Only $5 differential to shopping Amazon versus in-store

Discussion
Sep 15, 2014

According to a new survey, 63 percent of consumers would buy from Amazon if a $50 item in stores were $45 on Amazon — a $5.00 difference. At the same time, 82 percent of shoppers would consider BOPIS (buy online, pickup in-store) to receive a $10 rebate on a $50 item.

The conductor of the survey, Parago, an incentives and engagement company, said the research shows that while online retailers aggressively tap free shipping and cheap pricing, brick & mortars are missing opportunities to persuade consumers to shop in-store, particularly through BOPIS.

Key findings of the study, "BOPIS and BISBO Will Propel Retail into Orbit," include:

BOPIS not common: A total of 64 percent of shoppers BOPIS sometime. But only three percent do it weekly and seven percent do it monthly. Fifty-four percent do it a few times a year.

Convenience and price are driving customers online: With offline stores improving their price strategies, convenience has become the main reason consumers shop online, cited by 77 percent. That’s still followed closely by price, 67 percent; and then selection, 53 percent.

Openness for BOPIS: Among categories, 58 percent would consider BOPIS for electronics, the highest rate among categories. Other categories ranking high as far as willingness to BOPIS include: small appliances, 51 percent; large appliances, 45 percent; entertainment and apparel, both 38 percent; and furniture, 34 percent.

Motivated shoppers shop more: About half prefer a prepaid card reward as an incentive for both in-store and online purchases. About a quarter preferred a gift card.

Showrooming is still on a steep trajectory: Of smartphone owners, over 70 percent of all adults regularly compare prices and make purchases on their smartphones while standing in stores. Amazon and Google are the primary ways they compare prices.

While much of the study focused on the promise of BOPIS, Parago also said the results show brick & mortars are missing opportunities around BISBO (buy in-store, buy online), or incentivizing in-store shoppers to order online for out-of-stocks or online-only products.

"The good news for retailers is that shoppers are willing to change their behaviors in ways that are more advantageous to the industry," said Rodney Mason, CMO of Parago. "Shoppers just need (and in most cases are not being offered) the right incentives to do so."

Should retailers offer more incentives for online shoppers to pick up merchandise or shop in-store? Do you see an equal or bigger opportunity to encourage in-store shoppers to shop online?

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23 Comments on "Only $5 differential to shopping Amazon versus in-store"


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Paula Rosenblum
Guest
7 years 8 months ago

Somehow I feel like this is not exactly the right question. It’s more about stemming the tide of lost sales that have gone from store to online.

To me, I’d focus on making the in-store experience more convenient and split the difference on price ($47.50 vs. $50). While I’m a person who tends to buy online, 90 percent of purchases still occur in stores.

The question remains, “How do we make the in-store experience as convenient as online?” Not “Should I lower my prices even more?”

Amazon is going to get some serious pressure from shareholders to improve its bottom line. Why follow it into the pit? Ratchet up service levels.

Bob Phibbs
Guest
7 years 8 months ago

No.

A survey from a company that offers rebates and incentives saying they work does not mean everyone should offer them.

The more you discount and incent your customers in your stores the more you will fundamentally alter your experience, making customers into discount shoppers.

The path to profitability is an exceptional customer experience. It’s messy. It’s time-consuming and a constant goal for the leaders in retail.

Max Goldberg
Guest
7 years 8 months ago

There are pros and cons to shopping online and shopping in stores. Free shipping has become a must-have for online shopping and customers have been trained to compare prices while in stores. Brick-and-mortar retailers can counter the online experience by having knowledgeable, helpful sales people, keeping products in stock and having friendly return policies. There are many ways to compete with online other than price.

Nikki Baird
Guest
Nikki Baird
7 years 8 months ago

Well, after this year’s round of back-to-school shopping, I do see a big missed opportunity to save the sale in store by encouraging shoppers to buy out-of-stock items online. But while there is a definite benefit for retailers to offer click and collect (the BOPIS option), and I mean benefit for retailers that comes from driving incremental trips to stores where the shopper buys more than what they ordered online, I think Paula is right. There is a fundamental issue at play here, and that is, why didn’t you have it stocked in the right place the first time?

We’ll never get inventory 100 percent right 100 percent of the time, and therefore inventory flexibility is key, but the focus should be on meeting customer needs, not on incenting the behavior that retailers would prefer.

Tom Redd
Guest
7 years 8 months ago

The big edge Amazon has is delivery to the home. Home delivery AND dollar savings are the edge. As store-centered retailers get the right mix of promos and in-store delivery and returns worked out, Amazon will lose their edge. No one likes shipping stuff back—it is easier to take it back to a store.

