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Top retail fulfillment challenges and strategies

Apr 04, 2024 - Alyssa Wolfe
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Top retail fulfillment challenges and strategies | Cart.com
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Retail fulfillment has changed markedly. Between current customer expectations, omnichannel commerce and a bar set high by industry giants like Amazon—retail fulfillment is more complex than ever. Because the post-purchase experience has become crucial to customer satisfaction, retailers must develop effective fulfillment strategies while addressing common challenges. Being prepared allows brands to remain competitive, generate loyalty and achieve sustainable growth.

In this article, we'll cover the top retail fulfillment strategies that can help you meet any challenges head-on.

What is retail fulfillment?

Retail fulfillment entails receiving, picking and packing, and delivering customer orders. In today’s world, streamlined and efficient omnichannel fulfillment is table stakes for retail brands. However, many businesses struggle to meet growing customer demand for speed, value and convenience—all of which are critical to a positive fulfillment experience. A recent survey showed that consumers prefer free shipping to fast shipping but still expect delivery within five days. Perhaps more important is that 56% of all abandoned carts were shipping /fulfillment related. This makes understanding your fulfillment pain points essential so you can implement strategies that provide a seamless retail fulfillment experience.

4 common retail fulfillment challenges

Fulfillment challenges can significantly impact retail brands by causing order processing and shipment delays, leading to customer dissatisfaction, churn and negative reviews. When fulfillment processes are inefficient, it can increase operational costs, reducing profit margins and hindering business growth. Brands may also struggle to maintain inventory accuracy and visibility, risking stockouts or excess stock situations that further disrupt operations and customer experiences. Moreover, unresolved fulfillment challenges can erode brand reputation and loyalty, driving customers to seek retailers with more reliable fulfillment practices.

Here are four common retail fulfillment challenges and strategies to help you overcome them:

Poor integrations

Successful retail operations require seamless collaboration among various teams, including supply chain managers, planners, buyers, category managers, inventory analysts and order fulfillment managers, all supported by advanced retail-specific systems. Unfortunately, many retail processes suffer from poor integration, leading to several critical issues:

  • Inaccurate promotions: Retailers may struggle to accurately forecast additional inventory needs for promotions, leading to stockouts or overstock situations during promotional periods.
  • Disconnected teams: Purchasing, allocation and supply chain teams may operate in silos, using disparate systems and forecasts, resulting in coordination issues, excessive manual work and limited visibility into inventory status.
  • Inefficient processes: Manual workarounds and exceptions become common when systems are not integrated, causing inefficiencies and delays in order processing, fulfillment and delivery.
  • Limited visibility: Without seamless integration, retailers may lack real-time visibility into inventory levels, causing difficulties in managing stock across multiple channels and locations.
  • Missed opportunities: Poor integrations hinder retailers' ability to capitalize on sales opportunities, leading to missed revenue and potential loss of customer loyalty.

Integrations strategy

By embracing innovative solutions that provide centralized data views, retailers can enhance operational efficiency, optimize inventory management and deliver superior customer experiences. Retailers should look for integrations that seamlessly connect various aspects of their operations, including supply chain management, inventory forecasting, order processing and customer relationship management systems, to ensure efficient and synchronized workflows across the entire fulfillment process. Additionally, they should prioritize integrations that offer real-time data visibility and analytics capabilities, enabling proactive decision-making and optimized performance.

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Inventory management

Poor inventory management negatively impacts retail fulfillment operations in several ways. It can lead to stockouts or surplus stock situations, resulting in lost sales or excess carrying costs. It can also create inaccurate inventory data, leading to fulfillment errors. Mismanaged inventory results in inefficient order processing and fulfillment workflows, which can cause delays and increase labor costs. In addition, poor inventory visibility hampers demand forecasting and replenishment efforts, making it difficult to accurately meet customer demand.

Inventory management strategy

Better inventory management begins with an advanced software solution that offers real-time visibility into stock levels and movements. You can also optimize inventory replenishment processes by using data-driven demand forecasting techniques to accurately anticipate customer demand. You can streamline inventory handling and fulfillment operations by establishing efficient warehouse management practices, such as barcode scanning and automated picking systems.

Fulfillment forecasting

According to Gartner, “fulfillment forecasting is the key to optimizing retail inventory positioning.” But what does this mean? Retailers face the challenge of positioning inventory optimally throughout their network to better meet consumer demand. Plus, as fulfillment options increase, it becomes more difficult to forecast. There are also other factors influencing demand as well, from weather and social commentary to competitor pricing and shipping and returns policies. When fulfillment forecasting is inaccurate, brands lack insight into how, where and when consumers wish to receive their orders and must invest more resources to avoid product availability and stockout issues.

Fulfillment forecasting strategy

When brands can accurately achieve fulfillment forecasting, they are better equipped to distribute the right amount of inventory within their stores, distribution centers and other inventory nodes in their network. The solution is forecasting demand at a more granular level through AI and machine learning. Retailers can look for best-in-class solutions that offer higher-accuracy AI predictive analytics tools.

Limited fulfillment options

Brands that look to one fulfillment method can hinder their operations. It limits your ability to meet diverse customer preferences and expectations. For example, relying solely on traditional brick-and-mortar stores may alienate customers who prefer online shopping for its convenience. However, relying solely on ecommerce fulfillment may neglect customers who value the in-store experience or need immediate access to products. To address this challenge, retailers should adopt an omnichannel approach that seamlessly integrates multiple fulfillment methods to cater to the varied needs of their customer base.

Limited fulfillment options strategy

A hybrid order fulfillment approach suits modern retail fulfillment needs. It allows you to operate more efficiently to meet varying consumer needs. Some fulfillment options are:

  • Buy Online and Pick Up In-Store (BOPIS): Shoppers can purchase items online and collect them in person at a nearby store, saving on shipping fees.
  • Third-party fulfillment (3PL): A third-party fulfillment (3PL) approach outsources logistics and order fulfillment operations to a specialized provider. This provider handles various tasks such as warehousing, inventory management, picking and packing, and shipping orders on behalf of the retailer. You can leverage a 3PL’s expertise, partners and resources of a 3PL partner for more streamlined operations, reduced overhead costs and improved scalability. 3PL providers often have established networks and infrastructure, allowing retailers to offer faster delivery times and expand their reach to new markets.
  • Dropshipping: Online retailers collaborate with manufacturers capable of shipping directly from their warehouses, eliminating the need for inventory management. However, effective communication is crucial to ensure product availability and accurate shipping to customers.
  • Self-fulfillment: For small businesses with limited resources, managing fulfillment in-house offers control over brand integrity and customer satisfaction, though it requires significant bandwidth and logistics expertise.

Cart.com omnichannel fulfillment solutions

In an omnichannel world, streamlined retail fulfillment operations are key for seamlessly meeting customer expectations across various channels. Efficient fulfillment processes ensure timely order processing, accurate inventory management and consistent delivery experiences, regardless of the sales channel or preferred fulfillment method. By optimizing operations, retailers can reduce inventory costs, boost sales, achieve more accurate demand forecasting and improve operational visibility. Contact our team today to learn how we can help you with retail fulfillment.

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