It’s a routine Shick Ohana, who works from home as a social-media influencer, has gotten used to, even as the market for online order delivery has boomed since the pandemic.
“It saves a lot of time and it saves a lot of money too,” Shick Ohana said, because she avoids delivery charges as well as impulse purchases at the store.
The line between e-commerce sales and in-person shopping is blurring as more shoppers place orders online and then go pick up their goods rather than wait for a delivery van to reach their home.
Retailers have added the service known as buy-online, pickup-in-store partly to restrain the fulfillment costs that can cut into profit margins. Store workers pick and pack the orders and either bring them out to customers’ cars or set them in a designated pickup area, rather than go through the more complicated logistics of connecting warehouses to parcel carriers.
For retailers including Walmart, Target, Macy’s and others, it is an extension of their attempts to use their physical stores as kinds of virtual fulfillment centers, a strategy that has grown out of the surge in online shopping during the Covid-19 pandemic and the strain it exerted on companies’ distribution operations.
Costs associated with home delivery are equivalent to 10% to 15% of an e-commerce brand’s sales, versus 2% to 3% when a truck delivers goods to stores, according to Deutsche Bank Research.
“The last mile of e-comm is expensive. So having that curbside capability, where the vast majority of our orders get shipped from store or get fulfilled from store, that last-mile cost has come down significantly compared to where 2019 used to be,” Navdeep Gupta, chief financial officer of Dick’s Sporting Goods, said at a Bank of America consumer and retail conference in March.
For consumers, it means getting their goods faster than both home delivery and searching out items in stores themselves, industry experts say.
“Retailers are looking at it from how they leverage their stores and the critical assets that they are,” said Rob Harrold, managing director at consulting firm Deloitte. Consumers like the option “from a broader convenience standpoint,” he said.
As a shopper, “I know that somebody has already picked it for me and I may not even have to leave my car when I get there,” he said.
Demand for online order pickup surged during the pandemic as customers looked for ways to get everything from cleaning supplies to groceries quickly while limiting time in stores. Although some pandemic-era shopping trends have faded, and e-commerce growth has receded, consumers continue to choose pickup, experts say.
The share of U.S. e-commerce sales filled through pickup was up 76% in June compared with January 2019, according to online research group Adobe Analytics.
Target reported more than 5% growth in same-day services for the quarter ended April 29, with growth in curbside pickup “in the high-single-digits,” Chief Executive Brian Cornell said on a May 17 earnings call.
John David Rainey, Walmart’s chief financial officer, said the retailer last year handled more than 200 million curbside pickup orders. He told an investor meeting on April 5 that Walmart’s pickup and delivery business has grown at a 40% compound annual rate over the past three years.
E-commerce behemoth Amazon.com has even been getting in on the action by striking deals with store owners to handle orders for pickup under a service it calls Amazon Today, an operation that is separate from the same-day fulfillment Amazon offers for grocery orders through its Whole Foods and Amazon Fresh stores.
An Amazon spokesperson said about 1,000 stores across 100 cities, including home-goods seller Sur La Table, vitamin retailer GNC and apparel brand PacSun, use the option. A customer buying a kitchen appliance from Sur La Table through Amazon can now, for example, choose to pick their order up that day at a nearby store, which means Amazon doesn’t have to route the order through a fulfillment center.
For Sur La Table, the service is a way to reach new customers.
“We’re able to drive them to our stores so that they can experience the brand, they can interact with all of the services and things that we have going on in our stores,” said Sur La Table Chief Executive Jordan Voloshin.
Write to Liz Young at liz.young@wsj.com