Imagine carefully selecting your perfect lipstick shade on Ulta Beauty's website, only to discover it ships directly from your nearest store and arrives at lightning speed. This isn't fantasy—it's the reality of Ulta Beauty's rapidly expanding store fulfillment strategy.
America's largest beauty retailer has dramatically increased its ship-from-store capabilities. CEO Dave Kimbell announced during the August 24 earnings call that Ulta Beauty added 276 stores to its fulfillment network, significantly expanding its capacity for faster, more economical deliveries. As of January 28, only 115 locations handled e-commerce orders. Today, that number has skyrocketed to 400 stores—nearly its entire footprint. The company has also extended same-day delivery through DoorDash to "nearly all stores," creating unprecedented convenience for customers.
Store Fulfillment: The New Growth Engine for Retail
Store fulfillment transforms retail locations into miniature distribution centers, where online orders are picked, packed, and shipped directly from store inventory. While not unique to Ulta Beauty—retail giants like Walmart and BJ's Wholesale Club have adopted similar strategies—the approach holds particular significance for the beauty retailer. What began as a pandemic-era solution to surging e-commerce demand has evolved into a cornerstone strategy for operational efficiency, profitability, and customer loyalty.
Before COVID-19, Ulta Beauty's ship-from-store operations were virtually nonexistent. As shopping habits shifted online, the company rapidly adapted by integrating stores into its omnichannel ecosystem. This strategic pivot delivered multiple advantages:
- Faster deliveries: Store fulfillment slashes processing and transit times, with same-day service enabling customers to receive beauty products within hours.
- Lower shipping costs: Local fulfillment eliminates long-haul transportation expenses while dense store networks optimize last-mile delivery.
- Improved inventory utilization: Incorporating store stock into e-commerce channels reduces overstock risks while maximizing turnover and profitability.
- Stronger omnichannel integration: The strategy bridges digital and physical experiences, allowing customers to browse online, test products in-store, and choose their preferred fulfillment method.
CFO Scott Settersten noted store fulfillment enables "more efficient consumer delivery" and "better overall sales margins." Data shows Ulta stores fulfilled 31% of online orders in fiscal 2022 (up from 28% the prior year), with the figure reaching 39% in the most recent quarter.
Omnichannel Strategy: Meeting Diverse Consumer Needs
Store fulfillment represents one component of Ulta Beauty's comprehensive omnichannel approach, which also includes buy-online-pickup-in-store (BOPIS) and other services catering to varied shopping preferences.
"Customers can seamlessly move between physical and digital channels based on their needs," explained Kimbell. "We're committed to meeting them wherever they are in their beauty journey."
This customer-centric philosophy underpins Ulta Beauty's competitive differentiation in the crowded beauty retail market.
Supply Chain Upgrades: Building Future Capacity
Supporting this growth requires significant supply chain investments. Kimbell shared two key developments during the earnings call:
- Greer, South Carolina's new automated market fulfillment center began receiving inventory in July
- The Greenwood, Indiana distribution center installed advanced automated storage and retrieval systems (ASRS) to boost capacity
These infrastructure improvements position Ulta Beauty to handle increasing demand while maintaining its industry leadership.
Strategic Drivers Behind Ulta's Expansion
Multiple factors converged to propel Ulta Beauty's fulfillment network growth:
- Market conditions: Accelerating e-commerce penetration created both opportunity and necessity for omnichannel capabilities
- Consumer expectations: Rising demand for convenience and personalization in beauty shopping experiences
- Competitive pressures: Intensifying rivalry from traditional retailers and e-commerce giants like Amazon
- Technological enablement: Advancements in inventory management and logistics systems made store fulfillment operationally viable
The Road Ahead
Looking forward, Ulta Beauty may:
- Further expand its fulfillment network coverage
- Optimize processes through advanced picking/packing technologies
- Develop new logistics partnerships
- Enhance personalization and return experiences
By marrying operational efficiency with customer convenience, Ulta Beauty's store fulfillment strategy strengthens its market position while laying groundwork for sustained growth.