Omnichannel

Why retailers must get creative with BOPIS to link physical, digital customer experiences

DeAnn Campbell, who heads up retail strategy and insights at Harbor Retail, explains why as shopping patterns evolve and a broader range of customers become comfortable with online shopping, BOPIS will link the digital to the physical and become a powerful experiential channel in its own right.

Photo by istock.com

November 9, 2020 by DeAnn Campbell — Chief Strategy Officer, Hoobil8

When asked to visualize Best Buy in the future, our grandchildren will most likely picture a website rather than a physical store.

Why? Because retail's business model has flipped. Between 2015 and 2019, U.S. e-commerce sales grew from 10.7% to 16% of total retail sales (brick and mortar remained static at just under 4%).

As we emerge from this pandemic, digital shopping has accelerated, skipping to the end of the usual adoption curve to establish e-commerce as the transactional center of retail's business model.

This by no means heralds the end of brick and mortar. Rather, it signals the untethering of the physical store to allow more freedom to support the digital. Stores now have permission to take myriad forms to showcase products, engage customers, support operations, and create a halo effect to lift online sales.

Retail's great divide

State-mandated shutdowns across most of the U.S. have revealed retail's great divide. This rift is not between the "essential" open stores and the closed ones, however. It's between brands and retailers with the means to serve customers digitally and those without.

A May 2020 report showed that from March to April, total retail sales dropped 16.4% in every category except online retail, which posted an 8.4% monthly gain. E-commerce is no longer a supporting channel — it's now table-stakes for the entire retail industry.

As shoppers continue to move online over the course of this pandemic and beyond, weaknesses in fulfillment strategies have emerged from operations straining to deal with new cost and labor needs. Growing pressure to compete with one-day and same-day delivery offered by major players such as Amazon and Walmart add even more pain. And fulfillment needs will only continue to grow: In 2018, the global e-commerce market was projected to reach $24.3 trillion by 2025. That timing has accelerated with the coronavirus, and retailers are out of runway to get online order fulfillment operating in the black.

In an effort to adapt, retailers are turning to buy online, pick up in store (or BOPIS) models to handle surging online orders. This trend has grown exponentially over the past three years, with online orders fulfilled by BOPIS growing from 22% in 2017 to 33% last year.

Unlike typical retail innovations, BOPIS originated from shopper demand rather than operational savings. A study by Doddle showed that as early as 2018, 50% of shoppers decided where to shop online based on the availability of a BOPIS option. When you marry this driver with the profit-growing benefits it brings to retailers, BOPIS becomes a no-brainer.

A new channel emerges

As shopping patterns evolve and a broader range of customers become comfortable with online shopping, BOPIS will link the digital to the physical — and become a powerful experiential channel in its own right. Smart brands and retailers will leverage BOPIS to layer on even more creative applications to maximize return on investment and customer loyalty.

A few areas that could jump-start your journey include:

1. Dark stores: As e-commerce scales, the need for physical stores often shrinks. At the same time, your real estate locations were chosen because of their proximity to shoppers. Converting some of your stores (or even parts of stores) into mini distribution centers shaves off time and money from fulfillment for both delivery and BOPIS.

Bed Bath & Beyond recently announced plans to convert 25% of its stores into regional fulfillment centers and BOPIS support, and Nordstrom, Kroger, and Walmart have followed suit. Dark is clearly the new black.

2. Returns: Average in-store return rates hover around 5% to 10%, but online order returns range from 15% to 40%. As online sales grow, this can drag down bottom lines. With 65% of all returns attributed to retail error, simply allowing customers to inspect purchases at pickup can solve many issues.

Easy returns boost loyalty and reduce the potential that customers will take their future business elsewhere. And the sooner a product is returned, the less risk it will be damaged or seasonally expired — and the more likely it can be resold at full value.

3. Impulse buying: Shoppers spend an average of $2,100 per year on impulse buys, usually from packed shelves lining checkout queues. But BOPIS areas are often self-contained. Designing pickup areas that also offer browsing can not only boost spend, but also improve customer service by making wait times pass more quickly.

Besides this, creatively incorporating product recommendations both online and in the pickup area is a significant opportunity. Just take Amazon's "recommended for you" engine, which boosts average orders and improves conversion rates.

The benefits of BOPIS are only limited by imagination. You could also allow patrons to:

• Reserve products online to view in stores.
• Consolidate purchases from multiple vendors to one convenient pickup location.
• Access pickup locations closer to where they live via partnerships with local convenience stores.

If there's one thing COVID-19 has taught us, it's that now is the time to build resilience that can help handle future unknowns. BOPIS is an essential element of that resilience — not to mention the connective fiber between you and your customers.

DeAnn Campbell heads up retail strategy and insights at Harbor Retail.