Opinion
Maximizing fulfillment capabilities in smaller spaces has become big business, writes Kim Hart. What she describes is not new or innovative. It was a business practice common in the 1960s and 1970s.
Retailers with catalog divisions like Sears, Montgomery Ward and J.C. Penny placed small stores with backroom, mini warehouses in selected geographies where retail stores would not cash flow. Before internet shopping and all-points delivery by UPS or FedEx, those stores served as a delivery location for freight and rail shipments and a pickup location for individual customers who used catalogs to source items.
In animal health, OTC businesses like Walco and Lextron used stores as a supply depot for sales route drivers and walk-in trade. Aggressive feed stores added OTC animal health products. Manufacturers set up branch locations to service customers usually within a two-day footprint and take advantage of less expensive local delivery rates from USPS, bus routes and regional small package carriers.
Source: Axios, July 30, 2021. Link.
INSIGHTS: What’s the point? The fulfillment and logistics costs associated with JIT delivery are significant, especially when calculated as a reduction in gross margin instead of a percent of gross sales revenue.
Immediacy always adds exponential costs. In the absence of surcharges, the costs become hidden in unit price.”