In our recent post, “3 Ways Retailers Are Keeping Up With Amazon,” we highlighted omnichannel fulfillment as one of the ways that bricks and clicks retailers can give consumers service options that Amazon does not. Most big box retailers offer click and collect, including Walmart, Target, Staples, Bed Bath & Beyond, and dozens more. The concept is simple to understand, yet hard to execute. Merchants enable online shoppers to select “pick up in store” as a delivery option. Consumers choose this option for a variety of reasons, including eliminate shipping expense, ensure an item is available before traveling to a store, and the desire for immediate gratification. Retailers win, too. They eliminate shipping cost, deprecate inventory from front-line stores, and also increase overall sales (click and collect customers spend an additional 20% in store, on average).
Win #1 – Savings on shipping costs
Click and collect is a win-win for consumers and retailers.
The first win is that both save on shipping. Using Amazon as a best-case benchmark, shipping costs represent approximately 14% of online sales. Amazon’s 2017 shipping costs were $21.7 billion for $160.4 billion in 2017 sales, not including AWS. Whether retailers or consumers or both bear shipping expense, it’s a significant cost to absorb.
According to a 2018 Statista survey, 57% of consumers will cancel an online order if shipping costs are too high, and 54% will think twice about an online purchase if shipping costs are high.
Furthermore, 88 percent of millennials say they would consider buying online and picking up in store to save $10 on a $50 item, according to a Blackhawk Engagement Solutions study. 73% of those who purchased online and picked up in a store did so to avoid shipping fees, according to a survey by Internet Retailer.
Win #2 – Instant Gratification
With click and collect, consumers enjoy the convenience of buying online while having the item in hand on the same day. Why would consumers buy online if they know they’re planning to purchase or pickup at the store? One reason is product availability. Before going through the trouble of driving to a store, some consumers want to know that the product they want is actually in stock.
In a joint CFI / Ebay survey, 79 percent reported that “rather than waiting, they are likely to switch brands when the items they are shopping for are out of stock.” An Accenture survey of over 10,000 global consumers found that 49% identified “the ability to check store availability before purchase” as the change that “would most improve the connected shopping experience.”
Click and collect is one great way for customers ensure that they’ll be able to buy the product they’re seeking before driving to the store. REI even shows online shoppers which store is the closest one with a particular item in stock.
Win #3 – Flexible pickup
Some customers like the convenience of shopping online, but don’t have the flexibility to be home when a package arrives. Plus, some of them are concerned about porch pirates walking off with a valuable purchase.
Buying online and picking up in the store combines: (1) the convenience of shopping online with (2) the certainty that an item will be in stock and (3) the flexibility of picking it up when it fits a shopper’s schedule.
Win #4 – Additional in-store purchases
Numerous retailers have reported that, on average, order values increase by an additional 20% through in-store purchases when customers pick up an online order. A JDA consumer survey showed that nearly half of respondents who use BOPIS purchase additional item(s) when picking up online purchases.
On average, when a customer comes to the store intending to buy $100 worth of merchandise, they leave with $120 to $125 worth of merchandise (Halzack 2015)
Win #5 – Easier and less expensive returns
According to the JDA survey referenced above, Seventy percent of respondents said they prefer to return an online purchase to the store. Digging a bit deeper, consumers cited their biggest frustrations with online returns – paying for return postage and packaging (49%), returning items by mail or carrier (26%), and inability to return items to a store (9%) – all pointing towards in-store returns being a better option for most. Consumers know that if they can buy online and pick up in a store, then they can return to the store too.
Buy online pick up in store (aka click and collect) is just one way that bricks and clicks retailers can compete with Amazon by integrating their online and offline operations. Bringing this approach to life is complicated to implement. Online storefronts must have real-time store inventory information in complete an online click & collect sale. An Order and Inventory Management system is a must-have to make it work. There are also some operational requirements to consider. E.g., who is responsible for taking the purchased items off the shelves for the online buyer? Where are the orders stored?
Operational concerns aside, the rationale for testing it is compelling. Bricks and clicks retailers should prepare for the possibility that BOPIS will become a must-have capability in order to compete. At a minimum, they will need to understand the potential sales impact (both sales increases from implementing click & collect and decreases from not).
To learn more about tech-driven omnichannel commerce strategies, see the Retail Cloud Services section of our website.