Big savings draw customers to buy online and pick up at store

This article is brought to you by Retail Technology Review: Big savings draw customers to buy online and pick up at store.

By Pradeep Goel, Sr. Consultant, Retail Industry Group, MindTree Ltd.
 
Multi-channel customers are using different channels depending on convenience to complete their purchase. Many multi-channel customers now place orders on a retailer's website or a contact centre and pick-up the order from a nearby brick and mortar store. Thus a multi-channel customer saves on shipping cost and benefits from reduced delivery time.

Buy online and pick up in store has a major impact on online conversion. Savings on shipping cost, instant gratification and an opportunity to touch and feel the product in store before bringing home prompts many online users to place an order online and then collect in store. Once in store, a retailer can benefit by increased footfall of these profitable customers by employing appropriate cross sell and up-selling opportunities. Several studies have reported that store pickup contributes to increased In-store sales and the following are the key points which should be given high priority in order to have an excellent solution.
 
1. Inventory Display and Inventory Sharing Models
A customer should be able to see the SKUs (Stock Keeping Units) which are available for store pick up and should be able to check inventory of that item in a nearby store.  If a user location is identified nearby stores can be shown with the number of items available in each store. If the customer wants to pick up the item in a different region or far from their local store, they should be able to change the pickup location at the store inventory view page itself and a refreshed inventory should be displayed.

There can be three possible inventory sharing models. Sharing existing inventory of store, shipping items from distribution to store and employing a mix of both are all discussed below.
 
a) Sharing existing store inventory
Sharing existing inventory of stores is the best way and it can notably shorten the waiting time to pickup an item in store. Often an order can be picked up from the chosen store the same day as ordering it online. Items widely stocked in stores can be shared in this model.  A customer can enter the location and can find the store inventory of nearby stores. If a user location is identified then the inventory of the local and other nearby stores should be displayed. 
 
b) Shipping Site to Store
Items can be shipped to the store from the distribution centre. It may take few days before a customer can pick it from the store but this is an effective strategy for online items or items not stocked widely. Such items should be shared in this model.
 
c) Mixed Model
A mixed model can also be made available where the existing inventory of the store and distribution centre inventory are requested. Here the system will look for the existing inventory of a store for pickup in store. If an item is not available in the selected store, it will then look up the distribution centre inventory. The system offers site to store shipping option if the item is available in distribution centre. This can be an effective solution for a retailer whose store presence is thin or does not have many stores in a particular region. Here is a high level sequence diagram for implementing this solution.

Fig 1: Sequence Diagram for finding a store and item availability for store pickup
 
 
2. SKU management: 
Catalogue consolidation is a key step. Store only items which are sold only in stores but are not available for online purchases should be presented on the website as should online only items which can be shipped only to a customer. All items can be classified into three major categories.
a) Common SKUs SKUs common to both channels. Here a customer has an option, either to have them shipped or pick up from a nearby store. A customer should have both options available. In fact a customer should be able to place an order with shipping options as well as pick up at store options, if he desires so.

b) Store only SKUs SKUs which are sold only in stores. Customer has an option to place an order to pick them from a nearby store. Such SKUs can be displayed on the website with a message clearly identifying that the customer can order them online but has to pick up from the store.

c) Online Only SKUs SKUs which are available for online purchase only. Customer can add to the cart and can have them shipped to any address of his choice. Site to store shipping option can be made available for such items.

3. Price Management:
If a retailer has got different prices for an item in different stores, a transparent policy should be in place to determine the price. In case of a different online and store price, it is recommended to apply the store price where a customer is going to pick up his order.
 
4. Trip Saver Suggestions:
A customer may select different stores to pick up different items. If all items are available in a nearby store, then it is a good practice to display such suggestions so that a customer can save a trip and the order fulfillment can be faster. A customer may accept or decline this suggestion. If declined, the customer can proceed to pick up items from his chosen stores.
 
5. Order Pick up Date:
A customer may want to pick up the order as soon as possible or at a future date as convenient. If a customer wants to select a future date, a store calendar can be provided for date selection. Although care must be taken so a customer cannot select dates of weekly store holiday or any other holidays. A retailer may also think about blocking certain other dates in the calendar such as the opening of a major sales or clearance event which may result in a big footfall days. Such dates can be blocked for store pickup.
 
6. Order Pick up Notifications and Reminders:
Once a store has a customer's order ready for pickup, it is always a good practice to notify the customer.   It may be noted that the customer may ask someone else to pick up the order, hence the system should be capable of addressing this requirement and capturing additional email address or phone number for this purpose. A customer may be sent several notifications such as order confirmation, pickup in progress and ready for pickup etc. Along with these notifications, if a customer does not show up, some reminders should be sent before an order is cancelled.

All the above points are keys to providing an efficient and positive multi-channel customer experience. Of course these points can be customised further to meet the retailer's specific processes and its customers' requirements.  However, with this process in place, a customer can save a significant amount in shipping costs, delivery time and can visit the store at a time to suit to pick up the order. A retailer benefits by increased online conversion and also an increased foot fall of profitable customers while maintaining a single brand across multi-channel offerings.  A high rate of return on investment coupled with growing customer adoption of this solution further justifies a retailer's effort in this direction.
 
About the Author:
Pradeep Goel, Sr. Consultant, Retail Industry Group, MindTree Ltd.
Pradeep has over 12 years of experience in IT consulting, solution designing, product management, business analysis and retail package implementation. He has worked on merchandising, Oracle Retail, Point of Sales, Order Management System for various retailers across the world. Pradeep is a MS from National Technical University of Ukraine and has completed an Executive Programme in Business Management at the Indian Institute of Management, Calcutta.