New to Retail: BOPIS Free Shipping
Thursday, April 11, 2019

New to Retail: BOPIS Free Shipping

If you know anything about retail, you know that BOPIS free shipping isn’t new! In effect, BOPIS is the new free shipping. But until recently, we really have not been doing a good job of telling customers about it. There hasn’t been enough communication about this new way to think. Nor has there been enough focus on telling consumers about it. Well, that is about to change. The last mile delivery is expensive. As an emerging retail trend, BOPIS free shipping is the new free delivery.

What is BOPIS?

Our estimate is extra goods are purchased 58.8% of the time when a customer picks up their order in store

First of all, for anyone not familiar – BOPIS is the acronym for ‘buy online pickup in-store’. It is also known as in-store pickup, click and collect, store pickup, and BOPUS (Buy Online Pick Up In-store).

In essence, the key is the online and pick up parts. Online orders get processed in the digital commerce space. This can be done using standard online ordering, mobile commerce, voice commerce, text or even social media orders. Then when the online order is ready, the consumer will receive an email, text message, call, or social media message informing them. This message tells a shopper to ‘pick up your order’ with an identifier. Often, the instructions inform the shopper to please note the pickup area where to collect the goods in the brick and mortar store. Best practices are to have a dedicated pickup desk for this, but it may be at the customer service area.

The confirmation email or message goes out advising the customer to proceed to the store to pick up their merchandise. With photo ID in hand, the customer receives their goods. Shopping experience completed!

From the customer’s perspective the benefits of BOPIS for them comes down to ICE:

  • Instant Gratification
  • Control (of when and where to get their goods)
  • Experience (try before collecting the merchandise, and in-store service)

What is BOPIS Free Shipping?

BOPIS free shipping is the alternative to having an order fulfilled through a home/office delivery. Here the customer places that online order but picks up their purchase themselves. From a retailer’s perspective, those with omni-channel services already offer in-store pickup. In effect, it is a ‘free shipping’ method. But, more chains need to advertise it as such.

The cost for U.S. businesses to move and store goods rose 6.2% in 2017.
Source: Council of Supply Chain Management Professionals 2018 State of Logistics Report

Again, from a retailer’s perspective, the benefits of BOPIS are twofold. First, is that customers who collect their order in a physical store, often buy more goods. This happens 40% – 70% of the time. Our estimate is extra goods are purchased 58.8% of the time on an in-store pickup. Second, is that merchants save on shipping costs. Since the customer collects their own goods, the last mile delivery cost (expensive) is completely averted.

Shipping Costs Rising

A recent Supply & Demand Chain Executive article pegged businesses as spending $1.5 Trillion on shipping costs in 2017. It rose 6.2% from the previous year. This while GDP rose only 2.9% of 2017 in the US. All told, it accounts for 7.7% of GDP for the US for the year.

 

Driver Shortages

Driver Shortage
Source: ATA’s Truck Driver Shortage Analysis 2017

Among other things, fueling this increasing cost is the driver shortages. In the coming years, there will be growing shortages with an estimated shortfall of 175,000 truck drivers by 2026, according to Bob Costello VP of the American Trucking Association.

This shortage of drivers is a worldwide phenomenon. Just search on Google for driver shortage. You will find shortages noted across Canada, Australia, Europe and Asia. A report about European Road Freight Transport 2018, indicates that between UK, Germany, France, Denmark, Sweden and Norway – there is already a shortage of drivers to the tune of 127,500. As an example, “In Germany, the DSLV transport union reports that in the next 15 years, two-thirds of drivers will retire. Germany is facing a shortage of 45,000 truck drivers, with around 30,000 leaving the profession every year. This compares with only 2,000 people receiving truck-driving qualifications each year.”

Affecting the Last Mile

Most of the stats above focus on long haul trucking. That will make the overall cost of logistics higher. But will this affect the last mile, where which involves free delivery and BOPIS free shipping?

