Dive Brief:
- Ulta Beauty has expanded its ship-from-store capabilities to 276 new locations, offering faster and more cost-effective deliveries to additional customers, CEO Dave Kimbell said on an Aug. 24 earnings call.
- That represents a sharp jump from the 115 Ulta stores that fulfilled e-commerce orders as of Jan. 28. The company now fulfills e-commerce orders from 400 stores total, Kimbell said.
- Ulta has also expanded same-day delivery availability "to essentially every store," according to Kimbell. The company, which had 1,362 retail stores as of July 29, offers the service through DoorDash.
Dive Insight:
For Ulta and other retailers, such as Walmart and BJ’s Wholesale Club, ship from store has developed into a valuable strategy in the fulfillment playbook.
Store-based fulfillment didn't exist in any meaningful way for Ulta pre-pandemic, said Scott Settersten, its CFO, treasurer and assistant secretary. But as e-commerce demand boomed for the beauty company following the COVID-19 pandemic, Ulta leaned into the method.
This allowed the company to squeeze more revenue out of its retail locations while boosting delivery speeds. Store-based fulfillment of digital orders offers "a much more efficient delivery to the consumer and a much better overall margin profile of those sales," Settersten said.
In fiscal year 2022, Ulta stores fulfilled 31% of the company's digital orders, up from 28% the year prior. That metric increased further in the company's most recent quarter, covering 39% of digital orders, Kimbell said. Store fulfillment activity includes ship from store, same-day delivery and buy online, pick up in store capabilities.
"Guests continue to shift effortlessly between physical and digital channels, depending on their individual needs, and we are committed to meeting them wherever they are in their beauty journey," Kimbell said.
Kimbell also shared updates regarding other Ulta supply chain milestones on the call. Ulta's new market fulfillment center in Greer, South Carolina, began receiving inventory in July. The company also installed a new automated storage and retrieval system in its Greenwood, Indiana, distribution center to increase capacity and boost productivity.
