REI’s in-store pickup produces online sales 17 times more than expected

When outdoor sporting goods retailer REI Inc. introduced in-store pickup as a free-shipping option for online orders last June, it expected in-store pickup orders amounting to $1.5 million for the second half of the year. Much to REI executives surprise, orders totaled $26 million and have led to incremental store sales, Joan Broughton, vice president of multi-channel programs, tells Internet Retailer. “To say they exceeded our expectations is an understatement,” she says. “We knew this would be popular, but not as popular as it’s been.”

The in-store pick-up service was taken up quickly by customers, even though REI did little to promote it other than placing notices about it on its web sites, REI.com and REIOutlet.com, Broughton says. By the end of the first day that REI offered the service, 60 of the 66 stores it had at the time were processing in-store pick-up orders, she adds. REI now operates more than 70 stores.

At the end of the first month of the service, customers chose it for 25-30% of online orders–-a share that has continued to increase and is now about 40%, Broughton says. The service is particularly popular with orders of large items like canoes and kayaks. “It was interesting for us to learn the impact of free shipping through in-store pickup,” Broughton says. “It’s been so compelling that it has led to an 800% increase in our paddling category sales.”

The in-store pick-up option is also helping to drive additional store sales beyond the initial online orders. One out of three online shoppers who pick up at the store purchase additional products once in the store, with an average additional purchase of $90, Broughton says. “Our stores love the service,” Broughton says.

REI is able to offer free shipping for in-store pick-ups because it delivers online orders on trucks already scheduled for store deliveries, Broughton says. And because the distribution center that serves REI’s stores also serves its web sites, REI can easily place online orders on a truck headed for any one of its stores, REI says. REI supports its in-store pick-up service on infrastructure that includes IBM’s WebSphere platform with database software from Oracle Corp.