We want to give our special thanks to Faraz Kavehei & Johannes Bareis, the two students who co-authored this post.

Quick commerce or q-commerce is completely disrupting e-commerce and Retail. 

In this post, we’ll explain this model in a nutshell, introduce key players and analyze the advantages and challenges in the q-commerce industry.

What Is Quick Commerce or Q-Commerce?

Quick commerce, also known as Q-Commerce, is THE big new topic in the retail sector. Covid accelerated the rise of this new delivery model that addresses the consumer’s need for responsiveness and convenience. 

Q-commerce changes the entire shopping experience, from the initial spark of interest in a product to the delivery rider knocking on your door.  

Wait—you’re thinking—I thought online shopping was e-commerce, not q-commerce. 

And you’re not wrong. 

Q-commerce is a form of e-commerce, but the turnaround time between order and delivery is much shorter in quick commerce. For example, instead of waiting a couple of days for a product, customers receive their order within one hour, often in as little as 10 minutes. 

This is why q-commerce is also called the third generation of e-commerce. On-demand deliveries that are executed almost instantly will be the new benchmark.

Q-Commerce was not born during the pandemic. But the increase in online ordering during the pandemic created the perfect tailwind for q-commerce.

Multiple industries took a severe hit due to the pandemic; q-commerce was one of the few sectors of Retail that flourished when folks had to stay at home. And that change of habit is here to stay.

How Does Quick Commerce Work?

You are expecting a few friends but did not find the time to prepare. You can simply go to the q-delivery app of your choice and order snacks and maybe one or two bottles of wine. About 10 minutes later, a delivery rider will ring the bell of your door.

But how does the magic happen?

Most q-commerce pure players warehouses, so-called “dark stores” or “micro-fulfilment centers.” These dark stores enable workers to quickly pick and deliver the products they have in stock. 

Dark stores typically have over 1000 products ready for distribution. These “flash supermarkets” are often placed in strategic locations and act as urban fulfillment centers for a city district. 

Until now, it mostly sounds like a regular logistics company that moved a bit closer to the consumer. But Q-commerce players use technology to make their processes more efficient and agile. For example, they use data to understand which locations are better suited to establish dark stores. 

They develop specific Order Management Systems to route orders to the closest store to fulfill the order. Next, they match your order with the nearest rider to fulfill your order.

All within 30 minutes or less. 

The Quick Commerce business models

There are different q-commerce players all over the world.

All have some specificity, but these are the few common factors:

1. Delivery in less than an hour (10min delivery best-in-class)
2. Locally focused delivery from dark stores
3. A fleet of two-wheeled vehicles to move faster

Most q-commerce retailers are like supermarkets, so-called flash supermarkets.

They have everything from snacks to cosmetics to cleaning products. 

Some q-commerce pure players are, in fact, “supermarkets” that hold their inventory. Other q-commerce players work with legacy brick and mortar supermarkets. They are third-party providers that perform the delivery.

What Are the Advantages of Quick Commerce?

1. Speed, Speed, Speed

Speed is the most significant advantage of q-commerce.

The genesis of q-commerce came from the need for ultra-fast delivery in the food industry.

Q-commerce sellers generally don’t have physical locations where customers can walk in and buy things. Still, q-commerce retailers have a unique selling proposition (USP) that sets them apart from competitors. 

2. Brand loyalty

Q-commerce today is a commodity. 

There are many players, and customers can easily choose from which one to be served. 

But it is a winner-takes-all market. Not necessarily globally, but most likely in your district or city.

The one company that can meet customer demands quickly and efficiently will have the most repeat customers. 

Customers are more likely to make a repeat purchase from a company that has consistently met their needs.

3. Ultra-fast delivery with 24/7 operations 

Dark stores can operate 24/7, leaving no gaps between demand and delivery (given that the local laws permit 24/7 ops)

This makes q-commerce flourish in areas that have limited business hours for physical storefronts. 

One of the main benefits of Q-commerce is to order anything you need at any time of the day (or night). 

4. Tech-oriented inventory management

With AI and smart technology, q-commerce ensures that products are readily available for people in the area. 

Q-commerce software analyses demand trends to help re-shelf stocks based on demand. And even if a product is unavailable for a short period. Then, the app will simply stop promoting that particular product and steer the demand towards other products in stock.

5. It is super easy

Once you’ve tried q-commerce, you understand its ease.

Q-commerce apps generally have straightforward UX/UI. They are built to have super simple sign-in processes and make repeat purchases very easy. 

If you forget an item on your shopping trip and don’t want to return it, you can open an app and have someone bring it to you. 

