Amazon is in a class of its own in the Strategy and Innovation Dimension. Here, we’ve focused on the journey to being everywhere for the customer and making the channels “buyable”. We’ve looked at how pureplay etailers move from a ubiquitous digital store to ubiquitous product delivery; while established retailers make strides to leverage their store estate and beyond. In coming years these capabilities will be readily available, but for 2015 it takes a strategic commitment to lead, to deploy and to grow here. We’ve also considered the post-commitment moment from basket to “bought it”.
“AMAZON PERFORMED WELL in this Dimension because it has made arrangements with TfL, Collect+ and 160 Co-op stores to use their sites as collection points,” says InternetRetailing researcher Martin Shaw . “Amazon lockers are even at airports now. Moreover, it is equal top scorer in payment options.”
Among the group of seven Leading retailers, two traders stand out for offering click and collect services that extend well beyond their own premises. Interflora scores highly because it offers collection services at third-party stores across its extensive network of members. Marketplace eBay is set apart thanks to a partnership with Argos that enables shoppers to collect orders from high streets across the UK.
Boots is the retailer with most collection points, offering pick-ups at 2,300 of its 2,488 stores
Other Leading group retailers include New Look , Argos , John Lewis , George at Asda , and Asda . All are multichannel retailers that offer collections at stores as well as offering collections through Collect+. In addition, Asda and George at Asda enable collections from TfL transport sites, John Lewis delivers online orders to Waitrose stores as well as its own, while New Look and Argos achieved the maximum index value for payment options including PayPal and 3D Secure fraud prevention. The Train Line , which enables customers to pick up tickets from railway stations across the UK, completes this group.
Eighteen businesses made up the Model group of retailers. These include Schuh , which also stood out in the Operations and Logistics Dimension, as well as Currys Digital and PC World (both part of the Dixons Carphone group), Topshop , House of Fraser , M&S , White Stuff and Mothercare . All of these multichannel traders offer collection from most or all stores, as well as through Collect+, but none offered pick-up from TfL sites. Superdry was the only member of the group to achieve a maximum index value for payment options, and one of only five retailers across the ranking to do so.
Several notable retailers that might have been expected to rank higher came further down the list. Tesco , for example, has a wide-ranging click and collect network. But ranking in this section advantages retailers that offer collections through a majority of stores. Even though Tesco has 1,700 collection points, it has a total of 2,608 stores. The supermarket did offer collection through TfL sites – but not through Collect+.
|The evolution of click and collect|
Click and collect as a concept first emerged at Argos, when the retailer enabled check-and-reserve functionality back in 2000. But it only started to take off at scale when supermarkets took the idea further. Tesco, which pioneered drive-through click and collect in its supermarket car parks in 2010, started to report high levels of online orders being collected through click and collect at Christmas 2012, as did rival Sainsbury’s – 60 per cent of its general merchandise orders were picked up that Christmas.
The trend has only accelerated. It’s commonplace for retailers to report that more than half of online orders are now collected. The places that they’re picked up from are getting ever more sophisticated. Waitrose wants to install chilled lockers at Gatwick for shoppers to pick up their post-holiday groceries, while Asda is rolling out temperature-controlled intelligent pods where grocery orders can be stored until it’s convenient for the shopper to pick them up. Timescales are also getting shorter: Asda, which first launched its click and collect service in 2011, has moved quickly to catch up, introducing same-day collection at 250 pick-up points last summer.
WHAT WE LEARNED
Click and collect options have expanded quickly over recent months as the service has become a key differentiator for customers. By thinking strategically, retailers serve customers in ways that fit in with busy lives. Collecting grocery shopping at a London Underground station, for example, makes a real difference to commuters who cannot stay in to wait for home delivery, while picking up an Amazon parcel at the airport could mean the difference between getting an item on time for a holiday – or not.
