One of the biggest advantages of omnichannel retailing is the ability to use store locations as fulfillment hubs for online orders.
This strategy can reduce shipping time, lower logistics costs, and avoid dead stock.
But as promising as it sounds, the reality is more nuanced. Every store operates differently: some are in malls, others are store-in-store formats or newly opened, and many lack dedicated space for picking, packing, and shipping. These differences in layout, staffing, and fulfillment capacity significantly impact a store’s ability to fulfill online orders.
Treating all stores the same can lead to delays, mistakes, or a poor customer experience. That’s why it’s important to assess each store’s capability before routing orders their way, and that’s where smart order routing becomes important.
Routing logic that assumes every store can handle the same order volume is a common cause of fulfillment breakdowns. A store with minimal staff or no dedicated packing space simply can’t perform at the same level as one built for high-volume processing.
For example, assigning too many orders to a small-format or newly opened store may overwhelm the staff and compromise both the in-store and online customer experience. At the same time, ignoring underperforming or underutilized locations can result in idle capacity and slower inventory turnover.
The solution isn’t to remove stores from the routing process – it’s to use them more intelligently. That starts with understanding the different types of stores and aligning them with a smart order routing strategy.
Fig 1: Routing based on Store Types
Not all stores are built the same, and when fulfilling online orders, size and layout matter more than retailers often realize. Smaller locations, such as urban compact formats or pop-up stores, often lack the space and staffing capacity needed to manage fulfillment efficiently. When these stores are assigned orders beyond their operational limits, they can become bottlenecks, leading to slower processing times and service issues.
That’s why small-format stores should be assigned a lower routing priority with strict order caps. They can still be useful for routing, but only when volumes are controlled. Treating them as low-volume in the routing model helps prevent bottlenecks while still leveraging their geographic proximity when needed.
Larger format stores offer more backroom space or even dedicated areas for picking, packing, and shipping. With more staff on hand, it’s easier to assign fulfillment tasks without disrupting the in-store experience.
These stores should be ranked highest in routing logic. Their layout, staff, and infrastructure allow them to consistently handle high order volumes. Routing more orders to these stores also helps maintain service levels and frees smaller stores from operational pressure.
Newly opened stores often see low walk-in traffic, making them logical candidates for smart order routing and fulfillment. Leveraging their available capacity can keep staff engaged and help justify early-stage investments.
Still, new stores are usually ramping up their operations. Teams are adjusting to workflows, product knowledge, and store layout. Routing too many orders too soon can overwhelm them, leading to fulfillment delays and poor customer experience.
The right approach is to start with a limited routing priority, apply daily order caps, and monitor performance closely. As the store gains maturity and consistency, its routing rank can be increased.
Store-in-store formats, where a brand operates within a larger retail environment, offer a cost-effective way to expand presence, but they present specific fulfillment challenges. These store locations often have limited or shared stockrooms, constrained space, and no dedicated fulfillment staff.
Without clear responsibilities and coordination with the host store, even small volumes of online orders can result in delays, errors, or operational confusion, ultimately impacting customer experience.
To make store-in-store fulfillment viable, retailers need tightly managed workflows: clearly defined responsibilities, regular staff training, and strong communication with the host retailer. When these elements are in place, these locations can support local fulfillment effectively. Otherwise, it may be wise to limit their role in smart order routing and use them only in fallback scenarios, when inventory isn’t available elsewhere or during peak demand periods.
Some stores consistently fall short of sales expectations, whether due to location, local competition, or changing customer behavior. But just because they underperform in foot traffic doesn’t mean they should be overlooked.
These stores often have available inventory, underutilized staff, and fewer in-store distractions, making them strong candidates for smart order routing. Assigning them a higher routing rank can help move aging stock, reduce congestion at high-volume stores, and improve overall network efficiency.
Mall-based stores attract high foot traffic, making them great for walk-in sales and brand exposure.
But when routing orders, their physical constraints, limited backroom space, shared stockrooms, no dedicated areas for packing and shipping, and busy peak hours, must be considered. These conditions make it harder for them to process a high volume of online orders without causing delays.
