Photo: Stop & Shop
Should retailers charge for curbside pickup?
Sam’s Club will start charging most members a $4 curbside-pickup fee after June 28.
Free curbside pickup was traditionally reserved for Plus members, but the fee was waived “for a limited time” for Standard members in June 2020 in light of the pandemic. Plus membership ($100 annually) includes free shipping, a higher cash-back rate and other perks over Standard membership ($45 annually).
A Sam’s Club spokesperson told Business Insider, “Throughout the pandemic, we extended the limited time offer as a courtesy to our Club members. We are now expiring free Curbside Pickup for Club members and moving forward as planned with the $4 fee for Club members.”
Walmart and Target stand out for offering free curbside pickup with no minimum purchase, although some items aren’t included. Most grocers charge a fee or require a minimum order requirement. Some of the offerings are supported by Instacart or other third-party delivery services. Some allow customers to make specific instructions for personal shoppers, such as how ripe they like their bananas.
Among the policies at other retailers:
- Wegmans offers free curbside pickup with a minimum order of $10.
- Whole Foods offers free curbside pickup for Amazon Prime members with a minimum purchase order of $35.
- Sprouts’ curbside pickup fees are $1.99 for orders over $35 and $3.99 for orders under $35.
- Kroger and its banners offer free pickup for orders totaling $35 or more.
- Publix’s pickup is supported by Instacart. Fees may apply and items purchased through curbside pickup may be higher than in-store.
- Stop & Shop applies a $2.95 fee for curbside pickup with minimum order size of $30.
- H-E-B offers free curbside pickup on orders over $35, although online prices may vary from prices at inside stores.
- Hy-Vee offers curbside pickup for free with a minimum $24.95 purchase. A “Get it Faster” option for $9.95 offers pickup within two hours.
- Costco at most locations offers locker pickup for more expensive items such as jewelry and electronics. Since 2021, Costco has been piloting curbside pickup for grocery items at its three New Mexico stores that cost $10 with a minimum order of $100.
- Sam’s Club is ending free curbside pickup for most of its members, but Sam’s Club Plus shoppers will still enjoy the perk – Business Insider
- Free Store Pickup – Walmart
- Wegmans Delivery & Curbside Pickup – Wegmans
- WHAT IS THE FEE FOR CURBSIDE PICKUP? – Sprouts
- Get Started With Pickup Or Delivery – Stop & Shop
- Curbside and home delivery – H-E-B
- Delivery & Curbside Pickup Powered by Instacart FAQs – Publix
- Delivery Fees – Hy-Vee
- Pickup – Kroger
- Grocery Delivery and Pickup – Whole Foods
- New Mexico Members Try Curbside Pickup – Costco
Discussion Questions
DISCUSSION QUESTIONS: Should retailers offer free curbside pickup, at least with minimum orders? What factors for each retailer should go into deciding fees, minimum order sizes and adding value features, such as handling special requests?
Poll
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Nicola Kinsella
SVP Global Marketing, Fluent Commerce
Natalie Walkley
Sr. Director, Marketing @ Optoro
There is a cost to retailers of providing curbside pick-up, and it’s reasonable for retailers to charge for this service. That said, curbside has also become an expectation with consumers through the pandemic, and there will undoubtedly be some push-back to charging fees. As the article makes clear, many retailers who offer curbside pick-up are already charging some fees and/or requiring a minimum purchase. I expect to see more retailers start charging for curbside and other services.
Picking online orders incurs significant additional costs, especially for grocery where basket sizes are large. As such, it’s not surprising that some companies are bringing a dose of realism to the charges they pass across to consumers. The problem is that having been trained to see various services as “free” a lot of shoppers will resent paying additional charges – especially when they drive to the store for collection. And of course, there are plenty of other retailers that will still offer free services to protect their market share.
Any additional service has a cost and a value. Free anything can work for consumer and retailer with minimum order size, and with annual membership fees.
The growth of e-commerce is likely to be nipped and tucked somewhat due to “new” fees. Shoppers are not always rational. Although many retailers eliminated fees for curbside pickup and other e-commerce delivery services during the height of the COVID-19 pandemic, people have short memories and will view these charges as increases. That being said, minimum orders to qualify for free curbside and other services are good business.
It made sense to offer curbside during the height of the pandemic. But with the exception of grocery, I now mostly see empty curbside parking spaces. Putting higher and higher minimums and/or charging for the service to me is just the beginning of the end for “peak curbside.”
