Dropship and endless aisle process graphic

As customer expectations continue to change, brands must evolve, or risk the loyalty they have worked so hard to build. With multiple retailers seemingly suffering at the hands of surplus store square footage and stock, and others flourishing in the face of providing an omnichannel experience, is your brand embracing the endless aisle?

Join us for a webinar hosted by Redbox Digital’s Barry Thorn and Michael Sonier from Magento, as they discuss “Endless Aisle – The Business Imperative,” on July 11 at 9:00 a.m. PST / 5:00 p.m. BST.

Click here to register

Changing consumer habits and increased customer expectations are causing casualties on the high street, with household names like Mothercare closing almost a third of its outlets in a bid to survive.

The commerce industry is evolving, and retailers must adapt to survive. With industry reports suggesting 89% of customers are using at least one digital commerce channel, retail salvation seems to lie with technology enabling the delivery of superior customer service.

And since industry statistics predict a 30% increase in profitability for omnichannel adopters, the future looks set to be omnichannel.

Enter the endless aisle

The endless aisle refers to physical stores with virtual stock. It allows retailers to sell items to customers that aren’t available in-store; either because they are out of stock, or not carried by the store due to space restrictions.

Stores achieve this by sourcing the item online from a third party, who delivers direct to the customer. Or they fulfil the order from their own central warehouse, allowing them to offer a full product inventory and capture in-store sales they would have otherwise missed.

This seamless blend of the physical and the virtual ensures the customer leaves the store satisfied with their purchase, even if that purchase is delivered to their home or office at a later date.

Always being able to fulfil a sale gives retailers a major competitive advantage and explains why retail giants such as Amazon and Walmart enjoy such success with this strategy. Customers rely on them to be one-stop shops.

So what should retailers know about the aisle that offers more?

There are two versions of endless aisle: the first retail fulfilment model is the drop ship process. Here the retailer facilitates the sale, but the customer purchases the product from a third party who ships it to the customer’s home. And the customer is none the wiser the transaction has involved a third party.

This model allows the retailer to supply the customer with the exact product they require, rather than leaving them empty-handed and disappointed.
Forrester Research Inc estimates 10% of sales in retail stores are lost due to items being out of stock.

And crucially the endless aisle prevents customers from clicking across to competitors.

The retailer’s profit from this transaction is the differential between the wholesale price the supplier charges the retailer, and the price the retailer has charged the customer.

The additional value for the retailer is, although they don’t supply the sale, the customer associates them with a successful and satisfying shopping experience. Friction-free shopping generates loyal customers, since customers receiving exactly what they required have no reason to look elsewhere.

The second version of the endless aisle is the virtual shelf – an interactive touchscreen allowing the customer to search, browse, order and buy any item from the retailer’s entire product online catalogue, thus leapfrogging any stock limitations caused by restrictive retail footprints or prohibitive rates.

And it’s not just from the retailer’s entire product catalogue, but that of their suppliers, too.

This serves customers not wanting to wait for customer advisors to become free, and Millennials – omnichannel natives – who prefer not to interact with advisors. This model also frees customer advisors from having to remember to proffer the endless shelf, rather than in-store stock.

Naturally, both endless aisle models come with big benefits for the retailer.

More flexible and improved cash flow

Rather than tying up cash in products sitting stationary in a store until sold, retailers only pay for product when it sells. Industry statistics state $1.75 trillion USD is lost every year through overstocking, goods being out of stock and preventable returns.

Plus there’s the increase in revenue from saved conversions – physical store sales have increased by 10% due to endless aisle shopping.

Reduced overheads and risk

Removing the need to buy stock upfront and paying only for the products they sell, reduces overheads and requires lower risk for the retailer.

Free up resources

For retailers wanting to diversify their product line or for start-ups, the endless aisle is the perfect way to offer a more comprehensive product line without requiring increased resources of space, time, money and management.

Support growth

Retailers can sculpt their stock to reflect customers buying trends – a bonus for new businesses with little sales history that need to get up and running as quickly as possible, and also established businesses who want to expand and diversify without jeopardising their existing client base.

Extended reach

The endless aisle allows retailers greater reach. Shipping costs due to location are no longer an issue, retailers simply create links with vendors in different locations, close to the customers address. The drop ship process can also be employed for unusually large order or bulky items with a hefty shipping cost.

So far, so successful. However, there are challenges associated with implementing the endless aisle, which retailers should be fully cognisant of before implementing it into their retail strategy.

Real-time product availability

Inventory must be updated regularly and in real-time, and according to Forrester Research Inc at least 98% accurate to keep up to date with the order fulfilment across all of the retailer’s sales channels.

Staff confidence

Staff must be confident the inventory levels they access are correct – either on the cashier’s point of sale screen or the customer-facing screen –so the customer’s order can be fulfilled.

Multichannel order management

Systems integration is imperative if inventory levels are to be kept updated and must be managed in a centralised location to ensure effective management of any orders placed. Choosing the right Order Management System such as Magento is essential to enabling endless aisle shopping.

Tracking and notifying

A transparent and effective order process management system is key. Keeping the customer informed of their product’s status and arrival time, even though the supplier is fulfilling the order, can be the challenge here. Ensuring your software is up to this task is essential.

Three-way match

This is a safeguarding process designed to protect an organisation’s assets and prevent paying incorrect or fraudulent invoices. The quantity and price on the orders are compared on the vendor’s invoice, purchase order and received order, to ensure a correct three-way match.

So how to proceed? Retailers should be encouraged to ditch short-term solutions and focus instead on a more forward-facing approach. Implementing the endless aisle should be a key growth strategy, thoughtfully considered and carefully planned.

Additionally, retailers should commit to investing in the technology and hardware required to supply omni-shopping customers with the superior and seamless service they seek. For some industry experts this is no longer an option, but a retailer imperative.

Many businesses will encounter problems and built-in complexities that will need addressing in order to execute and sustain a successful endless aisle.

A creative partnership with Magento can be crucial to resolving such issues in supplying a platform of integrated systems, which Redbox Digital, as the only accredited Magento order management solutions partner, can customise for specific retail requirements. The result is a profitable and thriving endless aisle and an enhanced customer experience.