We recently connected with Bloomberg Senior Reporter, Matthew Boyle for his piece, Retail Created the Armchair Shopper and Now It Wishes It Hadn’t. The article dove into the industry's concern with fallen foot traffic and the increasing consumer behavior of shopping from the ‘comfort of the couch’ through free home delivery incentives.
Walmart, Target and other merchants have built their eCommerce businesses on the shaky foundation of free shipping, which wreaks havoc on their already-thin profit margins. As the article expresses, they did so to match Amazon’s fulfillment network, but have come to realize that coaxing shoppers to pick those orders up in the store or curbside is much more economical. The process, coined “BOPIS” for buy-online-pickup-in-store, is more efficient nowadays than it used to be. Still, nothing quite meets the appeal of free shipping.
Web orders with free shipping attached are up an average of 18% since mid-October, the time when holiday deals started trickling out, according to retail-industry software provider DynamicAction. Free home delivery is by far the best way to convince an otherwise hesitant shopper to make a purchase, a survey from the National Retail Federation found.
BOPIS orders have increased as well this holiday season, growing 41% so far, according to Adobe. That’s mostly thanks to more efficient inventory management and fulfillment systems. Retailers are striving to be better at nudging shoppers to choose the store-pickup option over home delivery because it makes financial sense. When a customer picks up a web order at the store, that costs 90% less than shipping it to them from a warehouse, Target’s Chief Operating Officer John Mulligan has said.
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