Fulfilling the Potential of the Store

At first glance, hardware cooperative Ace Hardware Corp. and video game chain GameStop Corp. are two retailers with little in common. However, both are leveraging their physical stores as fulfillment points for omnichannel purchases.

Ace is the place with in-store pickup

Oak Brook, Illinois-based Ace Hardware Corp. operates more than 4,400 stores and a distribution network of 14 retail support centers (RSCs) across the U.S. The company leverages this physical footprint to help meet the needs of online shoppers.

“We offer two flavors of buy-online-pickup-in-store,” said Mark Lowe, e-commerce marketing and digital department manager at Ace Hardware. “We have been shipping online orders from the RSCs to local stores for customer pickup since 2003.”

Since March 2015, the retailer has also been offering same-day in-store pickup of online orders using store stock.

“We are using the inventory at our stores as an e-commerce fulfillment channel,” said Lowe. “We give consumers the ability to pick up online orders from their local store that day.”

On the back end, Ace supports e-commerce transactions with an eBay Enterprise platform it ties to an internal warehouse management system and SAP fulfillment software.

Looking ahead, the retailer has been running a small test of delivering online orders to customer homes using local stores as fulfillment centers.

“We want to understand what it means operationally and how much consumer demand there is,” explained Lowe. “We’re always evaluating how to leverage our fulfillment network to expedite online orders.”

GameStop wins with store inventory

Product discovery is not a game, and GameStop Corp. is using a recently expanded ship-from-store program to bring goods as close to its customers as possible.

“We discovered 66% of our total unique SKUs were only represented on our store shelves, not in the warehouse,” said Jason Allen, VP multichannel operations for Grapevine, Texas-based GameStop. “Unless the customer came in a particular store that had that product on the shelf, there was no discovery.”

While all product SKUs did show up on GameStop’s website, they would be listed as out of stock if they were not in a warehouse. And the retailer’s Web in-store program, which lets employees look up items that were out of stock at the store, only provided visibility into inventory at warehouses, not in other locations.

Upon investigation, GameStop discovered that a large number of SKUs only available in-store were returned items that were never sent back to the warehouse.

“It was a massive discovery opportunity,” recalled Allen.

So in March 2015, GameStop did an initial pilot of a ship-from-store program. By allowing customers to view all products in the store online, and letting employees in nearby stores view on-shelf inventory as well, the chain saw a 20% lift in sales of goods that were not in the warehouse.

“Instead of taking items that weren’t selling and moving them around to other stores, we put them in front of customers all the time,” Allen added.

GameStop gradually expanded the range of its ship-from-store program throughout 2015 and now offers the service at all 4,000-plus stores across the U.S. It has also switched from its previous in-house-developed system to using eBay Enterprise StoreNet to manage ship-from-store activities.

In addition to boosting sales and customer satisfaction, GameStop has been able to reduce the need to offer items on clearance. The retailer can also now use stores as fulfillment points for any customer purchase, meaning a local store can be used to reduce the time it would take to deliver an item from a more distant warehouse.

“Oftentimes, innovation comes from simple pragmatic observation,” Allen stated. “We didn’t build a rocket ship here.”