A Macy’s omnichannel executive told IRCE 2015 attendees that the company now has some operational history and data to help it more accurately forecast buy online/pickup in store demand, predicting it will be three times higher during peak season than it was last December.
“When we started BOPS last June we did have forecasts, but it was wrong every day, by a lot,” said Kevin Gardiner, director of store operations and strategies for Macy’s. “Some days it was 50% or even 100% higher (than forecast), so it was not easy to come up with adequate staffing. This year we’re seeing (BOPS volume) three times as large as it was pre-holiday last year, and we expect holiday to be three times higher as well. At least this year we have some order history to fall back on.”
Asked if any of Macy’s merchandise categories were over-indexed for BOPS, Gardiner said he didn’t think there so.
“It’s interesting,” he said. “We get lots of orders for dresses and coats and lots of kitchen electronics; some days the orders are more than 50% for kitchen electronics. But it varies from day to day. I don’t think there are any that are under performing.”
On same-day shipping, which Macy’s offers in 10 major markets, Gardiner said it’s gone well enough that the retailer will continue to expand the program, even though store pickup is much more popular. “Same day is sexy, but there’s not nearly the demand as there is for BOPS,” he said.
Gardiner and his co-presenter, Follett Higher Education Group Senior Vice President of Ecommerce Product Development Roe McFarlane, said effective, real-time communication with shoppers, an easy-to-find pickup location, careful selection and placement of nearby merchandise and inventory integrity are among the keys to a successful BOPS program.
Gardiner said Macy’s sets its safety stock for BOPS – the level of reserve merchandise needed to prevent stock-outs – at about two to five of an item before promising it’s available for pickup, adding the figure can vary based on merchandise category. By comparison, safety stock levels for standard online orders can be as low as 1 or even zero.
“Inventory integrity is so important (with BOPS),” Gardiner said. “Sending an email or making a phone call (to let someone know an ecommerce shipment is delayed) is a bad customer experience, but if they’re taking the time to come to the store and you don’t have the item, it’s exponentially worse.”
McFarlane said Follett’s conversion rate for BOPS orders is higher than the industry average across device types: 7-8% during rush periods and 3-4% the rest of the year. He said desktop orders on average are $30 higher than via phone or tablet, and items per order 23% higher. He said 56% of the company’s online orders each year are fulfilled in store.
“We focus on achieving near real-time inventory visibility,” McFarlane said. “If an item drops off our site, it’s not avail to order in store; if it returns to store, it shows back up.”
He said Follett works to make fulfillment as easy as possible on store associates by displaying images of items on the pick list, in order of where they’re picked from. In-store labor planning is another success factor, he said, with associates fulfilling orders before the doors open.
Gardiner said Macy’s places its pickup locations next to the stockroom, so associates at the counter don’t have far to walk. It also lets customers show an ID to verify the purchase, instead of having to print out a confirmation email. “We go out of our way to pick each order in two hours or less, even though we promise it in four,” he said.
While some retailers, notably Sears and Target, have recently begun offering curbside pickup of online orders, Gardiner said Macy’s has not done so because it doesn’t offer the opportunity for upselling. Instead, the retailer focuses on making the in-store pickup experience as easy and convenient as possible.
“It’s not so much associates making transactions, asking if there’s anything else they want,” he said. “We don’t want to make it too salesly. But we do consider the placement of the pickup location and what ancillary merchandise we can put there. So if (the store location) is high in kitchen electronics for BOPS, we can add those items there you can upsell.”