July 2, 2012, 10:45 AM

Harder Than It Looks

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When an item isn't available in its distribution center, J&P's RedPrairie system automatically prints a packing slip at one of its stores, as well as instructions detailing what boxes and packing materials to use and how to assemble the order in the box. Then the trained staff grabs the item off of the shelf. "There isn't a lot of manual work because the packing stations are user-friendly," Parham says. "It's basically just making a box, putting the part in, putting the packing slip in and closing the shipment."

Le Chateau's VendorNet Inc.'s StoreNet Live software also aims to simplify the fulfillment process by assigning orders to be fulfilled based on stores' inventory levels, as well as the stores' proximity to the customer. Once the order is assigned, the system provides store associates with packing instructions that include details such as verifying that a pair of shoes has a left and right shoe and how to pack the order.

But the sophistication of the software goes only so far; there remain logistical hurdles to its stores fulfilling orders. To start, when an order is sent from the web site to the store, that store's employees have to know exactly what they're looking for and where it is located. That can prove challenging in a retail apparel store, says B2C Partners' Mirabito. For instance, a customer could be trying on the garment that an online customer has ordered. Even if that in-store customer doesn't buy the item, she might leave it in the dressing room, where it might remain for a day—or several days.

In addition, stores also need to have a designated space where employees can fulfill orders—space not available to display merchandise—which some of Le Chateau's stores don't have. And store employees must be trained how to pack and ship orders. Those requirements explain why so few of the retailer's stores are currently fulfilling orders (the retailer plans to slowly expand the program to more stores).

While Le Chateau deems the hassle worthwhile, others don't. Among them is videogame retailer and wholesaler GameQuestDirect.com, which has two physical stores and two warehouses.

The retailer, which sells online at GameQuestDirect.com and on online marketplaces, uses an order management system from GoECart Ecommerce Platform that gives it visibility into the inventory levels at all locations. But Margaret Kim, the company's project coordinator and director of marketing, says that the work involved in turning a physical store into a distribution center isn't worth it. "We don't want to have to burden our employees with the challenge," she says.

There's a reason specific to the product category. Knowing fraud is common in orders for video games, the retailer has implemented a number of security practices to avoid getting burned. "There are specific people at our warehouses who handle receiving and outgoing orders," she says. "They're taught to do one sort of thing. So are our store employees. We don't want to confuse the two."

That example illustrates why fulfilling from stores may not be for every retailer. But if multichannel retailers are going to survive, they'll have to take full advantage of both their physical and web stores, says RSR's Kilcourse. "Stores aren't going anywhere," he says. "But they have to evolve." That evolution isn't easy, and the path is not the same for all. For many, it remains a work in progress.



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