[Image of: RetailWire Logo and Tagline (for print)]

BUSINESS TIPS

IRI:
Shopper-Centric Execution
ChannelAdvisor:
Online Selling Strategies
RR Donnelley:
In-Store Marketing
LoyaltyOne:
Enriching Customer Relationships
 
[23 comments]

Let's talk about BOPIS (buy online, pickup in store)

August 4, 2014

Through a special arrangement, what follows is an excerpt of an article from WayfinD, a quarterly e-magazine filled with insights, trends and predictions from the retail and foodservice experts at WD Partners.

A friend of mine needed a new Apple MacBook Pro and a display to go with it. He researched online, looked at reviews on Amazon, and made the purchase on Apple.com. To complete the transaction, Apple gave him a choice: they could ship it to him (in two days, free of charge) or he could pick it up in the store that afternoon.

Eager to get his new stuff, he drove 25 minutes to an Apple store to claim it. The products were waiting for him — complete with his name printed on the label — less than an hour after he ordered them from his laggy old laptop. Best of all, as he left the store an Apple associate commented, "Hey, this is a big day for you. Nice system!"

I love this story because it illustrates several potential advantages for traditional retailers. It's a great example of customer service — providing options and understanding the customer's desire to get the product right away. It's also a story about increased margins — finding a way to use customer impatience to the company's financial advantage. It shows how a customer will happily use retail's greatest threat, Amazon, as a source for information but not the final sale, and that a trip to the store was still relevant. And most importantly, it demonstrates that, in this era of online disruption, having a physical store presence can be an actual advantage.

As our most recent research study, The Next Killer App: Stores, has shown, BOPIS (buy online, pickup in store) is one of the most effective ways retailers can differentiate from, and compete with, Amazon and other major online stores. But the store's role must be adjusted.

Remember when "service" was the most effective way to attract shoppers? Those days, for the most part, are over. Service has been supplanted by convenience. By a significant margin, consumers have told us over and over that they want convenience — and often that means a way of avoiding the hassle of going into an actual store when they already know what they want.

Stores, even those designed to provide immersive brand experiences, are designed to promote sales. To build the basket. To drive shoppers from one end to another in search of the handful of items they need. Online retailing, however, has conditioned shoppers to value convenience over experiences, and they are embracing it.

In other words, stores need to evolve into, essentially, fulfillment centers to meet the BOPIS opportunity. Our research suggests that heavy Prime Users are very open to the BOPIS concept, rating it higher in appeal and purchase influence than all other consumer segments divided by generation or gender.

Let me finish with a second story about the same guy who bought the Apple MacBook. Not long after that, he purchased a big LCD TV from Amazon. He read the reviews, chose the one he wanted, and thanks to his Prime membership, had the giant, awkward box delivered to his door two days later. Easy peasy, right?

Right ... until the unit started having trouble. At that point, he was on his own. No local store to call or visit for troubleshooting. No easy way to exchange or return it.

"That was the moment," he told me, "I wish I'd bought it from a store."

Discussion Questions:

Has convenience supplanted service as a greater need in the mind of consumers for most shopping trips? How will stores have to reprioritize to fully execute on the opportunity?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How much of a competitive advantage will having physical stores be for retailers over those with largely online operations over the next three to five years?

Comments:

The balance of convenience and service depends heavily on the level of involvement in the product category and an individual shopper's preference for self-service vs. assistance. But generally, a growing number of shoppers trust digital sources of influence (ratings, reviews) for input into key decisions about what to buy, shifting retailers' focus to ensuring adequate selection and stock and convenient options for purchase.

The practical considerations for BOPIS include ensuring complete and accurate product info is listed online (a major undertaking for both retailers and their suppliers); investing in systems that track perpetual inventories so that shoppers can trust that what's listed as in-stock actually is; and the training and operational excellence to balance traditional processes and customer demands with the new challenge of picking, packing and staging online orders for in-store pickup on increasingly urgent deadlines.

I do believe that BOPIS will grow in significance in the U.S., especially where same-day delivery is unavailable or where shoppers are sensitive to delivery fees. Already, one in five Walmart.com purchases are fulfilled from Walmart stores

But the growth of BOPIS won't be without significant investments in systems and training. And it still doesn't address one of Amazon's key advantages: selection. (AmazonFresh, for example, carries 500,000-plus SKUs of general merchandise—or three times-plus the assortment of a Walmart Supercenter.)

The value equation continues to evolve.

[Image of: View Braintrust Panelist button]
Keith Anderson, VP, Strategy & Insight, Profitero

This was a huge topic of interest at the recent Store Operations Council meeting in Las Vegas. Operations leaders had a lot to say about the goal of seamless commerce, and the many steps they'll have to take to get there.