You don’t have to take your sweatpants off and put jeans on again. 

What Are the Challenges of Quick Commerce?

1. Q-commerce is a commodity

The biggest challenge of quick commerce is staying on top. 

All the q-commerce players have a similar model. It all comes down to the best inventory and the best execution.

The number of players existing today makes q-commerce a commodity. As a result, there are almost no switching barriers for customers.

This means that customers have plenty of choices to choose a provider. And it is just as easy to lose a customer as to gain one. 

2. Q-commerce customers have Zero tolerance for failure

The primary drawback of ultra-fast delivery is living up to the ultra-fast standard. 

It is a market where customers have zero tolerance for failure. 

They will only stay loyal if their customer experience is always great. 

A player that provides only “good” experiences loses its value and customers. 

This is a market that is built on customers that NEED ultra-fast delivery for whatever reason. Unfortunately, these types of customers are the hardest to please.

3. Q-commerce is an extremely risky business model 

With such customers, players have to constantly monitor efficiency across their supply chain. 

The entire industry is hinged on speed and accuracy for profitability. And as we said before, this is a winner-takes-all market. This means that players need to raise massive amounts of cash to establish operations quickly and win the market. 

And the entire business model is based on the availability of staff. Companies cannot scale and maintain their operations without enough riders and pickers available. 

Players like Getir, Gorillas, or Flink have provided their staff with employment contracts. Others are still relying on gig workers. However, most countries and cities have started regulating the gig economy, which will impact the business model. 

So, in the end, only one or two players will survive per area, and most players will burn through their cash. 

4. Convenience often comes at the cost of work conditions 

Delivery speed and convenience might come at the cost of agreeable work conditions. 

Of course, it’s fantastic to shop for a beer and some snacks at 3 AM on a Tuesday. But there’s someone out there who has to bring you the bag of chips. 

And as we said before, parts of the industry are based on the gig economy without full-time contracts or benefits. We’re not saying the gig economy is bad per se. But it has time and time again been proven to offer precarious work conditions.

But riders and pickers also have the freedom to decide where they want to work. Arguably, a job in a classical supermarket is also not more exciting. 

In most countries, quick commerce companies would make a strategic mistake to offer lousy working conditions. There is a significant labor shortage in the low-wage sector, and companies have difficulties filling positions.

The food delivery company Wolt offers a sign-on bonus for new riders. An Indeed study suggests that the number of job postings is skyrocketing (e.g., 88% increase in the Loading & Stocking sector).

Companies should not focus on improving margins by reducing labor costs. Instead, they should consider the opportunity costs when they cannot fill positions or have enough riders available.

5. The model might not work everywhere

Q-commerce is mostly available to urban consumers. 

The economics of the model is catered to densely populated areas in urban areas. As a rule of thumb, we could say that the sweet spot of the model is in areas with at least four-story buildings.

Some players serve more rural areas but with much longer delivery times. The economics of the model are different outside of the cities. 

Additionally, it might not work in every country equally well. Convenience and delivery business models work very well in countries with high inequality (Singapore or Hong Kong). It needs a population segment with high disposable incomes that looks for convenience. And a lower-income population segment that is willing to perform the gig work. 

It remains to be seen if the model also works in countries with small Gini-Coefficients, such as Nordic countries.

6. Q-commerce has a significant impact on local and small businesses 

Additionally, one of the main casualties of q-commerce is local and small businesses.

It took a global pandemic to get stores to come around to in-store or curbside pickup for online orders. 

Stores that are not adopting an omnichannel approach are being crushed. 

This is a good thing because most local stores had utterly failed to adapt to changes in customer behavior.

But q-commerce mainly sells items from big supermarkets or big sellers. The type of players who can afford their commissions.

Most local small businesses don’t have the volume or margins to become q-commerce sellers. So a lot of them will inevitably be crushed by q-commerce players. 

Is Quick Commerce Profitable?

Short answer: yes, at least in the long term. 

There’s a lot of opportunity in quick commerce when executed correctly.

A study from Deloitte revealed that 50% of shoppers spent more money to get what they needed quickly in the heat of the pandemic. Q-commerce players can capture this willingness-to-pay.

In the US, GoPuff is the first-mover. They operate their better warehouses with 40% gross margins and a 10% contribution margin. 

Of course, increased competition will put pressure on margins.

100% of GoPuff’s fulfillment centers became profitable after 18 months, and the best ones were even profitable after nine months. 

At the same time, classical supermarkets are much more capital-intense and need many years to break even.

Is Quick Commerce Sustainable?

