BrainTrust Query: How important is buy online/pick up in-store as a strategy for retail growth?
Giving consumers a choice to buy online and pick up in-store is becoming a major point of competitive differentiation in the retail industry. Or is it?
Well-known pioneers Circuit City, CompUSA, Wal-Mart, Best Buy and Sears - and even smaller multi-channel players like Bombay Co. - are providing in-store pick-up for web orders as part of an overall strategy to improve customer service and increase profitable growth. To stay ahead of the curve, some retailers have even begun adding perks such as reserved parking spots, special checkout lines and in-store signage directing consumers to the pickup area. Wal-Mart has launched a program that offers free shipping to customers who purchase items online and have them shipped to one of the company's stores instead of their homes. The initiative has surpassed Wal-Mart's expectations, with about a third of all online sales occurring through this program.
"It's gone incredibly well," Raul Vazquez, Walmart.com's chief executive told The New York Times. "None of us expected to see it reach this percentage of sales at this point."
Customers who use the service already are among Wal-Mart's most loyal; the trial-period surveys showed that two-thirds of site-to-store customers shop weekly at Wal-Mart stores. According to a survey the company sent to customers who used the service during a trial period, about half spent an additional $60 in Wal-Mart stores when they went to pick up their online purchases. CompUSA says customers who buy online and pick up in stores spend 35 percent more than customers who shop only in stores.
Some retailers offer in-store pickup of web orders across most categories; others limit the service to items that can be carried out of the store. Wal-Mart's service allows customers access to thousands of items that only are available online. RadioShack launched its ship-to-store program in 1,300 company-owned stores last November, and plans to roll out the program to 3,400 franchises this year. Their aim is to get online shoppers to stores for up-selling and cross-selling.
According to a recent survey by The E-Tailing Group, the share of merchants offering same-day in-store pickup of products ordered online increased to 73 percent from 56 percent last year. The survey reviewed 23 multi-channel merchants and found significant improvements across many aspects of execution (store locators; product locators; web site visibility; free shipping; in-store return for items purchased online; designated pickup counters; in-store signage for pickup; average wait time). But the survey also found room for improvement in other aspects (post-order e-mail communication; provision of store phone numbers, hours and pickup instructions; product bar codes for ordered items; having ordered merchandise ready and waiting for pickup).
On the other hand, according to Retail Systems Research, less than a quarter of the retailers it surveyed indicated that they have fully implemented or are rolling out a buy online/pick up in-store program. The biggest implementation problems are order management (a customer-facing OMS is essential), and rollout (online executives are used to moving quickly, but a buy online/pick up in-store program requires months to install technology and train employees). As such, writes RSR managing partner Nikki Baird, buy online/pick up in store is not yet "ante to play" in retail.
Discussion Questions: How much emphasis should retailers be placing on a buy online/pick up in-store program? Where do you see the differentiating factors in the way programs are run?
[Author's commentary] Buy online/pick up in-store may not YET be ante to play in retail, but that day is coming, and probably sooner rather than later. It has been the pattern for such innovations to first be adopted by pioneers (both retailers and consumers), and then to quickly reach "critical mass." Then the trend cascades. Remember, consumers are ruthless - they expect that every retailer is, or should be, able to match the service and convenience level of best-in-industry retailers.