Whose job is it to pick and label the items? Does the store get credit for the sale, or the online channel? (Yes, there's still lots of argument about this.) If the item is online-only, what happens if the customer wants to return it? Should store associates attempt to engage the customer in the store, or have her stay in the car and bring it to her there?

The Apple Store carries a small number of SKUs and has no channel conflict, but there are lots of questions for traditional retailers.

[Image of: View Braintrust Panelist button]
Cathy Hotka, Principal, Cathy Hotka & Associates

As the dynamics of item availability are changing, constantly, consumers learn about the choices they have for access and delivery, along with the advantages/disadvantages of each. The anecdote in this article is a perfect example of how shoppers adjust expectations and decision making with each experience. The big LCD TV from Amazon could be returned with no hassle (unless the box was thrown out). An in-store purchase might not have guaranteed a hassle free return (sometimes an open box is a deterrent) and undoubtedly could not insure the TV's troubles would have been remedied.

[Image of: View Braintrust Panelist button]
Joan Treistman, President, The Treistman Group LLC

Not necessarily. This research is the latest in a stream that is defining the omni-channel concept. Omni-channel is about customers, not channels. BOPIS is another term for "click and collect."

I fully agree that this approach may cause Amazon to rethink its lack of bricks. The biggest advantage to BOPIS is the opportunity for the brick-and-mortar retailer to add on sales, many of which are unplanned. So in this respect, service will still be important. The key is for the store to have an easy collection system, complimented by employees capable of recommending value-added products that enhance the online purchase.

[Image of: View Braintrust Panelist button]
Richard J. George, Ph.D., Professor of Food Marketing, Haub School of Business, Saint Joseph's University

The very interesting part of Lee Peterson's story is the "invisible" technology and systems required to make BOPIS work in a 30-minute scenario.

Very FEW retailers have the capability to execute the Apple Store pickup in 30 minutes. In a vast majority of retailers their store inventory is perpetual (not virtual), and since they only take actual physical inventory once a year, what is in stock in store is at best a guess. The other interesting artifact for traditional retailers is that most online inventory systems were setup independent from stores.

I fully agree with Lee Peterson that stores will have to evolve to compete with e-commerce, and BOPIS is one critical differentiator. At the top of today's omni-channel consumer's wish list is being able to check if their local store has the item in stock that they are looking at online. The technology required to execute Apple BOPIS is expensive and should not be under estimated. Just ask Best Buy.

[Image of: View Braintrust Panelist button]
Chris Petersen, PhD, President, Integrated Marketing Solutions

I read somewhere that 85 percent of consumer spending happens in an 8-mile radius so local and brick-and-mortar always had the competitive advantage over e-commerce. E-commerce's current advantage is price discounting but the experience is not convenient if something goes wrong.

The advent of mobile commerce is the game-changer for retailers to adopt e-commerce practice of easy order while retaining the physically reachable customer service during fulfillment and delivery.

Stores will have to reprioritize their point-of-sale, replace the cash wrap counter (dismantle/get rid of), automate the order/transaction to kiosks and mobile point-of-sale, and focus more on omni-channel fulfillment and after-purchase support. This involves transforming the inventory room into a micro-fulfillment center similar to a mail-order operation to handle incoming orders, whether they come from the sales floor or from the Internet.

Ed Dunn, Founder, (Stealth Operation)

I don't think convenience has supplanted service, I think in the case of BOPIS, it's one more option for the shopper and doesn't appear to be a problem for the retailer to execute. Of course, there's the ugly side too; Clark Howard, a nationally known consumer advocate, talked about being in Walmart, seeing an item cheaper on walmart.com than in the store, ordering it for store pickup, watching the clerk take the item off the shelf for pickup, then had to wait a day to actually get it.

[Image of: View Braintrust Panelist button]
Dr. Stephen Needel, Managing Partner, Advanced Simulations

it's not about convenience versus service; shoppers want both, and those retailers that can think and execute outside of the "either/or" paradigm will differentiate from others (both digital and brick-and-mortar).

Stores are part of a hybrid future, the separate channel paradigm is gone forever and there's now a new non-fixed flow that is unique with each shopping journey. Physical and digital have to become one from a system, process, measurements and experience perspective. Everything is being redefined, and while that may cause some to wait for the dust to settle, the trouble is it never does.

The majority of retail investments have been in systems that optimize channels, so have organizational structures and incentives. What retailers need to do is visualize retailing differently and execute with a new mindset. Very difficult to do, even if you know that you have to change.

[Image of: View Braintrust Panelist button]
Mohamed Amer, Vice President, Global Consumer Industries, SAP

There was never one way to appeal to consumers, so having one criteria supplant another is myopic thinking. Consumers generally have a bundle of criteria they balance. The top priority may switch but the bundle stays fairly constant. It is important to stay abreast of what criteria are in the bundle and how the priorities change over time and for particular segments of consumers.