It is hard to prove that q-commerce is more sustainable than traditional shopping. But a few things about it are encouraging.

Deliveries are usually performed with electric scooters or e-bikes. It would be more sustainable if customers would no longer have to get into their cars to drive to the supermarkets or shopping centers.

The way supermarkets work produces significant food waste. Q-commerce has the potential to reduce food waste big time. It has short turnaround times of products. Food can be stored more functional (e.g., dark and cold). It does not have to be displayed in a way that is appealing to customers (e.g., on a shelf with bright light)

Customers do not touch food, and q-commerce companies can also sell the “curved cucumbers” that would be neglected in a supermarket. 

Since q-commerce firms are more data-driven, they can better forecast demand. In turn, companies waste less food by ordering the right amount of non-durable products.

Food about to expire could be promoted or discounted on the app. If quick commerce players operate seven days a week, they would not have to deal with fresh food that could get rotten over the weekend. 

What is next for Quick Commerce?

Expansion of the product offering

Most players have started with grocery delivery. But their product portfolio will expand to other areas such as OTC (over-the-counter) pharmaceuticals. 

After all, we want to stay in bed when we are sick and don’t want to make our way to a pharmacy. Some do this already.

Beyond Groceries, Food, and convenience products

Quick commerce does not have to be limited to food delivery, groceries, OTC drugs, or other convenience articles. It could also solve that last-mile problem in the broader retail industry. 

Q-commerce players could also help brands deliver other items like fashion of consumer electronics. 

First, start-ups are already addressing this niche. For instance, Arive works with brands like Apple to deliver their products within 30min. The biggest challenge here is inventory. The products can be “flipped” with groceries within 2-3 days. With laptops or designer fashion brands, the warehouses would need to have a lot of expensive inventory. The products need to be readily available in many sizes, colors, or technical configurations.

Reshuffling of the marketing budgets of food companies

Food companies like Kraft Heinz spend a lot of money promoting their brand and products (let’s say a Bacon BBQ-Sauce) to a broad audience. 

The demand for their product by customers and their brand image helps them to engage in favorable terms with supermarket chains and retailers. 

But their marketing efforts (e.g., in the form of billboards or TV spots) have also targeted consumers that are highly unlikely to buy their Bacon BBQ-Sauce. 

Maybe because they are vegetarian or simply do not like BBQs. 

Quick commerce players can disrupt marketing in the food industry. Unlike brick-and-mortar supermarkets, they have very detailed information about the preferences and habits of individual customers. 

They can monetize that knowledge and address consumers in a much more targeted and effective way. 

Own Label products increase margins.

Quick commerce players will be offering their private-label products. They can do this because they have direct access to the customer. 

Instead of negotiating with giants like Unilever, Kraft Heinz, and alike, they can offer customers own-label products. This would increase their profit margins.

Who’s Who in Global Quick Commerce

Let’s look at the major quick commerce players currently on the market. 

The amount of money being poured into financing rounds for each player gives you a sense of how big the market could be. 

GoPuff

The GoPuff business model is considered the q-commerce role model. Based in the U.S., GoPuff brings food, alcohol, over-the-counter drugs, and more to consumers in multiple states. 

With micro-fulfillment centers, for a delivery fee of $1.95, shoppers have access to over 3,000 products within 30 minutes.

The company confirmed in July 2021 to have raised $1Bn to expand its global operations. GoPuff is consolidating the market and has acquired competitors such as Dija, Bandit, Liquor Barn, RideOS, Fancy, and BevMo.

Getir

Getir is a Turkish company that started with the speedy delivery of groceries and food from local restaurants. 

The company can also provide apparel, pet food, and sex health products within minutes. 

The Getir app has raised USD 550M in 2021 to expand to the US and other countries. The acquisitions of Moovand BLOK have accelerated Getir’s expansion. 

Weezy

Weezy is a U.K-based grocery delivery service that offers instant delivery within 15 minutes. 

It also highlights its stance as an anti-gig economy company, stating that its “riders are more than just riders.”

The company has “only” raised $25M in 2021

Cajoo

Cajoo is a prominent French q-commerce delivery service. 

Servicing ten areas in France when we wrote the article, the company specializes in grocery delivery. 

In late July 2021, Carrefour, France’s biggest retail company, acquired a minority stake in Cajoo. This investment is for an undisclosed amount. 

This investment will allow the Cajoo App to speed up its development. And it will also give Carrefour direct insight to ramp up its delivery operations.

Gorillas

Gorillas is a leading q-commerce start-up and the fastest German company in history to reach the unicorn valuation.

