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Oct 20, 2003
Best Practice

How Gets 50%+ of Online Buyers to Choose (Far More Profitable) In-store Pick-up

SUMMARY: No summary available.
Way back in 1998, before Circuit City had even launched a full- throttle eretail site, the retail stores ran a promotion letting customers configure their own built-to-order PCs. Consumers could choose to have the PCs shipped to directly to them or they could pick it up from the store.

Against all expectations, more than half chose for in-store pick- up.

The ecommerce team took that lesson to heart. From the day the full ecommerce site launched in 1999, purchasers could choose to collect their online purchases from a nearby retail store.

Here are the lessons that Assistant VP Steve Duchelle, Circuit City Direct, says he and his team have learned since then about in-store pick-up best practices and metrics:

-> Best practice #1. Use the back-end inventory system to guarantee availability

Inventory integrity in Circuit City stores, combined with the close integration of web and store back-end systems, means customers can see if the desired item is definitely in-stock at the store location of their choice.

"Once you place your order online you can come visit the store and the product should be waiting for you."

Duchelle notes this immediacy of service is rare in the multichannel world. "If you look at the actual functionality out in the marketplace there's not too many doing it like we're doing it. Many etailers still offer the service that they'll go find the product and stage it, and *then* they'll send you an email saying you can pick it up."

-> Best Practice #2. Adjust to actual customer behavior

Although customers liked the initial in-store pick-up service, Duchelle's team saw room for improvement. "Customers were telling us we weren't doing a consistent job across the chain in meeting their expectations when they arrive in the store."

As a result, two years ago, Circuit City's CEO set a new standard for in-store pick-up; purchased items had to be ready and waiting within just 15 minutes of the online purchase.

Is 15 minutes really necessary?

Yes. Customer surveys revealed that 6% of customers turned up to collect the product within 30 minutes of ordering, and a further 19% in the subsequent 90 minutes. Duchelle comments, "That's why the emphasis on speed."

-> Best practice #3. Build in performance safeguards

Here's the process they use to meet the 15-minute standard:

#1 The online order gets immediately transitioned to the relevant store.

#2 A pick ticket prints in that store, showing the item and its location, and a timer starts.

#3 A sales associate has 15 minutes to find the product, acknowledge that they've found it, and then stage it in the customer pickup area.

#4 If the POS system doesn't recognize the completion of the task within 15 minutes, an appropriate warning message appears across the bottom of the terminal

#5 If the order is not completed within 30 minutes of the online purchase, an alert goes to the site customer service team, who call the store and "partner" with them to find the product.

Needless to say, it's Circuit City's back-end website/retail POS systems integration that makes this all possible.

-> Best Practice #4. Build in performance incentives

Although the website gets the credit for the sale, the store gets a volume credit when it comes to calculating bonuses. Duchelle says, "It's important that they have an incentive as well."

In addition, the ability of each store to match the 15 minute performance standard is the subject of reports distributed to upper management.

Duchelle explains, "There's a lot of competition between the stores to make sure they aren't on the list of those stores that aren't performing well."

-> Results: More than 50% choose in-store pick-up

On average, over 50% of Circuit City's online customers choose in-store pick-up.

The only time that average drops is when the site is running a free shipping promotion. And, Duchelle notes that even then more than 35% of buyers *still* choose in-store pick-up.

This tells him that..."there's obviously some value there in the eyes of the customer from a convenience and immediate gratification standpoint."

There's also significant value from the retailers' perspective, because once you've got a customer in the store to pick up a package, they are highly likely to make additional purchases on their way out the door.

Increased proven-buyer foot-traffic is a thing of joy and beauty for everyone.

Note: Circuit City is a member of, a forum for retailing online executives to share information, lessons-learned, new perspectives, insights and intelligence.
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