Driving Sales

Blending systems, technology and process powers seamless service for order online/pick-up in store

If there were ever doubts that picking up in a store merchandise purchased online could deliver big benefits to multi-channel retailers—beyond simply being convenient for customers—some figures from Wal-Mart Stores Inc. should settle them once and for all.

Wal-Mart last year completed the national rollout of its Site to Store free shipping option that allows customers who order on Walmart.com to collect their purchases at their local store. It’s been good for shoppers, saving them $25 million in shipping fees as of last summer, according to Walmart.com CEO Raul Vasquez. It’s been good for Wal-Mart too: 60% of customers who come into a store to pick up an item ordered online buy additional merchandise once there.

Wal-Mart isn’t the first multi-channel retailer to offer the order online/pick-up in store option, but when the world’s largest merchant embraces a shopping feature and makes it a success, it teaches a vast number of consumers to expect it, paving the way for the feature to become a standard among merchants with both a web site and stores.

Just what does it take operationally for merchants to execute a service so it looks seamless to the online shoppers who use it? Two retailers who pioneered the service early on, Sears Holdings Corp. and Recreational Equipment Inc., have answered that question for themselves—and maybe for other retailers thinking it over. They built the systems to support it, corralled the multiple departments and internal functions needed to make it work, and scrambled to right the ship whenever the then-uncharted waters grew choppy.

Touching all systems

Brad Brown, vice president of e-commerce and web strategies at REI, can think of some initiatives more challenging from a process and technology standpoint—changing e-commerce platforms, for instance—but not many.

“Multi-channel retailing is hard, and you want to do it in a consistent way,” he says. “You want to touch all systems that make the operation more efficient. Typically that means you are going to touch a lot of systems.”

Because order online/pick-up in store is relatively new and uncommon, that also means retailers pioneering it have had to develop internally the technology and systems integration to support the feature.

Sears was among the first major retailers to give its customers the option when it launched its program in 2003. It continues to evolve its initial process and systems to make sure it can deliver on shoppers’ expectations as the program grows.

“The worst thing you can do is tell customers to come to the store to pick up the item they’ve ordered and it’s not there,” says Paul Miller, senior vice president of direct commerce.

These days Sears aims to go beyond the simple assurance that an ordered item is ready. Its automated system lets customers know when they arrive at a store’s merchandise pick-up area and scan in their order information how long it will be before the package is placed in their hands. If it is not within five minutes, customers get a $5 gift card; if they don’t get the package within ten minutes, a $10 gift card, and so on.

Routing an order

That feature is one outgrowth of an end-to-end system developed by Sears that starts on Sears.com, reaches into a central back-end system, routes itself through stores as needed, and ends in a store’s designated pick-up area when the package is handed off to a customer.

What shoppers see on the web site’s product page is a box to click on if they’d like to have the product shipped or if they want to pick it up in a Sears store. After clicking Pick Up, they enter a ZIP code and the system determines which Sears stores are nearby.

Though the order online/pick-up in store option also is promoted in a Ready in Five box on Sears’ home page, Miller says it’s critical it be presented on the product page before a shopper commits to buying the item so it can be part of the purchase decision. “That is where you as a customer want to see it. Any later in the process and that might affect whether it’s something you are even looking for,” he says.

The promotion tells shoppers that items eligible for store pick-up are flagged on the site with an icon. It also lists categories to which the Ready in Five guarantee applies, since not every product in every category is covered. Miller won’t say what percentage of Sears products are covered, other than that it’s thousands of products and growing.

But he does note depth of inventory and speed of inventory turn both figure into whether Sears can actually deliver on the Ready in Five promise, so merchandise available for in-store pick-up of online orders clusters around certain categories.

When shoppers click the pick-up in store option, the system immediately checks inventory at the closest Sears stores. It also calculates, based on how fast the item has been selling, how likely it is the item could be picked up by another in-store shopper in the few minutes it takes for a local store associate to receive the order from Sears’ central system, pick it up and set it aside.

“We are going to let you buy that item as long as we have what we think is the required amount of inventory,” Miller says. If the order meets that standard, Sears’ order entry system fires it off to the right store, where store associates equipped with wireless handheld devices catch the order, pick the item from the floor, and send a message to a central system that generates an e-mail or text message to the shopper saying the order is ready for pick-up.

