Top Stories
Top Stories
Retail

There's never been this kind of surge in last-minute shoppers picking up online orders

Key Points
  • Unless shoppers are willing to pay for rush shipping, the deadline has passed for most online orders for delivery in time for Christmas.
  • Shoppers are using stores as pickup points at record rates this season.
  • This type of ordering, also know as click and collect, is up 47 percent this holiday season compared with last year, according to new data from Adobe.
Employees assist customers with online pickup orders at a Walmart Inc. store in Burbank, California, U.S., on Monday, Nov. 19, 2018.
Patrick T. Fallon | Bloomberg | Getty Images

Unless shoppers are willing to pay for rush shipping, the deadline has passed for most online orders for delivery in time for Christmas.

Shoppers are using stores as pickup points at record rates this season, with the number of shoppers opting to buy items online and pick up at stores surging in the final days before Christmas.

"Retailers have executed buy online, pick up in store very well this holiday season. This is the first time in the past three years that we have been measuring it where we saw actual performance increase for all retailers," Frank Layo, managing director at Kurt Salmon, part of Accenture Strategy, told CNBC in an interview.

"This year's top five for buy online, pick up in store in our study were Bed Bath & Beyond, Best Buy, Kohl's, Target and the Home Depot, " Layo said.

This type of ordering, also know as click and collect, is up 47 percent this holiday season compared with last year, according to new data from Adobe. Layo attributed the increase to more types of retailers offering it at more locations and shoppers getting more comfortable with the option.

Click and collect for Christmas

Target expects to fulfill three times the order pickup volume this holiday season compared with last. Typically, half of Target's digital orders are fulfilled by stores by shoppers picking up the orders or with the orders shipped to consumers from the store. But in the days leading up to Christmas, around 80 percent of online orders are fulfilled from stores, the company said.

At Macy's, the number of shoppers picking up items they bought online has nearly doubled this season compared with last year. In the two weeks following Black Friday, Macy's said its total store pickup sales are up significantly compared with last year from a higher volume of items ordered online and the launch of its buy online, ship to store program.

Dick's Sporting Goods forecasts the percentage of e-commerce orders placed for pick up in store will triple as the days get closer to Christmas.

At Walmart, while click and collect is popular during the holidays, the weeks leading up to Christmas are one of the most popular times for same-day pickup.

This holiday season has been record-breaking for Old Navy's buy online pickup in-store orders. The retailer is logging the highest volume of orders seen since the program launched. Old Navy is partnering with Lyft to offer free (or up to $10 off each way) round-trip rides to the store for picking up those online orders on Dec. 22. It also offered the Lyft rides for pickup on Dec. 15.

Shoppers end up buying more

For retailers, incremental sales are an added benefit. Shoppers come in to pick up online orders, and end up checking out with much more.

Macy's shoppers end up increasing their total by around 25 percent when picking up an online order in-store, the company said. At Kohl's, on average, there is a 20 to 25 percent attachment rate for additional in-store purchases, the department store said.

At Old Navy, about 15 to 25 percent of online orders for store pick up lead to additional in-store purchases, while around 30 percent of Target guests picking up continue to shop in-store, according to each company.

Making it convenient

"A lot of people like the convenience of [buy online, pick up in store], they like going into the store, they like the store experience, they like hearing the Christmas music and smelling the scents and everything that's out there, but they want the ease of ordering online" Layo said.

Many retailers have dedicated areas for online order pick up. Kohl's offers parking spots for these shoppers, and at Target some orders can be delivered directly to a customer's car without having to get out.

In addition to an online order pickup counter, Walmart has 680 pickup towers. Currently, Kohl's has buy online pick up in store lockers in eight stores, and Macy's has similar lockers in five locations.

Target, Kohl's and Dick's Sporting Goods say most online orders for store pick up are ready in an hour. At Old Navy and Macy's, most orders are ready in two hours, while Walmart says same-day pick up items can be ready in as little as four hours.

Buy online pick up in store isn't without its challenges. Store inventory is used to fulfill same-day orders, which means retail store employees have to find the merchandise, in the right size and style, and that can be difficult when a store is open and consumers are shopping from that same merchandise.

"It's so expensive," said Rod Sides, who leads the U.S. retail and distribution practice at Deloitte and serves as vice chairman. The merchandise is handled when it arrives at the store, when it's put out on the floor and again when it's pulled to fulfill an online order. "Handling inventory as many as three times to get the sale erodes margin," he said.

"Inventory management is critical to execute a click and collect in a one-hour or two-hour time window," Layo said. "You have to be 100 percent confident that you will not disappoint your customer."

Watch: Expect a strong close to the holiday shopping season

VIDEO2:3502:35
Expect a strong close for retail season, industry veteran says