As Australia’s larger retailers develop better system integrations and understand e-commerce better, they started to come to the fore once again in 2014 as dominant players in retail, offering their goods both in the virtual and real world.
This is where ‘click and collect’ has come into its own – last year’s buzzword in the retail industry, or is it?
To those in the e-commerce space, click and collect is the term synonymous with buying online and collecting in store, or so you would think! Click and collect is a relatively simple concept in theory, i.e. order online and instead of selecting a freight option, the buyer selects an option to collect their purchase from a retail store, or in the case of a pure-play online retailer, collection from a distribution centre or collection point.
Click and collect has been popular in the UK since Tesco announced in 2010 it would be offering a drive-through type of service for internet buyers.
Click and collect gains traction
In 2014, an article in Power Retail suggested that click and collect was starting to gain traction in Australia after a slow uptake by Australian retailers. Traditional thinking, infighting between departments struggling to gain share of voice, as well as budgetary and technical constraints are probable reasons for the slow uptake of click and collect.
A recent case study at a Melbourne-based pioneer in discounted online retailing highlighted a few interesting points relating to their implementation of click and collect.
The business knew that sales from December 15–24 dropped dismally as consumers turned to retail stores for last minute shopping. The idea behind this was that the business could experience an extra 10 days of peak volume sales that it had previously missed out on. The theory was correct because sales were tenfold on previous years in that busy period.
This achievement was not without its headaches.
In mid-2014 the company providing a true SAAS (software as a service) ERP system was approached to discuss the modifications needed to pass data from the retailer’s website after sale into their ERP system to enable pick and pack of the order. The ERP provider was bewildered what click and collect was, so too was the website development project manager – yes, this happened in 2014.
After defining what click and collect is, a brief was put forward to the developer and the ERP provider to provide a workable solution that would allow a click and collect option to appear at checkout, and for the warehouse to be able to tell the difference between Australia Post/bulk carriers and click and collect.
Sounds easy yet this took quite a few weeks between the vendors to get this right, testing and to-ing and fro-ing between eSOLD and the technology providers before it worked. Once ready, the service was widely promoted to customers.
So what happened?
Customers from around the country were choosing click and collect as it was free and they didn’t necessarily understand what click and collect meant. This was a customer service headache as freight had to be chased up and in many instances orders already picked and packed by the warehouse were cancelled. The part solution to this was to get the developer to block click and collect as an option to all buyers without a Victorian postcode. This reduced this problem massively but not entirely.
Another challenge was for products that weren’t kept in stock. Customers were arriving at the collection point to be told that their order was not available, not good news for irate customers. Further development work was rapidly done on the site to remove click and collect as an option for these products. Sales continued to grow with click and collect.
However, another issue became apparent. The area required to store these orders started to become disproportionate. Customer service had to start putting extra resources into constantly contacting customers to collect their orders.
Finally, customers collecting their orders wanted to add to their orders, change their mind or, to make matters worse, engage in idle chatter and conversation with the office staff or to see products before they bought them, all situations that add unnecessary and unplanned overheads to the business.
Watch for the hidden costs
In summary, click and collect is meant to be a great customer service alternative to consumers. It encourages sales to customers that need or want things today; to frugal buyers who may not have shopped originally due to unwillingness to paying for shipping; and it provides the opportunity for shoppers to see that a business actually does have a face, a human component which builds relationships and trust.
These factors all add value to the business. However, this comes at a cost that is not initially apparent. Systems, both electronic and human, have to be developed and extra manpower is required to manage this extra channel.
Mark Freidin is an experienced chief operating officer, e-commerce pioneer and consultant to fast-growing firms with his company internetretailing.com.au.