Controversial

The Retail Delivery Coin Toss

Free delivery comes at a cost; so does buy online/pick up in store. Some retailers have decided to offer some options for getting customers’ purchases into their hands — while doing away with other ones. Some gambles might pay off ... others might run the risk of busting retailers this holiday season.

 

Walmart Embraces Mobile — And Gambles Against Free Home Delivery

Bucking the trend that so many retailers are embracing this holiday season of offering free delivery (both ways) on all purchases, regardless of price point, Walmart will be offering free home delivery of purchases over $50 only and instead driving customers to head to one of 4,500 retail locations across the U.S. to pick up their online orders in store.

A key component of this move is the integration of mobile into the customer pickup experience. Fernando Madeira, president of Walmart.com, recently told Talk Business & Politics about the retailer’s plans to use a mobile check-in to streamline the pickup experience. This service, which has been in place at Sam’s Club since June, allows customers to check in with their mobile phone when they arrive at the store alerting the pickup delivery team to retrieve the order and thus reducing wait times. Madeira said the mobile check-in function will be turned on in the retailer’s app on Nov. 1.

The retailer estimates that 75 percent of its online sales will come through mobile devices this holiday season, with over 210 million visits to its website through the app expected in November and December. Another addition to the app is a newly expanded “child’s toy wish list” feature, which allows parents to scan a toy from their child’s mobile wish list and share it with relatives. The retail industry will certainly be paying attention to see if the move pays off.

 

BOPIS: A Big Win Or A Potential Customer Service Nightmare For Retailers?

BOPIS (Buy Online Pickup In Store) is not just a fun acronym to say, it also represents a potential win for retailers looking to compete in on-demand delivery of online orders.

The idea is that by using existing labor, inventory structures and retail space, more retailers will be able to compete with the likes of Amazon in delivering online purchases to customers faster. But these aging infrastructures, which were never intended to field such a demand, are starting to break under the pressure, which is resulting in less-than-happy customers.

Spend Matters recently reported that major retailers are struggling to deliver seamless customer experiences for items purchased online and picked up in store. Nearly half of all orders purchased online and picked up in store face some service issues. This frustrating customer experience is not what retailers are looking to create as they compete for instant gratification and to come through for last-minute shoppers, thus earning potential loyalty points with consumers.

Research from StellaService Inc. shows that 61 percent of retailers that sell products online also offer BOPIS services, suggesting the trend is picking up steam. However, Spend Matters goes on to note that just 20 percent of retailers it interviewed were properly investing in growth strategies to link physical stores to eCommerce operations. While using existing systems to fulfill BOPIS order may save retailers money in the short term, these noncommittal strategies may come at a bigger cost in the form of unhappy customers.

 

The High Cost Of Retail Delivery

A recent Wall Street Journal report cited brewing trouble for retailers looking to fulfill orders faster this holiday season. With clothing purchases costing anywhere from $4–$10 to ship, the cost of building out new fulfillment models and adopting new technologies mounting profit margins for even the most successful online retailers are looking thin. Pricing will certainly be a prime factor in many large retailers’ online strategy.

Large retailers, including Target, Urban Outfitters and Pier 1 Imports, have all been big performers in the online retail space. Nevertheless, they have recently revealed that they still struggle with the high cost of delivery. The companies point to investments in technology and infrastructure needed to handle eCommerce fulfillment as weighing heavily on margins.

According to a survey of retailers released last December by JDA Software Group Inc., only 16 percent of retailers surveyed said they make a profit on eCommerce demand. “Profitability is the biggest challenge because costs are rising faster than revenue,” the report concluded.

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