This holiday season, shoppers are expected to flock to one of retail’s most popular new services: in-store pickup of online purchases.
While the service is a hit with consumers, many retailers fall short in execution. According to a poll of 5,000 shoppers by Cognizant, more than 60% of those who used in-store pickup reported dissatisfaction, citing issues such as long wait times at the counter, items not ready for pick-up, and confusion among customer service associates.
By taking a fresh look at the service and fine-tuning the supporting processes and systems, retailers can minimize problems during the high-volume shopping season—and convert the positive experience into lasting customer loyalty.
The Broad Appeal of In-Store Pickup
In-store pickup appeals to a wide range of shoppers, scoring favor among the thrifty, who want to avoid shipping charges, and the time-pressed, who prefer to sidestep shipping wait times. At the holidays, it adds a seasonal measure of assurance by eliminating the uncertainty of shipping times. Shoppers know they will have merchandise in their hands in time for gift giving.
The service also offers a surprising upside for stores. Not only is it popular—30% of respondents use in-store pickup at least once a month, and an enthusiastic six percent take advantage of it once a week or more—but it also drives incremental store sales. Our survey found a whopping 65% of users bought additional products in stores when they arrived to pick up their online purchases. Contrary to concerns that the service cannibalizes bricks-and-mortar sales, our findings indicate in-store pickup attracts online shoppers and racks up additional store sales.
Fine-tuning Your Processes
Given those winning attributes, why the problems with in-store pickup? For one thing, the service is customer-centric: Shoppers’ perceptions are based on their store experiences, not on what happens behind the scenes. For another, in-store pickup requires a wide range of investments. Smart IT investments are more efficiently getting the product to pick-up points. But many retailers continue to overlook the attendant investments in store processes, staffing, and associates’ tools and training.
Following are steps retailers can take to fine-tune their in-store pickup service in time for the holiday rush.
Revisit how many customers will use the service. Many retailers fall short on this logical first step. Yet underestimating use of the service and failing to prepare properly for it can have dire consequences. Similarly, over-estimation can result in a cost structure that is unsustainable. Make sure you can scale up, or down, quickly if your forecast is off-target.
Take a second look at the path of pickup. Most stores initially manage their in-store pickup service from the customer service counter. Yet mixing the two can be problematic. Shoppers retrieving online purchases have distinctly different needs from those returning merchandise. What’s more, in-store pickup transactions take far longer than returns, often running eight to 10 minutes per customer as associates toggle through multiple screens such as cash register, inventory, and the web site. During high-volume shopping hours, housing the two services at one counter can generate long lines—and dissatisfied customers.
A more efficient approach is to separate the customer-service and in-store pickup functions. Locating the services apart from each other is also pragmatic: Why expose happy pickup customers to potentially frustrated shoppers making returns?
To maximize the incremental lift, consider placing in-store pickup next to an area that’s stocked with everyday and impulse items. Be sure pickup customers can also pay for their store purchases at the same time; don’t send them to another location for checkout.
Re-examine allocation of resources. More accurate volume estimates for in-store pickup will also lead to better staffing forecasts. Make use of the new forecast to examine all aspects of staffing. For example, what is your plan for managing the service’s peaks and volumes? Many retailers train too few associates, a shortcoming that becomes all too apparent during the crush of holiday purchases.
In addition to proper staffing of in-store pickup, retailers need to plan carefully for the ripple effects that the service spreads throughout the supply chain. For example, how do you balance shipments of single items from your distribution centers with full pallets or cartons?
Be sure you fully understand the economics of different fulfillment methods, and trade that off against improved customer satisfaction and margin lift. You can tolerate a loss on shipping when it’s a very small volume and you are looking to grow market share, but as volumes grow, the economics will have to stand on their own.
Set clear policies and procedures. Evaluate how your bricks-and-mortar procedures relate to the specific issues of in-store pickup. How will you handle discrepancies between online and in-store prices? What is your policy for customers who discover their online purchases are priced lower in-store due to promotions? Associates need clear policies for customers who want the new price.
In addition, be sure to determine processes for reselling returns. This is particularly an issue for retailers often offer in-store pickup and returns services for products they typically stock online only. To resell returned goods, including items not normally sold in the store, many retailers resort to heavy markdowns. More cost-effective options include restocking fees, or charging shoppers the cost to ship returned items back to vendors. Some retailers have learned to avoid problematic returns by eliminating hard-to-resell items from their in-store pickup mix.
Be sure not to neglect issues regarding associate compensation. Servicing in-store pick-up and returns can take away from core selling time, which is anathema to associates on commission.
Be prepared to pivot quickly. A critical service like in-store pickup demands daily analysis and a close eye on the numbers. As the service’s volume grows, staffing needs and store locations will evolve, and processes will need to be continually reviewed. Shifts in merchandise mix can fundamentally alter the overall economics of fulfillment, requiring a delicate balance between delivery times and volume leverage. What’s more, as the service’s novelty wears off, shoppers will expect ever greater service levels. How will you respond?
‘Tis almost the season for stressed-out shoppers. A smooth, glitch-free process for in-store pickup can be store retailers’ greatest ally and cultivator of loyal customers.
Cognizant provides information technology outsourcing and consulting services.Favorite