finds an item out of stock (OOS), they may bring it up with an associate. When they do, the salesperson will help the shopper enter the order for later home delivery or pickup. But, they will only do this if they will get their commission for doing so.
If stores get credit for shipping from their in-store inventory, then they will want to do it more often. That means the floor associates will promote your omnichannel services. Definitely, that’s good for the business and brand. This also means store managers will be pleased to have some of their staff fulfill online orders.
4. In-Store Pickup (Click & Collect)
A great option to ship products for online stores doesn’t include shipping at all! Instead, think in-store pickup. This is also commonly called click and collect, or BOPIS (buy-online-pickup-in-store). Like the ship-from-store model, in-store pickup is a core part of omnichannel retailing. Best of all, it is a huge boon for retailers.
The Click & Collect SuperConsumer research shows us that top shoppers want the in-store pickup option. In fact, 69.0% of Superconsumers expect in-store pickup where they get orders within 24 hours. Other research has shown an 25% increase of consumers planning to use BOPIS over this next year. Your best customers want BOPIS, so offer it!
For the Retailer…
Do you want to ship products for online stores – using physical stores as pickup points? Resoundingly, the answer is YES! And, there are three main reasons for it.
First, as expressed above, your best customers want it. Even those that shop online want to use in-store pickup for their online purchases. Instant gratification is one reason. Shoppers are impatient. They want to get their products now. Or maybe they want to try it on, to make sure it fits and feels right.
Second, it saves merchants the cost of shipping. If for no other reason, it means you don’t have to absorb the cost of shipping items to your customers.
Third, when the online shopper comes into the store for the pickup, 40% - 58% will buy more goods! The Click & Collect Superconsumer research shows that 41.0% of Superconsumer shoppers purchased more goods. They typically bought an additional $40 worth of merchandise. Against an AOV of $100 - $120, that’s an increase of 33% - 40% of the order value!
Whenever possible, get your online shopper to come into your stores to pick up their order. It is definitely good for business!
5. Ship-To-Store | Ship-To-Partner
The ideal scenario is to use an OMS to select store inventory to fulfill online shopping orders. But that’s not always possible. An alternative way to ship products for online stores is to ship them from a DC for pickup. It either means shipping the items to the store for pickup or to a partner for pickup. In-store pickup can be at a service desk, or from pickup lockers, for example. Retailers can give customers the option of picking up their goods from sister chains, or pickup partners. Penguin Pickup is a good example of shopping center pickup locations. Finally, these can also include pickups from either postal outlets or courier centres. Some couriers are even experimenting with mobile pickup truck stop pickup points.
Ship-to-store involves receiving the online order at the DC and shipping it to the store for pickup. This is not as ideal as using in-store inventory. It misses out on the benefits expressed in the ship-from-store description outlined above. In fact, store managers can find this to be both disruptive, and downright counter-productive. You can read our "BOPIS and Ship-To-Store - Not the Same!" for a deeper perspective.
For retailers without advance order consolidation capabilities in their OMS, it can provide a less efficient consolidation method. DC’s should experience fewer OOS situations. As such, an order with more than one item can be packed into one box, and shipped to the store. Although this can work, it fails to leverage a retailer’s physical store assets.
Which Option is Best?
No single answer will meet every retailer’s needs. Of the five methods to ship products for online stores, the in-store pickup option offers great promise. It leverages a merchant's entire resource base. It gives shoppers what they want. Pickup offers fast fulfillment, the opportunity to experience the goods, and personal service provided at bricks and mortar locations. A growing customer base expects these services.
If your retail chain is considering the click and collect option, do it wisely. Retail chains with 20 or more stores, cannot offer omnichannel services manually. To do this efficiently, and in real time, you need a robust order management system. Look for features like shipping rate brokering, preorder capabilities, and order consolidation. If you would like to consider your vision and options, contact us for a quick discussion. We would love to discuss the many resources we can offer, to help make your decision a sound one.
Charles Dimov is VP of Marketing at OrderDynamics. Charles has 23 years experience in Marketing, Sales and Management across various IT and Technology businesses. Previous roles include Chief of Staff, Director Product Marketing, and Director Sales. Charles has held roles in brand name firms like IBM, Ericsson, HP, ADP, and OrderDynamics.
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