They started their brand to limit food waste by providing fresh food on demand. Their main offer is to deliver in ten minutes or less. 

The Gorillas app operates in the UK, Belgium, Denmark, France, Germany, the Netherlands, Spain, Italy, and New York City. 

The company has closed a $1B Series C round in October 2021 with the strategic investor Delivery Hero as the lead investor.

Flink

Flink is the second major player from Germany and operates in even more German cities than Gorillas. 

The company also expanded to France, Austria, the Netherlands, and Belgium.

Flink is backed by financial investors like Target Global and strategic investors with strong delivery experience such as DoorDash and Prosus.

The start-up has entered into exclusive cooperation with the retail giant REWE Group. 

Jokr

Jokr has had extremely rapid growth. 

It was founded by the Foodpanda founder Ralf Wenzel and other former Foodpanda and Rocket Internet employees who understand the food delivery market. 

They have expanded to dozens of cities in the US, Latin America, and Europe in a few months. 

The company has raised $170M in 2021 to expand its global operations. 

Glovo

Founded in Barcelona in 2015, Glovo is one of the “old” players in the q-commerce business. 

With Delivery Hero as their leading investor, Glovo has become a significant player for on-demand delivery in EMEA markets. 

With the rise of q-commerce, Glovo has been investing in its ultrafast delivery capabilities to compete in this market. 

They benefit from solid brand awareness and a robust presence in their current markets. So let’s see how they fare in the q-commerce business.

Rappi

Rappi is the Unicorn out of Colombia.

Same as Glovo, the company was a senior player in the delivery business founded in 2015. 

The company’s main activities come from on-demand delivery. 

They have risen to the top, establishing themselves as the dominant player in Latin America. They have become the most significant player in countries like Colombia, Brazil, or Mexico. 

In 2021, they launched a new Rappi Turbo feature, allowing for deliveries in ten minutes or less. This is the start of their q-commerce business.

Again, same as Glovo, they benefit from brand awareness and customer loyalty in their current markets. It will be exciting to see how they compete in the quick-commerce business. 

What will Amazon do in quick commerce?

The retail giant Amazon is currently standing on the sideline regarding quick commerce. For example, its fastest service Amazon Fresh needs about 2-3 hours of delivery time in major cities. 

Going forward, there are two possibilities for how Amazon will (re-)act. 

1. They will wait and acquire the leading quick commerce player
2. They will choose a different strategy (just-in-time instead of instant on-demand delivery)

Amazon could also decide not to become part of the quick commerce race. 

They are still way ahead regarding access to the customer and their household (think Smart fridges and Alexa). Amazon could bet on the convenience of automatic restocking. Your milk or guacamole could be delivered and restocked just in time before your current container is fully consumed. 

Conclusion:

There may be a lot of challenges ahead for Q-commerce. 

The market will consolidate, but several players might dominate in a specific city or area. 

So we do believe q-commerce is here to stay and will only grow in popularity. It educates consumers and changes consumer demands in the long run.

But we are thrilled to see who comes out on top in the long run.

If you know other players to include in this list, drop us an email, and we’ll add them. 

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Today, customers have complete control of when, where, how, and from whom they want to buy products. 

The rise of digital channels has given unprecedented power to customers. This power shift has increased competition for retailers. It has forced them to adopt a strategy that fully satisfies customers at their convenience. 

That is where omnichannel fulfillment comes in.

To consider implementing an omnichannel strategy, a company must address five key pillars. 

The five pillars of omnichannel retail are:

1. Omnichannel 360º View of the Customer 
2. Omnichannel Customer Engagement
3. Omnichannel Fulfillment & Logistics 
4. Omnichannel Product Offering, and Merchandising
5. Omnichannel Backoffice: Finance, IT & HR

Once you have built a 360 view of your customers and you started deploying an omnichannel customer engagement strategy, you can deploy an omnichannel fulfillment strategy. 

What Is Omnichannel Fulfillment?

Omnichannel fulfillment is an order fulfillment process executed across multiple channels. At its core, this process ensures a consistent experience across all channels. 

Omnichannel fulfillment makes all products and services available in every channel. So whether it’s online or offline, products are available in the most convenient channel for customers. 

In other words, in omnichannel fulfillment, a customer can buy and get a product no matter where they are or what channel they are using. 

Having all products available across channels is similar to a multichannel fulfillment strategy. 

Multichannel fulfillment is fulfilling orders from multiple channels. Whether online or offline, in multichannel fulfillment, a customer can choose from various delivery options. 

