Will Retailers Trip on In-Store Pick-Up This Christmas? - eMarketer

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Will Retailers Trip on In-Store Pick-Up This Christmas?

Many have learned from last year's struggles, but challenges remain

December 2, 2016

Buy online, pick up in-store services were a disaster for many retailers last Christmas, and a headache for holiday shoppers. This year, retailers are expected to do better, but the bar has been set low.

Omnichannel Services Offered by US Merchants, 2015 & 2016 (% of respondents)

Many retailers underestimated consumer demand for buy online, pick up in-store, leaving disappointed buyers without products they had ordered online. “[Retailers] did not let the customer know when the order was ready or they just did not communicate throughout the process,” said Steven Osburn, retail supply chain strategist at Kurt Salmon. “There was also unclear communication once shoppers got to the store. It’s frustrating to show up to the store and not know where to pick up your package.”

This year, even more retailers are offering the service, according to data from Multichannel Merchant. The increasing number of first-time providers seems likely to increase the odds for problems.

This Christmas, retailers are looking to learn from their mistakes. And many have taken steps like hiring more workers and making sure they have more products on-hand to fulfill. But there are still some issues retailers need to work out.

“Retailers learned from last year and have invested in improving the systems, but they haven’t moved quickly enough,” said eMarketer retail analyst Yory Wurmser. “Some of the basic issues should be resolved, but there are inherent structural problems that will take a while to fix given current retailer priorities.”

“For one thing, the physical space for pick-up zones needs to be prioritized and put in a prominent, easy-to-access place. Second, the inventory systems need to be updated for order tracking and customer fulfillment. The systems are out there, but a lot of retailers are moving more slowly in implementing them than they should.”

Retailers are also facing fulfillment pressure because of stiff competition for online sales with Amazon. In-store sales are effectively flat for most retailers, so growth has to come from online selling.

“Competing with Amazon on price is difficult given Amazon’s huge investments in infrastructure and its advantages in scale,” Wurmser said. “These investments let Amazon deliver items more quickly and cheaply than other companies, which is why Amazon Prime can offer free 2-day shipping and affordable same-day shipping. In-store pick-up is a way that retailers can deliver items in a matter of hours for zero shipping costs—plus it brings people into stores where they’re likely to make additional impulse purchases.”

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