Photo: Walmart
What should stores do about BOPIS abandonment?
BOPIS abandonment, or when a user cancels or fails to collect their online purchases at the store, is a “surprisingly frequent occurrence,” according to a recent Forrester report, “Abolish Abandon Rates For In-Store Pickup.”
The report cites a Forrester survey from 2015 that found that that just below 30 percent of all BOPIS users and 40 percent of Millennials had abandoned a BOPIS purchase in the past three months.
Those abandoning a BOPIS pickup cited a variety of reasons for doing so. These included choosing to have the item shipped to their home instead, finding a better deal from another store, changing their mind, and forgetting to do the pickup. Other reasons given included finding that the item was not ready to pick up when they arrived and not liking the item once they saw it. Retailers often incur costs from the loss of a sale, needlessly reserving inventory and the waste of associates’ time.
Kevon Hills, SVP, operations and insights at StellaService, also told RetailWire that certain retailers would run up additional costs because they use ship-to-store to fulfill BOPIS orders.
With BOPIS users often spending more when they arrive at the store, charging a BOPIS fee to dissuade abandonment — even if redeemable — may be counterproductive.
The Forrester report advises reducing the risks of “No-Shows” by making it a priority for stores to fulfill orders quickly. The quicker a notification is received, the more likely they are to be picked up. Other recommendations include sending “thank you” e-mails, employing marketing that highlights the benefits of BOPIS (i.e., saving on shipping), and sending steady reminders.
“Having full inventory transparency can help by allowing items to be restocked in store versus going back to a warehouse,” suggested Mr. Hills. “Also having clear training and incentives in place for associates so that they know how to handle cancelled orders can help mitigate friction.”
Discussion Questions
DISCUSSION QUESTIONS: How aggressively should retailers work to reduce BOPIS abandonment? What advice would you have for reducing the occurrence and/or the impact of BOPIS abandonment?
Poll
BrainTrust
Ori Marom
Founder and CEO, Segmentis
Lee Kent
Principal, Your Retail Authority, LLC
At the recent meeting of the Store Operations Council, retailers discussed the incentives they had to put in place for stores to fulfill these orders. They emphasized that giving the online P&L “credit” for the sale while asking stores to do that work was getting massive push-back from stores. Abandoned orders won’t do anything to improve that. I wonder if texting reminders, instead of emailing them, would cause purchasers to abandon orders less.
BOPIS, like e-commerce returns, cost retailers millions of dollars each year. Retailers need to manage BOPIS abandonment carefully, lest they destroy customer relationships. My first instinct is to charge consumers a fee for abandoning their orders, much as merchants reserve the right to charge a restocking fee on returned merchandise. My second thought is for retailers to be transparent with consumers about the cost of fulfilling their orders — make consumers partners in the process. Perhaps with better understanding of the costs involved, consumers will become more sensitive to abandoning orders.
As a consumer, why on earth would I want to pay you any more than the lowest prices that I can find?
They need to aggressively address BOPIS abandonment. It is a no-brainer in that it incurs a cost. But it MUST be seen as a BEST PRACTICE initiative and not a breakthrough modern wonder.
If you want to reduce BOPIS abandonment stop abandoning the customer who has chosen to pick-up the order in the store. Make it quicker, simpler and easier. Not exactly brain surgery.
If 30 percent to 40 percent of BOPIS orders are abandoned, the metrics saying it is necessary and preferable need to reflect that. “Credit for the sale” will be with us for the foreseeable future with a battle between online and in-store. If associates are supposed to run around the store speedily picking orders — at the expense of customer service to those who actually DID come to the store — and 40 percent are wasted ventures, I’d say that’s counterproductive. In fact, I’d say that’s dumb — especially when ship-to-store is included in the mix.
Tom already nails two important aspects. First is notifying the consumer right away. In the click-and-collect world, a strong order management system (OMS) will provide this type of flexible communications. To Cathy’s point, email is a great way to notify customers, but you need to have the flexibility to notify them on the platform of their choice. That could be text reminders, email, Snapchat, Twitter DM or an Instagram product shot.
Second, because abandonment is going to happen and is unavoidable (cost of doing business), here too retailers need the right OMS technology that can process a return/failed pickup and put it back into store inventory, then show it to other online customers. What one customer does not want, another will be eager to purchase.
