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Getting Inventory to the Point of Demand: An Alternative for E-commerce Businesses

home-depot.jpgA few weeks ago, I blogged about one of the most dynamic new trends in e-commerce: cross-channel sales. This is the trend toward consumers selecting and buying their items online and picking them up at a physical location, be it a retail store or distribution center.

It’s a trend that, on its surface, seems to go against the grain of what e-commerce is supposed to be about. But let’s consider why it’s now a crucial component of e-commerce, and why your company should consider incorporating it into your business strategy.

Accommodating the cross-channel shopper

The natural assumption is that people who are shopping online also want their items shipped directly to their homes. But take a look at what some of the biggest online sellers are doing, and that assumption immediately gets thrown out the window.

Home Depot knows this trend well. In a September interview with the Wall Street Journal, the company’s chief financial officer, Carol Tomé, noted that 42 percent of the company’s online sales are picked up in stores.

Home Depot isn’t alone in this trend. Both Target and Walmart have shifted their online sales strategies to make it easier for people to pick up their online-ordered goods at a brick-and-mortar location.

Why is in-store pick-up such a hot trend? The reasons vary, but can usually be boiled down to two key factors: The customer lives in a location where home delivery by a parcel service or USPS is inconvenient or there is a risk of theft. Or, they want to get their item faster than the traditional truck-based delivery system can get it to them. They are willing to drive a few miles to get the item into their hands faster.  

The challenge for e-commerce businesses

Big retailers like Home Depot and Walmart are well structured to naturally incorporate in-store pick-up. They already have an extensive network of stores stretching nationwide. They don’t need to build an infrastructure of stores.

But there’s a substantial number of online retailers who don’t have an existing brick-and-mortar infrastructure.

Creating one from scratch may be too expensive for their business model, or perhaps the brick-and-mortar solution isn’t something they have expertise in. The problem is, they aren’t keeping pace with the wants of their customers, particularly those who live in thickly populated urban areas.

An alternative solution

This issue of last-mile e-commerce delivery in urban environments is being closely studied in both academic circles such as MIT, by urban planners, and by the retail industry. One of the solutions is creating pick-up/customer service centers in urban areas.

These are brick-and-mortar locations that serve the “undeliverable” urban customer. They are accessible by car or other transport, carry the stock that customers want, are open at convenient hours, and have an in-person customer service representative to provide help and a human face in the transaction.

Their advantage for sellers is they provide the last-mile delivery solution for customers who want to pick up their items, but they don’t require the same level of management and investment that a traditional retail storefront requires.

E-commerce businesses need to incorporate a cross-channel strategy in order to keep pace with the changing trends in customer fulfillment. For businesses looking for a solution that fulfills the demand, pick-up centers are a viable solution.

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Topics: last-mile delivery void customer convenience center cross-channel shopping cross-channel shopper e-commerce