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COVID-19 & Retail: The Impact of Buying Online and Picking Up in Store

It’s a shopping concept you’re likely familiar with: buying online and picking up in store — otherwise known as BOPIS. You can purchase most goods this way, including art supplies, groceries, hardware tools, personal hygiene products, pet food, clothing, and a whole lot more. Popular stores such as Dick’s Sporting Goods, Macy’s, Apple, Best Buy, Bed Bath & Beyond, Home Depot, Walmart, and Target all offer this increasingly popular service.

BOPIS has grown steadily over the past few years — but it has exploded within the last month due to COVID-19 and the in-person shopping restrictions affecting essential and non-essential businesses.  

Prior to COVID-19’s effects on retail and buying habits, almost 70% of U.S. consumers used BOPIS, and it’s expected that about 90% of brick-and-mortar retailers will offer BOPIS by 2021. But that percentage could likely change as retailers and consumers adjust to these unique shopping circumstances.  

In this blog post, learn about the benefits and inefficiencies of BOPIS, how the system has been impacted by COVID-19, and what this could mean in the future for retailers and consumers.

5 Areas Retailers Should Focus on When It Comes to BOPIS

1.     Convenience vs. Inconvenience

Convenience is likely the number one reason consumers are opting to buy online and pick up in store. They can shop easily and efficiently from their phones, computers, or devices without the hassle of browsing through a store’s merchandise in person and waiting in the checkout line. But is this really convenient for everyone? What about the customers who are still choosing to stop in-store?

Online shopping is more often about a quick, efficient transaction. In-store shopping has become about the experience — and there are still plenty of customers who prefer the in-person shopping experience over a virtual one. If a store is depleting its inventory on the shelves to serve its virtual customers, customers who are browsing the aisles may find less of a selection.

Conversely, an online shopper may see an item in stock — only to order it and receive a notification indicating otherwise. At the end of the day, what may be a convenience for one customer may result in an inconvenience for another.

 

2.     Order Fulfillment

What are the processes that stores use to fulfill orders so they can be ready in time for customers? In some cases, products need to be shipped to a store from a warehouse. In others, employees will collect items from around the store with a large cart that contains separate bins for different orders.

Grocery chains and restaurants often require consumers to set a specific pickup time, and some even offer real-time communication as an order is being fulfilled. Wegmans, for example, is one of many grocery stores currently offering curbside pickup or delivery. The employee fills the order around the store and can text/communicate with the customer in real time if a product is out of stock to see if the customer would like it replaced with another item.

Other retailers, such as Target, promise that if an item is in stock, the customer can pick it up within a specific time frame (usually 2 or 4 hours after placing the order). In most cases, customers receive either a text message or email notification when the order is ready. Some stores work with third-party vendors who hire employees to fill BOPIS orders.

 

3.     Inventory Management

As mentioned, a store’s out of stock condition can provide a negative customer experience for those who are still shopping in person. Retailers need to think about their “silos” of inventory. Do they have products specifically for online purchases? Are other products slated only for store shelves? In many cases, stores are using their in-story inventory to fulfill online orders. Retailers need to think about how to bring those silos of inventory together to provide the best service to customers.

Other questions retailers need consider include: Do they tend to stock more in store? What are the retail purchase trends? Do they have enough space? In most cases, retail stores are not warehouses, which has led to the prevalence of “dark stores” — physical spaces that retailers rent where consumers can pick up items purchased online.

COVID-19 has forced a lot of essential retailers who are still physically open to designate parts of their store, or parking lot, to online order pickup due to increased curbside sales.

Also, retailers need to consider how quickly purchases (whether online or in-store) are reflected in product availability. With such high demand for essential products in the wake of COVID-19, retailers can’t keep certain products in stock and must think about how to balance online versus in-store availability when they do secure those items. This can prove even more challenging when third-party vendors, such as Instacart, are involved.

 

4.     Processing Payment

It’s important that retailers consider whether their point of sale (POS) system aligns and integrates with their eCommerce site. Also, if they do not employ a mobile POS, how are they dealing with payment? Retailers need to ensure that their method is Payment Card Industry (PCI) compliant and that a customer’s personal information and credit card numbers are safe and secure.

