Joshua Warren  0:06  
If Nordstrom racks inventory is so inaccurate that they can't do ship from store, well, how much of their financial reporting then isn't accurate? How much of the property tax they're paying is inaccurate? Are they paying tax on products that aren't actually in that store? And so that's where we are very first thing is, your inventory systems have to be super accurate?

Darin Newbold  0:30  
Well, Good day and welcome back to Commerce today. My name is Darren and as always with me, is our wonderful host, co host, Josh, and we have a we have an interesting topic as always, for you around the commerce that's going on. And as related to that I wanted to share with you Josh, I don't know if you knew this or not, but my, my youngest daughter just got a new job. And she's so excited about it. It's with a high end retailer that does athleisure wear, but one of the things she was talking to me about is she has her handheld device that that they use there. And she was telling me about how she can basically help customers get products that they don't have in their store get shipped directly to them. And they fill out all the information right on that device right in the store. It makes the customer happy. They're going to get what they want. And it solves the problem. And so I mean, that fundamental ship to store which our topic today is all about when the ship from store breaks down. So I gave you a great example of one that's going awesome. Where do we go from here?

Joshua Warren  1:32  
Yeah, well, before we dive in to one where it's not going so great. I do want to point out that example that you gave is is such a good example just because apparel is where ship from store really shines. And so, you know, I have so much experience and I've seen so many members of family order products, order shirts, dresses, things like that online because the local store didn't have it and it ends up being shipped from the store. You know, kind of one of the examples I gave earlier is you might have a particular size and color combination that us here in Texas really likes but it's totally out of stock sold out not in the warehouse not in any of the stores but say middle of nowhere Alaska, they might actually have that sitting on their shelf because no one in the right mind in Alaska wears that color. Well if that store can ship from store now that inventory item that would probably be clearanced and maybe even eventually written off now it's been sold full price via the website via shipped from stores. So So yeah, for apparel ship from store is so critical. And that's why this case study caught my eye. So Nordstrom Rack Nordstrom has been a leader in E commerce and omni channel for years and years. But ship from store has broken down at Nordstrom Rack, and they actually in a recent earnings call admitted that they were losing money and they are basically turning off ship from store. They had a very high order cancellation rate. And I really liked the spin. This is really like peak earnings call spin. We had higher cancellation rates there because it's a little more difficult finding the product in a treasure hunt environment in Nordstrom Rack stores. So basically they couldn't find their own products that their inventory system said were in the store. They either weren't in the store, the store associate couldn't find it.

Darin Newbold  3:24  
Oh my well. Yeah, that can create some problems if you can't find the stuff. But I guess let's break this down a little bit. Because there's more to this than just just this one thing and we all want to be clear Hey, we we lie there's nothing wrong with Nordstrom Rack. And there's nothing wrong with Nordstrom in the stores. We we like to both and our fans all the way around. But going by this post that we've got here that we're evaluating, we want to we want to bring up where this can go wrong and being able to or or knowing, knowing where your stuff is at that's fundamental, and then being able to get to it. So I guess Josh, maybe break down a little bit more of where does this where does this break down? Or where can this break down? For companies?

Joshua Warren  4:09  
Yeah, the very first thing is if your inventory isn't accurate, and that, you know, there's probably some CFOs out there listening that are shivering at that thought just because if Nordstrom racks inventory is so inaccurate that they can't do ship from store. Well, how much of their financial reporting that isn't accurate, how much of the property tax they're paying, is it accurate? Are they paying tax on products that aren't actually in that store? And so that's where you know, very first thing is, your inventory systems have to be super accurate. I know you know, I've worked with retailers where when you get into especially transferring products from store to store, things can get real messy real fast and some of the older ERPs were suddenly one product where one inventory item for one store shows up twice. It shows up once in the old store Once in the new store different things like that. So that can get out of control really fast. And you have to make sure that those systems are accurate within the there is a human component to this as well. And you could say, is it training? Is it the store associates themselves? Is it the merchandising, but if the inventory is accurate, that means that there are store associates that are spending probably a good amount of time in the store that don't know where these products are. And so then you kind of wonder, okay, what sort of yes, they want that treasure hunt, you know, really digging, trying to find that that great deal, that great product environment. But have they made it so complicated, so messy, basically, that people can't find what they want? was? Yeah, is there

Darin Newbold  5:42  
has this become a business brought model problem, where the fundamental model of the treasure hunt is not working well. But as a merchant, as a leader of a merchant store and doing all this? What would prevent me or why? Why wouldn't I want to do this? Because I know it comes up. In fact, I know that in our experience, we've, we've seen clients that have almost purposefully made it impossible to do ship from store because they've segmented their their systems, whether it's their ERP, or their inventory, or they've segmented their their product line based on a geography in a way that hey, only these items are sold in the western half of the country, and, and so on. Where do you see something like that? And how do you deal with it?

