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

BUSINESS TIPS

ChannelAdvisor:
Online Selling Strategies
RR Donnelley:
In-Store Marketing
LoyaltyOne:
Enriching Customer Relationships
 
[22 comments]

Target offers incentives to buy online/pick up in stores

August 11, 2014

In late July, Target ran a promotion offering $10 off any online order of $40 or more if the customer chose in-store pickup. By all accounts, it could be the first or possibly a rare case of in-store pickup being incentivized.

The deal comes as Target has been ratcheting up its promotions, including offering $10 coupons when you buy a threshold amount in certain categories.

But Target spokesman Eddie Baeb told the Minneapolis Star Tribune that store pickup, which debuted nationally in November 2013, already consistently makes up more than 10 percent of Target's online sales. The promotion was designed to "to drive more engagement and use."

In an interview with RetailWire, Lee Peterson, EVP, creative services, WD Partners, saw the promotion as a way to test the broad appeal of BOPIS (buy online, pickup in-store).

"The thing is, from a retailer's perspective, you don't know how big something like this can be, so you have to get people to try it to see if it has any merit in terms of driving significant volume," said Mr. Peterson, "and then measure its scale."

But Mr. Peterson believes it's worth incenting the use of BOPIS. In a recent article in WayfinD, a quarterly e-magazine from WD Partners, he asserts that BOPIS could be a major differential for retailers with physical stores, arguing that service at retail has been effectively supplanted by convenience. To work effectively, however, stores will have to evolve more into fulfillment centers, he argues.

"From what I can see from our research, people already like BOPIS a lot, but the 'top 2 boxes' numbers really never cross 60 percent," Mr. Peterson told RetailWire. "Throw 10 bucks in the mix and I'd bet on that number going over 75 percent."

Indeed, he believes free shipping — the popular incentive many e-tailers use to encourage shoppers to avoid the trip to a physical store — will disappear as an incentive, but that BOPIS is just getting under way.

"Every item in any store today has shipping built into its cost, you just don't see it," argues Mr. Peterson. "Buying online will soon be the same. However, I see the 10 bucks for BOPIS purchases as a way to begin to understand what it means to their business on a macro level, not just a way to drive traffic. I don't think we know what that is yet. But Target will soon."

FINANCIALS:     [NYSE:TGT] [ ]

Discussion Questions:

Is BOPIS (buy online, pickup in-store) worth incenting? Should it be more of a one-off offer or a permanent incentive to drive BOPIS use? When should shopper actions be incented?

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 frequently should stores be incenting shoppers to encourage BOPIS (buy online, pickup in-store)?

Comments:

Sadly, Mr. Peterson is probably right about free shipping. Carriers are raising rates, and sooner or later those costs will be passed along to consumers.

Having said that, there's a more concrete reason retailers would like to drive BOPIS (I think I hate that acronym, by the way. It sounds like a disease). In all the years I have been tracking retailers' opinions about cross-channel customers (almost a decade), they've mostly believed their cross-channel shoppers are more profitable than their single-channel shoppers.

It's the same logic as gift cards, really. The customer goes to the store and buys an impulse item in addition to the planned purchase. In effect, she "over-spends" the original order. It's a second touch point.

[Image of: View Braintrust Panelist button]
Paula Rosenblum, Managing Partner, RSR Research

Yesterday, I ordered items from Walmart and received text messages that the item would be available for pickup today. Well, this morning, I got a text message stating the item was out of stock. I checked online and a cryptic message said the order was cancelled, and I saw another order that said the same product will be delivered a week from now. So now I'm confused. There is no phone number, just a customer service form to fill out and submit to Walmart.

While BOPIS sounds good in theory, I have seen this at other stores including Best Buy, where web server machines send out emails/text messages stating one status of an order but when you arrive, the sales associate tells you another story about your order, and the staff of the local store is clueless about who to contact when a customer has a question about their BOPIS order. This is August and I'm not confident in the implementation of BOPIS, with retailers attempting to automate the process and leave the local staff in the dark to not provide the necessary support.

Ed Dunn, Founder, (Stealth Operation)

As a retailer launches BOPIS it's a good idea to incentivize consumers to give it a try. I suggest trying it for a few months, but not making the offer permanent. Incentives work well when a retailer wants consumers to try something new or wants to build a significant point of differentiation from competitors.

With Target, I worry that items it features online may be out of stock in stores, particularly if the items are featured in its weekly circular. The company has a reputation for not ordering enough to meet expected demand. They can incentivize customers all they want, but if the items are not in-store when the consumer wants them, they have defeated the purpose of the incentive and created ill will.

[Image of: View Braintrust Panelist button]
Max Goldberg, President, Max Goldberg & Associates

Yes. Two reasons: Offset shipping costs and encourage add-on impulse purchases.