That’s why mall-based stores should be ranked lower in routing. They can still be used strategically during off-peak periods, but they shouldn’t be the default destination in routing decisions.
It’s also logical to use these stores in fallback scenarios so that they only receive orders when higher-ranked stores are unavailable.
In some mall locations, rent isn’t fixed, it’s tied to store sales. That means routing too many online orders through these stores inflates rent unnecessarily, even when those sales weren’t generated by mall foot traffic.
Stores with fixed-rent structures, like outlets or standalone locations, don’t carry this downside. Their costs remain stable regardless of how many online orders are fulfilled from them.
Because of this, retailers should prioritize fixed-rent stores for smart order routing. Variable-rent stores can still contribute to the network, but they’re better positioned as fallback options.
Fig 2: Routing Store Types
Now that we’ve explored the operational nuances of various store types, the next step is translating that insight into a structured system. That’s where a store ranking model becomes necessary.
Once store types are mapped and understood, the next step is turning that insight into a smart order routing strategy that is scalable, adaptable, and easy to maintain.
Fig 3: Routing at Stores
A strong foundation for this approach is to classify stores into fulfillment tiers by creating multiple store groups based on their physical format, staffing capacity, rent agreements, historical fulfillment performance, and operational readiness. For example:
These are your powerhouses. Typically, large-format stores on fixed-rent agreements have:
• Ample space for picking and packing
• Dedicated fulfillment staff
• Strong performance track records
Use them as your default smart order routing destinations. They keep the fulfillment engine running.
These stores are capable, but not built for bulk fulfillment. They may include:
• Standard-format stores
• Reliable but moderately staffed locations
Route orders here when Tier 1 stores face stockouts, capacity limits, or regional restrictions.
These stores carry structural or contractual limitations:
• Mall-based outlets
• Store-in-store formats
• Variable rent locations
They’re best used sparingly as a backup when the top tiers are unavailable.
Routing logic should be designed to reflect this hierarchy, defaulting orders to Tier 1 stores first and cascading down to lower-priority tiers only when necessary. This approach ensures that high-performing stores are not overwhelmed while still keeping the broader store network engaged and productive.
To keep the system sustainable:
• Apply store-level caps (daily order limits, SKU volume thresholds)
• Monitor real-time performance metrics like rejection rates, fulfillment time, and SLA adherence
• Adjust dynamically, deprioritize stores that struggle, and reward those that consistently deliver
Use dashboards and reports such as:
• Store Shipment Performance Report: Track order volumes, successful shipments, and misses
• Daily Unfulfilled Orders Report: Identify where and why bottlenecks are forming
Over time, these insights help you fine-tune the routing logic, so every order flows to the right store, at the right time, maximizing speed, accuracy, and profitability.
The truth is, no two stores are the same, and that’s not a flaw; it’s a strength. Each location brings different strengths and constraints to the fulfillment network. Some excel at high-volume processing, others are better suited for fallback or region-specific fulfillment. The smartest retailers don’t ignore these differences; they build their routing logic around them.
By grouping stores into fulfillment tiers based on format, performance, rent model, and capacity, retailers can implement scalable routing logic that reflects real-world conditions. Orders flow first to stores best equipped to handle them, with fallback logic in place to ensure continuity when primary options aren’t available. It’s a model that’s not just smarter, it’s more agile, more efficient, and more profitable.
But this isn’t set-it-and-forget-it. As store capabilities evolve, so must your routing logic. That’s why data is important. Reports like Store Shipment Performance and Daily Unfulfilled Orders give retailers the insights they need to adjust smart order routing rules in real-time and keep service levels high.
The goal isn’t just to ship orders, it’s to build a responsive, margin-conscious fulfillment engine that delivers consistently excellent customer experiences.
That’s exactly what HotWax Commerce enables: smart order routing that matches each store’s real-world readiness, driving speed, efficiency, and margin protection.
Contact an expert today to see how HotWax Commerce can help you optimize your smart order routing strategies.
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