How Retailers Can Overcome BOPIS Challenges to Drive Growth

Consumers are embracing buy-online-pickup-in-store (BOPIS) in droves, and retailers in every segment are racing to implement the fast-fulfillment service. But without the right technology and processes in place retailers struggle to provide the service and alienate fickle shoppers who demand a seamless in-store pickup experience. Not only is BOPIS usage on the rise, it is increasing with hockey-stick like trajectory. In fact, in 2018 BOPIS grew 73% between Thanksgiving and Black Friday. And Gartner reports that BOPIS increased from 53% in 2017 to 61% in 2018, and continues to grow this year. Overall 21% of shoppers purchase a product online and pick it up in a store at least twice each month, which is helping to bridge the gap between digital and physical shopping and breath new life into the store. Click-and-collect is here to stay and will grow in importance over time, but only those retailers with superior back-end systems and an engaging and streamlined customer experience will be able to reap the rewards. Keep reading to discover the biggest challenges retailers face when deploying BOPIS and the key steps they can implement to increase its clout. While BOPIS is growing by leaps in bounds across the industry, very few retailers actually do it well. To discover which chains provide the best BOPIS experience IHL Group deployed 300 secret shoppers to research and rank the top 10 U.S. retailers for click-and-collect. “With this research, we found that almost all of these retailers have done a terrific job improving the online purchase experience,” explained Greg Buzek, president of IHL Group. “However, there is great work to be done in the store level execution once the order is placed. This includes the time to pick the order, the time to notify the customer, and then the execution of the pickup at the physical store.” The top five retailers for BOPIS on this list includes Best Buy, The Home Depot, Bed Bath & Beyond, Kohl’s and Target. The shoppers ranked each retailer for online purchasing experience, in-store pickup experience, total pickup time from entry to exit, and likeliness to recommend or use the service in the future. Other key findings from the report include: What can retailers do to capitalize on these trends and ensure they are among the top BOPIS performers? The following four steps can provide a solid foundation. #1 Revisit Your BOPIS Strategy Many retailers often use Amazon as a benchmarking point, which makes sense as 62% of shoppers have access to a Prime membership. However, other retailers are starting to catch up, which is where options such as BOPIS or click-and-collect can help more traditional brick-and-mortar stores keep pace. Click-and-collect is a fulfillment option retailers cannot ignore. Many went to market as soon as possible to compete and have a piecemeal or disjointed strategy that has fallen into place over the last several years. However, savvy retailers are starting to realize they are either losing money or barely breaking even on orders (due to labor impact in stores, inventory swell for safety sock, etc.). Rather than simply ‘making it work’ for retailers, it’s imperative to first take inventory of the solutions and processes in place by asking questions such as: Is our POS application still working for us or is there something better? Is our order management system still efficient, or do we have to recode, add extensions, etc.? Are our technologies (such as CRM) integrated? Are we pulling labor hours away from somewhere else or are we outsourcing? Are we putting limits on stock in case someone tries to buy out our entire inventory tomorrow? Looking at solution areas like these can help as a starting point for retailers to overcome some of the challenges one pain point at a time, until they have a clear strategy that will help them become more consistent in their BOPIS delivery. Alternatively, retailers can start by evaluating the ideal BOPIS experience which includes the online purchase process, the notification time or communication process, and the pickup process. Retailers should establish goals for improving in each of these three areas, a timeline to achieve those goals, and the technology investment needed to deliver on the ideal experience. “[BOPIS has] presented a lot of challenges that we’ve had to work through as a team,” says Matt Jones, senior director, digital strategy and mobile apps for Home Depot. “But it’s clear that the customer is telling us this is how they want to shop and engage.” #2 Streamline Technology and Process The ideal model for click-and-collect can take many forms depending on the retailer. Small stores with limited staff may look at a checkout or customer service desk option. Some stores have a dedicated order pickup area, while others tout curbside/drive-thru options or lockers. In the UK, alternate pickup locations is a growing trend where orders are in high traffic areas like parking lots or train stations. However, regardless of the BOPIS model selected, investing in the right technology is crucial. Some of the top strategic priorities for retailers in 2019 are already focused on such investments (42% are looking to refresh POS infrastructure), but some retailers are implementing technology and processes to integrate systems and deliver a more seamless experience for shoppers: While click-and-collect offerings such as Kroger’s Clicklist have been embraced by retailers and shoppers, relying on stores as fulfillment centers – either for home delivery or order pick up – is inherently inefficient from a supply chain standpoint and not seen as a long-term solution. In response Kroger has embraced Ocado’s technology