Differentiation is the key to success in Multi-channel Retailing

by Deepak Sharma on Tuesday, June 05, 2007

Internet Retailer is reporting on how retailers are trying to differentiate the buy online/pick up in store programs to stay ahead of the competition. Started in 1999 by Circuit City, the buy online/pickup in store program was quickly caught on by other retailers. Almost all big US retailers have this program today in one way or another.  The strategies adopted by different retailers differ, while some are providing guarantee that the order will be ready for pick-up in less than 30 minutes, others have created strategies/campaigns to target consumers during holidays when time is of great essence to their customers. But all this differentiation is paying, as per CompUSA, "customers who buy online and pick up in store spend 35% more than customers who shop only in stores".  

Circuit City stores offer one or both conveniences. Individual stores are provided the choice because Circuit City figures they play a key role in making the program work, Mendelsohn says. The retailer guarantees an item ordered online will be ready for pick-up at a designated store in 24 minutes. If not, the customer receives a $24 Circuit City gift card....

As competitors such as Circuit City enhanced their programs by guaranteeing fulfillment in a specified window, CompUSA began working to achieve fulfillment in 15 minutes. The benchmark was based on customer feedback and store data.

After stores demonstrated they could achieve at least a 95% success rate for fulfilling orders in the prescribed time, CompUSA launched its 15-minute guarantee in November 2006. Shoppers also have the option of picking up an online order later the same day or the following day. “We wanted to differentiate our program. The time guarantee and other pick-up options are a way to do that,” Hurlebaus says.

Fulfilling 95% of online orders in 15 minutes requires each store to integrate its inventory management system with that of the e-commerce site. Shoppers then can identify online items in stock at their local store. To improve customer satisfaction, CompUSA allows customers to search the inventory of stores within a 50-mile radius of a designated ZIP code to provide greater availability of products if a customer’s preferred store is out of stock. CompUSA uses an in-house order management system to link store and web site inventories......

“Offering in-store pick-up in most major categories, reserved parking spots, designated pick-up lines in stores, and in-store signage directing consumers to the pick-up area are points of differentiation from our competitors,” a Best Buy spokeswoman says. While competitors such as Circuit City and CompUSA offer some of these services, they do not offer all of them, she adds.

While providing extra service to online shoppers, in-store pick-up also leads to increased purchases, retailers say. CompUSA says customers who buy online and pick up in store spend 35% more than customers who shop only in stores. To encourage cross-channel shopping, CompUSA’s store associates suggest add-on items after a customer purchases something online and arrives for in-store pick-up; the retailer also prints in-store offers on pick-up receipts. “We have been very pleased with the results,” Hurlebaus says.

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