Pool distribution is a shipping strategy that is gaining momentum, as consumers turn increasingly to e-commerce, and the future of America’s malls is unknown. It has actually been around for many years, particularly with specialty retailers. Pool distribution increases speed to destination and lowers overall costs. The concept is simple; instead of ordering individual LTL (less-than-truckload) deliveries to multiple stores or destinations, the pool distribution method (or simply “pool”) collects truckloads of freight at a strategically located distribution point. That pool point then combines multiple deliveries into one truck and delivers them to geographically routed destinations. The ultimate goals for the retail shipper are to get the right product to the right store when it is needed, and to do so as quickly and cost-effectively as possible. To accomplish this goal, the right numbers of each SKU need to be on the shelf at each store and not in the distribution center. Pool distribution – when done right – is a tried and true shipping strategy to make that happen.
Pool Distribution for Specialty Retailers
Today, specialty retailers share an ever-growing need to capitalize not only on the efficiencies and cost-savings of pool distribution, but also on it’s ability to provide greater insight into inventory management. As malls evolve into an experience-based destination more so than a consumer-based one, and while e-commerce companies are experimenting with opening their first brick-and-mortar stores or even pop-ups, specialty retailers are finding themselves under more pressure to successfully meet the demands of their consumers. Today more than ever, logistics is becoming a major part of their strategy.
In ” A New Argument for Pool Distribution as More Specialty E-Retailers Set Up Shop,” published by Inbound Logistics, Alex Sampera, VP of Product Management at Descartes Systems Group writes, “Today, retailers are using pool distribution in a variety of innovative ways to compete with ecommerce-first retailers who, by design, are able to be more responsive to shopper’s needs. For example, with pool distribution, retailers have complete visibility into where merchandise is at a moment’s notice and greater insight into replenishment lead times—helping them to optimize in-store inventory management and replenishment programs. At last year’s Descartes Evolution, retailers such as Five Below discussed their use of pool distribution in high-volume markets to achieve greater transparency and flexibility in managing inventory coming into its stores, and helping the company make better use of backrooms.”
By partnering with a logistics provider such as Pace to leverage pool distribution, specialty retailers can optimize when, where, and how their inventory is received. This frees up their sales teams to be more interactive as well as knowledgeable with shoppers and better meet consumer demand, which excites the brand experience and develops customer loyalty.
Pace’s Journey Into Pool Distribution
Pace began its recent journey and investment into retail pool distribution last fall when we received multiple phone calls on a Monday morning from retailers who have stores in the same shopping malls asking for help. Their pool distribution provider was shutting down effective immediately, and they were wondering if Pace would be a potential candidate to step in. At the time, pool distribution was uncharted waters for Pace, but it would prove to be a win-win. We’d soon discover that we could successfully provide these new customers the shipping strategy they required with the high performing service metrics they expected while also adding a sound tactic to our business strategy for customer and vertical diversification.
Many other logistics service providers (LSPs) and third-party logistics providers (3PLs) like Pace offer pallet-based, cross dock final mile or last mile logistics. When it comes to providing pool distribution the start-up costs are significant. These include upfront investments in equipment, software, and personnel training. The leadership team at Pace carefully weighed the risk versus reward – considering these upfront costs – and decided to forge ahead.
Learning a new service vertical in a very short amount of time was also a risk the team at Pace was prepared to take. We’ve done so before several times within the e-commerce vertical, and we believe that our willingness to take healthy risks alongside our partners enables us to truly live out our passion for Solving Logistics Together.
We began by creating cross-departmental teams who were involved in every step of the startup from setting up equipment to training in the scanning process. At this stage, we literally had Systems people assembling conveyor belts. We also recruited and hired new team members with experience in pool distribution. As a team, we really tried to be resourceful and get the maximum from as many resources as we could dedicate. We leaned on our culture and values to guide us through uncharted waters.
Early on, we experienced and tried to embrace the necessary learning curve. True to our value that says “Always Improve”, we worked hard to see every failure as a lesson for the next sort. We quickly discovered the discipline that would be required to maintain integrity in scanning throughout every stage from inbound receiving to sorting to delivery. Also, we learned that driver discipline is a must. In addition to accounting for each carton through proper scanning, a driver is often the intermediary who communicates issues, shortages, or concerns from store personnel.
Shortly after our first startup in pool distribution, peak season began. Anticipating this overlap, we again relied on our culture and processes to ensure we had the right people in the right seats to manage the upcoming surge in deliveries. Depending on Entrepreneurial Operating System (EOS) to keep us disciplined in making sound business, leadership, and structural decisions really helped. EOS is a way of doing business that Pace has adopted and invested in for many years. We believe it has helped us navigate growth as a company and the many changes outside of our control that we’ve seen through the years from technology, industry regulations, and most recently the COVID-19 pandemic.
COVID-19 has created volatility for everyone, but especially for retailers. From temporarily closing brick and mortar sales while managing upticks in online shopping, retailers are required to be flexible and adaptive during this time. From big box to specialty, retail stores are also remaining conscientious about how to safely get their stores open and protect the health of their customers and their personnel. Pace is committed to you – our customers – and we understand that you require adaptability, flexibility, and out-of-the-box customized logistics solutions now more than ever.
In Pace Partners First: A COVID 19 Message to Our Customers, Pace CEO Matt Lawrence reminds us, “Partners, as you and your teams manage the incredible changes before you, we at Pace want to work with you to build the unique, creative solutions that your business requires to navigate and emerge from this environment successfully. We are prepared to be nimble and inventive, as we discover how to make the best of this era and come out stronger together. In the event that you want to contact us and don’t already have an Account Manager or Business Development Partner at Pace, please call 866-410-7222 or email [email protected]. One of our team members will respond to you within 24 hours. You can always find us online at www.pace-usa.com.”
As for our leap into pool distribution, we are happy to report that our business in this service offering is growing and continues to provide a winning solution for meeting our customers’ needs in today’s economy.