Store of the Future   //   December 22, 2020

How retailers are dealing with procrastinating shoppers

With Christmas just days away, retailers are doing everything they can to try to get customers to not add to the online shipping backlog (while, at the same time, still getting customers to buy).

For most retailers, that means offering extra incentives for last-minute customers to use same-day fulfillment options like buy online, pickup in-store, or to buy gift cards. Bed Bath & Beyond and JC Penney are respectively offering 20% and 10% off buy online, pickup in-store orders. Nordstrom meanwhile, is advertising a deal on its page where customers get a $50 coupon if they buy $300 worth of digital giftcards by December 26. “There’s still time to get a $50 e-giftcard for $40, delivered same-day,” reads a promo on Adidas’ website.

If someone does still want to get items shipped to them in time for Christmas, it’s going to cost them. Gap is currently advertising on its website that customers need to place their orders by 12/22 at 12 p.m. Pacific Standard Time using priority shipping, in order to receive it by December 24. And, that they will need to pay a $22 shipping fee. (A Gap spokesperson told Modern Retail that $22 is the priority shipping fee Gap charges year-round, and that it’s also still offering curbside pickup and buy online pick-up at many of its stores.) Williams-Sonoma is advertising a similar fee — $26 — for orders placed within the next two days that request next-day delivery.

Retailers have been preparing for this moment for months. Every year, companies have to contend with the fact that some people will want to place orders that won’t arrive in time for Christmas. But this year is unique as more people are doing their holiday shopping online than ever before, leading to record shipping delays. Carriers like FedEx and UPS have taken previously unheard of measures to quell the backlog, like limiting the number of packages they will pick up each day from certain retailers.

Put together, retailers are trying to offer as many fulfillment and delivery options to procrastinators — but bottlenecks are growing.

Over the last few months, retailers have been trying to get their shopping done early, by extending their Black Friday promotions and offering more deals during the month of November. Still, many retailers feared that too many shoppers would try to do last-minute shopping online, overwhelming both retailers and carriers in the final days before Christmas. “The big question is: are enough consumers going to shop earlier so it leaves capacity at the back end of holiday?” Marc Rosen, president of Levi’s America’s business, told Modern Retail earlier this month.

“For months, we knew that shipping capacity would be an important factor this holiday peak season” Gap Inc.’s chief operating officer Shawn Curran told Modern Retail in an emailed statement. And while he declined to share specifics on how Gap is calculating shipping cutoff dates, he said “our on-time delivery performance continues to be strong and our collective teams are maniacally focused on ensuring our customers have a great experience this holiday season.”

Focusing on alternative fulfillments
Now these fears are becoming a reality, and stores are trying to find the best options that avoid carrier delays. To that end, the quickest way that retailers can get orders to these types of customers is either using buy online pickup in-stores, or a same-day delivery service like Instacart, Shipt or Postmates.

The work to add buy online, pickup in-store as a fulfillment option began well ahead of the holidays. Andrew Lipsman, e-commerce analyst at eMarketer told Modern Retail that many retailers had no choice but to roll out curbside pickup, if they were deemed a non-essential retailer in the spring, as that was one of the only ways they could still allow people to buy from their stores.

Most big-box retailers like Target, Walmart and Best Buy had offered this type of fulfillment services for years — but others had to scramble. Bed Bath & Beyond, Ulta Beauty and Levi’s and were among those who rolled out buy online pickup in-store or curbside pickup services for the first time during the pandemic.

As retailers prepared for the holiday rush, they raced to offer even more fulfillment options — with some stores like Dick’s Sporting Goods and Bed Bath & Beyond striking deals to offer same-day delivery with Instacart. Dick’s Sporting Goods’ senior vice president of e-commerce Joe Pietropola told CNBC that the company plans to offer same-day delivery through Instacart at more stores eventually (it currently offers the service at 150 of its more than 730 locations but it accelerated the launch in time for the holidays).

Now, it is by and large too late for retailers to add any new fulfillment options, so instead they are trying to offer incentives to customers to either purchase gift cards in lieu of items that need to be shipped, or to use buy online pickup in-store orders that can be fulfilled the same day. Those that don’t have those fulfillment options instead have to hope that their customers will be willing to bite the bullet and pay more for expedited shipping.

“How many consumers are going to be OK paying $20 in shipping?” said Lipsman. “If people are getting $30 to $50 gifts on average, but they have to pay $20 plus in shipping–  they are just not as likely to make that transaction.”

Photo by freestocks on Unsplash