February 28, 2008, 12:00 AM

Driving Sales

Two merchants show what it takes operationally to execute seamlessly an order online/pick-up in store program.

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.

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