Home improvements chain retailer Lowe’s Cos. Inc. credits a big improvement in fulfillment flexibility with helping to grow web sales by 70% in 2011.
Last summer Lowe’s, No. 91 the Internet Retailer Top 500, rolled out a new online distribution program the chain calls “flexible fulfillment” to expedite order processing and shipping. Previously all orders purchased on Lowes.com were shipped only from the chain’s network of distribution centers. If the item was unavailable or out of stock, customers had to wait until the inventory was replenished.
With flexible fulfillment, orders placed online are now shipped one of three ways to the shopper: from the warehouse, the closest Lowe’s store with the available inventory or directly from a supplier’s regional distribution center. Since the service went live, the number of orders picked, packed and shipped through the flexible fulfillment option exceeded 275,000, says Lowe’s vice president of e-commerce Gihad Jawhar. “We also began shipping items directly to customers from select stores, suppliers and regional distribution centers in addition to our dedicated Internet warehouse,” Jawhar says. “With more items available for parcel shipment than ever before, we can provide faster delivery.”
With more fulfillment options, Lowe’s, which grew e-commerce sales to an Internet Retailer-estimated $510 million in 2011 from $300 million in 2010, is also able to reduce the number of days its takes to ship an order. “Flexible fulfillment allows the customer to order any product that can be shipped parcel post that is stocked in either a regional distribution center or a store or in a vendor's distribution center and have it shipped directly to a home or place of business,” Lowe’s executive vice president of merchandising Bob Gfeller told attendees at the chain’s investor’s day conference in December. “Most items can be ordered and delivered within two days and due to the geographical distribution of the locations we can reach approximately 96% of the population in one day.”
With more options to ship items directly from multiple sources and not just from a series of central warehouses Lowe’s says it’s now making more than $1 billion worth of new inventory available to its online shoppers. Without providing details, Lowes also says more flexible fulfillment will help the company save big money on its inventory and distribution costs over time. “Flexible fulfillment makes additional inventory readily available to each and every customer and shipped to them from the most cost-effective node, which is a win for all parties,” Gfeller said. “We expect our line design improvements supported by flexible fulfillment to drive sales while saving on distribution costs and allowing us to decrease inventory by nearly 15% to $7.3 billion over the next four years.”
Sean Bartlett, director of mobile strategy and platforms at Lowe’s, will speak at the Internet Retailer Conference & Exhibition 2012 in June in a session titled “How chains can harness the power of mobile phones.”