Is ‘free’ a big enough incentive to get consumers to try click and collect?

Discussion
Source: Walmart
Jul 31, 2017
Tom Ryan

According to the survey from JDA, 80 percent of shoppers would give greater consideration to buy online/pick up in-store (BOPIS) services if discounts or incentives were offered.

The survey of 1,058 U.S.-based consumers found half used BOPIS in the last 12 months, a 44 percent increase since the “2015 JDA Voice of the Consumer” survey. Of those using BOPIS, 40 percent “sometimes” made additional purchases in-store.

Convenience was found again to be the primary reason shoppers use BOPIS. Of those who have used BOPIS, avoiding home delivery (39.6 percent) and wanting the product sooner (33.1 percent) remain the top reasons for selecting the fulfillment option, similar to findings in 2016 and 2015.

Said Jim Prewitt, VP of retail industry strategy at JDA, in a statement, “By offering incentives to shoppers to use BOPIS, like discounting, retailers are driving more foot traffic into stores, and potentially, buying more than they intended to, once they arrive at the store, boosting store sales.”

Walmart stands out as the only major retailer offering an incentive for in-store pickup, although its offered only for select items. Launched in May, its Pickup Discount program offers discounts on more than one million of Walmart’s “most popular” items. Discounts range from 25 cents for a Hanes t-shirt to $82.42 for a Greenworks chainsaw.

“We are removing one of the most expensive portions of e-commerce transaction, which is last mile delivery,” Marc Lore, president and CEO, Walmart e-commerce U.S., told Fortune at the time of the launch. “It costs us less to ship to stores, so our customers should share in those savings.”

At Macy’s, those using in-store pickup receive a “savings pass” to earn an extra 15 to 20 percent off their next in-store purchase. Other major stores only promise the advantage of “free” pickup although some use quick one or two-hour turnaround and curbside pickup as incentives. Many grocers charge for in-store pickup, as does Kroger at $4.95 per order.

DISCUSSION QUESTIONS: Do you see more benefits or drawbacks in using discounts to encourage in-store pickup? Would one or two-hour pickup window promises, curbside pickup or some other feature be most effective as an incentive?

Braintrust
"BOPIS adoption will be driven by the inherent incentive of saving consumers something more precious than a small financial discount -- their time."
"There are two reasons I believe BOPIS usage will grow — time and money."
"As far back as 2005, Circuit City offered BOPIS availability of your items in only 24 minutes. And we all know what happened to them..."

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28 Comments on "Is ‘free’ a big enough incentive to get consumers to try click and collect?"

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Mark Ryski
BrainTrust

BOPIS is here to stay and it makes sense for retailers like Walmart to encourage its use. Offering discounts to encourage use/trial of BOPIS is a reasonable short-term tactic. Once customers try and (hopefully) have a positive experience they are more likely to continue using it, regardless of whether there is a financial incentive to do so or not. Getting shoppers back into the store and the prospect of add-on sales is well worth the investment.

Will Kesling
Guest

Well said. Getting the customer back in the store, with the hopes that they decide to also buy other things would be great. I would love to get the data on Walmart to see how BOPIS compares to online, and what % of BOPIS also convert to additional sales while in the store.

Jon Polin
BrainTrust

I’m skeptical of market research that concludes that a discount is the answer to any challenge. Incentive for BOPIS? I think we will start to see widespread adoption of BOPIS in the coming few months and it won’t be driven by financial incentives. It’ll be driven by the inherent incentive of saving consumers something more precious than a small financial discount — their time. As a regular grocery shopper, if you can save me 45 minutes of time by doing the picking and packing for me, I’m in! Plus, like 90 percent of U.S. consumers, I pass my grocery store on a daily basis, so swinging by on my way home from work to grab the groceries that are packed and waiting for me is just not a big deal.

Craig Bloomfield
Guest

I couldn’t agree more! Time above all other commodities is head and shoulders the most valuable to consumers. Give them time and you give them choice, no need for a discount either as often they will pay more for this time/choice reward as we all need juggle a million things each and every day.

