Jean-Florian RichardDirector of Global Strategic Partnerships at Arvato Financial Solutions: ‘BOPIS, as part of a modern omnichannel strategy, is becoming a necessity in e-commerce but also comes at a price due to fraud and additional operating costs’
The growth of omnichannel shopping is one of the biggest trends in the retail industry. The Retail Industry Leaders Association has ranked omnichannel presence as the #1 “must” for the coming years.
About two-thirds of shoppers shop online and pick up in-store several times a year. Why? The consumer benefits from increased flexibility and control, as online purchases can be picked up in-store at their convenience. The tedious search for goods in store is eliminated while a convenient ‘inspection’ is always assured, combined with the option of instant in-store returns. Also, potential shipping costs can be avoided. The pandemic has further heightened the relevance of BOPIS, as customers are either banned from making purchases in person or focus on avoiding contact. According to a Shopify study, 64% of pre-pandemic BOPIS shoppers use the service more often than before the “new normal”.
Nearly half of the TOP 500 merchants already offer BOPIS. At first glance, there are also a lot of advantages for the merchant as delivery and packaging costs are reduced while generating the possibility to stay in contact with the customer face to face. However, some of the benefits to the consumer come at the expense of the retailer. BOPIS requires additional in-store storage capacity, forcing some retailers to reinvent their entire in-store setup. One example: According to RetailWire, quoting Best Buy CEO Corie Barry, the company is “reducing its retail floor space at four Minneapolis locations from 27,000 square feet to 15,000 square feet to make more room for scene and fulfillment of newly popular services”. That’s almost halfway through the floor plan! While Best Buy is enjoying huge success, the “new normal” is sure to leave some marketers struggling to find answers for themselves. adapt to the ultra-boosted omnichannel environment they face.Some merchants are particularly overwhelmed with BOPIS “instant” order processing, as customers tend to show up in the store before the order has actually been processed by physical operations.
While these operational issues should not be underestimated, the biggest headache potentially associated with BOPIS is fraud. Fraudsters are increasingly recognizing the weakness of some retailers’ BOPIS processes and taking advantage of the short time between order creation and in-store pickup.
Every minute counts
BOPIS fuels the need for fast and accurate fraud management. Lack of some vital buyer information (eg missing shipping address) and time sensitivity puts stress on dealing with merchant fraud. Less data means less information available to fraud engines in automatic risk assessment. Many major US retailers promise customers that BOPIS orders are ready for pickup in 30 minutes or less. As a result, there is hardly any time left for anti-fraud services to manually check orders flagged as potential abuse. Fraudsters use exactly this short window between purchase and withdrawal to avoid manual verification by retailers. This can either lead to stricter BOPIS fraud rule sets (and therefore likely higher false positive rates) or high levels of fraud. Especially in high season it becomes a massive pain. For many large customers, we have set up agile 24/7/365 teams capable of responding to urgent order review requests at any time. Since they mostly work in global teams of merchants around the world, we can manage spikes much more easily than a single merchant ever could.
Should you care about BOPIS? You bet!
Studies indicate that by 2024, at least 40% of all US sales will be generated through BOPIS. I also see great opportunities for the European market. Implemented correctly, it nicely bridges the gap between in-store and online sales, creating win-win scenarios that the industry has been waiting for for years. And I don’t believe stores will be degraded to warehouses: almost 50% of all shoppers make additional purchases in the store while picking up their BOPIS order – this requires attractive floor plans. However, retailers need to be aware, especially of fake orders placed by criminals.
This editorial is part of The Fraud Prevention in Ecommerce 2021/2022 report, the ultimate source of knowledge that delves into the evolving payments fraud ecosystem, revealing the most effective security methods for businesses to win the battle against bad actors.
About Jan Florian Richard
Jan Florian Richard has worked for Arvato Financial Solutions for over 12 years in various roles. As Director of Global Strategic Partnerships, he orchestrates processes throughout the order-to-pay lifecycle within an ecosystem of champions league partners.
About Arvato Financial Solutions
Arvato Financial Solutions provides financial services integrated across the order-to-cash lifecycle to renowned international brands so they can focus on their core business. As the backbone of growth, Arvato Financial Solutions’ team of 7,000 experts ensures that customer credit management runs effortlessly and efficiently.
