Photos: Bed Bath & Beyond
Bed Bath & Beyond adds off-hour pickups and speedier fulfillment to its ‘omni-always’ suite
Bed Bath & Beyond announced yesterday that it is rolling out a new buy online and curbside pickup program that will allow customers the option of getting their orders one-hour before its stores open to the public.
The retailer said the new service will be available at its namesake chain and its buybuy BABY stores with the idea of giving early risers or busy customers who commute to work the option of placing orders the night before for grabbing their purchases as early as 8:00 a.m.
Bed Bath & Beyond also announced that it is reducing the time before all other in-store or curbside orders are ready for pickup from its previous two-hour window to one.
The company said it has nearly doubled the number of zip codes to 16,000 where it makes same-day deliveries. Bed Bath & Beyond and buybuyBABY added Roadie, a crowdsourced delivery platform with more than 200,000 drivers across the country, to get packages to customers quickly. In addition to the new service partner, DoorDash and Shipt also make same-day deliveries for the retailer.
Rafeh Masood, chief digital officer of Bed Bath & Beyond said the added services are part of the retailer’s reinvention under its digital-first, omni-always strategy to serve consumers looking for shopping and fulfillment options that best meet their individual needs.
“The country is getting ‘back to normal’ and we want to give consumers expanded flexibility on how to get online orders, within hours,” said Mr. Masood in a statement. “Whether that means placing a last-minute same-day delivery order to better entertain this summer or picking up an online order on the way to work, we are finding new innovative ways to meet the evolving needs of today’s digital customers.”
The retailer reports that 31 percent of online orders it received in the first quarter were fulfilled from its stores. The company, like many other retailers, understands that store pickup transactions provide it with a means to increase sales and reduce last-mile expenses at the same time.
More than half of Bed Bath & Beyond’s customers now shop in stores and online with the retailer, and digital accounts for 38 percent of its total sales. The retailer’s mobile app was downloaded more than 500,000 times in the first quarter and is up by more than three million over the past year.
Discussion Questions
DISCUSSION QUESTIONS: Ideally, what percentage of online orders should most retailers fulfill from stores? Do you see off-hour pickup services becoming more common at retail as life gets “back to normal” in the U.S.?
Poll
Loading …BrainTrust
DeAnn Campbell
Head of Retail Insights, AAG Consulting Group
Carol Spieckerman
President, Spieckerman Retail
I doubt that there is an “ideal” percentage of online orders that should be fulfilled from stores, but I do think that expanding convenience for customers is always a good thing, as long as you can offer the service consistently and profitably. Off-hour pick-up seems like a potentially really useful service for some customers, even post-pandemic. However only time will tell if there’s enough uptake to make this make sense for Bed, Bath & Beyond.
The percentage should be fluid and respond to the consumer’s behavior – use of data and forecasting can provide actionable insights. They can also use surveys to garner customer sentiment. I like Trurating’s one-question technique.
Given the size of Bed Bath & Beyond stores and the cost of delivering their range of products, store fulfillment is the economical choice. Off-hours pickup before and even after regular store hours makes sense. It would be interesting to see if they can automate it to 24/7 in the future with smart lockers. It’s a feature I would definitely use during the work week since I can’t get to the store during their main hours. The important thing is that they are trying new processes.
It depends on the product category. For example, someone who is buying furniture will more likely want it delivered on a weekend rather than on a workday. For such categories, it would make sense to deliver from a DC to drive efficiency while providing convenience. For other categories where the need could be more immediate, store fulfillment would make more sense.
Ideally, the more orders you can fill from a store the more profitable your sales will be. In 2018 about half of Target’s online orders were filled from stores. Today that number exceeds 80 percent. Shipping online orders from a regional warehouse is not nearly as profitable as shipping them from a local store, so Target’s strategic shift to ship from store has raised their profit margins substantially.