Max Goldberg
BrainTrust

Far more consumers prefer free shipping to in-store pickup, so retailers will have to use incentives to get those numbers to change. Discounts on selected items, coupons for savings on future visits and short turnaround times all give consumers an incentive to pick up their purchases, rather than have them delivered, and save retailers the cost of shipping.

Charles Dimov
BrainTrust

In-store pickup discounts will be a good idea for enticing more customers to try click and collect. BUT it needs to be used sparingly. Retailers will want to use this as a promotional offering for a limited time. It is a good way to get people to try it, get used to it and then leverage the cost savings as an opportunity to support retail margins.

The idea of having to pay an in-store pickup charge will definitely discourage shoppers. It is a new offering for North America and most of the world (outside of the U.K. where there is a high rate of click and collect use). An extra charge, like Kroger’s, is there to offset picking costs but will harm uptake of the new service. Face it, shoppers are price sensitive particularly when shopping online. If they are going to pick up an order, at the very least they expect NOT to have to pay extra.

Craig Bloomfield
Guest

Very true, and if retailers insist in charging for service then they better make sure its just that … a VERY good service. Paying $4 to wait 15 minutes at store to collect will see customers voting with their feet as the hard work and money spent getting them there is wasted.

Brandon Rael
BrainTrust

The most valuable incentive of any BOPIS model is removing the friction associated with the in-store shopping experience and enabling the last-mile transaction to close the conversion loop. Leveraging the store as a fulfillment center for popular and commoditized products could be a competitive advantage for brick-and-mortar retailers as they leverage their digital channels to draw customers to their stores.

In my mind, the best savings “pass” for consumers isn’t necessarily in the form of discounts. Rather it is the time they will save with curbside pickup, which is the most valuable commodity in today’s time-deprived society. Additionally, there will be incremental opportunities for retailers to drive more business in-store, as retailers will benefit from the potential impulse purchases that will naturally occur once a customer is in-store.

Craig Bloomfield
Guest

I would very much echo your comments on time being the most valuable commodity. Retailers need to remember that everyone is on the clock in one form or another. IF you can get a customer into store to collect (and hopefully buy more) then they need time to do this. Run their clock down with collection queues, frustration and general service fatigue and they have no time to browse and buy.

Art Suriano
BrainTrust

If retailers want a leg up on e-commerce competitors, the only way is getting customers in their stores. When a customer shops online and picks up the item in the store, there is always that opportunity for impulse buying and more sales. So Walmart offering discount incentives when picking up in the store is very smart and is bringing in extra business. For Walmart, the discounts given are still better than the cost of delivery and customers always frown when they are asked to pay for shipping, so this program is a win-win for everyone. Curbside pickup is a convenience for the customer, but it will not get the customer in the store.

Walmart is smart to expand the program they have and other retailers need to take notice and consider offering discounts or other incentives like coupons or discounts on other purchases to their customers when they pick up their item in the store.

Nir Manor
BrainTrust

BOPIS is an efficient way to get products for shoppers who need the product urgently and it should be a component of every retailer’s omnichannel strategy. Offering discounts for BOPIS can make sense to generate shoppers’ trial but will not work as a long-term strategy. Other benefits such as coupons for present or future in-store purchases make sense as a longer-term strategy since they would drive volume for in-store purchase and support the omnichannel strategy.

Sterling Hawkins
BrainTrust

There’s also a convenience factor beyond urgency that makes it easier for shoppers to get product on their way. We’re agreed that BOPIS discounts are a great way to get consumers to trial the experience. Making it a fully integrated and valuable component of a full omnichannel strategy is the way to keep consumers engaged.

Adam Silverman
BrainTrust

Here we are again — discussing how discounts drive behavior. In every survey I’ve ever done (I was a Principal Analyst at Forrester focusing on the Digital Store and had access to lots of survey data), customers will always indicate a higher adoption of new tech or process if an incentive is offered. BOPIS allows customers to avoid shipping fees which will always be a top reason for using the capability. However subsidized discounts to drive adoption rarely work long-term. It’s good for awareness, but if the core capability doesn’t add much value then the subsidized discount will not succeed as a tactic to drive long-term adoption.

