July 14, 2015 by The Bridge Solutions Group Team
How can ‘Buy Online Pickup In-Store’ be profitable?
John Lewis just announced a £2 fee for Buy Online Pickup In Store (BOPIS) orders under £30. And the retail industry is buzzing with opinions. Is this the best (or an inevitable) method for ensuring the profitability of BOPIS?
And the John Lewis approach is not typical. They’re fulfilling BOPIS orders from distribution centers (DCs), so they’re technically ‘Ship to Store’ orders, which has advantages. In a DC inventory has assigned locations. So it’s easy to find. The retail store floor? Not so much. Inventory can be in fitting rooms, in carts, or just randomly moved by a shopper. This makes BOPIS ‘pick tasks’ time consuming and costly. Are fees the only way to achieve profitable BOPIS?
Absolutely not. There are many options. And truthfully, the best way to achieve profitable BOPIS will depend on your brand, your merchandise, your customer demographic and your customers’ priorities. So here are some ideas to get you thinking…
1. Position BOPIS as a personal shopper service
It takes time to pick items from shelves. But customers don’t know this unless you tell them. So don’t treat BOPIS like it’s being picked by a nameless, faceless worker in a DC. Give your BOPIS order pickers some personality. Let your customers know that each order has been hand picked and packed with care, just for them.
2. Encourage additional in-store purchases
Walmart places their in-store pickup counter at the back of the store. Convenient? No. But their target demographic has a low tolerance for additional fees, and there’s a good chance at least one end cap will entice them to make an additional purchase. But what if your customers place a higher value on convenience? What are your options?
What about giving them an in-store coupon with their BOPIS order? Better yet, make it time sensitive: only valid that day. Or personalized: offer a discount on products that compliment their BOPIS order. And consider ‘invoking the crowd’ with wording like “Customers who bought this also bought _______”.
3. Minimum Order Size
Many retailers offer free shipping in exchange for a larger order. Does it make sense to require a minimum order size in exchange for free BOPIS?
4. Avoid low value BOPIS orders by providing store inventory visibility online
Can your customers view your store inventory online? If not, you may be encouraging low dollar value BOPIS orders. Why? Because customers don’t want to visit your store and find an item is out of stock. By placing a BOPIS order, they know the item will be there when they stop by. Show them your inventory and they may decide it easier to ‘pick’ the order themselves.
5. Spread the cost across all products
A small percentage increase in the cost of all your products lets you maintain margins in a way that’s largely ‘invisible’ to your customers. It may also require fewer in-store business process changes. The challenge? You have to understand your true cost of BOPIS. Do you?
Need help with your omni-channel fulfillment strategy? Contact us!
In the mean time, here’s some interesting reading. It’s a survey from PwC and JDA that found only 19 percent of the top 250 retailers (and only 16 percent of all respondents) can fulfill omni-channel demand profitably. Click below to download your copy today.