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Risk and Rewards: Buy Online Pick Up In-Store

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Walk into most any Internet Retailer’s top 50 stores and you’ll see the place where the buzzwords of retail—omnichannel, customer experience, last-mile, digital transformation—meet retail’s physical reality. You’ll see a sign hanging from the ceiling or painted on the wall: Pick Up Here. The spot marks the intersection of online and offline, the place where buy-online-pick-up-in-store (BOPIS) happens.

While primitive versions of the service have been around for decades, changes in technology, competitive strategies, consumer habits, and customer expectations have led to a BOPIS boom.

Signifyd’s survey of 250 decision-makers representing BOPIS retailers paints a picture of large retailers who see in-store pickup as a must-have in this modern world of ecommerce. Here, we explore their ideas and how they are approaching logistical challenges and added fraud risk by providing the service.

Why do consumers pick up in-store?

Like most retail innovations in the digital era, the BOPIS boom has been driven by consumers. According to one JDA survey, 40 percent of consumers turn to BOPIS to avoid delivery charges. Meanwhile, 33 percent use BOPIS to get their items quickly. Convenience was cited by 12 percent of people, and eight percent of people use BOPIS because they want to browse a store while picking products up. Finally, seven percent said they feel more confident that their items will end up in their hands if they pick them up themselves.

Whatever their reasons for turning to BOPIS, consumers appear to be racing ahead of retailers when it comes to the trend. Research firm L2 reported in 2017 that only 47 percent of retailers in the United States and the United Kingdom offered pickup of online orders in stores. However, as the pandemic drove lower personal interaction, in-store pickup has exploded into the sphere of nearly every retailer that has a high street presence.

What makes BOPIS so hard?

It turns out that BOPIS is one of those things that is much easier to talk about than it is to actually do. It’s not the sort of innovation that retailers can adopt overnight. Buy-online pickup-in-store requires additional procedures because it is a card-not-present transaction in which the retailer or its fraud-protection vendor shoulders the fraud-risk burden.

While the trend is often referred to as a win-win for consumers and retailers, BOPIS is, in fact, more of a win-lose: Consumers get convenience and fulfillment options, while retailers get logistical headaches and a new avenue for fraud losses because the online shopper no longer gives a delivery address, which provides valuable data to confirm a shopper’s identity.

The logistical struggles start with the fact that retailers have traditionally run their brick-and-mortar stores and their online worlds as separate channels. Each of those sales channels is complicated enough on its own, but unifying them and adding in other siloed operations, such as catalog sales and customer call centers, adds to the complexity.

But you can’t compete without BOPIS

Whatever the challenges, it seems that today, more than two decades into the ecommerce era, providing pick-up-in-store is not simply a nice-to-have from a retailer’s perspective. It’s a must-have—and right now.

But knowing that something is valuable and doing that something successfully are two different things.

Retailers who have launched BOPIS appear to be confident in their ability to deliver—or, in this case, to not deliver—according to Signifyd’s survey of retail enterprises. But that isn’t to say there aren’t significant concerns among respondents.

44 percent of market leaders said that providing the service was a competitive imperative, including 12.4 percent who said BOPIS gives them a competitive advantage against Amazon.

Another 37.6 percent of respondents said the biggest boost from BOPIS was the additional purchases consumers make when they show up to pick up their orders.

However, doing BOPIS right requires a near-perfect insight into inventory across the in-store and online channels. And not just a general idea, but a knowledge of where each individual piece of inventory is at any time and where it needs to go in order to meet the needs of a buy-online-pick-up-in-store customer.

BOPIS changes everything for store associates

Offering BOPIS means retailers need to train store associates to pick and pack orders from store shelves or backrooms. It means employees need to be ready to serve customers quickly when they arrive at the store or risk defeating the whole purpose of BOPIS.

It also means that associates need to understand the unique fraud vulnerabilities that BOPIS exposes a retailer to. It means the associate needs to know how to determine that the credit card account used to pay for the order actually belongs to the customer standing in front of him or her.

Among the large retailers surveyed by Signifyd, 40.4 percent acknowledged that offering a pick-up-in-store option created increased fraud concerns. In particular, 25.2 percent put their fraud losses from BOPIS in the 3 to 10 percent of revenue range. That’s a staggering percentage by fraud standards.

Another 42.8 percent said BOPIS fraud losses represented between 0 to 1 percent of revenue.

It’s practically inevitable that when there is a new way to purchase something, new ways to cheat the system will follow. In the case of BOPIS, the fraud play isn’t very complicated. The fundamentals are the same as with more traditional ecommerce fraud. A fraudster, or more likely a fraud ring using stolen identities, makes an online purchase. Or perhaps the fraudster or ring makes the purchase from a legitimate online account that they have infiltrated.

While the best fraud-protection systems look at a host of outside data to determine whether an order is legitimate or fraudulent, one extremely valuable piece of information is the delivery address in the order.

Protecting retailers

Photo IDs and signatures are the tools of choice to protect retailers. A government-issued ID was the most popular form of identity verification among the retailers Signifyd surveyed, with 76 percent of them saying it was sufficient to pick up a package. Allowing respondents to select more than one choice, 52.8 percent said that asking for the credit card with which the merchandise was purchased was sufficient at authenticating purchases.

Meanwhile, 82 percent of retailers said they require a signature before a customer can leave with an order. While it’s a common-sense requirement, it’s only of value if an associate has an established signature with which to compare it.

Having a better BOPIS service

So given that the importance of BOPIS is growing and that all signs are that it is going to be an increasingly important channel in the future, what should retailers do to make sure they are providing the kind of ordering and collecting experience their customers demand?

The following tips were assembled from a variety of retail experts:

  1. Train your associates. They need to learn how to stand firm when customers show up without proper identification, while at the same time avoiding insulting legitimate customers who simply forgot the documents they need.
  2. Communicate, communicate, communicate. A BOPIS customer should never be wondering what is happening with their order. Send immediate confirmation when an order is placed, explaining that another email or text with all the details needed for collection will arrive when the order is ready. When the order is ready, send another message that includes store directions, explains exactly where to go in the store, lists the identification needed to pick up the order, says how long the order will be held, and offers a contact method for those with questions.
  3. Combine your online and in-store order management and inventory systems. You need absolute insight into your inventory — what you have, where it is, and how quickly it can get to the store where it needs to be for pick up.
  4. Make sure your BOPIS is a thing. Don’t have BOPIS customers line up with traditional customers. Create a dedicated space for in-store pickup staffed by associates who are BOPIS experts.
  5. Consider automation. Consider kiosks that can authenticate identity before the customer reaches an associate and an inventory control system that helps an associate know the exact location of an item needed for pickup.
  6. Follow best practices when it comes to fraud protection. Consider a customer’s order history. Have you seen this customer before? Has he or she previously ordered online? Has he or she used BOPIS before? Have orders from the same customer come in unusually quickly or in unusually high numbers — even at other stores under your brand? Design systems that can protect you from fraud while still delivering the customer experience your shoppers expect.
  7. Test your BOPIS procedures with a secret shopper program. Just over 63 percent of the retailers surveyed for Signifyd use secret shopper testing. Be sure to design the program as an educational tool, not a punitive program, to avoid demoralizing your associates.

BOPIS is still a relatively new flavor of the shopping experience. There is still time to get it right. The bad news? Getting it wrong is costly, both in terms of customer loyalty and lifetime value, and in losses due to fraud.

The good news? There are those who have figured out how to tap into the profit potential of BOPIS in both the short and long run. And there is help to be had in starting up or shoring up your buy-online-pick-up-in-store game.

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