The good news for BOPIS is the higher adoption rate year-over-year. This shows there is real value.

And by the way, Walmart is not subsidizing their BOPIS discount. They are leveraging existing infrastructure (i.e. trucks already going to the store for replenishment) and therefore delivering the product to the customer (at least to their store) with lower cost. They are passing this savings on to the customers and NOT subsidizing BOPIS. Big difference.

Richard J. George, Ph.D.
BrainTrust

I have always been a fan of BOPIS. Why? Because of the one significant research finding, namely, that 40 percent of customers “sometimes” made additional purchases in-store. I believe this is the real advantage of BOPIS; the opportunity to get customers in-store where they can purchase higher-margin, perishable products like flowers, artisan breads, cheeses, etc. Remember, they are entering the store with empty carts (a heuristic to measure spending) and the opportunity to place some fresh, impulse and high-margin items in their shopping cart is not to be missed.

Steve Montgomery
BrainTrust

There are two reasons I believe BOPIS usage will grow — time and money. I use the entirely unscientific research sample of one. I have found that I can often find items I want at Walmart.com cheaper than on Amazon. That saves me both the delivery fees or the cost of joining Prime (I tried it found we did not use often enough to justify). And in terms of saving time, yes I have to stop by the Walmart but often have reason to be in that area and the items generally arrive within a couple days. Again, a totally unscientific example. I admit on one occasion I actually bought something else in the store.

Camille P. Schuster, PhD.
BrainTrust

If you are truly consumer-centric, you will know that some consumers have distinct preferences for home delivery or in-store pickup. Some consumers will find one or the other more convenient depending upon the product or situation, some consumers will choose whichever one saves money or time. There is no one-size-fits-all. A monetary incentive will attract some people some of the time.

Ed Rosenbaum
BrainTrust

BOPIS appears to be a win/win for everyone. Customers can purchase at their leisure as well as pick up at a time they so choose. As for the retailer, they still get the customer to come into the store when they pick up thus maybe getting another sale. I know from my own experience of late that my wife has been doing more BOPIS and starting to enjoy it. It becomes a positive experience. I do not think a discount will do any more than get the customer to think about it. BOPIS is here and not going away. It is already a winner.

Doug Garnett
BrainTrust

It’s not clear what problem the incentive is solving. The Walmart comment seems to imply that they fear shipping costs (because apparently competition is forcing us to quit asking consumers to pay for advantages).

Perhaps from an “online store” perspective, giving an incentive for consumers to use a less costly approach makes sense. But from total economics? Both online and BOPIS are premium services — the costs for supplying them are both higher than when sold in-store. So from a store perspective this seems an entirely upside-down idea.

When we stop honest communication with consumers about costs and economics (as cell phone companies did by making handsets appear “free”), we are building a bad debt of consumer expectation — one that will hurt us in the future.

In other words, this idea just seems upside-down.

Michael La Kier
BrainTrust

Walmart should focus on making experience of pickup in-store better before rolling out this type of incentive. Most stores still only offer pickup at the VERY BACK of the store. If BOPIS is about convenience, trudging through the store is not a good way to deliver this.

Ryan Mathews
BrainTrust

“Free” helps to build interest, but it’s an impossible policy to change. I’m not a fan of discounting as a substitute for providing the kind of consumer value shoppers are willing to pay for. If free BOPIS catches on as an industry standard, retail margins will just erode further — if that’s possible. So, yes I’d like to see more experimentation with value-added features.

Brian Numainville
BrainTrust

BOPIS reduces friction, boosts traffic to the store (and sometimes additional sales beyond the initial item(s), is much more cost effective than delivery, and will remain so going forward. Offering customers an incentive to try the service with a discount is a tactic that can be strategically used to build traffic. If kept in place too long, this will become an expectation rather than a periodic tactic that can be used to boost trial.