 

5.     The Customer Experience

At the end of the day, retailers are aiming for high customer satisfaction — whether they’ve been offering BOPIS services for years or are just pivoting due to the current circumstances.

How important is a positive customer experience? About 50% of loyal customers have left a company for a competitor who was able to stay more relevant and better satisfy their needs. In addition, 93% of customers are likely to make repeat purchases with companies who offer excellent customer service.

Not only do consumers want a great product, but they also want a great experience, and that includes processing their order and accepting payment.   

5 Ways BOPIS Benefit Retailers

Some retailers have an effective buy online pickup in store method, and others are in the process of working out the kinks. Provided a retailer employs an efficient, secure system, here are some benefits:

1.     Extra purchases from customers: In many cases, customers may be apt to purchase additional items once they arrive at the store for pickup, especially if they forgot something.

2.     Lower shipping costs: Most stores offer the option of free delivery when you buy online and pick up in store (if it needs to be shipped from another store or warehouse). Also, 48% of surveyed shoppers use BOPIS to counter shipping fees and 65% of customers say they look up the free-shipping thresholds before adding items to their carts.

3.     Provide consumers with a wider inventory selection: Customers who order online may get to the store and find additional items they wish to purchase, because sometimes retailers have inventory that is only available in-store.

4.     Levering data: BOPIS allows businesses to see trends and which products are popular during which time frames — in other words, another way for retailers to generate customer purchase history data.

5.     Personalization: The retailer can “suggest” other items a person may be interested in purchasing based on the contents of a customer’s cart. For example, if the customer is purchasing coffee, they may also be interested in creamer or filters. The retailer can also send personalized emails and text message alerts indicating when the order is ready.

How Will COVID-19 Affect the Future of BOPIS?

Here are some questions to consider when it comes to how COVID-19 may affect the future of the BOPIS concept:

·       Will there be more online purchases – especially of essential items? People are figuring out how to purchase essential items, such as groceries, shampoo, and toilet paper, online. What was once a physical trip to the store may now change as consumers have realized how easy it is to purchase things they need with the click of a button.

·       Will consumers purchase from different retailers? Customers may discover a new store because of a positive and supportive customer service and transaction experience that may otherwise not have happened if it weren’t for COVID-19. Conversely, consumers may move away from retailers and brands with whom they’ve had a negative BOPIS experience.

·       Are there tools retailers can use to mitigate temporary problems? With the high demand of BOPIS transactions for essential businesses due to COVID-19, retailers have likely discovered that if there are problems with their systems, they can’t wait days or weeks for a solution. In the future, retailers may consider whether there are tools available to employ a quick, temporary solution before circling back for a more permanent one.

·       Will retailers see an increase in their private label merchandise? As a result of COVID-19, consumers have exhibited panic-buying behaviors and are buying whatever they need — no matter the brand. In many cases, having something is better than nothing of a specific brand.

·       How will stores continue to adapt to BOPIS? Since buying online has increased in popularity over recent years, some stores are opting to up their in-store experience game. For example, William Sonoma offers cooking demonstrations, some sporting goods retailers have indoor climbing walls, and Nike’s New York City headquarters boasts an indoor basketball court.

·       How can non-essential retailers sell their products more effectively online? These types of business are working with their suppliers to evaluate their merchandise and figure out how to sell items they had previously ordered. COVID-19 may provide some non-essential businesses with “food for thought” when it comes to exploring different purchasing options for the future.

·       What’s working with the current BOPIS system? What isn’t? COVID-19 has certainly exposed a lot of inefficiencies with this concept as retailers struggle to meet demands and pivot to curbside pickup. This will likely force a lot of businesses to closely examine what’s working, what isn’t, and how future improvements could provide a smoother, more streamlined process for all involved.

Enhance & Improve with Hitachi Solutions

We leverage the full power of the Microsoft stack, including Azure DatabricksMachine LearningDynamics 365 Commerce, and Synapse Analytics to help both online and brick-and-mortar retailers. Whether you’re interested in enhancing your eCommerce platform or implementing BOPIS services, Hitachi Solutions can help. Contact us today to get started.

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