The omni-channel era has arrived, and sellers need to pay higher logistics costs

That’s a big deal for the retailer, which also gets a major marketing advantage from permanent billboards in its stores. Amid all the other changes the pandemic has wrought, that operating model may now also be dramatically changed forever.

Last year, online shopping reached new heights. Under the umbrella of that online shopping, consumers are trying to avoid flocking to curbside and delivery options. BOPIS, which allows customers to spend less time in stores during the pandemic , has also experienced massive growth across the industry. In all of these options, consumers are transferring the labor that used to be done to retailers.

The survey found that two-thirds of retail executives believe the growth of omnichannel and digital shopping is the biggest trend impacting the industry , as well as its biggest challenge.

“The margins on online sales are significantly lower than store sales. You have to invest in capabilities to have a better margin structure, ” Sajal Kohli said in an interview.

In the U.S., the percentage of online sales supported by physical stores rose to 37% during the 2020 holiday season, up from 32% in 2019, according to GlobalData. Online orders from stores grew 103% last year, while retailers saw an 80% increase in store-shipped orders.

Retailers began experimenting with curbside pickup in previous years , but it became a dominant channel this year, with many retailers seeing triple-digit growth in curbside sales over the year.

At Dick’s Sporting Goods, for example, curbside and BOPIS sales grew 250% year over year, driving 57% annual growth in e-commerce . Dick’s CEO Lauren Hobart said that in the fourth quarter, the company’s stores accounted for 90% of all sales , and 70% of online sales were fulfilled through the retailer’s curbside .

Hobart , which launched in March 2020, also noted that curbside pickup has helped improve overall profitability in Dick’s online channels, and that the company expects Dick’s to become a larger part of its offer.

Curbside and BOPIS margins on a $100 sweater, for example, are much smaller than in-store or online sales shipped from a distribution center, according to AlixPartners estimates.

North America

Omnichannel

logistics