BOPIS: Retail's Next Frontier of Competitive Advantage

A shopper visits a retail store after researching online and doesn't like anything he sees. An associate then offers to show him additional collections on an iPad. Scanning online offerings and reviews, the shopper decides to buy online and pick up in-store (BOPIS) the same day.

Such shoppers are increasingly common in the U.S. and UK. In the realm of omnichannel shopping, the ability for consumers to research, select, reserve and pay for products online, then pick up in-store is an innovation that elegantly addresses the mind-set of today's shoppers. Nearly 80 percent of purchases are researched online, and one of consumers’ objections to purchasing online is they haven't touched or seen the product. Shoppers can also become highly frustrated when a product they want is out of stock at the store.

Over the last three years, BOPIS has become mainstream, with 88 percent of top 100 U.S. retailers offering the service. Thirty percent of retailers added the capability in 2013, but there's a long way to go for customer experience and business value to be optimized. Only 45 percent of retailers have extended BOPIS capabilities to include the ability to ship products from fulfillment centers to stores, 25 percent provide real-time visibility to inventory levels, and 16 percent suggest alternatives for out-of-stock products.

Having more robust supply chain and inventory management capabilities can increase sales and improve customer satisfaction. Some online experiences offer room for improvement: 18 percent of retailers enable shoppers to filter and view those search results eligible for pickup in-store, 53 percent support mixed carts (home delivery for some items and pickup for others), and 74 percent provide robust communication throughout the transaction (e.g., an email alerting the customer that their product is ready to be picked up). Yet only half support text messaging. Providing intuitive, transparent user experiences can drive adoption and improve conversion rates.

In contrast, retailers in the U.K. are more able to offer BOPIS as part of the omnichannel shopping experience because of the country's condensed geography. One major retailer, John Lewis, increased BOPIS by 61.8 percent and e-commerce sales by 22.7 percent. Another example is House of Fraser, which offers visibility of in-store stock on its website and in its apps. Thirty-five percent of House of Fraser's online orders are picked up in-store, despite the fact the retailer has only 60 stores in the U.K.

The Cognizant UK Shopper Study 2013 found in a span of three months that over 60 percent of shoppers had used BOPIS — a quarter of them more than once a month — and more than 80 percent had shopped in-store, then purchased online at least once.

Omnichannel fulfillment represents a strategic advantage in that retailers can leverage inventory across multiple locations and streamline fulfillment processes, reducing operational costs and enhancing the customer experience.

There's now plenty of evidence to suggest BOPIS is a good investment. It helps shoppers overcome traditional objections to shopping online and converts them to omnichannel shoppers, who are nearly 21 percent more profitable than single-channel shoppers. Retailers have observed as much as a 33 percent lift in sales from in-store pick-up of online orders. BOPIS allows retailers to better connect online and offline sales, leading to improved ability to personalize marketing messages. As more shoppers adopt BOPIS, retailers will see additional benefits including inventory optimization and fewer returns.

BOPIS offers a competitive advantage for brick-and-mortar retailers and has delivered meaningful benefits in its inaugural run. Retailers will continue to invest in enhancing the customer experience around BOPIS. Perhaps 24-hour pickup, faster pickup, expanded assortments, improved in-store service, better personalized experiences or enhanced cross-sell/upsell will be next on the docket.

Shannon Warner and Ian Jarvis are both assistant vice presidents of retail consulting at Cognizant, a provider of IT, business consulting, enterprise applications and business process services.