Ralph Jacobson
BrainTrust

Once again, what’s new is what’s old. As far back as 2005, yes, a dozen years ago, Circuit City offered BOPIS availability of your items in only 24 minutes. And we all know what happened to them. BOPIS incentives are only one element of profitable growth in an eCommerce strategy. Yes, definitely execute on BOPIS incentives, but don’t think that will be the answer to profitability, alone.

Mark Price
BrainTrust

Consumers will always say that a reduction in price will change their behavior. While that may be true to some extent in the short term, consumers tend to return to their old patterns without some longer-term customer experience benefit. If BOPIS requires standing in line after struggling to find parking, then the initiative is doomed from the start.

Retailers can make better use of their money by improving customer experience for those BOPIS customers than engaging in discounts that will quickly be matched by competition.

Jett McCandless
BrainTrust

Customers want fast delivery at affordable prices above anything else. Offering in-store pickup for a discount will only work if the deal is considerably more attractive than delivery. It’s a dangerous way to gamble, as providing a poor customer experience can mean losing customers for good. Consistency is key, and if a customer has a choice between in-store pickup with Walmart and two-day delivery from Amazon, they’ll pick Amazon an extremely high percentage of the time.

Ricardo Belmar
BrainTrust

BOPIS is about convenience for the consumer. Not just the convenience of near instant gratification from getting an item faster than waiting for delivery (in most cases) but also the convenience of an easy in-store pickup experience. The number one reason most studies find why consumers do not use BOPIS is a bad pickup experience. By making this a good experience, it encourages consumers to shop further while in the store — again, because it’s convenient since you’re already there! Offering discount incentives is one tactic that can encourage adoption of BOPIS services, but in the long-term it’s yet another conditioning tactic that will just result in more price erosion and higher expectation from consumers for lower than normal prices.

Cynthia Holcomb
BrainTrust

I think a win-win to incentivize in store pickup if it is EASY to do… Easy parking, easy access. etc. If not, too much friction UNLESS a customer can combine in-store pickup with other purchases needed, like food etc. Great way to pick up product purchased on a regular basis without having to worry about a package stolen off the front porch or going to an Amazon “Prime” Locker. I like the Walmart Tower concept because Walmart has so many items people use frequently and run out of frequently. Even Amazon Prime re-orders can not compete with the unexpected need for more beer because one had an unexpected party!

Alex Senn
BrainTrust
While BOPIS gets more and more penetration into retailers, it’s important not to start discounting for this effort to early as it will cause a “J.C. Penney effect” which means discounting too much to the point where consumers will only buy something from you at some sort of discounted price. This does not go over well in the long term. On the other hand, offering a reward for referring someone who tries BOPIS, or offering an incentive on every fifth BOPIS, does make a lot of sense. Perhaps the FIRST time using BOPIS it might be worthwhile to include some sort of discount, just to get the customer using it, but in most cases the more you discount, the harder it will be to keep replicating success with this customer once they come to expect a discount. The key with this effort is to keep the customer coming back to use BOPIS. Anything that does not enhance this effort on its own is a waste of time. Referrals or coffee club-type rewards are the only probable way to make this work. I think the curbside incentives are not worth it given the extra time and care this effort takes on… Read more »
Craig Bloomfield
Guest

For Europeans where C&C is long established, there tends to be 3 main drivers for using the service. Avoiding delivery costs, securing that must have item, inability to receive a home/work delivery. There are more but these tend to lead the way. So this is what gets the customer through the door to use the service, but arguably the bigger question is what will keep them coming back and selling the service on behalf of the retailer? Convenience — making the in/at store collection experience as simple and stress free as it can be. No queues, no waiting, no fuss, no standing in line explaining to several people the who/what/where/when of their order — just a fast efficient and service lead store collection journey that the customer can control. Get this right and the service will sell itself. Retailers crave the additional sales that store collections can bring, but run down the customer’s clock with a long collection process and their time to buy has ran out.

wpDiscuz
Braintrust
"BOPIS adoption will be driven by the inherent incentive of saving consumers something more precious than a small financial discount -- their time."
"There are two reasons I believe BOPIS usage will grow — time and money."
"As far back as 2005, Circuit City offered BOPIS availability of your items in only 24 minutes. And we all know what happened to them..."

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