Over half of Walgreen’s digital orders are same-day orders. “A third of those are pickup orders — and that’s not including photo,” Lindsay Mikos, senior director, retail omnichannel, Walgreens told Digital Commerce 360.
COVID-19 accelerated the need for safe and secure shopping solutions as people weren’t going into Walgreens stores, she said. While that urgency has subsided, consumers still want the ability to order online without having to go into a physical store or want the ability to order what they need online and pick it up quickly and go, or place an order for delivery, she said. In 2022, Walgreens completed 35 million pickup orders and one-hour deliveries from its stores.
Mikos sat down with Digital Commerce 360 at the Retail Innovation Conference & Expo to delve deeper into how consumer behavior has carried over from the pandemic, prompting the beauty and health retail chain to continue offering different ways to serve customers. That includes delivering orders to customers within a certain distance from a Walgreens store. Nearly 80% of its U.S. consumers live within five miles of a Walgreens store, according to the retailer.
Walgreens offers 30-minute pickups, as well as drive-thru and curbside pickup options. The retailer launched its “one-hour delivery or it’s free” guarantee in May 2023.
More online shoppers — 68% in 2023 versus 51% in 2022 and 58% in 2021 — said they want the ability to check online for product availability at a nearby store and for buy online, pickup in store (BOPIS), according to Digital Commerce 360 and Bizrate Insights omnichannel survey of 1,069 online shoppers in February 2023. Half of respondents ordered online and picked up a product in store in 2023, compared with 37% in 2022 and 43% in 2021.
Omnichannel is a key driver of overall digital growth
“It really goes back to having a variety of options to meet the customer where they are at that point in their lives,” Mikos said of the retailer’s Walgreens pickups strategy.
Demand for convenience is ongoing.
“We’re continuing to see it; it’s double digit growth,” Mikos said. “It’s a key driver of our overall digital growth.”
Originally, Mikos said the retail chain was concerned that digital orders might “cannibalize the store,” she said. “That’s always been the biggest fear, but it doesn’t. It actually drives incremental value. They spend more money with us. We’re able to engage with them more often and give them more relevant offers.”
Walgreens customers can sign up for the retailer’s loyalty program. When they check out using their loyalty rewards either in-store or online, Walgreens tracks order history. As a result, the retailer can send later offers and discounts for items that tie into a customer’s buying history.
“And we can say we’ll have it ready for you to pick up in 30 minutes — it’s that type of replenishment we can tap into,” Mikos said.
Tracking inventory in real time
Walgreens’ fill rate is over 90%, Mikos said.
“It’s not 100%, so we’re thinking about how to have the right inventory to meet demand,” she said.
The retail chain is working to improve speed. A good example is when COVID-19 test kits were in high demand, she said.
“We couldn’t keep them on the shelves, and it was critical to have the right technology systems to keep an accurate view of inventory,” Mikos said. “We’ve made technology investments over the last year to have that near-real-time inventory.”
It’s a tricky process as in-store employees fulfill online orders by picking items from the store, Mikos said. To do this, they refer to handheld devices with software that shows employees what should be on the shelves. The retailer uses communications software vendor Theatro.
“The item might not be on the [main] shelf, but there might be a secondary spot in the store where the item is,” Mikos said. “It might be on an end stand or in the back room. But the software tells them to check other spots before saying we don’t have something.”
Walgreens’ delivery strategy
Walgreens partnered with third-party couriers such as DoorDash and Uber to offer real-time tracking and SMS notifications.
“It’s like when you order food from DoorDash or see which step of the process your pizza order is in a pizza tracker,” Mikos said. “If you have cold items like ice cream, you want to make sure it doesn’t melt on the front porch.”
Walgreens also offers customers the ability to schedule when deliveries are made, like from grocers such as Whole Foods and Kroger.
Currently, Walgreens does not charge customers service fees but does require a minimum order of $10.
“The reason for the [order minimum] is to maintain profitability. A team member is going to need to stop doing other tasks to go and pick that order,” Mikos said.
Walgreens Boots Alliance Inc. ranks No. 19 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American online retailers.
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