By the way, have you noticed Target has shifted its guest services location in some stores to the express checkout lanes, where shoppers can now complete BOPIS transactions? Frees up some nice real estate at the front of the store where managers can localize the assortments.

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

When you lease or own brick-and-mortar facilities you want most people to come to that investment center to buy, not just pick up stuff bought online.

Retailing appears to have become an endless series of incentives and new technological applications as the art of value retailing struggles. Who can give a clear, succinct definition of what retailing has become today—and why?

[Image of: View Braintrust Panelist button]
Gene Hoffman, President/CEO, Corporate Strategies International

At $10 per $40 I doubt it can be a permanent incentive, but the incentive to "drive traffic to the store" can't be argued with. You have to wonder what would happen to a retailer if they took all the time and money they spent on one weekly flyer and put it all into an online incentive to drive traffic to stores (or drive customers to buy online). I'm betting the online promotion properly executed will beat the paper flyer any day. As Ed notes, you have to have your act together logistically first, though.

[Image of: View Braintrust Panelist button]
Peter J. Charness, SVP America, Global CMO, TXT Group

BOPIS makes sense as an incentive, but only if you leverage that opportunity with the customer now in your store into an even greater sale.

I've seen this work both ways (good and terrible). Setting aside the technical glitches, the worst scenario is when you go to the store to pick something up and the associate just "clerks" the sale, adding no value and not looking to sell you anything else.

The best is when the staff are properly trained to know how to leverage the opportunity into greater sales by pre-planning what could/should be suggested with the item being picked up.
Big opportunity lies in BOPIS, the question is how many retailers will take advantage of it.

[Image of: View Braintrust Panelist button]
Kevin Graff, President, Graff Retail

I would like to see the hypothesis of the experiment. Kelly Tackett's point above is provocative. What are the add-on sales opportunities of in-store pickup? A key point of Target's strategy is to make the need-purchases fast and easy so there is time for the want-purchases. In-store pickup would fall into the need category, I think, given it is a completed purchase which leaves much more time for shopping and comparing.

I know I need these 10 things, Target will let me buy them online, so that leaves me time to spend picking a drapery rod, considering a new rug for the bath or thinking about how I'll frame the kids' school pictures this year.

To Lee's points, this is huge, and could point to interesting changes in the way stores operate and are laid out.

[Image of: View Braintrust Panelist button]
Chuck Palmer, Vice President of Strategy, JohnRyan

If the order can be filled from merchandise in the store and the store is capable of pulling orders, this could be a real win with very little cost. If not, it could still be a win, in that a lot of orders could be combined to reduce delivery cost. A third possible win is that a customer walks into the store to pick up an order and ends up buying more stuff.

[Image of: View Braintrust Panelist button]
Mel Kleiman, President, Humetrics

The question of when and how shopper actions should include incentives has a couple of considerations:

  1. Who is gaining the most value from the action—the retailer or the shopper? Is the convenience to the shopper of a service like BOPIS a coveted convenience, versus the buy online and wait for shipment model? Or, for some, is it perceived as the shopper doing the leg work? If there are supply chain benefits derived by the retailer, does that justify maintaining an incentive over the long term?

  2. Are incentives needed to gain traction with the new offerings? In other words, does providing an incentive to shoppers make the most sense in order to educate them and get traction and frequency of usage for something like BOPIS? And if the incentive is intended to only be used to help the service gain momentum, is there risk in how much the shopper then expects those incentives to always be offered?

[Image of: View Braintrust Panelist button]
Matt Schmitt, President, Chief Strategy & Innovation Officer, Reflect

This is exactly what the airlines did when they wanted to "train" their customers (passengers) on using online ticket purchasing and check-in. I remember promotions that gave me extra miles if I booked online or checked in online. As a result, I learned their system. Today those incentives are gone, although now many airlines will charge a fee to process a ticket through the reservations agent.

I see BOPIS incentives as the same as what airlines used to do. It's a new service and sometimes customers need to not only learn about it, but be trained to use it.

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

What a great idea to test! It can win in several ways. The promotion could win share by driving future consideration for BOPIS purchases. But it could also work just in and of itself, driving purchases of large enough BOPIS baskets and/or driving in-store purchases while people pick up. So long as data is fully integrated and one has the systems to measure true omni-channel results, this is well worth trying.

[Image of: View Braintrust Panelist button]
Jonathan Marek, Senior Vice President, Applied Predictive Technologies

Target should be utilizing BOPIS as a way to regain customers and drive store traffic. This is just one of many marketing efforts that they need to overcome their data breach issue. Training their customers to order and then pick up will only add to their in store traffic. The obvious need is to be sure that when the customer orders and then goes to pick up, the process is smooth and convenient.

[Image of: View Braintrust Panelist button]
J. Peter Deeb, Managing Partner, Deeb MacDonald & Associates, L.L.C.