What is the cost of an abandoned order? What percentage of orders are abandoned? The customer pays in advance. Rather than penalize the customer when they don’t pick up, how about an incentive when they do? Maybe it’s a small rebate or discount on the next order. It would be interesting to see how an incentive reduces the number of abandoned orders.
It depends on the retailer’s experience with the abandonment rates incurred. While this is a metric that should be tracked, I am not sure that it is by all retailers. Like many expenses until it reaches a certain threshold it will receive little to no attention.
However, the best way to make sure it does not become a big expense is to set up practices and procedures early on. While I am not sure how it would be received by the customers, charging their credit card when the item is ordered rather than at the time of pickup should encourage more consumers to complete the purchase process. That way they would have skin in the game.
On the bright side, it’s less expensive than a full delivered-at-home return. Eventually all these costs have to make it into the product margin model. At some points retailers will have to figure out if a dedicated warehouse/BOPIS depot is more cost effective than a store, particularly if that depot also serves as a distribution point for store inventory and stock balancing as well.
The empowerment of the customer comes at great cost to retailers. To me, BOPIS abandonment looks very much like product return which customers absolutely expect to involve no hassle at all.
The power resides with the customer. Progressive retailers should accept this fact rather than resist it. The problem, of course, is that no retailer can make a profit in such a hostile environment.
It is therefore high time for DEEP change that must come with a new business model and a novel type of coalition between manufacturers and physical retailers.
With online purchasing came higher returns! For many reasons such as buying multiple sizes to get the right one, getting caught up in the moment and then realizing it was a mistake, whatever. The truth is, the easier we make shopping for consumers, the more fickle they become. I honestly don’t have a great idea for this issue but charging them a fee is not it. That will turn away our very demanding consumers big-time.
Retailers who price match may be able to reduce some of those losses otherwise. I too am all about transparency. One thought that came to my mind is what UPS does. You can watch your package move along the path and it seems to create an eagerness. Then you get to give them special instructions about where and when to drop it. Now, I know we are talking about BOPIS, so just put that concept into context. Create an eagerness, let the consumer in on the process, price match, incent them and maybe we can reduce the losses.
Just a few thoughts for my 2 cents.
In a few words? Very aggressively! Why? Because there is no free lunch and it is costing retailers handling and possibly shipping costs to get the product to the pickup location. BOPIS is not free and someone has to pay the piper. Retailers can reduce abandonment by charging a forfeit penalty (marketing impact?), raising prices (not a desirable alternative), charging for the confirmed product up-front (legality?) and probably more options of which I have not yet thought. One way or another, this will sort itself out when a balance can be struck between fairness, customer service and foolishness.
BOPIS is NOT for wimps and wusses! It requires excellent execution everyday. While BOPIS represents the opportunity to drive store traffic and additional sales, it also carries grave risks if not executed flawlessly. Bottom line, consumers expect their purchase to be there, and they expect to collect it far more quickly than having to go through the cashier lane. A very high percentage of customers who have one BOPIS failure (more than 37 percent) become very high risks as future BOPIS abandoners.
To accomplish BOPIS and reduce abandonment, retailers need to be able to have new systems, skills and competencies: real time shelf inventory, dedicated BOPIS space front and center, well-trained BOPIS staff who are more than just clerks, immediate confirmation of BOPIS orders/purchases, text and other reminders, and the list goes on.
And underlying all of this, everyone in the retail organization has to be aligned on BOPIS as total strategy without any internal competition over who gets credit for the sale or dividing commissions.
Retailers can ill afford to put BOPIS in stores because it is a trend. Tom Dougherty has it right … the best way to reduce BOPIS abandonment is to make BOPIS a BEST PRACTICE (and an essential for future survival).
The reality is twofold:
Although I agree that retail stores must be customer-centric in order to compete, customers should expect to be held accountable for their orders. Some customers may indeed spend money when they go to the store to retrieve the order, but many won’t go to the store at all.
A $10 holding fee is reasonable for items ordered from other locations. This 10 dollars can go towards the purchase when customers pick it up. By all means, be transparent. If retailers don’t encourage customer accountability, they can’t keep prices low.
Just as e-commerce brands charge customers for return shipping, it’s only fair for BOPIS abandoners who “just forget” to recoup a small portion of the cost.
A $10 fee to buy from a retailer will just turn people off.
Sadly the “Amazon Model” has the most efficient and highest profit of merchandising options. Retailers are going to find out that the pickup options will actually cost them more money, time and personnel than the direct-ship model. I can’t see the pickup model even lasting beyond another year once the costs start affecting the bottom line.
