Click-and-collect continues to gain popularity amongst shoppers, so retailers need to innovate to create a cost-effective offer.

Click-and-collect is regularly cited by retailers as one of their most popular services, but many may have jumped on the bandwagon a tad early and are now failing to reap the rewards.

It is common knowledge that click-and-collect can be an extremely costly fulfilment offer, with limited benefits for many retailers.

But it’s also well known that the shopper who uses multiple channels is the most profitable, and with retailers fulfilling up to 70% of online orders in this way it’s the profitability of the offer that is indeed essential.

Removing the click-and-collect offer altogether will of course turn off many of these customers, which is a no-go for any retailer. But by optimising the process, they can reduce cost and increase profit.

Purchasing priorities

So, why hasn’t this been top of the agenda all along?

Because to optimise effectively, retailers must first decide where click-and-collect fits into their overall business strategy. Is it a service to drive traffic and gain incremental sales, or does it simply represent a box that retailers feel they have no choice but to tick?

There are some great click-and-collect examples in the industry, such as Asda’s To You service. The supermarket giant is clearly proving it can drive incremental sales and win new customers by driving existing and new shoppers into the store.

John Lewis and Tesco also saw such huge pick-up that they made the decision to moderate click-and-collect demand by charging for low value orders.

However, not all retailers are seeing the successes of the service.

The questions is, if you could offer an excellent experience, drive more shoppers to your store and fulfil orders in a way that was cheaper than any other method, why wouldn’t you do it?

But in reality, the answer is not so simple. Retailers in today’s market struggle to offer an excellent click-and-collect experience and, more often than not, the cost of fulfilling the order is far greater than other methods, making it a largely profitless service.

“If you could offer an excellent experience, drive more shoppers to your store and fulfil orders in a way that was cheaper than any other method, why wouldn’t you do it?”

Craig Sears-Black, Manhattan Associates

For many retailers, however, the key to these challenges becomes more apparent than first thought. Why ship stock from an ecommerce distribution centre every time someone orders a product via click-and-collect?

Why not, instead, take the order from store stock? This way of operating not only helps to provide the excellent experience demanded by customers but also integrates the supply chain completely, by combining the selling channels so that sales and supply chain can be optimised together rather than in isolation.

Not only is this far more cost effective, it also creates a much more seamless and enjoyable experience for customers.

The service is only going to rise in demand and the issue is going to get bigger for many retailers as a result.

To constrain demand for the service is to ignore both a selling opportunity and a fundamental retail failing. So, instead, retailers should look at achieving successes through new models.

Retailers who are able to evolve the right formula of cost management and excellence in customer service will be the winners; the most important facet of this is to maximise the return on store assets, and on each and every store associate.

  • Craig Sears-Black is managing director of Manhattan Associates UK