Joshua Warren  6:33  
Yeah, I think that, really, you can overcome all of that as long as you have buy in and support from the right departments. Because really, what it comes down to is, you don't want there to be fights between store managers and kind of the Store team versus the E commerce team. Because ship from store, really just like byline pickup and store those technologies that only provides a positive customer experience, if the store is bought into it, and if the store is supporting that if they're willing to make that a seamless experience for the customer. So once you have that part figured out to me everything else, it's it's just a technical problem to solve. It's just an integration to build a system to upgrade or improve that type of thing.

Darin Newbold  7:15  
Well, okay, and one of the things that you had shared, as we were kind of prepping for this was an example or a situation where, where maybe even a company that desperately needs to do this has fundamentally wanted to do this, but yet has chosen for various reasons not to do this. What are situations like that and when what maybe prevents them, or what's the fear that maybe they're dealing with,

Joshua Warren  7:42  
some of it is actually pretty simple logistics and kind of wrapping your head around. So for ship from store, you need a computer or some other tablet, some device that you can pick the orders with, and then you need a printer, you can print the labels with. And then you need a basic packaging station. So you need to be able to throw in a box, throw an envelope, put a label on it, get ready to ship. Well, if your products require boxes, and they require multiple sizes of boxes, when you have say 500 stores, you start thinking about, okay, I need to buy 10, let's just say 10 of 10 different types of a given box, and I need to buy that for 500 stores, we're all suddenly you're talking about spending, you know, potentially 10s of millions of dollars, just on cardboard,

Darin Newbold  8:27  
right? Okay, well, that starts to get to be a big deal, what

Joshua Warren  8:31  
else it does, and really the it's a lot of different things like that of the scale of realizing, okay, now each store needs to have at least one employee that's trained on how to do this, they need to know how this is going to work, they need to be able to fill these orders. And so it becomes really a matter of adding up all the investments you need to make and being willing to make those investments and getting all the right stakeholders on board with those investments. And once you make them, you know, except maybe and in this case with Nordstrom Rack, once you make them the benefits from ship from store, like not only does it provide a better experience for your customers, but suddenly those inventory items that weren't turning over that were just sitting there, now you're moving those and instead of moving those that may be at a clearance price are moving at full price full price. Yeah,

Darin Newbold  9:15  
that really does become a big thing. Well, is there? Let me ask this question in and coming throwing you on the spot here, which is always fun. But I'm thinking of a large retailer that sells a wide variety, not just a clothing, but sells everything from clothing to widgets, to large widgets to widgets that have engines and whatever I mean, all this kind of stuff. Can you only have a subset of products that maybe you would do that ship to store kind of thing, situation where so that you can maybe start with a smaller subset, so you wouldn't have to do the investment of every size of box known demand kind of thing? Yeah, definitely. And that's where, you know, for instance, we

Joshua Warren  9:53  
worked with a retailer that among other things in their stores, they sold kayaks and they realized, well, we don't want it How to ship a kayak. And so why not, if you're using the right tools, if you have a modern platform, it should be pretty simple for you to exclude a individual product or product line or product category from being included in that that ship from store option. And that is a great way to start is to, even instead of looking at it as excluding certain products, maybe pick your best selling product line, especially if it's an apparel product line, or if it's something where there's some sort of element of a large number of variations where some stores might have them in stock, some stores might not start by just including those in your ship from shore program.

Darin Newbold  10:37  
Okay, that starts to make some sense, and that's one of those that I know with some retailers obviously, you know, wouldn't want to be doing firearms and those kinds of things, because there's a lot to deal with in that or, or a lot more rules and regulations that you might have to deal with. But obviously, apparel is going to be a natural in a perfect fit for that. Well, what else can you tell us about kind of the challenges or the pitfalls or the things that merchants ought to watch out for, as they look at this ship from ship from or ship to store?

Joshua Warren  11:08  
Like there's so much that we deal with with omni channel, it really just comes down to kind of the basics of retail, make sure your inventory is accurate, make sure your systems are talking to each other, make sure your people are talking to each other. And once you have that figured out, I think you're gonna have a really seamless ship from store implementation.

Darin Newbold  11:26  
Okay, when there's a training component as well, because we got to have that that training piece done inside the store. So someone and probably more than one because you always want to have that backup to to be able to watch over that. Okay. Well, anything else that that you think of on this as we kind of wrap this one up?

Joshua Warren  11:45  
Now, just I hope that all the retailers out there listening are able to find their products in their stores and implement a ship from store programs successful and if

Darin Newbold  11:55  
you need a treasure hunt, Nordstrom Rack is the place to go. And with that, we again are so thankful and we really enjoyed having you with us here at Commerce today. Take care until next time

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