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B&M Retailers’ Secret Weapon: Fulfillment Centers

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As the age-old saying goes, “If you can’t beat them, join them.” And while eCommerce hasn’t quite delivered the final blow to a flagging in-store retail economy, it’s clear that some brick-and-mortar merchants are quick to adopt some lessons from their digital counterparts.

The Wall Street Journal reported that some traditional retail giants have been opening up their own dedicated fulfillment centers to shoulder the growing load of online orders. In particular, Home Depot has constructed three massive warehouses at strategic locations so that it can deliver customers’ orders anywhere in the U.S. in as little as two business days. Home Depot CEO Craig Menear explained that the moves are simply a representation of his organization’s adaptations to changing consumer demands and behaviors.

“As our customers are transacting more frequently through our online channels, we have invested in creating the right fulfillment options to support that growing business,” Menear told investors during an earnings call, as quoted by WSJ.

The warehouses will do what they can to connect holiday shopping purchases with their final destinations as 5.1 percent of all of Home Depot’s third quarter sales were conducted online. However, this is below the industry average; as WSJ explained, online transactions reached an all-time peak in the same quarter at 7.4 percent.

Walmart has also been busy building its own network of fulfillment centers, including a 1-million-square-foot warehouse outside Atlanta, Georgia.

“As we build out our eCommerce capabilities, we are deepening our digital relationships with our customers,” Doug McMillon, Walmart’s CEO, told WSJ.

As eCommerce providers already know, building out the groundwork of a successful logistics plan is just the first step. Successfully executing the shipment of millions of orders, especially during a holiday shopping season when online orders are expected to rise to unprecedented levels, that’s another task entirely.

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PYMNTS STUDY: THE CROSS-BORDER MERCHANT FRICTION INDEX – JUNE 2020

The PYMNTS Cross-Border Merchant Friction Index analyzes the key friction points experienced by consumers browsing, shopping and paying for purchases on international eCommerce sites. PYMNTS examined the checkout processes of 266 B2B and B2C eCommerce sites across 12 industries and operating from locations across Europe and the United States to provide a comprehensive overview of their checkout offerings.

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