Is in-store pickup really a win for shoppers and retailers?
As consumers continue to embrace a range of ‘bricks & mortar’ and online shopping options, retailers are stepping up to the plate.
And it’s working. Research that WisePlum conducted with the Retail Council of Canada and Microsoft found that 29 percent of customers did their specialty store shopping online. For mass merchandiser shopping, online adoption was slightly lower at 24 percent.
Moreover, the study also found that online shoppers were generally happy with their experience — 68 percent of online department store shoppers said they would ‘definitely recommend’ their department store retailer.
A third, hybrid option is also becoming increasingly popular — online shopping combined with in-store pickup. This option promises benefits to both consumers and retailers alike, but does the reality live up to the hype? A closer examination points to a mixed picture:
Benefits to consumers
No shipping costs. Perhaps the most popular reason that customers use in-store pickup is to avoid paying shipping charges.
Ability to physically inspect purchases. Many consumers love the ease of online shopping but prefer to view their purchases live before completing the transaction.
Instant returns. The WisePlum study found that the inconvenience and shipping fees associated with returning items were the top complaints for online shoppers. In-store pickup gives customers the ability to return a product on the spot — and at no charge — for whatever reason.
Convenience. Online ordering and in-store pickup provide flexibility for shoppers — they can order at any time, and pick up their purchases during store hours.
Less time in the store. In-store pickup holds the promise of a quick getaway. Shoppers can spend minimal time in the store, even during peak hours or sale events.
The growing pains
Lack of inventory. Many consumers are eager to order online, only to learn that their purchases are not immediately available for pickup at their store of choice. With next day delivery now the norm, shoppers find this delay frustrating, and as a result, many will not consider in-store pickup in the future.
Confusing process. In-store pickup is new for many retailers, and often staff members are unfamiliar with procedures for inventory retrieval and checkout. Many retailers also locate pick-up at the back of the store or co-locate it with customer service. All of these can slow down purchase pickup for customers, creating an overall negative shopping experience.
Long lines. It’s no secret that for many retail customers standing in the check-out is a pet peeve. Online shoppers who pick up in-store are often dismayed to discover long pick-up lines — precisely what they were hoping to avoid when shopping online in the first place.
What about retailers?
At first blush, in-store pickup appears to be a win across the board for retailers. It certainly drives more traffic to stores, and many customers picking up are likely to make additional purchases.
Retailers also don’t have to offer free delivery to customers picking up in-store — depending on volumes, that can translate into meaningful savings. They may also require fewer store salespeople or customer service staff if they are completing significant percentages of sales online.
But retailers betting on in-store pickup also face major challenges:
Inventory and order management. These in-store applications and processes often need to be overhauled to accommodate customer pick-ups.
Substitutions. When a product is out of stock, retailers may choose to surprise and delight their customers by offering a larger size or premium replacement product item. If they opt for this strategy, how do they forecast and manage additional costs?
New equipment and store redesign. Both store floors and backroom warehousing may need to be retrofitted to support in-store pickup.
Staff training. In many ways, in-store pickup can be considered a separate retail operation within the store. Both existing and new staff need to be trained to understand the nuances and promote a positive customer experience.
Most retailers will feel compelled to embrace in-store pickup. Larger players are already adopting the practice — Walmart Canada announced free pick-up in May, and Best Buy features ‘reserve online and pick up in-store within 20 minutes.’
Just as next-day and free shipping have become table stakes for many shoppers, in-store pickup is sure to follow.
With widespread adoption, however, comes the opportunity for differentiation. Some retailers will undoubtedly take the lead and find ways to improve in-store pick-up — delivering a better customer experience, and potentially disrupting the competition.
Michael Tropp is a WisePlum contributor.