Will a new BOPIS option boost Amazon’s results?

Discussion
Photo: Amazon
Jul 01, 2019
Tom Ryan

In what some reports defined as the e-commerce giant’s launch of BOPIS, Amazon.com last week formally introduced Counter, which allows its customers to pick up packages at third-party retail locations. 

Rite Aid will be Amazon’s first Counter partner in the U.S. The service launched last week at more than a hundred Rite Aid stores and is set to reach over 1,500 by year’s end. Amazon is actively looking to bring additional partners on board, including small to midsize businesses and other large chains.

Initially rolled out quietly in the U.K. and Italy, Counter hasbeen positively received, driving strong customer engagement and additional foot traffic for partners,” according to Amazon’s statement.

The service is available at no extra cost for all Amazon shipping options, including same-day and next-day delivery.

Amazon, which in April revealed plans to reduce its free Prime shipping guarantee from two days to one, gains more ways to meet delivery promises with the new service.


Amazon Introduces Counter in the U.S. – Where Customers Can Pick Up Their Package and Shop Too – YouTube

The option complements the more than 3,000 Amazon Lockers for self-service pickup and returns that have been installed in convenience stores, local grocers, copy centers, Stein Marts and Whole Foods Markets. Rite Aid has more than 300 Lockers. Lockers are also located at some campuses and apartment complexes. Kohl’s accepts returns in its locations.

Customers gain another delivery option and some protections against package theft.

For retail partners, Counter’s “straightforward pickup flow and user-friendly technology helps ensure store associates can serve customers without disrupting their daily activities.” The benefit is expected to be extra traffic. Said Jocelyn Konrad, EVP, pharmacy and retail operations of Rite Aid, “Being the first store partner for Counter in the U.S. is a differentiator for Rite Aid.” 

Amazon said Counter is not connected to its other efforts to get into pharmacy retailing, such as its purchase of startup PillPack last year.

“With Counter, we’ve leveraged our growing logistics network and invested in new, easy to use technology to give customers yet another delivery option rooted in flexibility and control,” Patrick Supanc, worldwide director of Amazon Hub, said in a statement.

DISCUSSION QUESTIONS: Does Amazon need a personnel-assisted Counter option at stores in addition to Lockers? Should third-party retailers welcome Counter with open arms?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"From a retailer perspective, this could be a good strategy to increase foot traffic in their stores and, hopefully, increase sales."
"Amazon has also been aggressively exploring how to expand into brick-and-mortar."
"Retailers that don’t participate in this program won’t get the additional traffic and will therefore be at a disadvantage."

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32 Comments on "Will a new BOPIS option boost Amazon’s results?"


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Shep Hyken
BrainTrust

This is simply another option for customers to get their merchandise. It’s all about offering up a convenient experience, and this alternative could be seen by many customers as easy and convenient. In addition, this is a great way to get customers into a store. Foot traffic counts!

Paula Rosenblum
BrainTrust

The data is now unambiguous and clear – for most categories of merchandise, stores remain retailers’ most profitable selling avenue.

As it enters a more mature part of its lifecycle, I think Amazon needs stores. You can’t live on 40 percent returns in apparel, and you can’t market your way to profitability.

It can sell electronics and book online, but just about every other category leaks profits when sold direct to consumer, with little chance of impulse buys and add-on sales.

Georganne Bender
BrainTrust

I attended a panel at GlobalShop which shared that once an online retailer reaches 10 million in sales it hits a wall and needs to open brick-and-mortar stores.

Ryan Mathews
BrainTrust

I worry that may be “old think.” What was true in the past isn’t necessarily going to be true in the future.

Georganne Bender
BrainTrust

The panel was moderated by Melissa Gonzales, CEO of the Lionesque Group. Panelists were from Stella & Dot, Burrow and Showfields. I asked for clarification and Melissa backed it up with facts.

Bob Amster
BrainTrust

The retailers that act as the pick-up points are the ones that need the BOPIS option more. The concept creates not just the foot traffic but the interpersonal interaction, and the potentially extended stay in their stores. For Amazon, it means rounding out the array of offerings for delivery.

David Naumann
BrainTrust
David Naumann
Vice President, Retail Marketing, enVista
1 month 16 days ago

Counter is another way Amazon is providing customers more options while lowering the cost of delivery. Most customers are accustomed to getting Amazon packages at their homes, however, recent news about porch pirates has made some customers a little nervous about getting packages delivered when they are not home. Counter offers an alternative and if they regularly visit a store like Rite Aid, they can kill two birds with one stone.

Delivery to Counter locations will likely reduce the last mile delivery costs for Amazon, which is probably the key driver of this decision. From a retailer perspective, this could be a good strategy to increase foot traffic in their stores and, hopefully, increase sales.

Ken Cassar
BrainTrust

Retail (and business and life, more broadly) is not always a zero sum game and Counter is a perfect example. Rite Aid needs store traffic, Amazon needs to expand its brick-and-mortar footprint, and has realized that acquisitions of retail chains can be painful (Whole Foods).

