BOPIS excellence requires store fulfillment investments
Retailers are investing in BOPIS (Buy Online Pick Up In Store) and other store-based fulfillment options such as curbside pickup to offer shoppers rapid service while at the same time reducing fulfillment costs for online orders.
Consumers want their orders as quickly as possible and because of current supply chain challenges, it makes sense for retailers to use store inventory to fulfill online orders where possible.
Consequently, the share of the in-store IT budget devoted to omnichannel fulfillment has increased from 19% to 22% as more retailers prioritize investment in this area, according to the latest research from RSR Research.
There has been a sharp increase in the popularity of services like BOPIS with 82% of retailers reporting sales fulfilled from their stores have increased in the last 12 months. A third of them report increases of more than 20%.
There are many advantages for retailers in encouraging customers to use these flexible fulfillment options. The most important is clearly cost savings, which can be significant, particularly for smaller retailers who do not have enough volume to negotiate discounts with logistics companies.
As more consumers have come to expect free and rapid delivery for their online orders, thanks to the precedent set by Amazon Prime, retailers who try to pass on the costs of fulfilling online orders from a fulfillment center by charging customers for delivery are increasingly at a disadvantage.
Store-based fulfillment has other benefits. Speed is perhaps the benefit that online shoppers appreciate most and this is one area where physical stores have a built-in advantage over online-only retailers.
According to the RSR Research report, 29% of the retailers surveyed say BOPIS orders are ready in less than 30 minutes, with a similar figure for curbside pickup. Overall, most orders are ready for pickup in an hour or less.
Speedy service is just as important once the consumer is in the store or their car pulls up to the pickup point. The overall shopping experience can be negatively affected if the consumer has to wait a long time in line to collect goods irrespective of how quickly the order was prepared.
Fortunately, retailers have realized this and 67% say that consumers wait no longer than four minutes to pick up online orders.
According to RSR Research:
The success of a flexible fulfillment strategy hinges on convenience and speed, and regardless of the in-store fulfillment channel they choose, once the customer is in the store wait times must be minimal.”
Another benefit of in-store fulfillment is the additional sales made by shoppers once they come into the store to pick up their online order. In fact, 41% of retailers report that shoppers’ average Click and Collect order increased by 1-2 items during pickup.
While the benefits of in-store fulfillment are many, it brings several challenges, as we discussed in an earlier blogpost.
The most common challenge is not related to technology but rather to people issues, which is mentioned by 71% of the respondents. Labor shortages affect the retail sector hard and there is the additional problem of having to train staff on in-store fulfillment procedures.
Other challenge hinderings the successful adoption of in-store fulfillment is poor inventory accuracy, mentioned by 27% of respondents, and lack of appropriate technology, which affects 18% or nearly one out of every five retailers.