Simply put, yes. Arguably, many of the innovations in last mile delivery are being driven from a need and growing cost. As an example, The Atlantic reported that Amazon spent $21.7 Billion on shipping costs in 2017. This was almost double that spent in 2015. Their fulfillment costs grew 66% in the first quarter of 2018, compared to the same period in the previous year.

Free delivery is having an impact on retail’s bottom line. Worse, we are likely to see this trend continue in the following years. All this puts an onus on BOPIS free shipping becoming the new free delivery offer for retail.

Retail Trend: BOPIS Free Shipping

More and more retailers are starting to realize how click and collect is a major cost saving asset. Better yet, retailers that already offer the service are starting to leverage it as a selling feature. In our case, we are seeing BOPIS free shipping advertised on more retail sites. Here is just a short random list of a few notables. Check out some of their experiences.

Home Depot

BOPIS Free Shipping - Home Depot

Home Depot shows a full image when customers search for free pickup. They have done a good job of advertising “Free pick up In-Store” for those who expressly seek it. Although this is a good start, an improvement is to advertise it on the front page.

Target

BOPIS Free Shipping - Target Example 2

Target is an omni-channel retail champion. During the holiday season, they use ship-from-store to fulfill 60%-70% of their orders. At the bottom of the main web-page, customers find shipping and delivery offers. Among these is an example of BOPIS free shipping, being Target’s free pickup service.

Simons

BOPIS Free Shipping - Simons Example Canada

Simons is a comparatively small fashion retailer. Yet, they serve as an excellent example of how BOPIS free shipping isn’t reserved for only the largest of retail chains. This Canadian chain provides a good example by listing in-store pickup at the top of their front page, listed as a form of free delivery. Literally, in this case, Simons considers in-store pickup the new ‘free delivery’.

Lowes Canada

BOPIS Free Shipping - Lowes Canada

Lowes provides a good example of providing customers with a choice. They do not expressly call out store pickup services as a form of free delivery. However, unlike many retailers which offer click and collect, they do advertise alongside the free shipping offer. Customers have a choice of either purchasing over $49 for a free delivery, or they may pick up the items for themselves, with no minimum.

Walmart

BOPIS Free Shipping - Walmart USA

 

Walmart is among the examples of retailers pushing omni-channel retailing, aggressively. Although not quite at the top of the page, the pickup option is listed alongside the free delivery. In this case, it is notable that Walmart has positioned shop pickup in the left-most position (which should result in great attention and clicks). Although, not a perfect example of BOPIS free shipping, it is notable.

Simple Communication

Silly as it may seem, the first step of BOPIS free shipping – is telling customers about it. Above are several examples of retailers stepping in that direction. Simons is the only one that has clearly stepped toward BOPIS being the new free delivery model. They have been express about this point, straight at the top of their website. This is a good example of what retailers should be copying.

BOPIS free shipping saves your retail chain some of the last mile expenses

As the costs of logistics, trucking, and last mile shipping grow, retailers will be seeking alternatives. Offering BOPIS free shipping, or positioning in-store customer collection of purchases as a method of free delivery – is smart. It saves your retail chain some of the last mile expenses and provides yet another opportunity to bring in another purchase from that customer.

Simply tell people about your offering. That’s the first step. Omni-channel retail doesn’t work if people don’t know about it. Offer in-store pickup as a ‘free delivery’ option. It won’t do anything for your retail chain if customers aren’t aware.

In the coming years will in-store pickup become the new free delivery? I firmly believe it will. The next question, of course, is how many retailers are ready, with the right technology in place? Further still, how many retailers are ready, yet have not informed shoppers yet?

Author: 

Charles Dimov, VP of Marketing at OrderDynamics

Charles Dimov is VP of Marketing at OrderDynamics. Charles has 23 years experience in Marketing, Sales and Management across various IT and Technology businesses. Previous roles include Chief of Staff, Director Product Marketing, and Director Sales. Charles has held roles in brand name firms like IBM, Ericsson, HP, ADP, and OrderDynamics.

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