The distinction between online and in-store purchases doesn't have to be an all-or-nothing choice. That's what Walmart (WMT -0.63%) has learned, and it's offering customers a host of purchase options.
With "buy online, pick up in store," otherwise known as BOPIS, the company is tuning in to the most current buyer behaviors. Customers like to order through a digital channel but procure it themselves, as we shall see.
How BOPIS works
The basic premise of BOPIS is exactly as it sounds: customers can browse online, where they purchase the items, and then pick them up from a store.
Why is this option so popular? And what do customers gain from BOPIS compared to home delivery or shopping at the store?
The advantage over in-store shopping is clear: It saves time for busy customers.
But there are many other benefits to BOPIS. One is that customers don't have to wait for brown boxes to show up at their doors. While Amazon.com is increasingly offering same-day service for many of its items, it's not yet standard and doesn't reach all households. And Amazon doesn't have many free-standing stores, except for Whole Foods Markets.
Another benefit is that while many online retailers offer free shipping, many others don't, especially for express options. Thus, BOPIS allows customers to save time shopping while also getting their packages quickly without paying for delivery.
Jamie Nordstrom, president of stores for Nordstrom, said of BOPIS: "It's the single fastest-growing part of our business." He also said it's the most profitable.
How Walmart is getting it right
Numerous U.S. retailers are seeing the benefits of offering in-store pickup, including Macy's, Gap, Target, Nordstrom, Best Buy, and many more. But Walmart has certain advantages.
For one, its sheer number of stores makes it easy for customers to use this service. There are over 5,000 Walmart stores across the U.S., so the likelihood of one being nearby is pretty high. The company says it now offers "fresh and perishable foods within 10 miles of 90% of the U.S. population." Compare that with 870 stores for Macy's and 345 Nordstrom stores (including all store formats).
Furthermore, in a customer-centric move, Walmart offers free pickup at any FedEx Office location. Customers can simply click on "choose FedEx location" at checkout, then pick from the available sites.
As part of its store pickup option, in many locations Walmart offers grocery pickup and loading: A customer can order online, and a Walmart personal shopper will put together the order and bring it straight to the customer's car.
The last element of the Walmart BOPIS system is mobile check-in, where customers let the store know they're on their way over, so it can have the order ready and waiting.
How it's improving sales
An Adobe study on consumer spending for the 2019 Black Friday weekend noted the importance of BOPIS as a tool for retailers.
- Year-to-date, BOPIS orders have been very strong, with a 39% increase over 2018.
- 37% of shoppers are planning to use BOPIS for the holiday season.
- 82% of BOPIS shoppers will make additional purchases while picking up their orders.
Earlier this year, Walmart CEO Doug McMillon said, "We're ... convinced [customers] want us and expect us to bring our stores and e-commerce businesses together in a digitally connected seamless way that makes shopping easier."
As with the general retail trend, Walmart's e-commerce business is growing at a fast pace, with U.S. e-commerce sales rising 41% last quarter. Clearly, Walmart's strategy of using its physical assets to boost digital sales is paying off for the retailer.
During Walmart's fourth-quarter earnings call back in February, McMillon said:
Our stores and clubs are becoming more digital, and we're using technology to change how we work. More customers can now access our brand through multiple channels, and it's important that we engage them in different ways. We've learned that those customers who shop with us both in stores and online spend about twice as much in total, and they spend more in our stores.
It's also great for the company because it doesn't have to shell out extra for the free delivery that appeals to customers. Walmart is competing heavily in this sphere with options including free next-day delivery on orders over $35 and free standard shipping with no minimum purchase. For example, Walmart CFO Brett Briggs noted that in last year's fourth quarter, "Walmart U.S. gross margin rate declined 27 basis points due primarily to the increasing mix of e-commerce growth, pricing strategy, and higher transportation expenses."
With BOPIS offering so many benefits for both the customer and the store, it's sure to become an increasingly large part of this blue chip company's sales.