[Image of: View Braintrust Panelist button]
Camille P. Schuster, Ph.D., President, Global Collaborations, Inc.

Convenience and service are the same thing. Service is delivering what the customer wants. The problem continues to be highlighted in Cathy's commentary: "who gets the credit for the sales? The store or the online channel?" Mr. Retailer, why would you care? A sale is a sale is a sale.

The story quoted in the discussion is wonderful. But, even beyond the satisfaction of having that computer almost immediately, BOPIS offers a very pragmatic solution to online ordering. If you don't live in apartment with a doorman as I do, you must have concerns about delivery. Rather than having something dropped off at an empty home, why not just swing by the store on your way home from work, or as you are out running errands and playing taxi driver? As my granddaughter would say, "easy-peasy."

[Image of: View Braintrust Panelist button]
Gene Detroyer, Professor, Independent

As I've been saying for some time now, "As long as people live in brick-and-mortar houses, they will be shopping in brick-and-mortar stores." Those "new" stores are what I refer to as "surprise/delight/now." That function is already served in existing stores—with or without online ordering—but all three functions; surprise, delight and NOW, are buried in a long tail sea more efficiently served online.

The story here illustrates the proper function of a paradigm that WILL dominate retailing 10 years from now.

[Image of: View Braintrust Panelist button]
Herb Sorensen, Ph.D., Scientific Advisor TNS Global Retail & Shopper, Shopper Scientist LLC

In Lee's first story we read about both convenience and service. Both are critical to success in today's retail world. The laptop was ordered, picked up the same day and he received excellent customer service, also knowing he had a place to go for questions or setup problems. Story two was similar except there was nowhere to turn for service. Here is where retail has the potential to grow and thrive over the next several years. If they are smart, the opportunity to be one of the success stories is there for the taking. If they do this half-heartedly like so many other opportunities; then, well, you know the rest of the story.

[Image of: View Braintrust Panelist button]
Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

Convenience IS service for many consumers.

The demand is for anything, anytime, anywhere. And that is a trend which will grow stronger over time.

Before we can think of new solutions, we must remember what we want from stores when we are the consumers. BOPIS is one approach, but stores are going to have to learn how to become far more agile to keep customers satisfied.

[Image of: View Braintrust Panelist button]
Ryan Mathews, Founder, ceo, Black Monk Consulting

Convenience can't supplant service as a greater need because convenience is a service. It's in the best interest of retailers to always be looking for means to streamline the purchasing journey, no matter which destination the customer chooses to complete the transaction.

'RetailRetell'

Convenience will be paramount in some categories (particularly ones that are low price, low involvement), but service still has a dominant place in most purchasing decisions. And in fact, can't convenience really be viewed as a component of service? Because although several of the big box retailers have a distinct advantage in terms of convenience (thanks to their vast store bases), several fall down by making customers navigate the whole store just to reach the collection point, where clueless employees are charged with trying to track down your order.

[Image of: View Braintrust Panelist button]
Kelly Tackett, Research Director, Planet Retail

I found a booster seat for my son on Walmart.com and decided to give their Ship-to-Store a try for the first time. The wait time was over two weeks. I had to run to Walmart about a week later and while there I checked in on it—in transit was all they could tell me, due the next week. The very next morning I got an email alert that it was available to pick up. I went back to the store and waited 20 minutes for someone to finally come to the desk. For a company that is supposed to be the best at logistics in the world, they get a D- in my book.

From the c-suite, click and collect seems like a no-brainer means of competing. But when they've squeezed every last penny out of the supply chain and employee pay and benefits, convenience on par with Amazon is the last thing they can deliver on. Unless they are ready to rethink the entire value chain from DC, to store (let's get out-of-stocks right, first), to customer in the name of Customer Service, this will be a struggle.

Daniel Silverman, Vice President, Business Consulting Services, Clavis Insight

I have an interesting tale about online/in-store purchases. Last week I went to Best Buy to look at big LED Smart TVs and check the prices. I found one I liked. Then I went to nearby Costco to perhaps get a better price on the same model. Yes, I got a better price, but before buying, I went home to research product reviews online.

Satisfied with the reviews on the model I wanted, I went online to Amazon (I am a Prime member) to check the price. It was the same as Costco, but of course there was no shipping charge and sales tax.

I mulled over my options for two days, but then Amazon suddenly raised the price of the television to match that of Best Buy. An in-store purchase and carry out at Costco seemed like my best option. But they only take American Express cards and I wanted to use my new MasterCard, which came with a special promotion of 0% interest for one year.