Upon arrival

An associate is responsible for moving an item to a designated pick-up area within the store that’s equipped with program-dedicated kiosks. There, an arriving customer scans either the bar code in a printout of a confirming e-mail or a credit card; a digital display in the pick-up area shows the customer’s name and when he should expect to have the item brought to him by a runner.

The end-to-end system and process depends on real-time visibility into inventory, which Sears had in place prior to launching order online/pick-up in store. “If you have real-time inventory and a fairly decent level of acuity around it, you can confidently offer this as a service to consumers. If you don’t have it, it’s much more difficult,” Miller says.

The process also depends on integrating: a central hub to receive orders, send them to the right store and generate e-mails to customers; software powering associates’ handhelds and the pick-up area kiosks; and training for associates using the handhelds and staffing the merchandise pick-up area.

Miller says the whole system represents a true interactive multi-channel endeavor. “When most people talk about multi-channel they mean multiple channels: they have stores, a web site, catalogs,” he says. “But this is something that has to be so deeply integrated: the inventory levels, the communications stream, the e-mails are all separate things. That part is the heavy lifting, but when it works well, it’s a very solid experience.”

With thousands of stores as potential pick-up locations, Sears’ program frequently can get merchandise into customers’ hands within a matter of hours of placing an order online. With far fewer stores, REI’s order online/pick-up in store system fulfills orders from its two warehouses rather than store floors, so shipping time from a warehouse to a store must be factored in. That means a product may not be delivered for a few weeks after an order is placed.

REI’s program, launched in 2003, followed a former will-call system in which customers could order an item to be shipped to an REI store to preview there and purchase. When that system ended under Y2K compliance efforts, it created the opportunity to develop a new system that allowed shoppers to actually purchase an item online and have it shipped free to an REI store for pick-up.

Changing destination

Working with the requirements of the online operation, the warehouses and other involved departments, REI built a system that automates the process. That system, with its roots in what first was the direct replacement of will-call, was designed to enable in-store shoppers to place an order at a kiosk and have it shipped directly from a warehouse to a home address.

To that system, REI added the ability to change the ship-to address to an REI store. From a process standpoint, the warehouse picks the order as if it were a direct-to-consumer order, but it then diverts the order to outbound truck shipping lanes, where it’s queued with other merchandise headed for store shelves. Since it’s fulfilling from a warehouse into which it has inventory visibility, REI’s process doesn’t require a real-time visibility for customers on what’s available in a store.

“If it’s not in a warehouse or can’t be back-ordered, we don’t show it on the site,” says Kirk Stephens, director of retail operations.

References to the free ship-to-store offer are placed throughout REI.com. Shoppers considering the option can click on a link that produces a menu showing estimated delivery time to a selected store, based on distance from the distribution center.

The process generates three e-mails to the customer—when the order has been pulled at the warehouse, when the order ships and when it arrives at the store. The last one is triggered when an REI store associate scans the box as it comes off a truck; the item then is moved to the customer service area. On pick-up, customers present the last e-mail or an ID. That scan goes through REI’s point-of-sale system to generate a receipt for signature capture and alert the back-end system the order has been fulfilled.

Store associates in their orientation learn how to direct customers arriving to collect online orders, Brown says, while associates involved in receiving and reconciling fulfillment through the point-of-sale system get specific training.

Surprise

Though the order online/pick-up in store program today runs like a well-oiled machine, the process was optimized only after REI saw how popular it was, Brown says. Initially, many elements were manual. But the rate of customer adoption took REI by surprise. Within months of the rollout and largely through internal development, it automated the e-mails, the receiving piece and the point-of-sale system integration.

Today about 40% of orders on REI.com are picked up in an REI store, and 35% of customers who pick up an online order make an additional purchase in store. And though REI hasn’t done a precise calculation, Brown has the sense of a healthy return on time and effort sunk into the offering.

“We have never done a program-specific P&L,” he says. “But we’re pretty confident this has added to our business, and without a doubt it’s a great customer service.”

mary@verticalwebmedia.com