August 8, 2002, 12:00 AM

Circuit City’s 15-minute rule drives web order store pick-up

Customers pick up at the store just over half of the orders they place at Circuit City’s web site. Circuit City requires stores to make the items ready for pick-up within 15 minutes of the when the order arrives at the store.

When Circuit City Stores Inc., installed kiosks in stores in 1998 that allowed shoppers to order electronically from its database of electronics merchandise, the chain’s executives assumed that 75% of shoppers ordering from the kiosks would elect the home delivery option. Instead, fully 57% of kiosk buyers opted to pick up the merchandise at the store at the time of order. The lesson of that experience was not lost on Circuit City’s brass when it came time to design an e-retailing channel. That channel, they decided, would prominently feature an option that would allow web shoppers to pick up merchandise the same day at a nearby Circuit City outlet.

Today, that option accounts for slightly more than half of all sales on Circuit City’s web site, saving customers the cost of shipping and cutting the investment required by Circuit City to build and operate a separate pick-and-pack distribution center to support its first foray into direct merchandising. “Our desire in entering web-based merchandising was to leverage existing infrastructure, and the main infrastructure we want to leverage was our stores themselves,” Steve Duchelle, director of e-commerce for the Richmond, VA-based retailer told the eTail conference.

The store pick-up option required Circuit City from day one to tackle the daunting task of integrating its web-based order and fulfillment system with the legacy system that tracks store sales and inventory. Its POS system already has real-time inventory data for its stores, and each evening data on store inventories are made available to its web site. Soon, said Duchelle, data on store inventories will by sent to the web servers every 15 minutes, nearly emulating the real-time stock data available within each store.

The store pick-up program is relatively simple from the customers’ perspective. When ordering on the chain’s web site and selecting the store pick-up option, consumers provide their ZIP codes and within two seconds receive information on the availability of the product ordered at the three stores closest to the web customer. (If merchandise is not available, web shoppers receive e-mails notifying them when the merchandise is back in stock). As soon as the order is received from the web, it is posted on the POS system of the store designated by the web shopper as the pick-up outlet. The system generates a pick ticket to reserve the product for the incoming web buyer, who picks up the merchandise at the store after presenting the credit card that matches the one used to buy the merchandise.

But what was simple for the shopper was not always so simple for Circuit City. “At first,” conceded Duchelle, “our customer service on the pick-up side was not as consistent as we wanted.” To deal with problems of customers waiting for web-ordered merchandise to be retreived from store inventories to customer delivery points, Circuit City invoked a 15-minute rule. “It means that all items ordered from the web must be ready for pick-up at the store within 15 minutes of when the order hits the store’s POS system and a pick ticket is printed.”

The rule has some serious enforcement measures behind it. If merchandise is not reported ready for pick-up in 15 minutes, a beeper alarm goes off at the POS terminal that received the order. If the order is still not ready for pick-up after 30 minutes, the store get a call from web operations. Each week, the chain distributes a report on how its stores performed against the 15-minute rule.

Given its commitment to timely delivery, it is not surprising that Circuit City has detailed information on when web-ordered merchandise is picked up at the store, and Duchelle shared that data with his eTail audience. 6% of web orders are pick-up within 30 minutes of order, another 19% are picked up between 30 minutes and two hours of order, 16% between two to four hours of order; 63% are picked up on the same day the web order is made.

Interestingly, the company’s web site gets all of the sales credit for items ordered on the web and picked up at the store, although the store fulfilling the order receives a “volume credit” that is applied in calculating bonuses for hitting sales targets. Unfortunately for the web operation’s crew, the web site gets no credit when shoppers use the web to research a purchase and then go to the store to buy it. Said Duchelle of such purchases: “I get no benefit except a ‘nice job’ compliment from store managers.”

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