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COVID and the acceleration of flexible order fulfillment in retail

Published May 18, 2021

By Dominique Shipley, NCR VOYIX Retail Transformation Practice

What is flexible order fulfillment?

It means using store locations as distribution centers to either ship products to customers or allowing customers to pick their order up inside or outside of the store (buy-online-pickup-in-store, or BOPIS). And from a customer standpoint, it means using an app or website to place orders and enjoying extra convenience and choice. For retailers, it means fulfilling the order using the customer’s preferred delivery or pickup options, then leveraging multiple footprints to fulfill that order (inventory at the store, from another store or from a distribution center).

Prior to 2020, many retailers didn’t feel a pressing sense of urgency to implement flexible order fulfillment methods since the majority of their sales were still being driven by in-store shopping. While they knew that seamless omnichannel experiences were becoming an expectation and that they’d eventually need to define what this meant for their customers, this shift was also slated to happen gradually.

Then the pandemic happened.

Due to safety concerns and government regulations, consumer shopping behavior abruptly shifted towards an increased interaction with digital channels: according to Statista, the quarterly share of e-commerce sales of total U.S. retail sales increased by about 36 percent from Q1 to Q2 2020.

Additionally, a consumer survey conducted at the end of 2020 by NCR VOYIX’s Retail Transformation Consulting Team found that 70 percent of those surveyed are shopping in person less frequently, and these consumers increasingly prefer flexible order fulfillment methods (a 45 percent increase in preference for buy online, pick-up in-store; a 94 percent increase in preference for buy online, deliver).

To remain competitive and meet customer demands, brick-and-mortar retailers have been pushed to quickly implement flexibility in how consumers are able to receive their products. Those with existing online channels had to adjust operations to enable more flexibility in how orders were being fulfilled; others without an online presence developed or outsourced quick solutions. 

We and other industry leaders expect many of these new shopping behaviors to become permanent and that consumers will continue to demand more seamless and flexible shopping experiences. Because of this, retailers need to think through how they implement ordering and fulfillment methods in a way that meets customer expectations and is operationally secure.

Related: How brick-and-mortar retailers can win back customers in 2021

Here are a few of the many areas that retailers should consider as they look to operationalize flexible order fulfillment:

Understand customer preferences

To determine their strategies, retailers should always put the customer first. As a result of the pandemic, consumers are increasingly interested in safety and convenience as they shop, which is partially driving the urgency around expanding various methods of flexible order fulfillment. How that translates to their desired experience will vary by store location, the customer's age and type of product that they're purchasing (plus many other factors). 

To understand how to offer fulfillment that meets their needs, it’s important for retailers to conduct customer research leveraging their existing customer interaction data and through conducting customer experience surveys. This will help you gauge which fulfillment methods will be the most important to invest in, and how to design the operational processes and determine appropriate customer touchpoints to ensure that customer needs are met.

Related: Dark stores and test centers: Using physical retail to advance e-commerce

Focus on inventory transparency and availability

Traditionally, as a retailer, you’ve been focused on ensuring your inventory is available on shelves to meet in-store customer demand. Now, with your customers ordering products through online channels for either immediate availability or timely delivery, it’s increasingly important for those channels to reflect the accurate availability of products.

Technically, retailers need systems that allow them to know the number of items available at the store, where an item is within the store, when an item has been purchased and removed from the inventory count, and when an item has been returned and available for sale.

You also must set thresholds for which items can be shown as available for online fulfillment—otherwise, an item may be misplaced or in a customer's cart, and you won't be able to complete the order. Operationally, store team members need to conduct regular inventory audits and ensure that the right inventory is reflected in their counts on a near real-time basis. The frequency of execution of these audits will vary depending on your store traffic levels and availability of team members.

Develop contingencies to protect a customer's experience when inventory is suddenly unavailable

There will be (hopefully rare) occasions where inventory was displayed as available through an online channel upon selection and purchase, but is no longer available for fulfillment. To ensure your customer experience isn't severely impacted, you should proactively plan for ways to alert the customer and give them options for substitutions. 

During order placement, you can allow customers to select their substitution preference if it's out of stock. After order placement, you can alert customers if an item is no longer available and allow them to determine whether a substitution will suffice. These touchpoints can occur digitally or on the phone, but what’s important here is ensuring that you're high-touch throughout the process so your customers feel they're being taken care of.

Enable team members with the right structure and tools

The implementation of new fulfillment methods will impact your store team member roles. Whether they're the ones picking an order and delivering that order directly to the customer, or they're facilitating a third-party's execution of that fulfillment, clarity and training around new role expectations is important for successful execution.

Additionally, your team members need to be armed with the right tools to not only be alerted of new orders and expected fulfillment completion time, but to also be able to actively complete the order and communicate its status with the customer. This will ensure employees are not only able to successfully deliver on their role expectations, but that the customer is able to have their order fulfilled as expected.

Safeguard in-store experiences while fulfilling online orders

It’s important for you as a retailer to ensure that, as you’re fulfilling orders, you're not disrupting the experience of your in-store shoppers. One consideration is around the employee's physical presence as they're fulfilling orders and ensuring that they’re not only trained to not disrupt the in-store shopper, but also show that they're available to help when needed.

Another consideration is the availability of on-shelf inventory for these in-store customers—you'll need to determine the best inventory to fulfill these online orders so that it doesn't take away from inventory that in-store shoppers may want to browse and purchase.

Finally, once an order has been fulfilled, inventory should be staged in an area that’s not distracting to the customer and is well organized and easily accessible for employees when final delivery to the customer is being completed.

Related: Using self-service technologies as a competitive advantage in a post-pandemic retail environment

It’s clear: the future is flexible

Every so often, a disruption occurs that forces retailers to adapt to a new environment with new customer expectations. As we’ve witnessed over the past year, the pandemic has pushed retailers to think differently about how they offer increased flexibility to their customers. And while flexible order fulfillment is not a new concept, it’s also not simple to implement.

Ultimately, you’ll need to think about the overall impact of the implementation of these fulfillment methods—how to meet online customer expectations while preserving the in-store experience; how to ensure operationally and technically inventory is visible and available for sale; and how to enable store team members to effectively execute new operational expectations.

Thinking about its implementation holistically will help you ensure you're able to maintain long-term operational benefits.

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