The critical difference is that omnichannel fulfillment ensures a consistent customer experience across fulfillment options.

Omnichannel fulfillment is adapting the delivery process and options to the customer’s behavior, ultimately making the whole experience convenient and efficient.

All channels and delivery options are interconnected in an omnichannel fulfillment strategy. 

They are synchronized to gather a maximum amount of data and provide an equal value to the customer.

What are the five primary options of Omnichannel Fulfilment?

To understand how omnichannel fulfillment works, let’s first understand the options it can take. 

There are five primary options of omnichannel fulfillment:

1. Store pick-up
2. Warehouse delivery 
3. Ship-from-store 
4. Ship-to-store 
5. Endless aisle

Let’s dive into each of them in detail.

1. Omnichannel Fulfillment: Store Pickup 

The most common form of omnichannel fulfillment option is store pick-up. This method includes different options such as E-reservation or Click and Collect.

What is E-reservation?

E-reservation is the delivery option where an item is reserved online and picked up in the store. The actual payment and transaction happen at the store. 

The main convenience is that the customer ensures the item is in stock before going to the store.

What is Click and Collect?

Click and collect is where the item is reserved and paid online and picked up in the store. 

This method is often referred to by the acronyms BOPIS or BOPUS for Buy Online, Pickup In-Store. It can also be written Click & Collect or C&C. 

The main convenience is to ensure a fast, efficient process without really needing to enter the store. 

What is store pick-up or Buy Online, Pickup In-Store?

Whether it’s E-reservation or Click And Collect, most retailers are deploying store-pickup. It is the preferred option by brick-and-mortar retailers that want to be omnichannel retailers. 

In a survey in 2020 by Forrester, 87% of retailers planned to implement buy-online-pickup-in-store before 2022. 

Retailers prefer this method because it allows them to leverage their physical footprint. In addition, this option will enable them to drive traffic to their stores from their digital channels. 

There is no doubt that the physical store still carries significant value for customers. Touching, feeling, and smelling a product can highly increase the chances of purchasing that product. 

What do retailers need to implement omnichannel store pick-up? 

By implementing BOPIS, retailers know they can drive traffic to the store. Most of the time, they generate additional sales when the customer is in the store.

But in-store pick-up can also be a form of multichannel fulfillment. 

So omnichannel store-pickup requires two additional efforts from the retailer:

1. All products and services must be available online and offline. 
2. Product content must have consistent quality across channels. 
3. High inventory accuracy
4. Transform stores into fulfillment centers

1. Full availability of all products and services online and offline:

Very often, retailers have different inventory for physical or online stores. In turn, they offer products that are exclusive to a single channel. Or are simply available in a single store.

For example, a retailer that has certain products published on its website that can be purchased online. Or that can’t be delivered at home. Or that can’t be found at the store. 

This negatively impacts the customer experience and generates frustration among potential buyers.

2. Quality product content across channels

Regarding product content, the logic is very similar. 

Omnichannel store pick-up requires that product content must be consistent across channels. When customers are at the physical store, they can touch, feel, and see a product’s details. 

The online experience must match the physical store experience.

In other words, omnichannel store pick-up requires having online product pages with:

• Quality pictures
• Detailed descriptions and specs
• If possible, videos or tutorials for the product

3. High inventory accuracy across channels 

Store pick-up has tons of benefits for retailers. But, when considered in an omnichannel strategy, it carries some operational complexity. 

For starters, retailers need to have high inventory accuracy. This is crucial to avoid disappointments for customers due to stock out.

Inventory accuracy goes hand-in-hand with the full availability of products across channels. 

It is one of the biggest challenges for retailers, as real-time and reliable stock count is not easy. And a fundamental principle of working capital is to reduce the days of inventory rotation as much as possible.

4. Transform stores into fulfillment centers to control hidden costs

Like inventory, retailers need to have a higher cost efficiency to make omnichannel store pick-up work. 

In-store pick-up has loads of hidden costs of order fulfillment from the stores. A physical store has significant differences from a fulfillment center. 

The time to pick and prepare an order in a store is higher than at a specialized fulfillment center. This makes the traditional store less efficient for omnichannel store pick-up. 

Retailers who want to implement omnichannel in-store pick-up must rethink the role of the store. 

The store must be transformed into a fulfillment center with a showroom. This way, customers can still get the full value of the physical experience, and retailers can offer omnichannel store pick-up. 

2. Omnichannel Fulfillment: Warehouse fulfillment: 

Warehouse fulfillment is shipping products from a warehouse to the customer’s place of choice. 

That’s as easy as it gets.

