E-commerce fulfillment has gone through several stages. The first, and most enduring, enables folks to buy online and have the product delivered to their residence or place of business. Then came the “buy online, pick up in store” model, which goes by the gastrointestinal-sounding acronym of “BOPIS.” This works for retailers with in-store inventories that consumers can come by and grab on nearly a moment’s notice. It also gives retailers the opportunity to sell more product to the consumer once they’ve stopped in.
As the holiday season approaches, a third fulfillment option is gaining traction: The “buy on-line, ship-to-store” model, or “BOSS” for short. This program involves shipping direct to store those items not regularly stocked there. Retailers such as Macy’s Inc. (NYSE:M), Michaels Cos. Inc. (NYSE:MIK), and Kohl’s Corp. (NYSE:KSS) have announced BOSS programs, according to real estate and logistics services company CBRE Inc. (NYSE:CBRE) Kohl’s is starting the program in 20 stores, with plans to expand it across its 1,100 or so store network over the next few months, according to CBRE, which issued a report today on different e-commerce fulfillment options.
During the holidays, Kohl’s is offering $5 in “Kohl’s Cash,” through an initiative called “Smart Cart,” for consumers who order online and pick up at the store.
The BOSS program carries with it certain benefits for retailers. Because goods are delivered to a central receiving point, retailers are spared the costs and complexities of delivering to individual customers’ doorsteps. BOSS can allow retailers to streamline in-store inventory counts while minimizing the dreaded stock-out scenario, a problem that becomes even more lethal during the holidays. Consumers who are irritated by a stock-out might be appeased should the retailer promise the item will be in the store in, say, two days, according to Joe Dunlap, who heads CBRE’s supply chain advisory group. This might keep the customer from going down the street to a rival retailer unless the product is needed immediately, he added.
The program works best for shipping bulky, low-value items that are difficult to process on a conveyor, and where retailers might have to charge for shipping. (Think a wall picture valued at $20). A customer unwilling to pay $8.95 to ship such an item may be game to drive down the store and avoid the shipping costs. The program is not designed for quick-turn consumer goods that need constant replenishment.
For consumers, the difference between the BOSS and BOPIS programs may be inconsequential. After all, a store pick-up is a store pick-up. For retailers, however, executing the additional fulfillment option could be a challenge, according to Dunlap. Some retailers operate separate distribution centers for their stores and e-commerce operations. Picking one-off orders, or “eaches,” from two DCs rather than one adds a layer of complexity. Retailers with limited each picking in DCs that mostly do full-case replenishment will be challenged to implement each picking only for BOSS, he said. Retailers with infrequent store deliveries may find customers to be impatient, but those who pass more of the shipping cost to consumers who want home delivery and offer free in-store pickup will find better adoption, he added.
The structure of a BOSS program would depend on the size of the retailer. A smaller retailer may receive one to two trailers per week. A big-box retailer, by contrast, might get one or two trailers per day, particularly during peak season.
The addition of BOSS to the other fulfillment programs puts more emphasis on the omnichannel model that promises customers that goods will be delivered, seamlessly, any way they want it. “Retailers should expect this holiday shopping season to be more interconnected than ever,” the CBRE report said. “As a result, many retailers likely will utilize both the BOPS and BOSS programs to lower delivery costs and increase in-store attachment sales while ultimately providing a seamless in-store customer experience.”