6 Benefits of Buy Online, Pick up in Store (BOPS) for Retailers
In order to compete with e-commerce giants like Amazon—who, due to volume, can survive on thin margins while remaining profitable—traditional retailers need to leverage every advantage that they’ve got. While analysts like to point to brick and mortar stores, with their high overhead, as a weakness for traditional retailers, the truth is that those stores are actually one of the greatest strategic assets that a retailer has.
Each physical, brick-and-mortar store that a retailer has as a part of its supply chain is, in essence, a miniature fulfillment center all its own. Many retailers have been leveraging this fact by using their stores to fulfill e-commerce orders placed by customers, allowing them to reduce shipping costs and delivery time compared to fulfillment from a centralized DC.
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But there’s another way for retailers to leverage their stores as a part of an omni-channel fulfillment strategy: Encouraging customers to place their orders online, but pick up in store in lieu of delivery.
Buy online, pick up in-store (BOPS) has been gaining a lot of steam of late, especially amongst larger retailers who have extensive networks of physical locations to leverage. From Walmart to Target to Kohls to JCPenney, retailers have begun to use buy online, pick up in-store as both a differentiator and to drive profits.
Below, we discuss some of the greatest benefits of incorporating buy online, pick up in-store into your omni-channel order fulfillment strategy.
Benefits of Buy Online, Pick Up In-store
1. Increased Consumer Choice
Today’s consumers have, over the years, grown accustomed to greater and greater choice in how they shop. Whether it’s by physically going to a store to browse and make a purchase in person, by shopping online and having the product shipped directly to their home, or by shopping online and picking up the purchase from a store, customers want the freedom to receive orders as they wish.
Incorporating buy online, pick up in-store as a part of their omni-channel order fulfillment strategy allows retailers to meet this demand and appeal to different kinds of shoppers without alienating anyone. Ultimately, this may allow retailers to capture and retain more sales than a narrower fulfillment strategy may allow.
2. Decreased Shipping Costs
As discussed above, many retailers have already begun using their physical, brick and mortar stores to fulfill e-commerce orders. Doing so allows retailers to fulfill orders from the store that is closest to the customer, sometimes drastically reducing shipping costs compared to fulfillment from a centralized DC.
Implementing a buy online, pick up in-store strategy takes this one step further, potentially allowing retailers to eliminate the cost of last-mile shipping since, after all, the customer is picking up their product from the store. In these cases, retailers only need to pay freight costs associated with replenishing store stock.
It is important, though, that retailers invest enough time and resources into training and process development so that in-store order pickers and packers are as efficient as possible. When moving to in-store fulfillment, it isn’t uncommon for there to be a decrease in efficiency compared to fulfillment from the DC. Adequate training can help to keep rising labor costs (from needing to hire more workers to fulfill these orders) from eating too much into the cost savings.
3. Decreased Shipping Time
One of the byproducts of the rise of e-commerce is that it has made customers more impatient than ever before. They have grown used to speedy delivery, and thanks to Amazon Prime (and similar programs) they’ve grown used to receiving this same- or next-day delivery without needing to pay for it. That’s great for the customer but extremely expensive for the retailer.
By implementing a buy online, pick up in-store fulfillment strategy, retailers are able to offer customers the speed that they want, without getting trapped into offering free shipping. Customers who need their orders same or next day have the option of picking their order up from the store closest to them free of charge, while those who prefer to can wait for direct shipping. Keeping the customer happy in this way allows retailers to retain business and reclaim loyalty that has been eaten away by the e-commerce giants.
4. Increased Impulse Buy Opportunities
In the past, when customers needed to buy something, they would need to physically drive to a store and walk through the aisles in order to find the product that they need or want. Along the way, they would pass by other products, which they would then buy out of convenience or impulse.
The shift to online shopping has largely decreased the amount of impulse buying that the typical shopper does. Instead of browsing many items, the typical buyer zeroes in on the one item that they need, preferring to place multiple smaller orders as necessary compared to larger orders all at once. This, of course, increases the cost for retailers who then need to process a greater volume of orders with less profit coming from each.
By implementing a buy online, pick up in-store strategy, retailers are able to get the shopper into their store. Once they’ve accomplished this, it becomes much easier to convince the customer to purchase additional products, whether through strategically-placed advertisements or through upselling.
5. Fewer Returns
When it comes to e-commerce, processing returns is incredibly expensive for the retailer, who has to eat the cost of shipping back to the distribution center as well as the costs of repackaging. The expenses can be so great that some retailers simply discard returned product in lieu of reprocessing it. In either case, that is a loss of revenue for the retailer.
Customers who place their orders and pick them up from a store, though, have the ability to inspect their product before ever leaving the premises. This allows them to make swaps for other product if necessary, which decreases the return rate and can save retailers a substantial amount of money.
6. Greater System Integration
In order for BOPS to work, retailers will need to invest in a real-time inventory management system and warehouse management system. Without these systems in place, it would be incredibly difficult for retailers to have the inventory visibility across all channels that they need to be effective.
While putting these systems in place will, of course, require some level of investment, the inventory visibility that such an investment will result in will bring about a number of benefits. Key among them is the ability to anticipate stock outs, prevent losses (by fulfilling from the oldest stock within the supply chain), and replenish inventory intelligently.
One Piece of the Omni-Channel Puzzle
Omni-channel order fulfillment is all about giving the customer increased choice while reducing the costs of fulfillment. Implementing a BOPS strategy is another way that retailers can enhance their omni-channel strategy—but it’s not the only way, and it isn’t necessarily right for every business. A trusted systems integrator can help you determine whether buy online, pick up in-store makes sense for your operation.
- Romaine has spent over 30 years involved with organizations looking to optimize their distribution, manufacturing, and warehousing operations. Focusing on the customer’s processes, automation and business model, Romaine has helped dozens of organizations improve profitability by reducing labor, floor space, errors and inventory while improving accuracy, inventory turns and cut-off times.
Within the industry trade association, MHI, Romaine has taken numerous leadership positions including: Chairman of the Automated Storage & Retrieval (AS/RS) Group, Chairman of the Order Fulfillment Council of America, Chairman of the Warehouse Execution Systems Group and was one of the originators of the Carousel and VLM Product Section Group. He has also spearheaded the efforts to create the first ANSI industry safety standards for horizontal carousels.
Romaine is a frequent editorial and information contributor to hundreds of publications, blogs and online publications and has been a speaker at dozens of Supply Chain, Logistics, Lean and Facility organizations and functions. Just a few include the Parcel Forum, Institute of Industrial Engineers (IIE), Promat, North American Material Handling, Modex, National Mfg Week, Southern California Plant Operations, NJ Material Handling Assoc., Applied Ergonomics, Warehousing Education & Research Council (WERC), Lean Manufacturing Conference, Council of Supply Chain Management Professionals (CSCMP), NeoCon, Health Information Distribution Association (HIDA), National Catalog & Operations (NCOF), CSCMP and more.
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