What is omnichannel warehouse fulfillment?

From an omnichannel standpoint, warehouse fulfillment adds more value. The primary value is that all products are available for delivery at the customer’s convenience. 

No matter where the customer is located or when they want a product, they can order and receive it. 

In other words, the warehouse can fulfill an order at the time and place desired by the customer.

The warehouse carries the reception, storage, picking, and packaging of orders. Once the order is prepared, it ships it to ensure delivery when and where the customer requested. 

This type of delivery is the basis of e-commerce.

Omnichannel warehouse fulfillment provides the ultimate customer convenience.

Omnichannel warehouse fulfillment implies the order can be fulfilled at speed and place the customer wants it. 

A customer can need a product in less than two hours or might not mind waiting a few days for delivery. The important part is that they must have all options. 

On top of this omnichannel warehouse, fulfillment allows shipping orders placed from a physical store. 

Suppose a store doesn’t have an item in stock. The customer can make an order from the store and have it delivered to their house. 

Omnichannel warehouse fulfillment is highly cost-efficient.

Omnichannel warehouse fulfillment provides higher inventory management efficiency. In this case, long-tail products can be stored at a central location and have better inventory management. 

A central warehouse will always have better unit economics in storage, picking, and packaging costs than a store. 

This form of fulfillment has another benefit of increasing higher profitability per m2. This is one of the most important KPIs for traditional retail. 

Stores can serve as showrooms where the customer can touch and feel the product before making a purchase. 

Once they are ready to purchase, the product can be delivered from the warehouse if it’s not in store.

Speed is vital to make omnichannel warehouse fulfillment work.

The main drawback of omnichannel warehouse fulfillment is the delivery speed for an item. 

For some items, customers are willing to wait a couple of days for delivery. But for other items, they want to have the product immediately when making the purchase. 

This immediacy is impossible to achieve for all items on a national level from a central warehouse. 

Retailers must have a deep understanding of the customer’s needs and wants. They must identify which items need to be in-store and which can be fulfilled from a central warehouse.

In-house or external (3PL) warehouse fulfillment

Regarding warehouse fulfillment, there are two main options for retailers. 

They can have a standalone warehouse where they set up and have complete control of the entire process. Or they can use a third-party logistics provider (3PL). 

Outsourcing logistics can offer benefits depending on the volume and seasonality of orders. For some retailers, 3PL is generally more efficient in costs-per-order. And it provides a lot more flexibility in high seasonal markets.

But having in-house logistics allows complete control. And full control is critical to provide the best possible customer experience. 

3. Omnichannel Fulfillment: Ship-from-store

What is omnichannel ship-from-store?

Ship-from-store is a mix between store pick-up and warehouse fulfillment. Ship-from-store is where the physical store doubles as a proximity fulfillment center. 

From an omnichannel perspective, ship-from-store has the same requirements as store pick-up and warehouse fulfillment. It requires consistent product content, high inventory accuracy, and full product availability. 

For many retailers, their store network is one of their most important assets. They can leverage this footprint by converting physical stores into fulfillment centers. In turn, they can fulfill proximity orders, whether online or offline. 

Shipping orders from stores has considerable benefits in terms of delivery lead times. When the store works as a fulfillment center, it can ensure same-day delivery for orders within its proximity. 

Ship-from-store also has value in terms of inventory efficiency. Shipping items from stores increases transactions and provides higher stock rotation. 

Omnichannel ship-from-store requires an Order Management System.

The main drawback of ship-from-store fulfillment is the operational complexity. In this sense, managing multiple stocks in stores to fulfill an order requires a unified view of stocks.

But most traditional retailers have legacy systems that are unable to handle these requirements. And they generally struggle with inventory accuracy within stores. 

This can only be achieved with an Order Management System (OMS). An OMS provides a unified and accurate view of stocks between stores to define which store will fulfill an order. 

Retailers must fix these issues before trying omnichannel ship-from-store. 

4. Omnichannel Fulfillment: Ship-to-Store

What is omnichannel ship-to-store?

Omnichannel ship-to-store fulfillment is the next logical evolution of retail fulfillment. In particular, after having implemented in-store pick-up and warehouse fulfillment. 

Ship-to-store fulfillment is when the physical store becomes a delivery destination for orders. 

This method is used for products not in stock at the store to ensure a proper, omnichannel view of the retailers’ product offers. 

Ship-to-store allows the store to double as a pick-up place to receive orders if the product is not in store. 

Depending on the physical footprint, ship-to-store also provides convenience for the customer. Especially for those customers that are not always home and want a place to pick up items. 

