Source: Walmart
Can BOPIS keep up with its own success?
Buy online, pick up in-store (BOPIS), also known as click & collect, appeared to have reached a tipping point this past holiday season with more consumers taking advantage of the options offered by retailers. With greater demand there have also been challenges for retailers, who have had to engage in a balancing act with both inventory and labor.
Among the signals that BOPIS has gained acceptance:
- Adobe reported BOPIS for U.S retail orders grew 50 percent over the holiday;
- Target reported store pickup plus drive-up grew more than 60 percent over the November/December period, accounting for a quarter of its digital sales in those two months;
- Forty-eight percent of online orders at Home Depot in 2018 used BOPIS, according to Adweek. Twenty percent of those picking up purchased more after arrival;
- In early January, Walmart launched its biggest — and first-ever cross-platform — national marketing campaign for Walmart Grocery Pickup.
The National Retail Federation’s latest quarterly “Consumer View” report further found that 70 percent of consumers who are aware of BOPIS have tried it, with the top reason being to avoid shipping costs. Picking up at the cash register was by far the most frequent practice, done by 83 percent of those who tried BOPIS. Twenty-seven percent tried curbside pickup, 19 percent tried having merchandise delivered to the trunk of their car, and 16 percent retrieved purchases from a locker. All BOPIS users were open to those alternatives.
However, a survey by HRC Retail Advisory of 30 retail executives found 66 percent indicating that inventory inaccuracies made their BOPIS service offerings inconsistent.
At an NRF Big Show session showcasing a locker solution for BOPIS, Alex Price, global VP at JDA Software, said, “Retailers need real-time visibility into their inventory and to be flexible enough to move it around.”
Scott Fenwick, director of product strategy at Manhattan Associates, told Retail Dive that retailers struggling with BOPIS either didn’t plan fully or underestimated the costs, including extra labor. Some warehouse fulfillment tools, such as “pick-path optimization,” are being moved into the store to gain efficiencies.
Said Mr. Fenwick, “If they’re not putting in the right effective tools, then the customer is not going to have a good experience when they show up to pick up that merchandise.”
- Holiday Recap 2018 – Adobe
- Target Reports November/December Sales, Maintains Full-Year Sales and EPS Guidance – Target
- BOPIS, Retail’s Latest Acronym, Makes the Case for Delayed Gratification – Adweek
- NRF study says more online shoppers want free shipping – National Retail Federation
- Latest OrderDynamics Global Research Finds Only 37.6% of Retailers Offer Click & Collect – OrderDynamics
- Self-Serve, Automated In-Store Order Pick-Up Sees Clear Tipping Point at #NRF2019 – Apex Supply Chain Technologies/Business Wire
- NRF 2019: Six steps for navigating BOPIS with ease in 2019 – Retail Dive
- The death of ‘click and collect’ food shopping is unavoidable – The Globe And Mail
Discussion Questions
DISCUSSION QUESTIONS: Do you see optimizing inventory, labor or some other aspect as the main challenge to BOPIS execution? Will BOPIS continue to make significant gains over the next few years?
Poll
BrainTrust
Brandon Rael
Strategy & Operations Transformation Leader
Doug Garnett
President, Protonik
I see BOPIS having tremendous opportunities for retailers to keep customers happy allowing them to shop online, avoid shipping costs and when done correctly, get them in the store. Retailers should focus on how they can make picking up the item as easy as possible while at the same time create incentives for the customer who has come into the store to take advantage of an in-store offer from merely participating in the BOPIS program. The more we find ways of keeping the customer out of the store with curbside pick-up or lockers in the parking lot, the more the retailers are going to spend money without any benefit. So creative thinking is vital in coming up with reasons for BOPIS customers to enter the store when picking up items and incentives to do some additional shopping while they’re there.
The U.K., which is ahead of the U.S. on BOPIS (or click and collect as it is called there) went through this learning curve some years ago. Similar to the U.S., demand rocketed one Christmas and left retailers struggling with stock levels, storage space and labor management.
