The Buy Online, Pick-Up In-Store Wars
By Tom Ryan
Mimicking the pizza delivery wars of the eighties, retail turf
battles are occurring in the "Buy Online, Pick-Up In-Store” arena,
according to Kurt Salmon Associates. The need for turnaround speed comes as
several retailers report that 40 percent of their online purchases are being
picked up in-store.
On the one hand, the push is for shortest turnaround times.
The average promised turn time is two hours, according to KSA. But Best Buy
recently reduced its turnaround guarantee to 45 minutes. Lowe’s just
cut its turnaround time to 20 minutes. Still, some retailers’ guarantees
remain within four hours.
Wait time is also critical at the pickup counter.
Sears hands out $5.00 coupons if it takes longer than five minutes for a customer
to get their order once they reach the store.
"Once the offering is ubiquitous, speed will be the killer app," said
Noam Paransky, a retail strategist at Kurt Salmon Associates, in an interview
For the most part, he said, the performance has been good.
a board when you arrive at the pick-up counter that shows how long you (and
others) have been waiting (by last name) and shows their previous day and previous
month performance relative to their 5 minute promise," said
Mr. Paransky. "We recently shopped a store that was at 100 percent the
previous day and 98 percent the previous month. We received our order at the
counter in 53 seconds."
But the required functionality can be challenging
during peak shopping times. Some inventory listed may already be in customers’ shopping
carts and result in angry consumers at the pick-up counter. Under-reporting
inventory will risk unsold merchandise on the shelf. Walmart recently suffered
a service failure where they offered items that were part of a limited stock,
"Some shoppers had items sell out in the midst of their online checkout," said
Mr. Paransky. "Others received order confirmations only to find out later
that the item was no longer available when they went to pick it up and were
offered instead what consumers thought was an inferior substitute."
Paransky said tight inventory management and a near real-time inventory feed
to the web store is critical for reducing the likelihood of service failures.
He believes pick-up confirmations shouldn’t be sent out until the order is
complete and waiting at the pick-up counter.
"Nothing related to this service appears to create ‘customers gone
wild’ more than coming into the store to find out their order cannot be
satisfied after being told otherwise," said Mr. Paransky.
But he said retailers
will particularly benefit if they can effectively encourage a second in-store
visit at the time of pick-up. He also expects the service will continue to
grow since consumers are clearly enjoying the convenience.
"Consumers want instant gratification," said Mr. Paransky.
Questions: What challenges will retailers encounter as "Buy
Online, Pick-Up In-Store” becomes more pervasive? What logistical as
well as in-store operational issues will likely crop up?