The evolution of global 'click and collect' and returns processes
Our interview series with Jim Okamura has covered several facets of retailers' global cross-channel capabilities. To start off, Okamura provided an overview of his report which studied 144 large multichannel retailers in 17 markets. Next, he explained the proliferation of "research online, purchase offline", or ROPO capabilities in the industry and which retailers were performing best with the various customer-facing tools out there. In our next installment, Okamura dives into "click and collect" and in-store returns to get a sense for how retailers in different categories in various markets are delivering on these highly tangible aspects of customer service.
Tell us a bit about the state of "click and collect." What do customers expect and does that vary from one market to the next? How important is "click and collect" capability to retailers?
Click and collect, or “buy online, pick up in store” has been iconic in our view, representing cross-channel efforts overall. Yet it is only one variation of anytime/anywhere choice to shoppers. Ship-to-store has different processes from picking the online purchase from store inventory, for example, and makes different requirements of the retailer. The customer may not know the difference, as long as they get what they were promised, but the retailer needs to be confident of their own capabilities before they make this promise. How important is this to the retailer? It depends on the category of course as shopper expectations vary, but it can be one of the most effective programs to improve conversion rates and, if done properly, can rally the stores to support cross-channel capabilities overall. That, in our opinion, is worth a lot to gain an edge on your competition. We’re entering a stage of refining this relatively new process for most retailers, as overall we have a long way to go before we can satisfy customers. Other than the U.S. and U.K. markets, retailers in other markets who offer any click and collect service are typically “first generation” for this capability.
In this area, you found that electronics goods retailers are delivering well for their customers. Why does this category stand out among others?
I’m not sure we can say that they’re delivering well, but at least they’re trying. From our results we conclude that this has become table stakes for the electronics category, at least among market share leaders. Shoppers are increasingly expecting this capability, perhaps as rationale for not buying it from a cheaper pure play, and the quicker gratification. For the retailer it clearly is one means to differentiate itself versus pure plays, and at this stage the incumbent electronics leaders need every edge they can get.
What can a U.S. multichannel retailer learn from some of your "cross-channel champions" in the electronic goods category?
We like the in-store communications that send a strong message to customers encouraging click and collect. Conrad, the German electronics retailer, promotes the overall convenience - “how, when and where you want it” - in their prominent store signage. And it’s not just in the electronics category. Home Depot has raised the bar in their category by providing choice for consumers versus professional contractors, with a separate pick up desk. It was interesting to see some countries (France and the U.K.) adopting the related “reserve online and collect in store”, both with and without deposits paid online. This is not something we see in the U.S., but an interesting online twist to “holding” a product for a customer.
For click and collect to work smoothly, a big component is the customer's experience once he or she arrives in the store. What are some best practices that you've found in this area?
Even though we have seen click and collect for quite a few years now, we have to remember that the store experience is where it’s not working well, or it’s adequate but far from a great customer experience. Early adopters of store pickup such as Sears or JCPenney show that experience matters, as their stores have many years under their belt and we generally find the pickup goes without a hitch. What makes for a great store pickup experience is still grounded in basic processes that depend on store associates, their attitude and the right tools at their disposal (e.g., inventory and order visibility, customer notification and communication, and well thought through “exception processes”). Getting to a smooth pickup process takes time, especially to consistently execute across the entire network of stores. While we appreciate U.K. apparel retailer Next’s dedicated pickup desk, or Sears’ reserved parking spaces for pick up customers, or Container Store’s drive-up service as going the extra mile to improve the experience, we suggest that even before these services are added, most retailers should focus on the basic processes and work closely with store operations to improve the store experience.
Let's focus on returns. You mention in your study findings that D-I-Y retailers you surveyed now offer some form of buy or reserve online, pick up in store - but that fewer allow in-store returns. That could make for a rather confusing experience for the customer - what can retailers learn from this example?
I’m sure those retailers have their reasons for not taking returns (e.g. distributor drop ship, size or weight of the product), but I might challenge their rationale and how they prioritized cross-channel capabilities. We know a big benefit to retailers is driving store traffic through cross-channel programs, which in turn convinces store staff that this is helping the store and not just the e-commerce team. A good store returns process can go a long way, in our opinion, to pave the way for more complex capabilities such as store-to-web transactions.
Returning to a store something that was purchased online was long something of a sticking point for in-store staff, some of whom worried it was hurting their store profitability. In your overall experience, how are stores addressing the financial and operational issues involved with online purchase returns?
Yes, the stores can be hit with the negative financial impact of online returns, yet we consistently hear the flipside of converting store return traffic to additional sales outweighing the returns amount. In the U.S., store returns are expected among cross-channel shoppers, so we find this is less of an issue as there is a top down mandate. In our study this shows up in the assessment of the ease of returning products in the U.S. and U.K. markets, where the retailers had very high scores on this attribute. For those in early stages of store returns though, the lesson is to make sure to measure the impact of this store traffic (i.e., quantify the cross-channel influence impact), to quell any concerns from store management.
What about the in-store returns process for the customer? Who's getting this right - where and why are customers experiencing a smooth process?
As the most common cross-channel capability (69% of global retailers and 83% of U.S. retailers), store returns have a longer track record within the store selling environment - and it shows. If we think back six or seven years ago in our cross-channel audits, store returns were painfully slow and cumbersome compared to today. That makes all the difference – the store staff’s comfort level and experience with handling these transactions means an efficient experience. We can’t forget that this is a big contributor to improving online conversion rates, and a key reason to buy from a multichannel retailer’s website rather than a pure play. We can only reinforce repeat purchasing if the shopper is confident that store returns are simple.
Fashion and apparel retailers in the U.K. received outstanding marks from you for their click and collect and returns capabilities. What are they doing to set this high bar - and what can other categories learn from them?
I think this is a function of the competitive threat lighting a fire under the multichannel retailers to take store returns and store pickup seriously. Pure plays like ASOS and Net-a-Porter have had a big impact on the U.K. fashion market, and when macroeconomic conditions are as tough as they have been, any edge goes a long way. In the U.S. we anticipate the cross-channel battles are just emerging in specialty apparel, and in this case we might take some cues from our British counterparts.
If you're attending the 2012 Shop.org Annual Summit, please join Jim Okamura as he hosts a roundtable discussion on "Cross Channel Retailing: Opportunities and Challenges" on Tuesday, September 11 at 4:15 p.m. local time (Table 15). For the full set of findings from this research, please see the full Global Cross-Channel Retailing Report: The (Un)Connected Store report (written by Okamura Consulting and Ebeltoft Group) on the Shop.org site.
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