Retailer integration (ship-from-store)
Retailer integration involves expanding an existing sales network for a brand, an internet-only retailer or an association by integrating brick-and-mortar retailers into their own e-commerce strategy. To this end, retailers are involved in fulfilling the purchase contract agreed between the customer and the brand. Local retailers process the online orders, act as a warehouse and can serve as a service point for consumers.
The aim of dealer integration, also known as ship-from-store or integrated commerce, is to incorporate local retail partners into a brand’s online distribution process. This means that the customer places their order directly with the brand or with one of the above-mentioned partners in the web shop, which in turn forwards the incoming online order to the connected dealers via a special order management system. The participating local dealers can then choose the most lucrative and sensible customer order for them from the incoming orders.
Prerequisite: the local dealer must have the desired goods in stock. He accepts the order proactively and bindingly and then ships the products to the customer. If desired, shipping can be done directly through affiliated shipping service providers.
Environmental factor thanks to short delivery distances
The distance between the retailer and the customer plays a crucial role in the distribution of orders and thus for every order placed via the webshop with retailer integration; as a result, location-based distribution is prioritized in most retailer systems. The order is initially offered to the retailer at the nearest point of sale (POS). Only then is the search radius gradually expanded. This retailer integration enables the shortest delivery route, relieving the burden on last-mile logistics. If no retailer capable of delivery can be found, the webshop operator ships the goods to the consumer themselves from a central distribution center or outlet center.
To ensure a quick retailer response for the customer, authorized specialist retailers can also access the item exchange via smartphone, depending on the system.
The following advantages and disadvantages do not generally occur; they depend on the respective dealer system in use.
Dealer integration: advantages for brands, pure players and associations
- Brands, pure players and associations do not have to worry about shipping the goods. This is done by the local dealer who accepts the corresponding order (online order). The shop operator only has to step into the breach if the retailer does not have the goods in stock.
- As a rule, the integration of local retailers means that the logistics processes of returns management and part of the warehousing are handed over to the retailer.
- Warehousing: The operator no longer has to keep all the goods for online trading in a large warehouse, but uses the integrated retailers as decentralized storage locations. If all partners use an ERP system that is also responsible for inventory management, the online offer in the web shop can be compared with the retailer’s inventory. However, this also requires a greater administrative effort for the retailers.
- Returns processing: The local retailer usually handles returns and is also the point of contact for complaints.
- Another advantage arises when using stocks in branches abroad. If an additional location abroad is worthwhile, shipping costs and delivery times can be significantly reduced.
- Same-day delivery is another new service that can be offered to the customer because of the local dealer relationship.
Disadvantages for the brand, pure player, association
- Brands, pure players and associations run the risk that the product is not packaged and shipped in accordance with their ideas. This risk can be reduced by packaging specifications, but not completely eliminated.
- If the retailer acts as a vicarious agent, the brand, pure player or association waives a portion of the margin that they would have had they delivered the goods themselves, for example from their own central warehouse. This share goes to the retailer.
Retailer integration: Advantages for the retailer
- The retailer benefits from the manufacturer’s e-commerce and does not have to maintain its own web shop.
- The retailer can increase its sales area profitability.
- If in-store pickup is offered in addition to shipping, the retailer can bind the customer to the POS and increase its local reach in addition to its virtual reach.
Disadvantages for the retailer
- The retailer bears the risk of returns.
- The retailer is not the contractual partner of the customer, as the invoice is often issued by the website operator. Therefore, the retailer also has no access to the customer data. Without the option of picking up the goods at the retailer, the probability that the customer can also be won as an offline customer of the brick-and-mortar store is low.
Retailer integration: advantages for the customer
- Geographic proximity allows the customer to pick up the goods in person. However, there are also retailer systems that do not allow local pickup of goods.
- If the operator offers this feature or enables delivery via local courier services, the customer can receive their delivery on the same day.
- If the customer so desires, they have a personal point of contact in their area.
- By integrating brick-and-mortar retail, the availability of goods is higher than with an e-commerce solution based on a central warehouse.
Summary
The integration of local retail into the e-commerce strategy of a brand (ship-from-store) makes it easier for the respective retailer to enter into online retail. The brand itself benefits from decentralized warehousing and at the same time offers the customer a local point of contact for complaints and a useful service point.
For more information about retailer integration, read the articles No-Line Commerce, Multi-Channel, Cross-Channel, and Omni-Channel.