There must be a way to automate the hold to ensure inventory flow isn’t jammed and customers are delighted. An app that puts a clock on the request, captures an email/cellphone number, confirms the hold and appoints the time of pick up with followup reminders. My library has this. So it exists.
I agree with all that say the shopper is in charge. The opportunity to solve her problem her must be optimized. Communication would help.
Or as we say, “retail ain’t for sissies!”
Based on consumers’ expectations, BOPIS is now an essential service that retailers need to accommodate. With this service comes good things (incremental sales when the customer comes to the store to pick up their items) and not so good things (BOPIS abandonment). I don’t think charging for abandonments is worth it, as it will only damage your goodwill with the customer.
The best approach is to communicate with the and provide special offers to visit the store to pick up their items. Communicating in the medium individual customers prefer is key. Let them choose if they prefer email, text or some other social media messaging service. Frequent communication on the status of their purchase will also help, such as: your order is now ready for pick-up, reminder – your order is waiting for you, we look forward to seeing you when you pick up your products or offering to ship the item to their door. Another marketing strategy is to provide them an incentive to visit your store to pick-up their order. “Here is a XX% off coupon for other in-store purchases when you pick-up your order.”
At-store pickup of online orders will have a very different impact depending upon the type of merchandise being purchased. Grocery orders, for example, are much more complex to pick and pack compared with an individual item like an HDTV or a sweater. Abandoned grocery items are correspondingly more challenging to return to inventory (if they can be at all). But I’ll take a guess that grocery order abandonment rates are probably lower than consumer electronics or apparel. (Anybody collecting any data on this yet?)
Each retail sector will need to identify and define its own best practices and policies. The chain pharmacy sector provides one potential model worth studying. How many of us regularly order our prescription renewals by phone or online and collect them from the drive-in window? Are some orders abandoned? Surely. Pharmacies have very precise rules about how, when and if the items can be returned to inventory.
In the grocery sector, I could see merit in a no-refund policy regarding abandoned prepared foods orders. In consumer electronics, a re-stocking fee might apply. Retailers will need to test the waters on this, and perhaps educate shoppers as to why these policies allow them to charge the lowest possible retail prices.
Interesting topic (and, I might add, the kind of “real world complication” that is never anticipated when pundits are predicting the future). Two thoughts:
Given what we learned by leveraging human learning + machine reasoning, we see in-store pickups less favorably to drive sales. This is because in-store pickup works against the shopper’s psyche on why they do what we do. Regardless, here are few tips to reduce BOPIS rate:
1. PREDICT: Use information theory modeling to predict which item(s) consumers abandon. Do this as a multi-layer segmentation approach — segment consumers and SKUs. This exercise would also require data from the supply chain, consumer proximity, consumer segment, etc.
2. PRESCRIBE: Run revenue optimization models to find thresholds of profitability and loss. Find the cost of lost sale and then offer an additional incentive to pick the item.
3. TACTICAL: Through our human learning modeling, we have learned that when you show a customer how much effort went behind the offering, they are far more likely to appreciate it. Using this approach, alert them at every stage of the supply chain — when the item is getting prepared, packaged, leaves the warehouse, in transit, reaches to store, and waiting for pick-up. Note that each segment requires a different kind of messaging — a GEN Y would receive a different type of alerts vs. GEN X or Boomer.
We recently implemented the above strategies and were able to reduce the abandonment rate by 4%. But as an organization, we believe in-store pickup is not a sustainable model to drive sales.
The cost of this can easily erase any potential profit gains when you consider the labor involved, let alone the often damaged goods when orders are abandoned. Retailers need to look at the root causes and mitigate the risks for these added costs quickly. Some suggestions, like stronger, more intense follow up with the customer, or added incentives to pick up the order may help in some cases.
Another great article on the issue of BOPIS, and for me as someone owns a supermarket, this problem is deeper than what I am reading. First off, it costs real money to create this, which includes refrigerated storage, a scanning system to track the right orders, dry good bins for the center aisle stuff, and having all this perfectly married together when the customer arrives, and wants their product right now! That alone costs money, and unless prices are high enough to cover it, profits will suffer.
I take orders online for meats, deli, and bakery, and pick up percentage is about 99%, so I will stick with that, and we call or text them when the order is ready.
If you are going to commit to BOPIS, you better be prepared to do it right every single time, and by all means, make a profit on it.