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The opportunities and challenges of offering click & collect

Over the past ten years, click & collect has evolved from a side-line novelty into a front-line delivery option for many retail propositions. Today, click & collect is selected as the logistics offering for over a third of orders made on multichannel retail websites in the UK (it is closer to around 10% for all online orders) and there are now 40,000 third-party pick-up locations in the country.

But to what extent is this trend expected to continue on its upward trajectory?

In this article, IMRG provides an overview of its latest UK Click & Collect Review, supported by Doddle and Neopost Shipping, on the state of click & collect in Britain, seeking to shine a light on a logistics method growing in significance for online retailers.

More than a subsidiary

Click & collect is no longer a substitute service offering and it’s growing popularity can help to relieve pressure from a sometimes-overburdened supply chain and gives agency to customers, who are instead able to pick up parcels at time and place that suits them. But click & collect represents more than just an efficient method of fulfilment to retailers; it’s become a keystone of the business model and a focus for retail investment.

Click & collect, in a nutshell, provides:

  • Capacity and contingency for the overloaded home delivery channel
  • Cost-reduction opportunities for shoppers, retailers, and delivery companies
  • Increased choice and convenience options for shoppers
  • An enhanced customer experience for collections and returns
  • A contribution to the reduction of urban congestion (increasingly associated with online delivery)
  • An aid to conversion, increasing footfall and sales revenue for retailers

And yet, as with everything in retail, it is not without its challenges. Let’s take a brief look at a few of these.

Capacity

At certain moments over the past decade, the usefulness of click & collect has been underscored – such as during the extreme weather conditions leading up to Christmas 2010 and the operational issues caused by Black Friday’s huge growth in 2014. With online delivery orders seeing persistent growth in recent years, the potential of this delivery option for bridging the gap between offline and online has made click & collect a target for investment and promotion, particularly for multichannel retailers.

It’s worth remembering, however, that click & collect represents a balancing of the scales rather than a total solution; too many people attempting to collect their purchases could lead to queuing (especially in smaller outlets), so careful consideration needs to be given to preserve the customer experience. Getting an appropriate mix covering both home delivery and different click & collect options would appear to offer the best opportunity for efficiency: particularly during Christmas peak.

Cost

Failed home deliveries present a risk for any retailer’s predicted overheads. IMRG, with NetDespatch, recently published its latest estimate of the overall cost to online retail stakeholders of failed delivery as £1.6 billion.

Whether it involves redelivering the same product, or sending out a new product free of charge, failed deliveries reduce margin. Click & collect offers potential for lessening the costs associated with this issue: with the customer opting to collect themselves, there’s a far stronger guarantee the item will always be successfully ‘delivered’, thus incurring no additional delivery costs.

Customer experience

Click & collect provides an additional element of control for the customer, but it also adds another dimension from the retailer’s perspective. Many retailers report that customers collecting their orders in-store often buy additional items, so the up-sell opportunity is there, especially when staff training, store design and carefully considered promotions are there to support it

Mike Richmond, chief commercial officer at Doddle commented: “Increasing customer demand for click & collect is responsible for a huge shift in how retailers are now perceiving online shopping. 

“Rather than seeing it as a threat to the high street, the most switched on retailers are now embracing it as a much-needed opportunity to drive valuable footfall and attract new demographics in-store. Well over half (58%) of online shoppers collecting from Doddle locations make an incremental in-store purchase. With compelling figures like this it’s not surprising that IMRG’s latest report reveals that both in-store and third-party click & collect are set to significantly outpace home delivery in the UK over the next five years.”

The future?

Click & collect is already an essential element of any retailer’s delivery mix and, as the UK high street goes through significant transformation, it seems set to be an important part of the eventual answer.

Although most established with multichannel retailers it is not all about in-store; there are also third-party networks to expand the reach of all retailers including store-agnostic solutions where parcel-points and parcel lockers sit in retailer stores to accept orders (and shoppers) from other retailers.

It is hard to predict how orders will be shared among these options over the coming years, with the demand for faster fulfilment and greater availability of in-transit information influencing how click & collect develops.

However, it does seem apparent that click & collect is here to stay.

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