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Why temporary distribution operations are becoming a permanent fixture in today’s retail landscape

(Image credit: Image Credit: Pressmaster / Shutterstock)

Thanks to affordable short-term leases and advances in technology, the concept of the pop-up is changing the retail landscape as we know it. In the US, PopUp Republic estimates that pop-ups generate $50 billion in sales annually and there is no sign of this slowing down. A rise in omni-channel shopping trends and social commerce has led global retailers such as Birchbox, IKEA and Pantone to embrace the pop-up store – not only to raise brand awareness but to gain valuable feedback from their customers.

Whilst the pop-up phenomenon is nothing new to retail, the concept of the pop-up distribution centres is one that retailers are only just starting to take real advantage of. Whilst this is the case, these temporary fulfilment operations can provide e-tailers with a whole host of benefits. Here are just a couple of reasons temporary distribution operations are becoming an increasingly permanent fixture in today’s evolving retail landscape…

Getting closer to the customer

With service level expectations only getting harder and harder to meet – having a flexible approach to order fulfilment is crucial. Not only do today’s consumers expect an entirely seamless order experience, but they want it quick and at the best value possible. For the majority of consumers, next day delivery is a standard requirement and retailers who can’t keep up with this risk losing out to the competition.

Due to their flexible nature, non-traditional fulfilment methods such as pop-up distribution centres and space-on-demand warehousing could provide a flexible and cost-effective solution to this. Pop-up distribution centres can be deployed anywhere across the globe and help online retailers get their products closer to the customer. The effective positioning of a distribution centre is crucial for enabling not only faster but cheaper delivery and providing a seamless customer experience. Current ambiguity over the effect Brexit will have on cross-border trading, means that it is more important than ever for brands to be agile and able to respond quickly to the growing needs of today’s consumer.

Pop-up and decentralised distribution centres enable retailers to remain flexible and agile in the face of this uncertainty, especially for retailers who don’t want to commit to moving their inventories overseas permanently if they don’t have to.

Scaling up effectively

Alternative fulfilment technologies can also be extremely effective when scaling up. Thanks to advances in technology and a rise in social commerce, today’s brands can trade with little more than an Instagram page. Whilst social media can offer brands an easy and quick way of reaching their customers, it is also transforming current expectations in relation to delivery. If customers can order products at a click of a ‘Buy Now’ button, then they expect the delivery experience to be just as quick and seamless.

Pop-up shops in this instance could be the answer for brands who may not have the right infrastructure, ability or expertise in-house to react to customer demand. The flexibility of this solution can also allow growing brands to test the waters in new geographies and approach new audiences without having to commit to a permanent facility, reducing initial capital outlay and representing better value for money.

Keeping up with Peak demand

Keeping up with peak demand can be extremely challenging for e-tailers big and small. Often brands will find that their current facilities will not support peak volumes and that extra warehousing will be needed. Designing and implementing another permanent facility can be costly and extremely time-consuming, requiring highly accurate volume projections in order to be effective. For small to mid-size businesses peak demand can be difficult to predict and often brands will find themselves with very little time to react. Pop-up distribution centres take little time to implement and at a low cost can be tested during off-peak periods.

Brands preparing for seasonal events such as Christmas, Black Friday and Cyber Monday, can use pop-up distribution as a short-term solution to expanding fulfilment capabilities without making a permeant investment and ensure they are prepared to keep up with peak season trading. They can also be used to support short periods of increased demands around promotional campaigns.

Non-traditional fulfilment will be key to success

Despite the perception that pop-up distribution centres serve as a ‘short-term’ or ‘temporary’ solution to online order fulfilment, it is clear that the pop-up distribution centre is becoming an increasingly necessary tool for businesses competing in today’s volatile retail landscape. Thanks to the flexibility and low-cost of temporary fulfilment operations, retailers are able to embrace new markets without the need for permanent investment. This means retailers can serve customers quicker and more accurately which will eventually lead to increased customer retention and a strong ROI.

Ultimately, taking advantage of non-traditional fulfilment methods, underpinned by technology, will allow retailers to stay ahead in today’s fast-paced and competitive retail landscape. By allowing brands to remain agile, retailers can ensure their customers receive a completely seamless order experience time and time again. This will be key to thriving in today’s retail landscape.

Joe Farrell, Vice President of International Operations, PFS
Image Credit: Pressmaster / Shutterstock