SPS Commerce : Online, in-store functions are finding their way to convergence

By Corbett Bjerk, SPS Commerce

In this digital shopping era, retailers are beginning to realize that their store and e-commerce operations could work a whole lot better as an immediate family rather than distant cousins.

The two units have long been in their own silos - functioning as two different entities, with two different merchandising teams, with two totally different ways of handling inventory.

But companies like Gap, JCPenney, Macy's and specialty shoe retailer DSW are doing away with this model and have moved toward a singular function to maximize efficiency for themselves, their vendors and the consumer. Think of it like Thanksgiving dinner: things go more smoothly when everybody coordinates and brings a dish.

By merging online and store functions, retailers hope to accomplish this idea and more, mainly by reducing redundancies and sharing inventories across warehouses, stores and vendors to offer a robust supply of merchandise for today's omnichannel era. With offerings like find-in-store, reserve-in-store, ship-to-store, ship-from-store and the popular 'buy online, pick up in store' option, it's becoming ever more critical for retailers to have a good handle on all ends of the operation to fulfill orders seamlessly, not to mention handle returns.

And with the holidays just around the corner, having a combined store-online function gives retailers a huge competitive advantage because they can then give consumers the opportunity to experience their brand online - and then direct them to the closest store to purchase the merchandise. This especially rings true with the find-in-store and reserve-in-store options, wildly popular with webroomers who are looking to research products before making a purchase.

The push to combine these functions goes back to 2012, when Gap Inc. decided to bring together the inventories of its online and in-store fulfillment channels at its Gap, Athleta and Banana Republic divisions to support its ship-from-store option. At the time, the nation's largest specialty apparel chain was trying to figure out the best - and most efficient - way to provide this offering, and quickly realized that it was better that its IT and product management teams were located next to each other at corporate headquarters and were part of the same business unit.

While Gap was an early adapter, other retailers have recently caught on to this business model. Earlier this year, Macy's announced that it was combining its online and store merchandising and marketing teams, as well as plans to hire 150 workers for its digital technology unit in San Francisco and 1,500 for a new direct-to-consumer fulfillment center in Oklahoma.

And in June, JCPenney said it would align its stores and e-commerce operations to take advantage of its store locations for order fulfillment, as well as to do more personalized marketing with consumers. In addition to offering a buy online, pick up in store option, the retailer is aiming to attract new customers by increasing the variety of merchandise on its website and offering better pricing on its products - things retailers are better equipped to do when they have a combined model.

Nevertheless, creating a unified function isn't a simple switch for retailers. Gap, for instance, didn't initially roll out its ship-from-store option at all locations because doing so may have overwhelmed its fulfillment system. And with all retailers, store staff also needs to be trained and equipped to receive orders and ship - or set aside - goods for consumers who have purchased products.

These are all issues retailers will need to be mindful of as they seek to bring together the two sides. We've all heard stories of consumers using in-store pickup, only to find out later that the merchandise wasn't available or shoppers buying online, then learning there was no option to return in-store. Perfecting the unified system takes time, and such hiccups can happen along the way as retailers convert to this new model.

But there is help available. If you are a retailer looking to merge e-commerce and store fulfillment, see how the SPS Commerce Fulfillment solution can help automate the process and streamline the rollout of your combined function with ease!