The issues are largely solved now as most retailers have invested heavily. Stores have large dedicated areas for collection and storage, systems that give a single view of stock have been enhanced, and logistics have been improved to allow small units to be delivered to stores rather than big packs/pallets of products.
The downside is that some retailers have had to introduce charges for BOPIS, especially for small orders. It just wasn’t economical for them to keep offering the service for free on every order. I expect the U.S. will eventually follow a similar path.
BOPIS demands smart, surgical inventory management. Right product, right place, right time. The order can’t be pulled and packed in some central warehouse. It has to be ready in a couple of hours in the specific location of the customer’s choice. In apparel, if a customer is shopping the store and doesn’t find their size/color, then oh well. Maybe they can buy it online and have it shipped. If they specifically want to pick it up, and the retailer’s system is mistaken about availability, that is going to be one unhappy customer when they arrive for pickup. Inventory management is key.
BOPIS relies on three areas of a store’s retail business. Labor has to be available and properly trained. Inventory has to be there when the customer walks in. Space has to be made available in order to deal with storing additional packages and making the pick-up transaction frictionless. As usual for the last 1,000 years, it is not about one thing alone.
The BOPIS value proposition should be front and center when retailers are considering their 2019 priorities. To many it’s a fulfillment cost containment strategy, however, it is far more significant than that. Retail in 2019 is the battle for consumer loyalty. By offering consumers the ability not only to have an easy way to buy things online and pick them up the same day, the retailer also has to now capitalize on having these people in their stores.
In most fashion, specialty, home improvement, and lifestyle segments, this is where the magic, theater, and omnichannel retail truly takes place. The online transaction is only the means of attracting the customer to the store. Once they are there, it is imperative to have trained, empowered, educated and most importantly incentivized store associates or ambassadors, who have the right amount of customer insights. With this knowledge and a customer experience-focused strategy, the stores could drive the consumers to purchase more products, increase their conversions, drive higher priced retail sales, etc.
It’s very much a cultural change for most of these retail organizations. However, we should expect many companies to take the plunge and invest the right amount of resources into this valued service.
I agree with many of the comments below but would add a wrinkle. It is critical to have the product available when the customer arrives, a designated space to store it so that it doesn’t end up in someone else’s hands, and someone to help the customer immediately. These can all be done using processes and systems available today.
However, the critical challenge is the orchestration of all of the above in such a way that any/all “friction” is removed, meaning the customer shouldn’t have to wait in line, the product must be easy to find/deliver, and ideally a store team member should be available just in time to deliver the product as well as any other special offers in the moment. The “magic” is the retailer’s ability to handle this orchestration and “wow” the customer into coming back for more and more. Retailers like The Container Store understand this, are executing well today, and are continuing to innovate to stay ahead of the competitive curve.
I’d encourage anyone to try BOPIS with The Container Store. You’re likely to learn a thing or two and come back for more!
It is all about inventory. The great advantage of then online business model is that you can serve a huge number of customers with a large variety of items with much lower inventory levels. This has trained the customer expectation.
There can be no disappointment in OOS for either selection or pick. With BOPIS the critical inventory factor is not what is on the shelf, but what is in the back room. That back room must be filled more frequently than the traditional to-store deliveries. And it can be done, as online orders can signal the needs at the pickup.
There is a huge shift with online efforts from BOPIS we are not talking about. The myth of the dystopianly-named “endless aisle” will have to be confronted.
I thoroughly hate the extreme care needed at HomeDepot.com, for example, to sort between good BOPIS products they have in stock and the endless aisle goods used to pad the web offering.
These are in conflict. I would be interested in some good research about how much BOPIS is driven by goods in stock (buy online, pickup today) and endless aisle goods (buy online and some day it will arrive at the store).
