Will "Web Fronting" Become Mainstream?

June 06, 2009 · by Shipwire eCommerce Order Fulfillment Service

I read an article in FastCompany.com a few years ago about an apparel company in Portland that was developing a new model for retail storefronts that I wanted share with the readers - "Web Fronting". It was a business model for retailers that stuck me as obvious and forward thinking.

In this model, the brick-and-mortar store was essentially a showroom for their products. Buyers could buy products in the store; but, their pricing structure was designed to entice buyers to have the product shipped to the buyer's home from the business's central warehouse. They offered 10% discount for shipped items. They could do this because the business model gave them more margin - they rented less retail space (not a lot of warehouse space was needed) and they were not constantly shipping product from manufacture to retail outlet. Basically, the product stayed in the warehouse and then was shipped one time to the buyer.

I had never heard of the term "Web fronting" before; but, the business model made a immense sense to me. After about 50 google searches I finally found it here if you are interested in reading it. The bulk of the article is about eco-friendly business practices; but, there are a few paragraphs about Web Fronting.

The company that was profiled, Nau.com, is still going and you can check out their eco-friendly activeware and clothing. They get my compliments for the fashionable styles, eco-awareness and trendsetting business model.

Over the past couple years I’ve thought about the business model, even if I couldn’t find it or remember the company. I’ve been impressed by the Apple store’s push to get physically closer to buyers by eliminating the checkout counter – wired employees roam the store with hand-held credit card counters.

I think the idea of “Web Fronting” is awesome and could be employed in a number of unique circumstances. Cutting edge electronics displayed at kiosks in airports or mall courts where buyers can try, buy and get the product shipped home. The retail merchants can expand faster with less costly real estate and save a mountain on inventory transportation costs by employing the best practices of centralized inventory management.

The trade-off, from my perspective, is the buyer experience and the “high” of trading cash for product in hand. Clearly, some buyers will want the product NOW and the retailer will need a few items of inventory to satisfy those buyers. (Aside: Dell is learning the hard way that buyers need the option to carry out purchases with their “Dell Stores” which I’ve seen pretty much panned because you can't carry out purchases. I have not gone into one yet.).

Web Fronting merges offline and online buying experiences. As more and more buyers get used to online Web Fronting may become more of a standard. The main challenge I think is the buyer not wanting to trade the “Carry-out” experience with the “delivery” experience for purchases. I also think that shipping and order fulfillment must be executed flawlessly for this model to be properly employed. If I went into a store, try on a shirt and get it sent home and the wrong shirt size or color shows up I would be highly frustrated. Or if I wasn’t home and got a UPS yellow slip, “Hey we were here; but, you were not”, that would also test my patience.

I bring all this up now because I’ve gotten to know eco-friendly mattress company, Keetsa.com. They have slightly tweaked the Web fronting business model to their immense success. A mattress company is changing the game and growing by executing a satisfying “showroom” product experience environment blended with a patent pending mattress-in-a-box packaging, offering buyers delivery of a mattress in the mail shipped from order fulfillment warehouses and their central inventory store.

Hope you like the article, go check out a Keetsa mattress in one of their showrooms. They put their business model on the wall. If you are at Internet Retailer in June definitely go to the green business panel with Keetsa, Green Mountain Coffee and Shipwire.

(Disclaimer: Keetsa is a customer of mine and we are doing a panel at Internet Retailer together in June, which is how I learned about their model. I don't know Nau.com and only researched them for this article. I did not speak to anybody there to validate the FastCompany article.).

Nate Gilmore, Shipwire order fulfillment, warehouse logistics, Print Internet Postage

This post is filed under Tools, Tips and Suggestions and has the following keyword tags: web fronting, inventory, e-commerce, order fulfillment, Shipwire.

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