The digital-first, omni-always approach will become a baseline for retail survival, and the pre-opening concept is brilliant (at least for early risers). Let’s see if they tack on a late-night option, too (poor store staff). Hope they’ve considered the security implications of “opening” before being fully staffed.
If Bed Bath & Beyond adds micro-fulfillment centers (MFCs) to its distribution network, they might consider offering pickups from those centers, too. Very dependent on MFC location, though, and Bed Bath & Beyond wouldn’t want the shoppers to forget where the store is!
The more Bed Bath & Beyond can reduce third-party deliveries, the better. Shopper pickup is essentially free delivery from Bed Bath & Beyond’s perspective. Fewer points of failure and delay, too. From a merchandising perspective, we should see some inventiveness in coaxing these early-morning shoppers into the stores for some impulse buying during regular store hours. I’m not sure we will ever get back to normal — we have changed how and where we buy. Most of our customers are shipping almost everything from stores and not DCs.
This is a good addition that helps cement Bed Bath & Beyond’s efforts to drive more online sales and use stores more effectively. It will be especially useful for busy folks who want to collect something on the way to work or who need something early before the day starts. I presume that at the earlier hours there would already be staff in-store setting things up for the day, if so there is not likely to be an enormous amount of extra cost associated with the service.
Smart. An efficient way to incentivise online ordering and store fulfillment. Early hours for seniors made sense during the pandemic and I’m sure was appreciated. This makes even more sense to more people with hectic schedules. Any bets Target follows suit?
I don’t know that Bed Bath & Beyond’s offerings create the kind of urgency that the company is addressing. Even so, convenience and choice are inextricably linked in retail these days so Bed Bath & Beyond is on the right track overall. The company’s recent moves make more sense under its new leadership as assortments are standardized and new private brands gain traction. On recent visits, I did notice quite a bit of “air” and out-of-stocks so hopefully the stores aren’t robbing shelves in order to fulfill online orders. Either way, Bed Bath & Beyond is making bold moves that, once the bugs are worked out, make it more competitive.
The percentage of online orders fulfilled by stores will depend on retail segment. Some segments like grocery and department stores have huge inventories and can fulfill 80 percent to 100 percent of online orders from local stores. However specialty stores with limited inventory will have much lower fulfill from store rates. Off hour pick-up options are a valuable convenience for customers and I suspect we may see more retailers using lockers to offer 24-hour pick-up options.
The key here is to fulfill customer expectations with a retail model that treats stores like warehouses/fulfillment centers, while maximizing the availability of product to customers. This means longer hours, enhanced selection, and speedier fulfillment. This is a win/win for everyone!
There truly isn’t an ideal percentage of online orders that retailers should fulfill from stores. The customer will ultimately dictate how much of this should be based on their shopping behaviors. However Bed Bath & Beyond and other major retailers should capitalize on this opportunity and leverage their physical location as BOPIS and curbside pickup fulfillment centers. This provides an outstanding customer-first experience, mitigating some significant supply chain costs and driving increased profitability.
Bed Bath & Beyond has taken significant steps to shift to a digital-first and omni-always organization. The next steps of the journey are to remove as much of the manual processes as possible and look to automate the picking and fulfillment process to mitigate the crucial last mile.
The percentage of online orders a retailer should fulfill from a store will depend on a number of factors, which include proximity of the store to customers, the size of the store, store sales (non e-comm) and the replenishment cycle. Fulfilling from stores is a great way to reduce last mile costs and speed up delivery, but not at the expense of store sales. If a store has great sales per square feet (again, non e-comm), using inventory from that store to fulfill online orders may cannibalize store sales — which are higher margin because no shipping is involved.
An alternative could be to open a micro-fulfillment center (i.e. an extra stock room) adjacent to the store to fulfill online orders.
Hyperlocal fulfillment/micro-fulfillment–whatever you want to call it–requires striking a balance between meeting both physical and digital shoppers’ expectations.
I love the line in the question above that says, when life gets back to normal. There is NO NORMAL anymore. What is normal today most likely will not be normal in 3 months.