Shipping from stores in a pandemic

We have had a number of posts over the years on retailers filling ecommerce from brick-and-mortar stores (see, for example, here and here). From the perspective of inventory management, treating what’s in the stores and whatever is in a fulfillment center as one giant pool of inventory makes a lot of sense. In theory, there is no reason to turn down a web order just because the fulfillment center is stocked out if the needed item is sitting at some mall. The reality, of course, is more complex since picking and packing at a store is going to be more costly than doing the same work at a dedicated facility. Additionally, there is the question of how taking items to fulfill online orders impacts in-store customer behavior.

Now add to those concerns how shipping items from random locations impacts the logistics provider who has to collect and schlepp those packages. Apparently, FedEx has had enough and is working to rein in retailers shipping from stores (FedEx, Strained by Coronavirus, Caps How Much Retailers Can Ship From Stores, Wall Street Journal, May 14).

FedEx Corp. has limited the number of items that Kohl’s Corp. and about two dozen other retailers can ship from certain locations, as the delivery company tries to prevent its network from being overwhelmed during the coronavirus pandemic. …

During normal busy seasons, FedEx manages the volume in its network by working with customers for months on forecasts for how many packages they will send during certain periods. Most of the packages come from distribution centers, where trucks bring full trailers into FedEx facilities that sort packages for their journey through the network.

This is an interesting confluence of issues. On the one hand, a store like Kohl’s is going to have a lot of inventory sitting in its stores with no shoppers in sight. Further, they should be able to staff them at a reasonable level to fill orders while maintaining reasonable levels of social distancing etc. That is, shifting work to stores from fulfillment centers might compensate from having to reduce staffing levels at the latter.

On the other, the pandemic is blowing up the networks of shipping firms. Yes, an increase in volume because we are all ordering more things online is nice, but it has resulted in lots of residential deliveries as opposed business deliveries. All else being equal, FedEx would rather deliver 30 packages to one office tower than take the same packages to 30 houses scattered around some suburb.

What FedEx’s cap address is in some ways the reverse of the problem of running around a suburb to drop off items. It’s a lot easier to pick up a parcel of parcels at one fulfilment center than to visit multiple stores. Further, if you don’t regulate how many boxes you are picking up, you may need to send multiple trucks to collect what a retailer wants to ship out.