David Weinand
BrainTrust

Amazon’s strategy of ongoing “coopetition” seems to be extending its tentacles to an industry resigned to joining vs. fighting. The power of the Amazon brand and subsequent customer base is just too big now for retailers other than maybe the top five to fight. If they can achieve some percentages of enhanced attachment rate via partnering w/ Amazon then it seems whatever tools they roll out (lockers, Counters), retailers will jump on it. Should they do it? I think at some point sleeping with the enemy will come back to hurt them.

Liz Adamson
BrainTrust

Amazon is constantly looking for ways to improve the customer experience especially around delivery. With reports of packages being stolen off of porches, this is another way customers can get their packages without worrying about porch pirates.

Amazon has also been aggressively exploring how to expand into brick-and-mortar. With its partnership with Kohl’s, Amazon Go, the acquisition of Whole Foods, and now an BOPIS option with Rite Aid, it’s gathering data to figure out it’s next step in its expansion.

Brandon Rael
BrainTrust

Just as retailers and brands are capitalizing by being part of the Amazon online marketplace, there is another opportunity to partner with Amazon via the Counter services to drive the most precious commodity in retail, foot traffic to their stores.

There are far more advantages for third-party retailers to open up their doors for Amazon product pickups and returns. Convenience is king, however, the partnering retailers will have a chance to engage, entertain and perhaps draw new customers to their stores, that otherwise may never have happened.

Ben Ball
BrainTrust

Amazon reduces delivery costs substantially, offers their customer another option and gets free labor from the retail partner (RAD in this case) in exchange for more foot traffic. What’s not to like?

Ryan Mathews
BrainTrust

Ben, fair point IF the foot traffic follows. But how many people are going to want to struggle with their Amazon purchases AND more items?

LAURA RAMIREZ
Guest

Counter partners are going to need to shift compelling storytelling up to the front/pick-up area if they are to convert someone who is keen on just picking up a package vs. considering other in-store needs. It won’t be as easy as thinking traffic increase equates to additional revenue.

Jeff Sward
BrainTrust

It’s a positive thing that Amazon is going into some level of brick-and-mortar retailing, even if it’s just starting with some kind of “service/assist” set-up. But … it’s available “at no extra cost” to the customer but surely comes at extra cost for Amazon. Or is the retailer picking up the payroll for this service for the privilege of hosting an Amazon Counter? This sounds great from the customer’s point of view, but I’d love to know more about how all the gears mesh on this model.

Harley Feldman
BrainTrust

Amazon does not need a personnel-assisted Counter option in stores. The task is for the customer to pick up their Amazon-purchased items and does not require a person in the loop.

Third-party retailers should get a bump in sales when customers retrieve their Amazon packages. However, the advantage that retailers like Walmart have vs. Amazon is that the added sales to the third-party will not yield additional sales to Amazon or additional revenue unless Amazon chooses to give them a percentage of sales. Third-party retailers should evaluate and test Counter before welcoming the option to their stores.

Ryan Mathews
BrainTrust

Nobody should welcome “the enemy” with open arms unless it is to encourage them to walk into a trap. The Counter option holds out lots of potential for Amazon, less for its potential partners. The idea isn’t all that new. Back in the early days Amazon had a similar program with 7-Eleven in Tokyo. So the question should be, “Does Amazon want a personnel-assisted Counter option at stores in addition to Lockers?” And the answer to that question is yes. After all, how can more distribution points hurt them?

Rich Kizer
BrainTrust

Well, this can be a win for Amazon. And for Rite Aid? Yes it will build footprints probably to 35 feet into the store, and then out the door. Most retailers’ desire is to at least have a customer journey through the store that requires customers to see what they didn’t expect or even know they needed/wanted. Win for Amazon, maybe incidental sales for Rite Aid.

Doug Garnett
BrainTrust

The retailers won’t be able to complain about this — BOPIS has an impact on store sales.

But what is Amazon doing? I rated this “very unimportant” to Amazon — at least to their results.

The good part for Amazon is helping to solve the package security problem. But the good ends there.

When a retailer has BOPIS, they benefit because a large percentage of product is already at the store. However, Amazon will have to ship each product into the store in single packages (maybe aggregated groups of single packages).

So this does nothing for Amazon’s fundamental problem: Losing money on each sale.

Andrew Blatherwick
BrainTrust
For consumers, Amazon and even the retailers concerned, this is a positive move. Not everyone lives near or has access to the lockers and many do not like them anyway. For Amazon, it gives better service options to customers. For customers, it provides more convenience. For the retailers, it will certainly increase traffic flow, which in today’s economy and retail climate is so important. However, it is also a double-edged sword for the retailer. Do they really want to encourage and make it easier for their biggest and most dangerous competitor to thrive? This is particularly true in the case of Rite Aid. Amazon is committed to cracking the pharmacy market, which will undoubtedly hurt Rite Aid significantly. So why are they looking to help Amazon? Are they so desperate for traffic? Do they believe that they can beat Amazon if they have this traffic? I really do not understand the thinking. Where I can understand this is for retailers that are not directly competing with Amazon, if you can think of one! Or smaller… Read more »
Dave Bruno
BrainTrust

Hmmmm. Given Amazon’s recent forays into the drug category, I am not sure if I were Rite Aid I would invite the fox into the henhouse. Traffic is good, of course, but this feels like short-term gain in exchange for long-term pain…

LAURA RAMIREZ
Guest

Or maybe Amazon’s presence will highlight some pain points and necessary changes that which when implemented, will make said Counter partners better stores that can compete in a crowded marketplace and ultimately provide more for their customers and increase retention. (ftr: I’m not a fan of Amazon)

Mark Price
BrainTrust

Specific segments of customers will desire the human interaction of Counter to assist with pickup, putting packages in their cars and addressing issues (such as product damage, incorrect SKU, etc.) immediately. This additional method of interaction helps put more of a face on Amazon and improves perception of customer service.

