If you are a retailer, how do you compete against Amazon and Amazon Prime with its free 2-day delivery? The answer could be to deliver from the store.
Many retailers have more stores than Amazon has distribution centers. If you can effectively manage the inventory across stores, you could have a delivery advantage over Amazon from both a cost and time perspective.
However, Amazon is working hard to make same-day deliveries available to more customers. Currently, select items are available for same day delivery in over 8,000 cities.
Many other retailers are working on same-day delivery using the same concept of shipping from the retail store, including Walmart, Home Depot, Target, Macy’s, and J C Penney’s.
Zara is relatively late to the same-day delivery market. But, Zara’ Fast Fashion deserves fast delivery. They have broken traditional logistics and supply chain approaches to get new designs to customers quickly. They now hope to do the same in the last mile delivery to customers.
Video Spotlight: Zara Rolling Out Ship From Store Service
This post is based on the Forbes article, Zara’s Big Ship-From-Store Push Underscores Retail’s Bricks-Serving-Clicks Movement, by Barbara Thau, July 31, 2018; and the YouTube video, Zara Rolling Out Ship From Store Service, by Wochit Business, July 31, 2018. Image source: Getty Images/iStockphoto.
1. Should Zara compete directly with Amazon on fast delivery?
Guidance: The key to this question is the customer. It appears customers are expecting and demanding fast delivery. If you can’t get the product to the customer quickly, you might not be considered. Fast delivery might be a requirement of being in the industry. Their success will still rest with being Fast Fashion. But, fast delivery might be required by their customers.
2. The ship-from-store approach appears to be an obvious answer to Amazon’s fast deliveries. Why are many retailers struggling with this approach?
Guidance: Several condition must be in place in order for this strategy to be effective. For example, you need to have very high inventory accuracy in order for this to be effective. Many retailers do not have accurate inventory counts. Additionally, you must be able to find the item in the store. Without the ability to know if it is in stock and where to find it in the store, this approach is likely to fail.
Zara is coupling this fast delivery strategy with inventory management technology, implementing RFID tags for extremely high inventory accuracy and the ability to find the item in the store, to help effectively ship from the store.
- Stores were not designed to be used as a warehouse to ship products. Redesign of the store layout might be needed.
- New employees, or retrained and reallocated employees will be needed to fulfill the orders.
- New software might be needed to link the available inventory together and coordinate the delivery of online orders.
3. How should Amazon respond to the ship from store threats?
Guidance: Amazon has upped the ante in fast delivery. They have established same-day delivery in over 8,000 cities for select items. They are looking at a variety of technologies to get the product to the customers. They are considering innovative transportation sources by assisting in the creation of new last-mile delivery companies. They are adding new distribution centers. They have partnered with Kohl’s to return items, and possibly have a store within a store. These are just some of the approaches Amazon is using to reduce cost and speed shipment of products to the customer. It will be difficult to beat Amazon in the fast delivery segment.