Retail's Amazon antidote: Buy online, pickup in store

Brick-and-mortar retailers like Walmart, Target, and Best Buy found an advantage over Amazon this holiday: Store pickups on online orders.Offering cus...

Posted: Dec 30, 2018 8:56 AM

Brick-and-mortar retailers like Walmart, Target, and Best Buy found an advantage over Amazon this holiday: Store pickups on online orders.

Offering customers free pickups for digital orders has become a key part of these retailers' strategy to compete against Amazon's rapid and extensive home delivery network. Retailers have blanketed the country with store pickup options in recent years, and those investments paid off during the holidays.

Buy online, pickup-in-store spending increased 47% from November 1 to December 19 compared to a year ago, according to data from Adobe Analytics. Adobe said it was the biggest holiday on record for online pickups.

Customers have been quick to embrace online pickups from stores. Analysts say it appeals to shoppers who want to grab their stuff and go without waiting in checkout lines or interacting with sales workers on the floor.

At Walmart's investor day in October, Chief Customer Officer Janey Whiteside said pickup was attractive to both "a time-pressed mom" heading home after picking her kids up at school and a "convenience-seeking baby boomer on the way home from the golf course."

Picking up mobile or online orders from stores in hours can also be faster than waiting days for home delivery. It works for last-minute holiday shoppers who need to buy a gift in a hurry. Old Navy even partnered with Lyft to offer customers free rides to stores for online pickups last Saturday.

"The issue with delivery is that it can take several days," said Georgianna Oliver, the founder of Package Concierge, a firm that creates in-store lockers for retailers. She said weekly orders have doubled for her company's lockers since last last year.

For retailers, pickup is a better economic model because they can avoid paying expensive shipping fees. Retailers' profit margins have dipped in recent years from fulfilling online orders.

"The realization of the growing costs of e-commerce fulfillment pushed many brands to step it up this past year," said Steve Dennis, a retail consultant and former executive at Sears and Neiman Marcus.

Amazon (AMZN), which lags rivals in the space, just started offering grocery pickup from Whole Foods in August. It's only available in 22 cities. It has also been building out new stores like Amazon Go, Amazon Books, and Amazon-4 Star.

Best Buy (BBY) started offering pickup more than a decade ago. Forty percent of Best Buy's online orders today are picked up at one of its 1,000 US stores. "Stores are a wonderful asset,"CEO Hubert Joly told CNN Business in a recent interview. "People choose to go to the store because in less than an hour you can pick up your stuff."

Customers often select pickup from Best Buy instead of home delivery because they're buying gifts for family members, or they don't want to risk someone stealing an expensive TV off their porch, Joly said.

Walmart (WMT) has raced to add grocery pickup to more than 2,000 stores in four years. It also has added pickup towers for general items to 700 stores over the past two years. By the end of the year, it will be able to reach 70% of the US population with pickup, it said.

Walmart will soon overtake Apple as the third largest online retailer in the country thanks to customers picking up groceries in stores, according to report by research firm eMarketer.

Target (TGT) was late to roll out pickup, but has scaled what it calls "drive-up" to around 1,000 stores. Employees bring customers' orders out to their cars.

Target said that it was helping the company reduce costs. "Given the cost of last mile shipping, we like the economics of drive-up much better," Target Chief Operating Officer John Mulligan told analysts in November.

Despite the growth opportunities, pickup is not easy to operate and presents several obstacles for retailers, including security, inventory control, and staffing. Retailers have to implement procedures that prevent fraud, Oliver said.

Retailers also need to make sure stores don't run out of stock for online orders, and that workers are not overwhelmed with double duty handling pickups and running stores. Walmart, for example, has 25,000 trained personal shoppers to select produce and meat at stores for online orders.

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 312521

Reported Deaths: 5498
CountyCasesDeaths
Marion42641849
Lake27152455
Allen18010298
Elkhart17177221
St. Joseph16799229
Hamilton13011167
Vanderburgh9751120
Tippecanoe858727
Porter827986
Johnson6389165
Hendricks6098157
Vigo608384
Monroe536750
Clark515077
Madison5060122
Delaware4905103
LaPorte465595
Kosciusko462339
Howard344277
Warrick325672
Bartholomew316863
Floyd316277
Wayne307770
Cass299931
Marshall299144
Grant272550
Noble255046
Hancock253852
Henry247537
Boone244554
Dubois237931
Dearborn219030
Jackson215534
Morgan210843
Knox187819
Gibson186925
Shelby182155
Clinton180321
DeKalb177831
Lawrence177648
Adams168222
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Randolph124519
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Posey122116
Jefferson118816
Scott109020
Greene102653
Jay99013
Sullivan96416
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Fulton84518
Spencer8378
Perry82521
Fountain7798
Washington7527
Franklin69927
Carroll68613
Orange67328
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Owen6087
Tipton57627
Parke5706
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Pike50919
Pulaski39515
Martin3585
Brown3424
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Crawford2941
Union2702
Switzerland2575
Warren2382
Ohio2317
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Ohio Coronavirus Cases

Data is updated nightly.

Cases: 382743

Reported Deaths: 6274
CountyCasesDeaths
Franklin51161671
Cuyahoga37222743
Hamilton30493372
Montgomery20518236
Butler15199148
Lucas14566417
Summit13933327
Stark9193206
Warren841976
Mahoning7530300
Lake710067
Lorain6690106
Clermont593651
Delaware572537
Licking564577
Trumbull5584147
Fairfield554464
Greene538066
Clark5218101
Allen494989
Marion476759
Medina471657
Wood4598107
Miami437568
Pickaway404048
Portage358972
Columbiana357698
Tuscarawas342667
Richland328539
Wayne327394
Mercer296047
Muskingum252510
Hancock245940
Ross244559
Auglaize236435
Darke232560
Erie230268
Putnam229449
Ashtabula228354
Geauga211851
Scioto200616
Union19668
Shelby194017
Lawrence193039
Athens19134
Seneca182919
Belmont170229
Madison163119
Sandusky157729
Preble156521
Huron155519
Defiance144823
Holmes140439
Logan133517
Knox131718
Fulton128726
Jefferson128613
Crawford126817
Washington125227
Ottawa124530
Clinton109115
Williams10799
Ashland107825
Highland103718
Brown10135
Henry101323
Hardin99719
Champaign9825
Van Wert97318
Jackson96212
Fayette92717
Morrow9202
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Perry82912
Adams80313
Pike7661
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Hocking64516
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Carroll48810
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Monroe32321
Morgan2685
Vinton2246
Harrison2193
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