A customer in Paddington wants a dress. The website says sold out, because the warehouse in western Sydney has none left. Two kilometres from her house, the Paddington store has three on the rack. She buys from somebody else, and in eight weeks the store marks the dress down to clear it.
That happens in most retail businesses every day, and the reason is simple. The website only sells what the warehouse holds, and the stores are treated as a separate business.
Fulfilling online orders from stores fixes it. When the warehouse is out, the order goes to a store that has the item, and the store packs and sends it. It is a good idea, most retailers know it is a good idea, and most who try it get burnt the first time. This is about why, and what has to be true before it works.
What you get when it works
The website sells the combined stock of every location, so far fewer items show as sold out. Orders ship from the store closest to the customer, which is faster and often cheaper than shipping interstate from the warehouse. And the store staff who are quiet on a Tuesday afternoon do productive work in that time instead of refolding.
The stock that used to be marked down in one store gets sold at full price to a customer in another suburb. For a business with a lot of stores and a long tail of sizes, that is where the money is.
Why it goes wrong
The systems side is the easy part. Most modern point-of-sale and ecommerce platforms can do it. The hard part is the operation.
- Store stock counts are less accurate than warehouse counts. An item is on the website because the system says the store has one, the store cannot find it, and the customer gets a cancellation email. Do that a few times and the whole programme loses trust.
- Store staff were hired to sell. Packing an online order during a Saturday rush is the last thing they want to do, and if the process is fiddly they will not do it. Orders sit unshipped.
- Nobody decided the rules. Which orders go to stores? Only when the warehouse is out, or always for the closest store? What happens if the store has one unit and a walk-in customer wants it? How much stock does a store need before it becomes eligible?
- Packaging, labels and carrier pickups were an afterthought. The store has no satchels, no printer and no idea when the courier comes.
- Store managers are measured on store sales, so an online order fulfilled from their stock feels like a loss, not a win. If the incentive points the wrong way the programme fails quietly.
What has to be true first
Stock accuracy in the stores that will fulfil. Regular cycle counts, not an annual stocktake. If a store cannot keep its count within a couple of per cent, it should not be on the list yet.
A written set of routing rules that the warehouse and the stores agree with. Warehouse first, then stores with more than a set quantity, then a fallback. Keep the first version simple.
A packing process a new casual can follow in under two minutes: the order appears, they pick it, scan it, print a label, put it in the pickup spot. Anything longer will not survive a busy Saturday.
The physical kit in every participating store, and a carrier pickup that actually happens.
A decision about credit. If the store gets the sale in its numbers, the store manager becomes the programme's biggest supporter.
How to start
Two or three stores, chosen for stock accuracy and a manager who wants to do it, not for size. Warehouse-first routing only, so stores see a small trickle of orders for the first month. Measure three things: orders fulfilled, orders cancelled because the stock was not there, and hours the store spent. Fix the cancellation rate before adding stores.
The businesses that make this work treat it as an operations project with a systems component, not the other way round. Where AI helps is in the reporting and the exceptions: the daily list of orders sitting unshipped in stores, the stores whose cancellation rate is creeping up, the items that keep failing. If you are working out where this sits among the other things your business could fix, the AI Ops Audit puts a number on it alongside everything else.