Groupon says its focus is on the bottom line, rather than top-line growth.
Audio equipment brand JL Audio describes how it fulfills web items via dealer locations.
Figuring out the most efficient way to handle web fulfillment from stores is an evolving art form, according to retailers, vendors and analysts. And retailers are going about it in their own ways, according to the upcoming April issue of the Internet Retailer magazine.
Already, 84% of the top 50 retail chains ranked according to their online sales in the Internet Retailer’s 2013 Top 500 Guide use their stores as pickup or shipping points for items ordered online, and the tactic is likely to increase, experts say.
“As physical stores fight against e-commerce shops and digital giants like Amazon, moves like this—baking distribution center capabilities into retail locations—could give bricks-and-mortar retailers the advantage they need to compete with online retailers for customer retention,” says Sean Adkins, managing director and operations excellence practice lead at business and technology consulting firm West Monroe Partners. Amazon.com says it has 96 distribution centers worldwide, with more coming online all the time.
And it’s not only chains but manufacturers that are employing the fulfillment tactic.
JL Audio, which makes speakers, amplifiers and related equipment for cars, homes and boats, uses Shopatron technology to enable dealers that sell JL Audio equipment in their stores to fulfill orders placed directly with the manufacturer online.
Here’s how it works, with the use of Shopatron Manufacturer software: A customer places an order from JLAudio.com. Upon checkout, the e-commerce system can determine the dealer nearest to the customer. The order goes into what online marketing manager Jeremy Dawson calls a “bidding pool” that is updated daily at 1 p.m. Eastern time and eligible dealers can request to fulfill that order. There is no actual bidding; in the event of a tie, the dealer nearest to the customer with the inventory available wins the order.
Online customers at JLAudio.com also have the option at checkout to select in-store pickup; if the dealer nearest the consumer does not stock the item, then JL Audio ships it there. If no dealer successfully bids, or requests, the order, then the manufacturer can usually fulfill it from its own reserved stock, Dawson says. He estimates that dealers fulfill 95% of orders, though.
The manufacturer only allows into the program dealers who have demonstrated their ability to ship orders from their stores within 24 hours and that refrain from shipping demonstration products to customers. Dealers who fumble shipments risk harming JL Audio’s reputation, Dawson says. About 250 JL Audio dealers out of a nationwide network of more than 2,000 currently participate, he says.
The dealer assigned the order sees the customer’s name, phone number and shipping information within the Shopatron system. Orders are shipped via UPS and have tracking numbers. If products don’t reach the customer, or the dealer fails to ship within 24 hours, JL Audio may revoke the dealer’s right to ship future orders.
The advantage to dealers for shipping orders on JLAudio.com’s behalf is important because JL Audio products often require customers to seek advice or services from dealers regarding installation and other issues, a point of contact that can lead to a long-term relationship with the dealer. Dealers also earn their usual margin on the product minus a small fee to Shopatron for payment processing and use of the platform. JL Audio credits the program with helping to increase online sales by at least 28% since 2011.