Doesn’t it feel like the rules of how to ‘win at retailretail’ are constantly changing and shifting their focus? First the key was to bring in people to the physical store and shape their customer experience- making it memorable in some way. Then retail seemed to shift its focus to rely heavily on online shopping, leading to several brick and mortar retailers struggling to stay afloat. Today, BOPIS, the latest in retail trends, is throwing a life preserver to the brick and mortar store.
BOPIS, buy online pick up in store, is the latest happy medium convenience for shoppers that don’t necessarily have the time to browse the store, but also don’t want to pay shipping fees. And more and more retailers are going down this road. According to recent studies mentioned in a Retail Touchpoints article, by 2021, 90% of retailers will offer BOPIS and 50% of shoppers will have made decisions on where to shop based on BOPIS availability.
The concept is that you browse for an item online, place it in your cart and pay for it and then choose to pick it up in store. When you get to the store, you pick up your prepaid item and go about your merry way. Easy right? In theory yes. For the consumer, this saves them a lot of time and for those of you still dragging your heels on an Amazon Prime account, BOPIS is the perfect solution.
While BOPIS may be perfect for the customer, it can be challenging for a retail store owner. There is a risk of not having the item on hand when the customer comes to pick it up. A failure to fulfill can alienate the customer. If a customer walks into a store and that store does not have the jeans they want, they leave disappointed but are likely to return. If a customer purchases jeans online and gets to the store to pick them up, and they do not have the jeans in stock as promised, the chances of that customer returning are way less likely.
So how do you account for items purchased online but picked up in the actual store and make sure that you in fact do have those items available in house? This is where a good forecast demand planning solution comes into play. Incorrect forecasting and inventory management can increase carrying and supply chain costs and can cause either an overreaction or an under reaction.
4R approaches BOPIS by combining in-store and BOPIS demand into a single forecast that accounts for how the two demand streams will affect one another. We factor in the increased risks associated with BOPIS and the impact of factors like display minimums. Having that single forecast leads to fulfilling demand and maximizing margins.
4R’s predictive analytics account for things like Cannibalization, which occurs when a customer chooses buying the item online first rather than just going to the store without ordering the product ahead of time, and the Halo Effect, which is when a customer is picking up a BOPIS item and then ends up purchasing additional items.
Besides overall customer satisfaction, a main positive to the BOPIS trend is that it brings people in to the actual store, which in turn can increase attachment rates. Attachment rates are when a customer buys additional items in the store while picking up their BOPIS item. While they may not have intended to shop in the store itself, BOPIS presents more of an opportunity for a customer to come in to pick up the items they bought online, see something in a nearby display and end up spending more in the store. If you’re like most people and can’t visit Target without browsing the dollar bins, this is similar in theory. Some people can’t physically step into the store, go straight to customer service to pick up their item, and then leave. You go into Target for toilet paper and leave with a $100 receipt. Additional unexpected sales is a major win for the retailer.
If done right, BOPIS is an effective strategy against strictly online offerings. It increases customer satisfaction due to immediate availability and leads to increase in margins and reduced stranded inventory in store.
To learn more about BOPIS and 4R’s approach, check out these resources.
BOPIS White Paper