The past few years marked a rise in same-day local delivery services that never took off. Ebay Now shuttered in July, three years after launch. Google Shopping Express failed to expand beyond two San Francisco, West Los Angeles, the Peninsula, San Jose, and Manhattan. Others – like Instacart – are thriving, but new price increases question the economics of these services. L2 did an interview with Curbside Founder and CEO Jaron Waldman, who believes the friction point in mobile and online commerce will be solved with efficient in-store pickup options rather than faster shipping options.
L2’s Death of Pureplay study finds that brands are unlocking the potential of their brick-and-mortar with ship-from-store programs and facilitating in-store returns. Using stores as warehouses cuts down on shipping times and costs, as most are located closer to residential neighborhoods than e-commerce warehouses. Macy’s, for example, has surpassed Amazon in shipping hubs by fulfilling orders from the nearest store with the available item. And accepting returns of unwanted items at the store has proven to lead to a reversal of net sales – 95% are recouped vs. 80% for online returns – as those who return an item in-store often purchase. But when it comes to in-store pickup of online orders – which have proven to recoup and increase sales to 107% of the original transaction – retailers lag. Just 32% of evolved retailers in L2’s Pureplay study offer click-and-collect services. And less than half make the inventory of their stores visible in real time. Even programs like Walmart’s grocery pickup and Nordstrom’s curbside delivery by text have not expanded beyond pilot areas.
Curbside promises a more efficient and scalable solution by seamlessly connecting the consumer’s phone to pickup services. Instead of consumers having to wait at a designated spot and punch a kiosk button (or send a text) for an employee to come outside with their delivery, the curbside app detects when they are arriving close to the store and notifies employees to prepare their order to deliver to the car. It means faster pickup for consumers and lower employee costs for retailers, as they can delegate other tasks to employees in charge of pickups. So far, Curbside has partnered with Target, Best Buy and five malls. Shoppers looking to buy in those stores can look up the inventory of local branches on the Curbside app, and order them for pickup. Curbside has developed an SDK as well, for brands that want to integrate the technology in their own apps. (One national retailer is set to debut this feature on its app.)
Why all this investment on pickup rather than delivery? Waldman, who led the geolocation team of Apple, says the reason is cost. Curbside has partnered with postmates to develop an API for local commerce deliveries, but Waldman believes same day delivery is only applicable to a small segment of the population. “For those who want to pay $15 or $20 to get their items the same day, sure. But for most of America, adding $5 to $10 to every order has consequences,” Waldman says. And since most of Americans drive, same day pickup at the store is an effective solution. Placing an order and picking it up on the way home can save a lot of time, eliminating the need to browse, park, and stand in crowds.
Yet the battle doesn’t end with convincing consumers – or even retailers – to embrace the service. Reliable inventory information, or lack thereof, is one of Curbside’s challenges. In-store inventory is harder to track in real-time than warehouse, leading Curbside to use past purchase data to fill in the gaps. “If you place and order at Curbside and one of your items is not available, we use that data to gage whether the item is available at the store for future orders.” Items that are repeatedly unavailable will be hidden from the curbside app. Data is also used to gage acceptable substitutions.
L2’s Pureplay study predicts future retail stores to be hybrid e-commerce and brick-and-mortar players. With that, the distinction of e-commerce and brick-and mortar shoppers, stores and warehouses, and online and offline orders will blur. Curbside’s headway shows signs of the same.