Four steps to implement omnichannel ship-to-store

To properly implement omnichannel ship-to-store, Retailers must tackle certain complexities.

1. They must be able to track online and physically store orders once they get to the store. 
2. Omnichannel ship-to-store requires notifications for customers to know when their order is ready for pick-up. 
3. Once the customer is in the store, the pick-up experience must be as easy as possible.
4. Finally, the retailer must mark an order as picked up and start a return process if the customer requests it. 

Ship-to-store fulfillment ties all options together for maximum convenience.

Once ship-to-store and ship-from-store options are deployed, a retailer can implement store-to-store fulfillment. This unifies all point-of-sale inventory to address stock-outs and improve customer experience. 

The biggest drawback about ship-to-store is the additional delivery cost it carries with no immediacy for the customer. 

One could argue that ship-to-store has the inefficiencies of warehouse fulfillment, coupled with the inefficiencies of in-store pick-up. 

Retailers must work to tackle these inefficiencies to offer ship-to-store. Mainly to ensure a consistent experience for customers.

5. Omnichannel Fulfillment: Endless Aisle

Endless-aisle is a concept where a retailer extends its catalog offer with products that are not in stock. The endless-aisle can be internal or external, depending on who stocks the items.

What is an internal endless aisle?

An internal endless aisle occurs when a retailer has stores of different sizes. In this case, some products are only available at the biggest stores or a central warehouse. 

Retailers can leverage internal endless-aisle to make products available in all of their stores. The customer can purchase a product from a smaller store, even if that product is not available in the smaller store.

What is an external endless aisle? 

External endless-aisle is where retailers leverage products outside of their catalog offer. This can be very efficient for long-tail products from suppliers. 

It gives the retailer the flexibility to offer these products without carrying the risk of stock themselves. 

External endless-aisle is very similar to dropshipping. The supplier would be fulfilling the order in the name of the retailer that sold the order. 

What are the pros and cons of endless aisle fulfillment?

Endless aisle is attractive in inventory management and working capital management as the retailer doesn’t need to carry the stock before it makes the sale of the product. 

The biggest drawback of the endless aisle comes from the operational complexity it implies for retailers. 

In today’s customer experience standards, a customer doesn’t care who shipped the order. The customer expects the company they are buying from to ensure that everything works perfectly.

Therefore, retailers need to make sure to have the right processes for endless aisle:

• make sure that suppliers are fast and reliable for a consistent fulfillment experience
• have the right systems to track and follow up on orders from an omnichannel perspective. 

If they do not implement these steps, an endless aisle can become an operational nightmare. 

What Are The Benefits Of Providing Omnichannel Fulfillment?

Omnichannel fulfillment comes with an increase in convenience and a long-term reduction in costs. Here are the most common benefits of omnichannel fulfillment:

1. Better Customer Experience

As mentioned previously, omnichannel fulfillment keeps customers happy. Convenience is the key ingredient to get a happy customer.

Enabling an omnichannel fulfillment strategy to mix delivery options highly increases convenience. 

Omnichannel fulfillment enables faster delivery and provides options to meet customers’ needs. Every step of the delivery process for each option is designed to provide a great customer experience. 

Omnichannel fulfillment processes the order on time, picks up the goods correctly, and ships the items timely. There is no better way to increase customer satisfaction and retention.

2. Higher cost-efficiency in the long term

Omnichannel fulfillment requires some solutions that can be costly, to begin with. But in the long run, it is the most cost-efficient process to manage multiple sales channels.

In an omnichannel fulfillment view, the company maximizes stock rotation. 

The main objective is to reduce idle time for products and have the right quantity of products at the right place and at the right time. 

This can only be achieved by having a single, unified view of inventory across channels. This strategy maximizes order accuracy, reducing the costs of mistakes and returns.

3. Better Data and Reporting

An omnichannel fulfillment strategy requires a detailed view of a company’s supply chain.

The company must be able to track and measure the performance of each link of the supply chain. From the time to manufacture an item to the time it is received in-store to the delivery lead time. 

The entire supply chain is integrated to collect and gather data. This data allows companies to build detailed reporting to maximize the entire supply chain efficiency.

4. Increased brand awareness and word-of-mouth

An omnichannel fulfillment strategy puts the customer first. 

Customers understand that you care about their needs and are making an effort to provide them with convenience. Thus improving the chances of them having a great experience. 

In other words, an experience worth talking about with their friends.

With an omnichannel fulfillment strategy, a company caters to the customer’s needs. They don’t see customers as buyers, but they see them as fans. 

