3 Reasons for Retailers to Bring Order Fulfillment In-House
Grocery retailers are facing an in-store order fulfillment conundrum.
Failure to keep up with the growing demands of online retailing and in-store order fulfillment can lead to missed sales opportunities.
Or worse, dissatisfied customers who may shop elsewhere next time.
In many cases third party fulfillment companies have stepped in to fill the gap – picking and handing over groceries to the customer.
This works well as an option in many cases, but grocers should also seriously explore bringing order fulfillment in-house and understand the tangible benefits of doing so.
The ability to maintain closer relationships with customers, enhanced levels of customer data and insights, plus increased margins are just a few.
Grocers must also consider the pitfalls of not taking it in-house. These include:
- Loss of customer data
- Lack of pricing control
- Reduced brand awareness
Here we address the benefits of bringing order fulfillment in-house and outline why leveraging smart devices can provide a proven, accessible solution to do so.
In-house or outsourced order fulfillment considerations
Many assume the easiest solution for bolstering fulfillment capacity is third-party outsourcing.
66% of grocery retailers believe they can’t scale their online business without third-party fulfillment partners – seeing it as a growth opportunity.Source: INCISIV – Wynshop, Digital Grocery Study
And with 8.3% of all grocery sales expected to come from third-party providers, is it the nirvana for increasing fulfillment capacity?
If you delve deeper though, you soon realize that there is a trade off in benefits when outsourcing to third parties to gain that extra capacity. Here are some reasons grocery retailers might want to keep order fulfillment in-house:
1. Maintain closer relationships with customers
Retailers spend years, even decades, building a relationship with their customers. But if the only human-to-human contact is through a third party delivery company, retailers risk losing vital connections and loyalty.
Keeping order fulfillment in-house retains that direct relationship with your brand. And as consumers shift to shopping online, this is more important than ever.
- Retailers need to focus on customer loyalty in order to stay competitive.
- Loyal customers are more likely to spend more money and be less price-sensitive.
- Loyal customers are also more likely to recommend a retailer’s products and services to others.
84% of grocery retailers believe they will lose touch with their customer base because of third-party platforms.”Source: INCISIV – Wynshop, Digital Grocery Study
2. Superior customer data and insights
Customer data is king.
When retailers use outsourced order fulfillment, they lose access to insightful customer data that is gained by transacting with customers directly. This is essential to analyze shopping habits and preferences to give customers a truly personalized omnichannel experience.
24% of grocery retailers believe there is a loss of customer data when using third-party fulfillment.Source: VDC Research
By fulfilling orders via your store associates and within your ecosystem, grocers can gain a greater understanding of customer behavior to personalize service at an individual level and identify overarching trends at a macro level.
Boost margins and maintain control on pricing
Outsourcing to third parties can increase operational expenditure and, therefore, negatively impact on profit margins. Making use of existing operational resources to pick and handover orders can therefore help squeeze more out of your margins.
46% of grocery retailers believe third-party fulfillment reduces profit margins, while 24% believe it reduces control on pricing strategy control.Source: VDC Research
Also, by maintaining ownership of fulfillment, retailers can keep tighter control of pricing strategies.
Smart devices could be the solution for retailers
And there is a readily available solution for grocers to handle fulfillment in-house: They can get their in-store order fulfillment systems up and running in no time by giving smartphones with smart data capture powered apps to workers.
These can handle a variety of fulfillment jobs, like order picking and click and collect. Watch how it works in action:
With the right device, apps and smart data capture technology, you can provide an optimized experience for workers, boosting their satisfaction and efficiency. It also means that each store associate can have their own device as opposed to sharing dedicated devices.
Setting up and integrating an order fulfillment system on smartphones is easy with Scandit’s end-to-end solution*.
Retailers that are considering whether to outsource their in-store order fulfillment to a third party or maintain it in-house face a number of questions.
Third party fulfillment companies fulfill a valuable and useful service. But they also control pricing and have access to data.
Grocers can keep control of their pricing strategies by using smart devices, such as smartphones.
Smart devices can also improve the alignment between their e-commerce and store operations, while working with legacy infrastructure.
Interested in taking your in-store order fulfillment in-house? Get in touch to see how Scandit Smart Data Capture technology can take it to the next level.
Or check out our guide to what’s going on – Outsourcing or Internal Order Fulfillment? Important Considerations.
* Currently only available in the US and Canada