Customers hate to pay for shipping if they can avoid it, and they will definitely object to curbside charges. So give them a way to avoid them. Up the minimum order value. And if an order includes special requests, make that higher again. Obviously a retailer’s margins will need to be factored in to determine appropriate minimums, but the most important thing will be to set clear expectations up front and on each page of the buying journey.
Determining how labor intensive the order fulfillment is should dictate how much of a fee, if any, is reasonable for curbside pick-up. Picking grocery orders, especially large orders, is very labor intensive and it justifies some type of compensation from customers – a fee or a premium membership subscription. On the flip side, for an expensive and/or bulky item such as a TV or large home improvement item, there should be no charge for curbside pickup.
Retailers can be a bit too linear in their thinking when it comes to costs and fees. X service costs more = must charge for it. I’d suspect there are other, more creative ways to absorb the cost – whether through rethinking the labor model, structure of curbside, etc. that won’t lead to a consumer balking at a suddenly appearing extra fee.
I’d love to hear a solution, Katie, because nobody has come up with one (to my knowledge).
Spend less on shopper marketing and in-store ads to offset the cost of curbside pickup. 92% of consumers say they don’t use in-store advertising. Most consumers for most products have already made the decision on what they are buying by the time they are at the shelf.
A solution exists: the 3rd pathway between Amazon and Walmart. Someone knows… Think “upside down” and “just-in-time” to imagine and define it.
Of course one knows for decades how to think about such a model for this case. This has been written for a very long time. But firstly think upside down and “just-in-time.”
When a retailer provides a free service to customers and then takes it away it leaves a bad taste in the customer’s mouth. Especially when that service has been offered for free for a long period of time. Still, the height of the pandemic is over and we no longer require curbside pick-up as a safety measure. Now it’s a convenience and one shoppers should be willing to pay for. A minimum purchase requirement should take care of that.
Free curbside was a “needed to play” offering for retailers during the height of the pandemic. It isn’t today. The current labor shortage and rising wages means retailers need to, at minimum, find a way to mitigate its cost. Their choices are: charge more for the items selected, have a curbside fee, have a minimum purchase requirement, or some combination of these.
This is not a hard question. You burn the gas and perhaps lose some time or have it delivered. Stew Leonard’s mantra: you’re busy, let us help.
Customers know damned well that there are extra costs involved in order for the retailer to offer all the conveniences that shoppers now demand and expect. Therein lies the power of the word “free.” I think they also know the difference between free as a short term marketing customer acquisition tool and free as a long term benefit. A nominal fee or minimum purchase requirement is eminently fair. And it’s easily avoided by simply walking into the store.
I understand that there is a cost attached to curbside pickup, but there is also a greater cost involved in “free” delivery. (And yes, there is a cost to staffed checkout lanes that can be closed if customers are using curbside or self-checkout instead.) Retailers may view a fee as “fair” (mostly given the costs of picking orders inside the store), but I’m not sure that shoppers will agree.
The difficulty here is removing a perk that customers have come to depend on. As for Sam’s Club, with normally higher basket rings than a traditional supermarket (at least before the current inflation savaged supermarkets), this might incur significant pushback. The alternative is to increase the minimum order value for free curbside pickup. In addition to mollifying the customer the larger basket may contribute to an improved P&L.
The curbside and BOPIS operating models have gained significant momentum during the pandemic and in the post-pandemic world. However substantial capital investments are necessary to pivot the in-store operations team to fulfill digital orders and ramp up both the curbside and BOPIS operations.
It was inevitable that retailers would have to eventually add a surcharge for the convenience or apply the minimum purchase amounts to make this an economically feasible and profitable operation. There should be no issues with this, as customers have historically paid for the convenience these in-store fulfillment options provide, as long as the retailers are clear and transparent about the incremental costs.
First there were shipping fees — then there weren’t.
Then there were return fees — then there weren’t.
Curbside pickup will go in the same direction. Ultimately, the shoppers will vote with their dollars.
What is a retailer to do? Minimum order size will help and generate the least pushback. Shoppers understand that they are not dealing with a convenience store.
That being said, picking the order from the shelves is a costly service and having the pickers in the aisles is not welcomed by the in-store shoppers. The retailers must find a better way to provide the service without the cost of the pickers or the annoyance to the shoppers.
I believe the horse has left the barn on this. Obviously there is a cost, and retailers need to figure out how to recoup the expense. I believe that thresholds are probably the least objectionable way to recover margin from this capability. Adding fees now will cause retailers to lose marketshare, they need to be careful.