Flowers ordered through Interflora can be picked up from a network of more than 1,800 florists
Shoppers are embracing these choices. More than half of John Lewis’ online orders, for example, are now collected rather than delivered. It makes strategic sense to offer click and collect, and even more so with a choice of collection points. Delivering to a convenience store or petrol station, through services such as Collect+, may be the easiest option for a customer who can’t make it to a store. This also demonstrates that it’s not enough to innovate – any service must be as widely available as possible.
That said, 282 of our Top500 retailers do not offer any click and collect services at all. These are retailers that will likely miss out on business from customers who would rather go and get an item as quickly as possible than wait in for it to be delivered.
Choice also matters in payment methods. A recent OnePoll survey of 1,000 UK adult online shoppers, carried out for the PPRO Group, found that 45 per cent of UK shoppers would rather pay using PayPal, while 22 per cent preferred credit cards and 23 per cent debit cards. Tellingly, 68 per cent of those questioned said they had abandoned retail websites because of the payment process. Clearly giving choices about payment matters – but this area is often overlooked. Only five retailers gained the highest possible rating for payment options.
|The Elite group of one: what set Amazon apart?|
Amazon won top ranking in this Dimension for its wide-ranging use of third-party collection points. Amazon Lockers are now present at almost 300 locations – and counting. As of 11 September last year, passengers using Birmingham Airport could collect their online orders on their way into or out of the country using lockers located in the south check-in hall. The pureplay was rated more highly than any other company for its use of collection points. It also achieved the maximum achievable index value for its use of payments.
Just as collection services have improved and expanded at pace over the last year, so we’d expect that pace of innovation to continue. Expect more collection points to open near transport services, in the wake of John Lewis’ click-and-commute shop at St Pancras, while Network Rail parcel delivery shop Doddle will also continue to expand. More lockers are likely to be installed at airports, while InPost’s move to introduce lockerbanks to Victoria Coach Station could be copied at other bus stations.
If collection points can be anywhere, they can also be in other retailers’ shops, as eBay has found in its successful partnership with Argos. Shopping centre management company Capital & Regional, meanwhile, is introducing Collect+ in local Midlands malls as a way to boost footfall and spending. This theme may well be pushed further over the year ahead – lockerbanks in multi-storey car parks?
We also expect to see innovation and progress as retailers make their sites ever more “buyable”. An emphasis on making baskets simple, clear and consistent will always help customers, leading to higher conversion rates, while we also expect more retailers will use alternative payments, including PayPal.
Next year it’s likely we’ll vary the subjects that we cover in the Strategy and Innovation Dimension. This year’s Top500 report has focused on multichannel mechanisms, including click and collect. Next year the focus may be, for example, on selling internationally. To that end, during the year we’ll be monitoring the industry to seek out the most interesting areas of innovation before the upcoming Strategy and Innovation Dimension Report, coming out later in the year.”
In the Strategy and Innovation Dimension we’ve focused on two areas that extend the initial Footprint: click and collect, and payments. Both are strategies that meet the demands of ecommerce and multichannel customers, and improve the conversion of channel interest into completed sales.
We have looked at how click and collect is enabled across the store estate, and also when it goes beyond retailers’ own premises to third-party collection sites.
We ranked retailers by the number of stores operated and then weighted for the number of sites where collection was enabled. We divided the number of collection points (excluding Collect+) by store numbers, with pureplays having a nominal score of one store.
The result is that pureplays that deploy the fullest range of partner collection options have an indexation advantage, while multichannel retailers
that have not enabled click and collect through all stores are proportionally penalised.
Retailers not offering click and collect were not included in this study and their index value suffers accordingly.
We additionally analysed the payment and conversion strategy of the Largest 100 retailers through seven metrics. Maximum index value was available if these retailers offered PayPal payment; 3D Secure; showed delivery charges from the basket page, retained products in the basket once a customer had left the website; enabled customers to change or cancel their orders, alerted customers to their basket contents through an email, and offered feedback opportunities including a review email and a customer survey. This increased the performance spread and positioning within the largest 100.