John Lewis announced yesterday that it would be charging £2 for all click and collect orders under £30.
The retailer says this move will reduce costs and enable long term investment in the service, but is it a good idea?
John Lewis click and collect
Click and collect has been a major success for John Lewis since its launch in 2008.
It’s now the most popular choice for fulfilment, and the retailer processes more than 6m click and collect orders a year, compared to just 350,000 in its first year.
It also provides a great example of how to promote the service on site, as Christopher Ratcliff explored recently.
According to Mark Lewis, Online Director at John Lewis:
“We offer our customers a wide variety of delivery options but we know right now the delivery option of choice is next day Click & Collect. The change we have announced today will mean that the majority of orders will remain free of charge while allowing us to invest further in the expansion of Click & Collect to ensure it continues to delight customers as it grows in popularity.”
However, with many of its rivals offering free click and collect, will this £2 charge have an effect on John Lewis’ sales?
I suspect the answer is not much, as the retailer states that the majority of orders are above the £30 threshold.
However, as Schuh’s Deputy Head of Ecommerce Stuart McMillan says, it may have a negative impact on the in-store effect from customers coming in to collect orders:
“I think it will reduce click and collect, which is generally perceived as a ‘cheap option’ and deflect orders to home delivery. This may well have a negative impact on add-on sales that you might get when people are at the store picking up products.
“House of Fraser is a good example of capitalising on this phenomena, where it locates poorly performing departments adjacent to click and collect, thus encouraging footfall to that area.”
There is also the possibility, as suggested by our own online shopping pro David Moth, that people will just add more to their order to go beyond the £30 threshold before returning the extra items.
The cost to John Lewis of fulfilling click and collect orders is a factor here.
Unlike some retailers, John Lewis is shipping stock from central locations to stores for collection. Unlike Argos, it doesn’t fulfil orders using the stock already held in store, which would save on transport costs.
As Stuart McMillan explains, this can be less efficient:
“For us, click and collect is a cheap option. We have free standard delivery, which is all about ‘single packages being dispatched point-to-point’, click and collect is cheaper as a) the product is either already in the store or b) it gets picked as part of the standard store replenishment (we deliver in to stores 6+ days a week).
“My impression is that JL doesn’t fulfil these orders from store stock, which eliminates one of the big cost savings. They may also be carrying out extra processes at their DC for C&C orders, where ours are integrated.”
The ability to fulfil click and collect orders from in-store stock also offers a speed advantage for retailers.
Halfords, Argos, Schuh and others can often have stock ready for collection within the hour, which will help them to compete with services like Amazon’s one hour delivery.
“It’ll always be free for us and we’ll try and improve the service. Currently, if the stock is available in the store, the product is available in 20 minutes for a ‘reserve online, buy in-store’ service and one hour for ‘buy online, collect in-store’. The time difference is due to potential complexities of fraud checking cardholder not present orders.
“If the product isn’t in store, it’ll usually be there the next day, although it might take up to three days if we’ve had to transfer it between stores (we’re working to improve this). In all cases, we try and make the maximum number of products available to the maximum number of customers at the maximum speed.”
It remains to be seen what effect this has. Certainly, there are more convenient click and collect services than that offered by John Lewis, so perhaps the investment will allow the retailer to catch up with multichannel rivals.