Strong store/online retailers will win the game as Amazon keeps losing margin on Prime shoppers. Drone or no drone.

Gene Detroyer
Guest
7 years 8 months ago
I am apparently way out of step with these shoppers. For an item that cost $50 in the store, I would pay $10 MORE on Amazon (or another online site). Not having to go to a store and having something delivered right to my home is worth way more than $10. Do these shoppers not value their time? As for BOPIS, unless I was going to the store already, why would I want to make a special trip for something that can be delivered to my home (or office)? None of this computes in my head, but from a retailer’s point of view, it is a value to get people to the store for any reason. So, a BOPIS incentive makes sense on the surface. But, a $10 discount for the pickup comes straight out of the bottom line, therefore the store has to pick up margin (not revenue) in excess of $10 just to break even. If half the people picking up actually stop to shop and the other half just pick up and… Read more »
Paul Wolf
Guest
Paul Wolf
7 years 8 months ago

Given that there is a proven in-store uplift for retailers under BOPIS, they should be developing additional promotions and incentives under this format. This also represents one of the many “new” metrics retailers should have in place to track the progress for continuous improvements.

Doug Garnett
Guest
Doug Garnett
7 years 8 months ago

These are all critical issues. But we should be extraordinarily careful about listening to consumer recall/opinion-style research on the issue. How trustworthy is “I’d buy that product” based-research? Terrible.

For a true marketer, “I’d buy that product” is useful for learning—but it’s not the least bit predictive. So determining a five dollar difference drives choice to buy online? It’s really just headlong catching.

The truth seems more to be that the choice to buy online or not depends far more on factors OTHER THAN price. (Need to touch/feel, need for sales help, confidence in the purchase, need for speed, need for speedy ordering/not going to the store, etc.) And I think we’d find that price is only an important influencer in a portion of the sales—high ticket items, etc.

richard freund
Guest
richard freund
7 years 8 months ago

Amazon carries a lot of items that are not available in retail stores. That is quite the incentive to shop there.

Robert DiPietro
Guest
7 years 8 months ago

Incentives aren’t the (only) answer to getting shoppers to shop in-store vs. online. Retailers need to have a reason besides having the product in stock and instant gratification for the consumer to come into the store. That reason is knowledgeable sales associates. With a plethora of information available to the consumer online, sometimes it helps to have an associate cut through the information overload and help the customer make a decision on what is right for them.

You can’t incentivize your way to relevancy.

Graeme McVie
Guest
Graeme McVie
7 years 8 months ago
I don’t think there is a universal answer to this first question that will apply in all situations. There are many factors to consider including the specific category/item (as the research indicates), the margins of the product in question and the customers who are considering making the purchase. At the right points in time, for the right items and for the right, loyal customers it will make sense to offer incentives, especially if the incentives are calibrated for the individual shopper. But in other situations incentives may not align the retailer’s finite investments with the most valuable customers to reward them for their loyalty. While shopping online at home provides a lot of convenience there are a lot of shoppers who don’t want to wait for an item to be delivered and who enjoy the instant gratification of taking an item home from the store and using it straight away. When a shopper makes a trip to a physical store and finds the item out-of-stock the shopper can experience great dissatisfaction—encouraging in-store shoppers to buy… Read more »
Ralph Jacobson
Guest
7 years 8 months ago

Getting people in the store is still a key driver to profitable growth, to help offset the growing expenses around maintaining physicals presences while competing with online pure-play entities. The opportunity for high-margin impulse buys in-store is enough reason to implement effective BOPIS programs.

Ed Dennis
Guest
Ed Dennis
7 years 8 months ago
Online shoppers are there in many cases to reduce hassles in their lives. I sometimes pay more to have items delivered to me rather than have to go pick them up. I am sure I am not the average online shopper, but I do buy quite a lot online. The survey only deals with Amazon, and frankly I use Amazon as a showroom to locate exactly what I want. I then check the same item via Google and eBay and more often than not find it cheaper elsewhere. Then, my decision becomes how quickly do I want/need the item. I don’t know of any point in my decision tree that hopping in the car, driving 10 miles, parking my shiny new car in a lot full of clunkers, going to a pick up area and waiting for someone to find my item, inspecting it for damage, rolling it out to my car, checking the car for door dings, loading it into the car, driving 10 miles back to my house, dragging the item into the… Read more »
Ed Rosenbaum
Guest
7 years 8 months ago

How can you build a sale if you don’t get those shoppers in the store? It is that simple a question to me.

