Retailers shift their ad spending from TV, radio and print ads to digital ads.
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Fulfilling 95% of online orders in 15 minutes requires each store to integrate its inventory management system with that of the e-commerce site. Shoppers then can identify online items in stock at their local store. To improve customer satisfaction, CompUSA allows customers to search the inventory of stores within a 50-mile radius of a designated ZIP code to provide greater availability of products if a customer’s preferred store is out of stock. CompUSA uses an in-house order management system to link store and web site inventories.
“We get a lot of multi-channel shoppers who research items online and buy in store, and this is a way for us to keep from losing them to another retailer because an item is out-of-stock at one store,” Hurlebaus adds.
However, about 50% of shoppers who research an item online with one retailer will buy the product through another, Forrester’s Mendelsohn says. “That results in a lost sales opportunity for the first retailer,” she says. “So in-store pick-up is a way for retailers to keep these customers.”
Retailers including Sears and consumer electronics and home appliances merchant Best Buy Co. Inc. also are differentiating buy online/pick up in store by making the service available across most categories. Both retailers provide the service only on items that shoppers can carry out and load in their automobiles and clearly mark on their web sites products like refrigerators and other appliances that require delivery.
“Offering in-store pick-up in most major categories, reserved parking spots, designated pick-up lines in stores, and in-store signage directing consumers to the pick-up area are points of differentiation from our competitors,” a Best Buy spokeswoman says. While competitors such as Circuit City and CompUSA offer some of these services, they do not offer all of them, she adds.
While providing extra service to online shoppers, in-store pick-up also leads to increased purchases, retailers say. CompUSA says customers who buy online and pick up in store spend 35% more than customers who shop only in stores. To encourage cross-channel shopping, CompUSA’s store associates suggest add-on items after a customer purchases something online and arrives for in-store pick-up; the retailer also prints in-store offers on pick-up receipts. “We have been very pleased with the results,” Hurlebaus says.
Tuning in customers
The opportunity to engage online shoppers more effectively in cross-selling is a major reason Radio Shack launched its Ship-to-Store program in 1,300 company-owned stores last November. “The aim is to get online shoppers to the store where they can interact with a sales representative who can inform them about accessories they may have overlooked,” says Jimmy Mansker, vice president of RadioShack.com. “Multi-channel shopping strategies are about driving consumer behavior to encourage cross-selling.”
Radio Shack, which plans to roll out the program to 3,400 franchisees this year, acknowledges it needs to better learn how to provide the level of service customers want. “We need to get customer and store feedback first, then we can refine the program,” Mansker adds.
The type of customer feedback Radio Shack wants is how customers feel about such issues as site design and navigation. It also wants feedback from store managers about whether online shoppers are actually shopping in the store when they pick up an item ordered online. RadioShack ships items free of charge to a designated store within three to eight business days. Customers can choose to pay a fee for expedited shipping. Items are held at the store for up to 14 days.
Besides avoiding shipping fees, customers often use a buy online/pick up in store service to purchase products like hot video games prior to their availability in store.
In the two weeks prior to the release of “World of Warcraft: Burning Crusade” in early January, for example, Best Buy says customers tagged more than 70% of online orders for in-store pick-up, which is typical for a game marketed online ahead of its release date in the store. Shoppers can pick up the tagged item the day it hits the shelves.
“Convenience is a big benefit from a customer viewpoint,” Mendelsohn says. “Engaging shoppers through multiple channels enables retailers to keep them more engaged overall.”
While that may be true, buy online/pick up in store is not necessarily adaptable to all retail categories. Apparel, for instance, is one category where the concept may not work as well because retailers dealing in high fashion items tend to keep small quantities of stock by size in their stores because of the vast number of sizes. “You’ve got to have the in-store inventory to make it work,” says CompUSA’s Hurlebaus.
Outside of apparel and large items that require delivery, experts say the tactic should spread rapidly among multi-channel retailers as shoppers become more accustomed to the service.
“This is a service multi-channel retailers will need to offer if they want to stay competitive,” predicts Mendelsohn. “The number of online shoppers is growing annually and they are moving to the online channel for the convenience, the chance to save shipping costs and other payment options not necessarily available in store. These are important criteria to multi-channel shoppers.”
Peter Lucas is a Highland Park, Ill.-based freelance business writer.