Yes, this is a great advantage that brick and clicks have over pure e-tailers. It will reinforce a physical store chain's relevance vs. Amazon, especially if this becomes a wide-spread ingrained part of how people prefer to shop. It leverages the physical store customer base to gain and increase relevance among online shoppers for its web-store and also gives it a fighting chance vs. the trend towards increased percent of sales going through online channels.

[Image of: View Braintrust Panelist button]
Joel Rubinson, President, Rubinson Partners, Inc.

BOPIS is absolutely worth incenting. This approach, which permits consumers to purchase online and pick up same day, is an effective strategy to combat e-commerce benefits, by offering even faster "delivery." Customers who get used to purchasing online and picking up in-store will also purchase more in the store, simply by being there.

This is very strong strategy to address the consumer segment that desires the convenience of shopping online, but prefers to get their purchases sooner rather than later.

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

The BOPIS incentive is a good move for Target. Getting consumers to believe it will be a seamless experience worth the trip will be a solid incremental step for Target. Driving shoppers to the store is the right strategy for Target; they will check out the new items, pick up a few more things, and consider more online purchases. Agree that "training" customers to a new type of shopping experience is worth the incentive if the new shopper behavior drives purchase and delivers value.

Anne Bieler, Sr. Associate, Packaging and Technology Integrated Solutions

Yes. Yes. Yes. It's very worthwhile "incenting" BOPIS. I just finished writing a blog post that says customers will specifically go into stores because they like to order online and pick up in store. They say they prefer coming into the store because it's easier to return a product; it's preferable to see, feel, smell, touch, try on an object before buying, and to receive authoritative, hands-on advice from knowledgeable staff. Also, according to CNBC Retail Reporter, Courtney Reagan, customers like the instant gratification, can easier handle fragile items than shipping them, and much more. And a $10 discount on a $40 purchase to boot? That would be very hard to beat.

[Image of: View Braintrust Panelist button]
Naomi K. Shapiro, Strategic Market Communications, Upstream Commerce

This is exactly what the airlines did when they wanted to "train" their customers (passengers) on using online ticket purchasing and check in. I remember promotions that gave me extra miles if I booked online or checked in online. As a result, I learned their system. Today those incentives are gone, although now many airlines will charge a fee to process a ticket through the reservations agent.

I see BOPIS incentives as the same as what airlines used to do. It's a new service and sometimes customers need to not only learn about it, but be trained to use it.

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

I can't get past BOPIS. So I present you with a number of alternatives each at least as good as BOPIS.
Buy online, receive in-store (BORIS)
Get Online, acquire local (GOAL)
Order online, product awaits here (OOPAH)
Get online, Pickup at store (GOPAS)
Buy online, get at store (BOGAS) Maybe...
That's all I've got...

[Image of: View Braintrust Panelist button]
Larry Negrich, Vice President, Marketing, nGage Labs

It's worth a try but in my opinion, too early to say if there is a sustainable ROI or edge over online.

At the face of it, there are some pros for the retailer in terms of getting customers to the store, trying to get an advantage on the shipping costs.

For customers there are perceived benefits of getting a discount and providing an additional incentive to go to the store and touch and feel something they need to touch and feel before they buy it.

In my conversations with a host of retailers, it's a complex problem. There are a lot of consumer data but it's still not clear what's driving what. What complicates arriving at a definitive conclusion is the fact that shopper behavior and expectations online, in-store and cross-channel are very different even if it is the same shopper.

And finally, to add to that, many retailers' systems for omni-channel are still not in place which results in a poor experience on such offers.

This will evolve, but it's definitely worth experimenting ...

Mihir Kittur, Co-founder and Chief Innovation Officer, Ugam

Buy online and pickup in-store will be a brief intermediary stage to the eventual outsourcing of logistics by online retailers.

Online retailers already offer same-day delivery. The one I like is Newegg, which already had incredibly fast service, and now has same-day within 40km of their warehouse.

How long is it before we get more services like the Indian lunch delivery system? How long is it before we see third-party logistics company that will take products from the brands on consignment and offer same-day delivery to any online retailer that the brand has authorized?

The best thing about a physical store is that they can leverage all my senses to the optimal capacity to excite me about their product and get me to pull out my wallet.

Where cost is higher, you must charge more (or make up on volume) and when you can't do that anymore, you need to innovate. Buy online and pickup in-store, in my mind, is not an innovation. It's a desperate move.

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

I think so. Target should test the waters and see where this incentive takes them. If customers bite, it's a whole other way to drive impulse buys both online (during checkout) and in-store (when they pick up). That being said, there should be a major display, if not a staff, in the pickup area to help with up-selling.

[Image of: View Braintrust Panelist button]
Alexander Rink, CEO, 360pi

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