October 20, 2010, 2:33 PM

Gap will expand shipping options in U.S. in 2011

The retailer will test ship-from-store and buy online, pickup in store capabilities.

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Improved services for online customers will play a major role in Gap’s goal of reaching $2 billion in annual web sales by 2014, the company says.

In 2011, Gap will launch a daily free shipping option and will speed up delivery for paid shipping, Gap Inc. Direct president Toby Lenk told Wall Street analysts in New York at Gap’s annual investors’ day meeting last week. The retailer also will open a fulfillment center in the western U.S. during the second quarter of 2011.

“We need this capacity to enable our U.S. growth and to lower our outbound shipping costs, and it’s going to allow us to speed up delivery to our West Coast customers,” Lenk told analysts.

Gap, No. 23 in the Internet Retailer Top 500 Guide, also will begin piloting ship-from-store capabilities during the first quarter, starting with the Banana Republic apparel brand.

“What that means is we’re going to be able to use store inventory online,” Lenk said. “We will make visible in our system store inventory so we can book an order online and then send that order to the store for fulfillment. It’s going to allow us to stay in stock longer at the web site.”

Gap already has in place the cross-channel inventory management and order allocation platform needed to execute the ship-from-store program. That technology also will be used to launch order online, pickup in store capabilities in the future, Lenk said.

“We’re very excited to get into the brick-and-click arena,” he said. “It has great business potential over time.”

Overseas growth in 2011 will include the launch of web stores for 17 countries on Gap’s European platform. That’s in addition to the launch of stores in 10 European countries scheduled through the end of this year.

Gap plans to localize currency and languages on its international sites in early 2011, offering transactions in euro currency on the European continent and pounds in the U.K. “We’ve already localized language up in Canada for French and English,” Lenk said. “We’ll localize language in any country where it’s important enough—Italy, France, Germany. We have that capability.”

Gap also plans to continue expansion into China, including introducing multichannel operations, and expects to roll out Gap Online in Japan, he said.

In 2009, Internet Retailer estimated the web accounted for 8% of Gap’s total sales of $14.2 billion.

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