Bill James
Guest
Bill James
7 years 8 months ago
The retailers want to engage their customer(s) at all levels, online, mobile, and in-store. To run BOPIS and BISBO effectively from a real omni-channel engagement as many of them wish to do, they have to get their inventories right. The store inventory accuracy at any given moment is off 33-35%, that is what the systems say is there is about 66% accurate. There are a myriad of reasons for this everything from product returns, damaged goods, consignment issues, missing product in store, shrink, on and on. If you incent me to buy online and then drive me to come to the store and the product is not in stock and ready to go for me, you’ll only do it once; Amazon here I come. They want me in the store to pick up the new TV I just bought online so they can engage me on other products and services; the sound bar or service contract, that’s how they drive additional margin and revenue. Get me in to pick up what I want and sell… Read more »
Lee Kent
Guest
7 years 8 months ago

Retailers should certainly NOT be offering any monetary incentives for something that is already a savings to the customer, i.e. saving shipping costs by picking up in store.

As more retailers, including Amazon, learn that giving away shipping costs is costing them the bottom line, being transparent about what the customer will save will win in the end.

And that’s my 2 cents!

Mark Burr
Guest
7 years 8 months ago

I don’t think you need to offer an “incentive” to the consumer, the “incentive” is to have the option to pick up in store!

As the “old man” used to say, never pass up an opportunity to swing the doors! This isn’t any more complicated than that. It is all about options!

Arie Shpanya
Guest
7 years 8 months ago
Retailers should definitely offer incentives for shoppers to pick up and shop in-store. Both offer an opportunity for upselling and can benefit the bottom line. I think there is an equal opportunity to encourage in-store shoppers to shop online. The way to get mono-channel shoppers to convert to being omni-channel shoppers is to improve the experience by integrating the two channels seamlessly. This does’t necessarily mean lowering the price. There are many ways to improve the customer experience, such as free shipping and discounts when shoppers spend a certain amount that is over a retailer’s average order value. Shared inventories are a great way to improve convenience and build customer loyalty. While out of stock situations are unfortunate, offering to ship products when the desired size is out of stock in-store or put one on hold in-store if your web store runs out are ways that omni-channel can close the gap and the sale. I agree with Tom’s point that store-focused retailers have an advantage when it comes to returns. Buy online, return in-store simplifies… Read more »
Lee Peterson
Guest
7 years 8 months ago

Unless retailers want to close a lot more stores than they already are, they have to make better use of existing conditions. Which would include store associates, design and wayfinding and yes, new ways to take over the burden of fulfillment.

A study we did showed that the #1 digital retail integration consumers wanted to see was BOPIS. So that looks to us like step one. Going through the on and offline customer experience and upgrading key areas (like those mentioned above) would be next. But it needs to happen quick—the sand dial is literally turned over.

Mark Price
Guest
Mark Price
7 years 8 months ago

Retailers should push hard for BOPIS, which is a key differentiator from online shopping. There is no way that online can combat the benefit of being able to hold the item in their hand in the same day.

The benefit should be compelling to consumers after they try it. Incentives should be heavily focused on trial, less on repeat.

Larry Negrich
Guest
7 years 8 months ago

On quick read of this study, it seems to reveal that a majority of consumers prefer low cost and convenience. And it concludes by saying shoppers will alter their behavior if incented to do so—not the most startling news I’ve read today.

On the issue of BOPIS, this process as an option to improve customer experience is great and an advantage for retailers with physical stores. I can see smart retailers being able to properly utilize the technique to also drive sales in certain circumstances.

BOPIS, btw, better named by Nikki in her post as Click and Collect (CnC), is an interesting promotional mechanism to occasionally be used with a discount to drive select shoppers to stores in order to drive add-on sales. A retailer would have to do the analysis on the product/discount/shopper/channel/lift to see if it meets the criteria of a driver for add-on sales. But the sweeping use of a price discount for CnC seems more like a margin reduction technique than a profit driver.

Gordon Arnold
Guest
7 years 8 months ago

Combining in store pick up with well trained consumer courteous associates and quality impulse sales opportunities a B&M operation can capture high margin sales. Offering the customer a tempting same day coupon might see a prolonged visit and some additional sales. The addition of interactive electronic inquiry systems with new product and pricing information for “in-store only” products and services might earn a store visit or two.

Modeling the e-commerce sales approach parallel to the online only stores is a total loss for the B&M crowd in terms of market growth and maximizing every sales opportunity. Stores are not at all a liability in 21st century retail, the 20th century footprint and processes are.

Christopher P. Ramey
Guest
7 years 8 months ago

Ask your customer what they want. Then give it to them. There is no one right answer. Except to serve your customer on a one-to-one basis.

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