Doug, I’m glad someone has brought this up! In fact, at NRF I heard a good definition of terms we should be using to address this. The idea is that “click and collect” implies the merchandise is, in fact, in the store and can easily be picked up any time — assuming inventory counts are accurate. That leaves BOPIS as a term to use for items that “someday” arrive at the store for pickup, like your Home Depot experience.
But I agree with you that this can be misleading at some retailers and will only lead to dissatisfied customers. BOPIS and click and collect (under these definitions) have a clear benefit to consumers when used properly and transparently by the retailer. If misused, then the customer’s expectations will not be met.
BOPIS will continue to grow and address the dreaded final mile. I still believe that retailers need to figure out a way to get a BOPIS customer to come into the store at the time of pickup. Research has shown that the combination of online and in-store purchasing is greater than either method separately. People tend to spend based on the viewed number of items in their shopping carts. With an online order about to be safely loaded into the trunk of the car, the BOPIS customer could enter the store with an empty shopping cart. Even a brief visit highlighted by higher margin impulse items would have a significant impact on the grocer’s bottom line.
First of all, this is a great problem to have: too much business to handle. This is a newer process for physical stores to add to their daily grind. Some have made it seamless for the customer. Others need to take it seriously because it will only continue to grow in popularity. Nail down the process and then ensure store management enforces it it daily.
As many before have already suggested, BOPIS execution has several pieces, and all are important. The success that’s already being seen will continue to drive adoption by retailers, but the execution challenge comes from retailer expectations. It offers customers the opportunity to do business their way and unless retailers accept that customers hold the purse strings, and that customer needs are unique and they don’t necessarily align with the retailer, BOPIS will challenge even the best executions.
We’ll see BOPIS (and omnichannel) continue to make gains and grow with online transactions (they’re really tied at the hip). The tools used for BOPIS will continue to be optimized for better, easier, automated flows until it becomes second nature and completely mainstream.
While adopting new in-store processes for BOPIS had been a major challenge for retailers, most have figured it out and now have well-defined processes and many have dedicated areas for online purchase pick-ups in their stores. The greatest challenges for most retailers are inventory accuracy and visibility to real-time inventory.
Without accurate, real-time inventory visibility, retailers have resorted to safety stock in each store to avoid over-promising inventory. For example, they won’t show an item as available for BOPIS unless they have 2 or 3 items available in a store (according to latest inventory records). Retailers need to update their technology to enable real-time inventory or they will continue to turn customers away, even when they actually have the product in the store. With the advent of network technologies like SD-WAN and 5G, 100% uptime is a reality and there is no reason to fear cloud based POS. The old on premise store model must be replaced along with its latent inventory architecture that is always 1 day behind.
It is time for Real-Time Retail!
The one thing that will distinguish retailers in offering BOPIS to its shoppers is accuracy and ease of delivering the item to the customer in the store. If the shopper sees an item online and purchases it, and then arrives at the store to find the item is not ready or worse is unavailable, they will at least be wary or never do BOPIS with the retailer again. The product attribute that is required to do BOPIS in a short time well is accurate store inventory. If the store inventory is not accurate, the shopper is not guaranteed to have his/her order satisfied. Some retailers are moving forward with RFID implementations so the in store inventory is done automatically and is more accurate to insure BOPIS satisfaction.
BOPIS will continue to gain traction. There is great satisfaction using a cell phone to determine if the item desired is available at a local retail store, making the purchase from the phone, and driving to the store to pick it up. The process saves on the shopping time, store time, and should result in getting the product wanted without hassle.
The lack of understanding & visibility into where inventory sits is frightening given how long we have been talking about it. Multiple approaches have been tried but still the silos exist in a vast number of organisations.
As for BOPIS, it is clear why this is popular with consumers as the challenge of being at home is eliminated — however it is still expensive to execute — picking singles from store or DC and shipping to a collection point….
Retailers undertaking BOPIS might want to think about offsetting costs by taking a similar approach to convenience retail — by aiming to sell the customer something they did not come into the store for.