Fans that will help them attract more fans. And thus, lower acquisition costs and increased brand awareness.

5. Higher revenue and customer lifetime value

Higher brand awareness and word-of-mouth translate directly to higher revenue. But an omnichannel fulfillment strategy also has an underlying benefit to bring more revenue. 

The simple fact a company uses multiple channels mechanically increases the sources of revenue. 

Making products accessible through different channels increases customer reach and hence, increases revenue. 

This premise is true for both multichannel and omnichannel strategies. The single most important premise about omnichannel retail is as follows:

The overall value of a unified experience is larger than the sum of the value from combined channels. 

This added value to the customer experience is what promotes loyalty from customers and customer lifetime value. 

How are fulfillment strategies changing with COVID?

COVID has had a radical impact on consumer behavior as a considerable portion of customers have tried online ordering.

From a logistics perspective, warehouse workers have had to practice social distancing. And businesses have had to struggle to efficiently manage inventory. 

The growth of e-commerce penetration of the total retail market in 2020 has advanced the expected roadmap by two years globally. 

The global e-commerce share of retail reached 10.5% in 2020 when it was supposed to get to that figure in 2022 in pre-covid forecasts.

So, e-commerce is on the rise, but how about omnichannel fulfillment options? 

Covid19 pushed a profound acceleration to implement omnichannel delivery options. According to a survey from Forrester among retailers:

• 89% of retailers plan to implement Buy online, pickup in-store by 2023 
• 81% of retailers plan to implement Endless Aisle by 2023 
• 79% of retailers plan to implement Ship-from-store by 2023
• 73% of retailers plan to implement Ship-to-store by 2023

In summary, customer requirements are accelerating the transformation of fulfillment options. The pandemic has only made those requirements more pressing.

Thankfully, a majority of retailers are meeting customer requirements by implementing delivery options.

What are the difficulties of implementing an omnichannel fulfillment strategy?

If not deployed correctly, omnichannel fulfillment can break a company. 

There is no denying that implementing an omnichannel strategy requires time and resources. Resources in Capex, technical skills, systems, and software.

All this, with increased and transparent communication between teams.

An omnichannel fulfillment strategy has many long-term benefits, but not all companies are willing to invest. 

These are the biggest obstacles to implement an omnichannel fulfillment strategy:

1. Change in culture

Most traditional companies have had success with a single channel approach for several decades. This legacy generates overconfidence in the “old ways” and mistrust in the “new ways.” 

A significant culture change needs to be carried out in legacy retailers to shift towards an omnichannel vision. 

Most retailers’ senior leadership understands the need to implement an omnichannel strategy. Still, they have struggled to implement a change in culture to deploy an omnichannel vision. 

In many cases, there is a lack of resources or skills required to change a culture. 

Implementing an omnichannel strategy requires hiring new skills. Hiring new skills must be paired with upskilling existing employees. 

These new skills or hires need to be integrated and accepted within the company. And the company, as a whole, needs to create a new culture that integrates both new and existing roles.

2. Change in the organization

A company organization can be a major roadblock to implement an omnichannel fulfillment strategy.

Integrating new skills requires reviewing existing organizations. Retailers need to move from a classic “silo” organization to a transverse organization.

Omnichannel is a transverse strategy that needs to be integrated within all teams. All teams, including Marketing, Sales, HR, Supply chain, Finance, and IT, must work together. 

The big mistake retailers make implementing an omnichannel strategy is to have it driven by a single team. Very often, it’s the IT or Marketing teams. 

For an omnichannel strategy to flourish within a company, all teams must be aligned. And the organization must be designed to allow transverse projects to prosper.

3. Ressources and Capex

Implementing an omnichannel fulfillment strategy is in no way a quick and easy task.

For a legacy retailer, it is probably an even harder task.

The required technology to support an omnichannel strategy means revamping an entire systems architecture. It implies going from a monolithic system’s structure to a more agile microservice systems structure. 

Retailers need to invest in these solutions, and they also need to hire skills to implement these kinds of projects. 

On top of this, implementing fulfillment centers can be costly. Whether it’s within physical stores or a central warehouse, a fulfillment center requires Capex. 

Setting up a fulfillment center that can handle an omnichannel strategy can be expensive.

Retailers can be put back when considering the investments they need to make. But the reality is they won’t survive the retail apocalypse if they don’t do them. 

Of course, they need to make sure implementing this strategy doesn’t bankrupt the company. They can create a roadmap of omnichannel features to add in terms of cost/time to implement. 

It is paramount to understand that an omnichannel strategy doesn’t get implemented quickly.

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