So I phoned my local Best Buy store, and asked if they would match the Costco price (which represented a savings of over $100). They said YES, so I ordered and paid for the TV on the spot. I waited for their email advising me that the TV was ready for pick-up, and then drove to the store and got my new set.

Does all of this make me a smart shopper for my new 60-inch smart TV? Maybe. But I am exhausted.

[Image of: View Braintrust Panelist button]
John Karolefski, Editor in Chief, CPGmatters.com

The story illustrated in this article is a perfect example of "Flawless Execution." The key is the choice; two days via shipping or right now via in-store pickup. There is an argument that either one can be labeled convenient. Some would consider never leaving the office and waiting just two days as very convenient. Others would find the ability to get the item almost immediately, even if it means driving to the store and picking it up personally, as very convenient. It's the choice that makes this a great example.

Retailers have to recognize how their customers like to shop. If their model supports both online and in-store pick-up, they better start planning to do so (if they haven't already), because their competition is already planning to.

[Image of: View Braintrust Panelist button]
Shep Hyken, Chief Amazement Officer, Shepard Presentations, LLC

I don't believe that convenience has supplanted service. Rather, I would suggest we'd be better off thinking about convenience as a kind of service, rather than an either/or proposition. If you focus on convenience, you start to forget about the customer — convenient to whom, exactly? But if you stay focused on service — how can I help you? — then you stay focused on the customer, and that's the most important thing.

That said, I think the most important part of this story is that, in the end, it was consumer choice that was most important. Letting the consumer decide which method of fulfillment was most important to them, taking into account some combination of cost of fulfillment and speed of delivery.

I think, as consumer confidence grows, so will the trend away from lowest cost/no frills. As the story concludes, sometimes no frills means far less "convenience" than it looked like you paid for.

And can I make a plea to move away from BOPIS? The Brits have a much more elegant term, which is easier on the tongue, shorter to write, and has much more meaning than the abbreviated "BOPIS". That would be: Click & Collect.

[Image of: View Braintrust Panelist button]
Nikki Baird, Managing Partner, RSR Research

Given the rapid pace of change in technology today, I am not sure that convenience has supplanted service. Consumers, particularly in the segments that did not include millennial's, have difficulty researching and solving problems related to their purchases. Strong customer service can be a clear differentiator, since those difficulties that consumers are facing present a "moment of truth" when a retailer can make a real difference in consumer lives.

At the same time, convenience has been one of the areas where retailers have fallen short relative to online offerings. The sorry state of customer experience at retail often makes convenience a key differentiator.

Buy online pickup in-store is a way to engage consumers at the retail location while still providing the benefits of the online experience. Definitely an area for growth in the future.

[Image of: View Braintrust Panelist button]
Mark Price, Managing Partner, LiftPoint Consulting, Inc.

Convenience without great service is meaningless. In Lee Peterson's anecdote, total value equation for customer is a function of convenience as the motivation for online purchase, and great service level provided by "confirmed availability" and "30 minute pickup ETA" for the product.

In my viewpoint, service level still seals the deal, convenience motivates the customer to try, however what makes the customer come back to it and more importantly "like and share" with his network is "reliability" and "consistency" of the service level.

Anurag Rohatgi, Director, Omnichannel Solutions, SCA llc

I empathize with John Karolefski on what it takes to get the best possible deal nowadays. I do not believe all purchase decisions involve such  research and effort to buy a product, however. After all, shopping is supposed to be fun.

Definitely, when it comes to categories such as high-value consumer electronics, I tend to go with the service over convenience, and pick it from my local stores. On the numerous occasions, the wait times for the ship-to-store option at Walmart made me to look for other options where I can get it faster. I agree that the stores as fulfillment centers are a sore lesson among the consumer electronics retailers, and are catching up fast across apparel retailers.

Saravanan Logu, Digital Transformation Consulting Manager, Cognizant

There seems to be great momentum with this idea. Unfortunately, for retailers this is going to be difficult to sustain long term. This problem becomes very interesting when you combine it with mobile technology and price matching. Imagine the smart shopper goes into a store, compares online prices, matches prices and wants to pickup in store. As this technology improves, this problem will need to be addressed.

I think retailers will need to shift the cost of running physical shops onto the brands and shift their responsibility to simple property managers. With two way communication technology and crowd sourced mobile shopper assistance, the need for in store sales reps will decrease. There will be some interesting equilibrium reached.

[Image of: View Braintrust Panelist button]
Gajendra Ratnavel, CEO, L Squared Digital Signage

Search RetailWire
Follow Us...
[Image of:  Twitter Icon] [Image of:  Facebook Icon] [Image of:  LinkedIn Icon] [Image of:  RSS Icon]

RetailWire's
Getting Started video!

View this quick tutorial and learn all the essentials...

RetailWire Newsletters