Retailers should welcome Counter due to incremental traffic, a percent of which will make impulse purchases in the store. Clear win.

Greg Zakowicz
Guest

This makes perfect sense for them, as it creates more convenience for customers and should help reduce overall costs in the long-term. And seeing as consumers do make unplanned purchases while using BOPIS, I think it makes sense for retail partners to open their doors to a frenemy like Amazon. As they say, keep your enemies closer.

I also think this could signal another step toward tiered Prime membership levels. They have already provided a day of the week delivery option as well as moving to one-day shipping. There could easily be a day where different membership levels determine the speed, with maybe the lowest-cost option being the day of the week delivery or pick-up only, mid-tier with two-day or location pick-up, and top tier being one-day delivery (and maybe an included Prime Now benefit).

Ken Morris
BrainTrust

Amazon is continuing to expand its presence by offering consumers another delivery option while potentially lowering their cost of delivery. While lockers are a great idea, there are some consumers who prefer dealing with a human being to ensure they receive the service they require and this offers them a “live” option. For retailers such as Rite Aid this is a “no brainer” way to get more traffic into their stores and convert the traffic they already get. Consumers want options and convenience and this offers them both.

Ricardo Belmar
BrainTrust

For Amazon, this is about providing every possible pickup or delivery choice conceivable for customers. Amazon has built its brand on convenience in shopping and Counter is the latest reflection of that approach. Furthermore, this allows Amazon to anchor its brand into even more brick-and-mortar locations without having to open more of its own stores. It’s a good strategy for them and clearly a win for Amazon and its customers. For the retailers like Rite Aid who choose to participate in Counter – this is certainly a play for increased foot traffic, much as Kohl’s has done by accepting Amazon returns. I suspect mileage will vary for retailers on this aspect and it will depend on what product categories they sell as to whether or not customers will stay in the store and shop for other items.

David Dorf
BrainTrust

This is a win-win-win. Consumers get another option to receive packages and avoid porch theft; Amazon expands delivery options (and in some cases returns); retailers like Rite Aid get additional foot traffic. Some will prefer lockers, but this solution addresses those that prefer speaking to an associate. Retailers that don’t participate in this program won’t get the additional traffic and will therefore be at a disadvantage.

Richard J. George, Ph.D.
BrainTrust

This is a classic case where all parties win. Customers have another delivery option, Amazon saves on shipping costs, and participating retailers generate incremental volume thru extra traffic. Amazon continues its customer centric delivery focus while reducing its logistics expenses. Amazon is not finished experimenting.

Mohamed Amer
BrainTrust

The more customer options, the better unless they become complex and overwhelming. So far, Amazon has been careful to keep the user interface simple and the options intuitive. With more BOPIS and (future) drone deliveries (PrimeAir), the company needs to ensure it doesn’t trip over its mega-success. The “counter” is another excellent addition to the menu.

Bob Andersen
Guest

I haven’t used a Locker, but many Amazon customers may be hesitant to figure out how a locker works and prefer to have a live person retrieve their package. For Rite Aid it will drive incremental traffic which for brick and mortar stores is getting harder and harder to do. Not sure how long the contract goes for, but there must be an opt out for Rite Aid if the partnership doesn’t deliver the incremental sales it hoped for.

Ananda Chakravarty
BrainTrust

Amazon’s move here is way overdue. UPS has its Access Points program at numerous localized pickup spots, FedEx with Delivery Manager program at many Walgreens locations. The effort by Amazon here is tied to localized, last mile delivery, not really tied to its selling or even availability of products.

Rite Aid is hurting, with not so stellar 1st quarter results, so an appropriate deal with Amazon on distribution completely makes sense. That said, it’s not a win for everyone and for all intents and purposes, 100 or even 1500 locations for Amazon will hardly move the needle. The top 2 US drugstore chains have around 10,000 stores each. What it does do is reinforce the value and importance of BOPIS for retailers.

Brent Biddulph
BrainTrust

At the risk of stating the obvious here — Amazon figures out how to leverage desperate, undifferentiated traditional retail brick and mortar brands, and locations.

wpDiscuz
Braintrust
"From a retailer perspective, this could be a good strategy to increase foot traffic in their stores and, hopefully, increase sales."
"Amazon has also been aggressively exploring how to expand into brick-and-mortar."
"Retailers that don’t participate in this program won’t get the additional traffic and will therefore be at a disadvantage."

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