Target Australia shakes up its e-commerce fulfilment

Target Australia is using software to determine which stores in its network are best suited to perform in-store fulfilment of orders placed through the retailer’s digital channels.

(Credit: Hutchinson Builders)

The Wesfarmers-owned retailer is three years into its “in-store fulfilment” journey, where it relies on its network of stores - in additional to a central distribution centre - to pick, pack and ship orders to customers.

The main idea of in-store fulfilment is that a digital order can be picked and sent from a location that is closer to the customer, making the process faster, cheaper and a better experience for the customer.

“We started very slowly - you don’t need to turn on every single store to begin with,” Target Australia’s head of digital experience Sally Lennox told a recent Fluent Commerce event.

“We took the approach of working with our team members and listening to their needs; understanding how we make the task of picking orders, packing them and sending them out if that is the case as easy as possible.

“It’s about having the right equipment, the right platform and the right tools to actually make their job as easy as possible. It’s also about training - you need [to wrap] good training and support [around it].”

Target is one of a number of large Australian retail brands that uses Fluent Commerce’s hosted software to manage physical and virtual channels as a single omnichannel presence.

The vendor said recently that Target uses the software to “personalise stock available in certain stores to meet known customer preferences in that location.”

“By analysing their customers behaviour, Target has been able to determine which stores are better suited for fulfilment of orders and which are better suited for the collection of orders Australia-wide,” it said.

Lennox said that one of the flow-on effects of farming digitally-placed orders out to physical stores for fulfilment is that those stores get much better at inventory management.

“Because our stores are so key to making a sale and to actually fulfil that customer order, they become more invested in their own inventory accuracy,” Lennox said.

“They now take the opportunity to keep their inventory file up to date.

“There’s only so much that IT systems can actually support you with inventory. Some of it just comes down to process.”

In the stores that are selected to fulfil digitally placed orders, Lennox said a dedicated team member or “store champion” is appointed to act as an internal advocate for the project.

“They’re someone who’s really invested in the program, but they also look at it through the eyes of the customer,” she said.

“Not only do they see the benefit of the sale for the store, but they also understand that they’re doing something for a customer.

“It doesn’t matter if that customer has walked in off the street and wants to be served in a normal offline environment, they’re a customer that still wants their goods packaged in a nice way and delivered or available to pick up in a timely manner.

“If you identify the right team member within your store to take ownership, that sets you up for success and enables you to train other people in the stores.”

Lennox said that Target has set internal KPIs around in-store fulfilment and has introduced an element of competition between participating stores with fulfilment results shared via a central dashboard.

“That makes it fun and also allows team members to celebrate success which is an important part of the whole journey as well,” she said.

Lennox noted that the traditional divide between online and physical sales in retail is slowly being eroded.

“I’m finding more and more that what would once have been seen as ‘online’ is no longer about online - it’s about commerce and serving the customer,” she said.

“We’re here to serve a customer and it doesn’t matter where that order has come from. If you’ve got product to sell and a customer who wants it, and you can provide a high level of service, that’s what we’re here to do in retail.”

While Target Australia still had separate online and store-based teams, they worked closely together to understand each’s interdependencies and work out how best to serve the customer.

“We do have a structure of an online team and a store team, but we now work more closely and we understand that a sale is a sale and it’s about serving the customer,” Lennox said.

“I know many companies are moving to a different model. We haven’t done that yet but we are breaking down the barriers and making sure we’re having really good conversations with our counterparts throughout the business.”

Target’s owner Wesfarmers called out the retailer’s shifting online successes at its recent strategy day.

Department stores CEO Guy Russo said Target had “made good progress in resetting our online proposition which grows strongly and is now more profitable.”

He called out the success of in-store fulfilment to date.
“Increased utilisation of stores for customer fulfilment has reduced the delivery times,” he said.

The retailer had also improved customers’ “shopping experience through the availability and ability to view products available in store” when they were shopping online.

However, Russo noted there was still room to do even better.

“There exists significant opportunity to transform, innovate and accelerate our online offer,” he added.