platform as it allows it to be less reliant on leveraging stores as distribution nodes. For Home Depot, 48% of online orders in 2018 used BOPIS, retrieving their items from lockers set aside for this purpose or a customer service counter. To accommodate the pickup lockers, Home Depot redesigned some of stores. Following the redesign, 20% of its shoppers went on to buy even more items when they arrived to pick up their products One of the core functionalities Dick’s continues to focus on is last-mile fulfillment. Earlier this year the retailer went live with a small-scale BOPIS locker test at three locations. The pilot was well received by consumers ― both those that choose to use the service and those that simply benefited from a streamlined checkout experience due to less traffic at the registers. Because of the overwhelmingly positive response to the program, the pilot expanded to 10 locations. By including other emerging technologies into the mix such as advanced analytics for personalization or unique offers, AI for more visibility into the supply chain, and automation to cut down on labor costs, retailers can reap the benefits of a more unified commerce strategy. #3 Rethink the Supply Chain from the Docks to the Sales Floor As shoppers are increasingly turning to BOPIS, their expectations for instant gratification are also on the rise. This means that retailers need to make sure their supply chains can keep up with the constantly changing demand as accurately as possible. That is why embracing total visibility within the entire supply chain is the next step to streamlining the technologies and processes. In short, no matter the technology investment, if it does not integrate seamlessly with the other processes that go hand-in-hand with a successful BOPIS experience, shoppers will not return to using these services. Inventory and fulfillment challenges for the omnichannel experience have brought along new types of supply chain issues. Retailers are now adding micro-DFCs (like Albertsons Companies) next to larger stores or in central locations to pick all the high velocity SKUs in an automated way. With inventory ballooning to meet increasing merchandising demands, retail stores don’t have every style, size, etc., within the store anymore. Savvy retailers are investing in technology to ensure when it is not in place it can be fulfilled at near-lightning speed. Another supply chain challenge is within the returns process and take-back inventory. It is generally stated that about 10% of inventory comes back into the front door. Fraud in reverse supply chain is rampant and retailers need the tools in place to either redirect that inventory (using analytics), and/or to detect it. Because of the typical disconnected supply chain setup (and the more types of fulfillment that are evolving recently), connectivity throughout the entire supply chain is critical. For example, Dick’s is investing heavily in its DC capabilities by opening both large and small regional e-commerce fulfillment centers to increase efficiency. Other retailers are using their own vendors to do drop-ships. Whatever the process, the entire supply chain, all the way down to the last mile of delivery needs to be connected and talking to each other. This is when having a wall-to-wall retail managed services provider, or combined software (maintenance and support) and services can help. #4 Focus on the Whole Channel Experience While most retailers may focus on the in-store experience when it comes to BOPIS, others could argue that it should be more like focusing on the whole channel experience. Click-and-collect is increasingly becoming the way consumers want to shop because it is convenient, quick, and less risky than leaving a package exposed on their front doorsteps (NY Times reported as many as 31% of consumers experiencing package theft). Plus, more retailers are investing in the technology to support this channel making the availability of products more reliable. However, according to RIS’ “Shopper Megatrends Study,” “Click-and-collect bridges the gap between digital and in-store shopping, an important omni-commerce characteristic that retailers have not yet fully maximized.” For now it seems that retailers have greatly improved the mobile shopping experience and are starting to benefit from moving BOPIS or click-and-collect pickup locations front and center. What’s more, they’re also realizing how important it is to fully staff those pickup locations if it is not a self-service type of platform, in order to speed up the delivery process. While there is still room for improvement on the speed to fulfillment, retailers are making strides to achieving higher efficiency levels, or are making the right investments to get there in the near future. For example, Walmart saw a 60% improvement in speed when using automation via its Pickup Towers. Impact of BOPIS Online and In-Store While many retailers can see the potential positive impact of BOPIS on their bottom lines, it is still not an easy undertaking. But, when done right, the implications can drive better online business and in-store traffic — all while creating a better whole channel experience for consumers who now have higher expectations in a post-Amazon world. The foundation of a BOPIS strategy should focus on delivering a brand experience that gives consumers confidence in what they are purchasing, clarity on the price they pay, commitment on the timing of delivery and certainty on the condition they will receive their products. By establishing that mindset, and then putting the tools and processes in place to achieve it, retailers can set themselves up for BOPIS success.

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