Retailers Shift to In-Store Fulfillment, BOPIS Drives Additional Sales

Retailers accelerated BOPIS strategies amid pandemic disruptions

COVID-19 changed buying patterns overnight. To safely meet customer needs, retailers rapidly pivoted to in-store fulfillment—termed “buy online, pickup in store” (BOPIS). It grew more than 500% during the pandemic. Big brands, like Walmart and Target, capitalized on evolving customer expectations, boosting in-store fulfillment and utilizing store footprints. Now, Target fulfills approximately 95% of its eCommerce orders within its stores.

Good news: Consumers crave in-store fulfillment

• Fifty-nine percent of consumers expect BOPIS as a shopping option.
• Ninety-two percent of consumers shop elsewhere to save on shipping, leading to cart abandonment. In-store fulfillment removes shipping fees.
• Shoppers interested in BOPIS enjoy convenience and prefer selecting flexible pickup times.

In-store fulfillment utilizes excess store space and eliminates costly last-mile transportation

• Retailers meet customer expectations and utilize excess store space.
• They save on last-mile transportation, shipping goods from regional distribution centers to stores.
• Forty-five percent of retailers used physical stores as mini-fulfillment centers, mitigating supply chain disruptions. And 36% considered mini-fulfillment models adding network flexibility ahead of peak disruption.
• Ninety percent of retailers are likely to adopt BOPIS by 2024.

In-store fulfillment grows as retailers adopt the channel and customers utilize it. Analysts predict BOPIS will top $100B in sales in 2022, a 21% increase year-over-year. It will likely exceed $200B by 2027.

BOPIS drives eCommerce and in-store sales

Retailers recognize eCommerce and in-store retail are not rival strategies. In-store fulfillment strengthens omnichannel offerings and increases sales.

• Customers blend in-store and eCommerce retail. Fifty-nine percent of consumers expect BOPIS as a shopping option.
• In-store fulfillment generates instant gratification and increased customer lifetime value. Eighty-eight percent of retailers agree in-store shopping delivers instant gratification. And 79% confirm in-person shopping increases customer lifetime value.
• BOPIS boosts eCommerce orders and in-store purchases. Shoppers spend more when they use in-store fulfillment. Eighty-five percent of shoppers make additional unplanned in-store purchases when picking up online orders.

Many brick-and-mortar stores can’t meet distribution and in-store fulfillment demand

There are some in-store fulfillment drawbacks. Retailers don’t design stores to hold bulk inventory. Small backroom footprints cannot fulfill online orders quickly. Online purchases and traditional store sales also destabilize inventory counts and item availability—especially for seasonal or high-demand goods.

A BOPIS strategy requires balancing in-store inventory with additional inventory in regional distribution centers. Stores can then restock quickly through local distribution networks. The challenge: placing the right inventory in the right locations at the right time.

If goods sell too quickly in retail stores without an effective distribution strategy, customers face stockouts. Stockouts mean lost sales and weakened customer loyalty. Seventy percent of consumers plan to switch retailers or brands to avoid stockouts.

Add nodes positioning high-moving SKUs close to stores

As retailers expand in-store fulfillment, they reassess their distribution networks, adding nodes for fast-moving inventory close to stores.

But traditional supply chains don’t change quickly—or cheaply. Retailers can add warehouse nodes, but it’s a costly strategy. And industrial vacancy rates rest at record lows.

Ideally, retailers optimize their networks, positioning all inventory for effective distribution and in-store fulfillment over time. They avoid stockouts, improve customer experiences and increase online and in-store sales.

You might also be interested in:

• Article: Flexe Institute Market Watch: Vessel Rerouting and Inland Logistics Implications
• Article: Beat Disruption and Win Customers—How Retailers Mitigate Delivery Challenges to Meet Expectations
• Report: The 2022 Omnichannel Retail Report