Retailers seeking to provide rapid deliveries face an ever-moving target as consumers’ definition of speed evolves.
Customers who were once content to wait three to five business days for packages have become accustomed to Amazon Prime’s free two-day delivery and expect to find such conveniences elsewhere, for example.
Studies suggest that even next-day delivery may be too slow. A significant share of Generation Z consumers — those aged 18 to 25 — are turning to buy online, pick up in store (BOPIS) purchasing models to meet their speed needs. This method allows consumers to use retailers’ websites or apps to browse, select and pay for items, after which they then visit physical stores to collect their goods.
Retailers are embracing the BOPIS — or click-and-collect — trend as they seek to get an edge over Amazon and other eCommerce giants. Some stores are leveraging automation to make the click-and-collect experience faster as well as cheaper and easier to manage.
This month’s Deep Dive explores the growing demand for BOPIS options — particularly among Gen Z and rural consumers as well as busy professionals — and how retailers are looking to use automation to provide more robust, convenient services.
Quick Access and Impulses
Retailers are adopting click-and-collect to appeal to younger consumers. A 2019 survey of 1,000 Gen Z consumers found that 58 percent had used BOPIS. An additional 60 percent said the availability of automated pickup lockers affected which retailers they chose to buy from.
Young consumers appear drawn to this purchasing model because it provides the advantages of physical retail alongside the key benefits of eCommerce. Survey respondents highlighted the value of in-store collection because it offers immediate access to goods, while online purchasing ensured them that the products they want will be in stock and waiting for them.
The survey also found that 59 percent of respondents turned to BOPIS to get items faster than online shopping can provide. Thirty-two percent said they would be willing to wait up to two days to receive purchases, 24 percent would wait only a few hours and 8 percent would not wait more than one hour.
Retailers can win doubly from click-and-collect shopping. Not only is it in demand, but those who come into stores are more prone to impulse buy than those who shop online. A study found that just 3 percent of shoppers browsing products online make purchases, whereas the browse-to-purchase conversion rate can be as high as 60 percent in some physical stores.
Reaching Rural Customers and Busy Professionals
BOPIS also appeals to customers in rural locations who are less likely to have affordable home delivery options. Postal carriers must travel farther to reach these consumers, meaning it is not always profitable for carriers like FedEx and UPS to serve those locales. Rural customers may therefore see diminished online delivery offerings. Amazon Prime members in the 48 contiguous U.S. states receive free two-day shipping, while members in Alaska have access only to free shipping within three to seven business days.
Some retailers are looking to BOPIS to fill this service gap and compete against the likes of Amazon. These retailers have goods delivered to their brick-and-mortar locations rather than undergoing the more expensive prospect of delivering to each individual customer.
Tractor Supply Co. is one such retail chain with a rural customer base that embraced this model for its equipment, bulk animal feed and other items. Steve Barbarick, the company’s chief operating officer and president, credited Q2 2019’s strong sales to BOPIS and in-store fulfillment.
Even urbanites can struggle with eCommerce deliveries. Customers who work in offices during the day or are otherwise unable to be home to pick up packages may fear porch pirates. Some may be willing to install smart locks, allowing delivery drivers to bring packages inside, but many prefer to have items delivered securely to store staff for later pickup or to self-serve solutions, such as lockers placed in convenience stores.
Risks and Automation Supports
Retailers may find it challenging to provide convenient and secure BOPIS services, however. Enabling this model could mean deploying new fraud-fighting strategies while also retraining staff to handle item pickups.
Fraudsters could use stolen credit cards to place orders, then collect the items to keep or sell. Customers who discover such crimes can hit retailers with painful chargebacks. Card issuers are liable for in-store purchases, but BOPIS involves card-not-present (CNP) transactions, putting retailers on the hook for any fraud.
Behavioral analysis tools can identify instances of suspicious activity, while automation solutions can reduce the work retailers must undergo to provide BOPIS and accelerate pickup processes. A study of shopping experiences at 10 major U.S. retailers found that stores providing automated pickup — as opposed to staffed pickup — for BOPIS purchases had 28 percent quicker order collection. That acceleration was even more dramatic at Walmart, where researchers reported 60 percent faster pickups.
Retailers and solution providers have been exploring various models for fostering convenient, secure services. Walmart first deployed Pickup Tower kiosks at 200 of its stores in 2017 and has since expanded the service further. Customers scan order confirmation barcodes on their phones at sensors to retrieve their packages from the machines.
Walmart recently enabled shoppers to make returns at the machines, and the company also announced plans to facilitate the retrieval of large items — such as televisions — via pickup lockers.
Mark Ibbotson, executive vice president of Walmart’s Realty and Central Operations divisions, stated in a 2018 presentation that the Pickup Towers’ first round of deployment significantly increased the host stores’ net promoter scores — a metric that assesses customer loyalty — and that some customers placed orders simply to try the machines.
Automated solutions provider Bell and Howell, refrigeration company KPS Global and food logistics firm Viscon Logistics have also dabbled in kiosks, collaborating on an automated grocery order collection solution. Shoppers drive up to and park at the kiosks, which measure 20-by-11 feet and are designed to stand alone or join existing stores. Customers then scan quick-response (QR) codes to retrieve their orders within 45 seconds.
Larry Blue, president and CEO at Bell and Howell, explained that the 24/7 kiosks enable order collection from up to seven customers at a time and are intended to meet changing demands brought about by the popularity of online shopping. The kiosks hold groceries at the appropriate temperatures to ensure freshness, although this has not been a smooth development process. Walmart deployed an earlier version of the machines that drew customer complaints over condensation problems that hindered order retrieval doors from opening properly.
Blue said in an interview with PYMNTS’ Karen Webster that it is important to sate shoppers’ desires for quick service by placing automated kiosks at store entrances. Automation provides speed for click-and-collect customers as they no longer have to wait for employees to hunt through backroom shelves for orders. It also spares sales associates from splitting time between these customers and regular in-store shoppers, enabling them to provide more focused service to the latter.
Gen Z consumers, rural residents, busy professionals and others are pressuring retailers for easy online shopping paired with quick access to their purchases. Retailers racing to meet these needs may find automated BOPIS to be an important strategy for gaining an edge over eCommerce giants.