Author: Dan Berthiaume
Source: CSA The Business of Retail
Footwear retailer Aldo Group realizes the best ship-from-store options do not always take the fewest steps.
Aldo, which operates more than 3,000 points of sale in over 100 countries, leverages store inventories to fulfill online orders. This maximizes the convenience and speed of e-commerce purchases. However, shipping online orders from stores also requires Aldo to manage and forecast multiple sources of demand, properly allocate store inventories, and execute order fulfillment without cannibalizing sales or jeopardizing margins.
To ensure it fulfills online orders from stores with maximum efficiency and accuracy, Aldo utilizes the artificial intelligence (AI)-based Celect fulfillment optimization module. Aldo feeds in data inputs from its order management system, such as real-time order processing data, inventory positions of SKUs in orders to be processed, and in-store transaction data.
To optimize how online orders are fulfilled, Aldo created a number of custom rules, including split shipment rules, store or tier eligibility, store capacity to handle certain volumes of orders, shipping costs and methods, and store outage responsiveness (such as local power outages and transportation challenges).
As a result, rather than simply fulfill online orders from the nearest store that has inventory in stock, Aldo can optimize fulfillment to obtain inventory from the most profitable location. For example, Aldo may obtain better margins by fulfilling an online order from a store that is further away from the customer’s home, but preparing to place the item on markdown.
Other benefits include improved inventory turn by prioritizing unproductive inventory and protecting profitable inventory, increasing in-store conversion by up to 12% with lower out-of-stocks, and reduced shipping costs through better store sourcing, fewer split shipments, and less end-of-season movement. Aldo says that since optimizing ship-from-store fulfillment, it has recovered seven-figure margin dollars per year.
“Celect connects to our order management system, and it also receives data inputs from our business intelligence systems,” said Matthew Marchand, COO of Aldo Group. “It’s a behind-the-scenes technology though, which is great because it requires very little monitoring. Once the integration and the automated feeds are in place, the system optimizes on its own and only requires monitoring to ‘keep the lights on’ as well as periodic analysis on the results and identify future opportunities.”