Nikki Baird of Retail Systems Research has written a great article about implementing buy online & pick up in store in their weekly column Retail Paradox. She talks about the ROI potential and if it is necessary for retailers to implement these capabilities.
“Is buy online/pick-up in the store (BOL/PUIS from here on out) the cross-channel activity with the highest ROI? The panel’s consensus: the ever-popular answer, “It depends.” It certainly can provide a solid ROI – despite fears of channel cannibalization, whether coming from stores or from online, BOL/PUIS actually offers growth opportunities. It captures online sales that would have been lost because the consumer needed it “right now.” It also is additive to in-store sales, as consumers coming into stores tend to purchase more than just the item they came in to pick up.”
I agree with these statements and they are all very valid. I also think that it’s beyond the ROI you are able to measure directly in same store sales year over year. It comes down to customer experience and the loyalty that the positive experience generates. We know that 17% of store sales, about $400 billion, is currently influenced by online research. Forrester predicts this to be over $1 trillion in the next 5 years. As the reliance on information on the web continues to increase, customers will demand to be able to do business in whichever channel suites them at that particular time. If a consumer is not able to achieve the experience they are looking for, their loyalty will go elsewhere.
Currently, I’m fairly loyal to Amazon.com for books. Most of the time, they provide the customer experience I am looking for. They have a wide selection of books, ways of finding and recommending books I would like, but more importantly they have in depth reviews of the books that I generally find reliable. At some point, Borders or Barnes & Noble or someone is going to obtain these same capabilities plus be able to allow me to get it the same day from my local store. When that happens, my loyalty will shift, because I will be in control of which experience I want to have that day.
Obviously this issue is much larger than BOL/PUIS. It’s inventory visibility to know that I can pick it up in 2 of 4 stores in my general area.(predecessor to a sucessful BOL/PUIS implementation) It’s also order on the web, return in store or order from the web, modify order at the call center, and then pick up in store.
The key to all of these capabilities in Nikki’s last bullet:
What are the biggest implementation obstacles in implementing BOL/PUIS? There are two that I always get asked about. The first is around order management – what application should be the customer-facing order management system? Retailers have tried to adapt their merchandising order management, have tried to extend their POS special order capability, and have tried to build out their order capture front-end to serve this critical capability. The reality is, you need a system that is designed to be a customer-facing order management system, which is tightly integrated into order capture, POS, and fulfillment. Nothing else will work. If you don’t have a strong central OMS that can bridge online and in-store, you are going to drop the ball with your customers. “
I completely agree.
September 8th, 2007 on 3:34 pm
Let us not forget the cost of giving your loyal customers an unnecessary reason to try a competitor. When a shopper is in the mode of “I want it now” or “I want to know it is there” they are likely to explore other alternatives if you cannot meet that immediate emotional need on your site.
This gap in functionality can very well be the impetus for them to try another brand, perhaps for the first time, and the potential for defection rises dramatically once they have taken that first step.
September 9th, 2007 on 6:18 pm
Good point Brian. Thanks for commenting!
September 18th, 2007 on 8:05 pm
I also agree with all the benefits of BOL/PUIS discussed here. The challenges that, usually more established, reatilers face in implementation can be numerous:
Pricing – Many retailers struggle with profitability if they are forced to offer the same price for an item, class, or even category both on line and in the store. Usually this arrises from differing cost structures in the store and web supply chains, siloed purchasing/vendor management resulting from the legacy store only channel, or even the differing level of returns for on line versus in store purchases.
Marketing & Promotions – Some retailers have separate planning cycles, and separate promotional calendars/processes for on line versus stores. This goes back to pricing in the end. There can also be technical web site limitations for things like BOGOs which can be more easily implemented in the stores.
Merchandising – The customer experience and be really inconsistent on the web if the on line and in-store assortments are not very similar. The “not available in stores” can be frustrating – but the retailer can have very valid reasons for not offering items in stores. Think of high margin, but low profit/ft2 items.
Branding and Visual Merchandising – sometimes retailers have siloed operations for basic processes like photo shoots… for apparel especially, if the models used, lighting, or branding approach are not similar, it can be hard for consumers to find items on the web based on paper promotions (more common than you think)
These are just a few of the more interesting challenges I’ve seen in the last few years.