Bold stroke of the obvious, there’s nothing in e-commerce retailing that’s free. Free shipping, free curbside delivery and free buy online pick-up in-store are all unsustainable expenses. Add to that free returns and the industry is heading toward a bright light at the head of the tunnel they are in that’s an oncoming train. At some point the consumer needs to be convinced that the intrinsic value of the goods they are buying is worth the inevitable incremental cost of the transaction they engage in.
This is a case of a competitive edge, the operational costs of curbside pick up are not insignificant but the benefits to customers are also valuable. As a marketing tool free curbside pick-up can be useful and certainly as a tool to build basket size by having a minimum is valuable. It’s not easy for smaller retailers to compete if free becomes the norm.
This reminds me of the minimum order required for paying with a card. I doubt many people are going to care if they are loyal shoppers and the charge is nominal, especially tied to a minimum purchase threshold. However for non-grocery I could see annoyed people just saying, “Next time, I’ll just order it on Amazon.”
As for special requests and other anomalies, it just depends on the business. This question might be a boogeyman.
Should airlines charge you for booking a better seat on the aircraft? Should a hotel charge for a nicer room? These “upgrades” enhance the experience for customers much in the same way as curbside pickup. Upgrade fees, as an example, can be made waived of course, much like free shipping. It all comes back to the fundamental truth that customers will pay a premium for a better experience.
First: Customers will pay for convenience.
Second: Curbside pickup is convenience.
There was a time when restaurants would deliver food at no charge. Not anymore. And that is exactly what’s happening with curbside pickup, at least for the near future.
This is one of those situations where finance, marketing and PR all collide because of different goals; and there’s no (one) “right” answer. Although the finance guy in me tends toward “cover your cost,” I have to recognize stores don’t charge for using a checker or opening the door or a lot of other things that cost money as well.
All that having been said, a few observations about what was outlined here:
Agreed that $10 is too low in terms of covering all costs.
Since Wegmans is a sound grocer, and has better quality products, my guess here is their reporting could reveal the majority of curbside pickup orders are over $70 (or higher) anyway, which makes it moot. In that case, the $10 helps lower the customers perception of any barriers, making it an easy decision. Good for them if true.
Grocers have a choice.
Either view this as a cost center. Charging a small fee where they maybe cover picking, and prepping costs for curbside. Good for accounting, being conservative. But at what risk of customer unhappiness?
Or take the path of curbside with no charge for a minimum order, whereby grocers may not break even, and so some other aspect of future value or upside needs to happen. It could be additional offers, product add-ons, points, invites, experiences, messages, video links, thanks.
Ultimately the Brand and Customer Experience is in play here. Innovative, growth-minded grocers play towards laying out a strategy with customers in mind, then implementing.
Customers will balk at having to pay for a service that was mostly free for two years. My guess is people would shift to either more delivery services (which mostly have a fee associated already) or shop in the store themselves. However, if retailers deicde to charge for curbside, they need to consider item count *and order value, versus just order value. Picking 2-3 expensive items would be less cumbersome than picking 45 lower value items.
This is a tricky one as for some grocers it was offered as a cheaper to operate alternative to delivery — the logic being that it saves delivery driver time, equipment and fuel. However it still requires labour (or specialised equipment) in order to pick the orders — something that in theory saves time for the consumer.
Because it has been offered for free in the past it may be relevant, when introducing a charge, to highlight additional benefits compared to previously that consumers are attaining.
Yes! Free curbside pickup, free freight, free returns have to be a part of any retailer’s online offering. That said, basic minimum orders, enhanced subscription (like Prime) fees, and an enriched online retail offering is necessary to cover costs and give better value for those who pay for the enhanced subscription costs.
The meaning of the product has been “redefined,” the physical product and the customer buying experience together make up the actual product. What makes the retailers different from one another? The quality of experience they deliver! In curbside pick-up, a shopper is following your specific instructions, bringing the selected items “ready and packed” to your vehicle at your comfort, saving you time and all the hassle. Everything comes with a price tag attached, a customer will have to pay the associated cost for the superior services and the additional fee won’t be a hefty price to pay for such customers. So, I think it is justified to charge a suitable fee and state a minimum order value as these are the requisites to meet the basic business requirements of a retailer and this will also help them to serve their customers even better!
Cost should be included in any sort of subscription, cost of goods/doing business, or minimum order quantity. Shoppers don’t want to see extra charges like curbside pickup fees (and no tipping).