BOPIS: The Key to Solving the Last-Mile Problem. What Potential Does an Approach Adapted to Social Change Bring to Business?

The demand for e-commerce continues to grow year after year, driven by the proliferation of digital devices and compounded by the impact of the COVID-19 pandemic. A significant issue arising from this trend is the increasing burden on delivery companies. Particularly concerning the "last mile" – the final point of contact with the customer – problems surrounding package delivery are frequently discussed. One solution expected to improve this situation is the product delivery style known as "BOPIS," where customers pick up their items at a store.This time, under the theme "How does BOPIS, also noted as a solution to the last-mile problem, bring value to both businesses and customers?", we explore the hints for business revitalization hidden within BOPIS.

The "Last Mile Problem" Sparked by Booming E-Commerce

With the spread of the novel coronavirus, "stay-at-home consumption" – purchasing goods and services from home, such as online shopping and streaming videos – has rapidly expanded. According to the "Household Expenditure Survey" conducted by the Statistics Bureau of the Ministry of Internal Affairs and Communications targeting households with two or more people, the percentage of households using internet shopping increased rapidly around March 2020. Since May of that year, it has been revealed that over half of households have continued to use it.

Furthermore, in the food and beverage sector, heavily impacted by stay-at-home requests, users of food delivery services—where meals ordered online are delivered to homes by couriers—have increased, particularly in major cities. This article also explains the surge in demand for e-commerce businesses driven by the pandemic.

Amidst these circumstances, the "last mile" problem in logistics has become a frequently discussed topic. The term "last mile" originated in the telecommunications industry, referring to "the final segment from the base station providing communication connections to individual households or businesses." It has been repurposed in logistics to denote "the final point of contact for delivering goods or services to the customer," primarily used to address issues arising at this stage.

Currently, while automation using robots is advancing for shipping goods from production sites and warehouse management, last-mile delivery to customers still heavily relies on human labor. Compounded by the expansion of e-commerce demand, the increased volume of deliveries places a significant burden on delivery personnel.

One factor intensifying this last-mile problem is the fierce price competition in the e-commerce market. As part of efforts to enhance competitiveness in sales promotions, many e-commerce sites offer "free shipping."As delivery costs are reduced and payments to carriers become targets for cost-cutting, carrier profit margins decline. This results in worsening driver conditions and labor shortages, further exacerbating the burden from the ever-increasing delivery volume. Furthermore, it is said that many cases involve recipients requesting redelivery only to be absent, leaving delivery personnel perplexed.

BOPIS: A New Shopping Model Benefiting Both E-commerce and Customers

To solve the worsening last-mile problem, reducing "unnecessary deliveries," including redeliveries, is crucial. One approach gaining attention recently is "BOPIS."

BOPIS, an acronym for "Buy Online Pick up In Store," refers to a service where customers order products online via e-commerce sites or apps and then pick them up at a physical store. Mobile ordering, where customers place advance orders online for restaurants and pick up freshly prepared food at the storefront, is also a form of BOPIS. Since customers collect items themselves, it eliminates delivery costs, ensures reliable product handover, and avoids the hassle of redeliveries.

BOPIS is gaining attention not only for reducing the burden on delivery companies but also because it offers various benefits to retailers and restaurants. Customers using BOPIS always visit the physical store. Even those who don't usually visit the store might start coming regularly if they like the in-store selection or the face-to-face service. Beyond these customer acquisition benefits, let's look at the advantages for retailers, referencing real-world examples.

Benefits for Retailers: Case Study of a Clothing Chain Store
1. Increased In-Store Sales
This clothing chain reports that 90% of its online shoppers choose in-store pickup because it eliminates shipping fees. Many of these customers end up purchasing an additional 2-3 items while visiting the store to collect their order, contributing to increased in-store sales.

2. Reduced Delivery Costs
BOPIS is also key to achieving the chain's stated goal of "low-cost e-commerce." By using the logistics and delivery network designed for physical stores to fulfill BOPIS orders, the chain reportedly reduces shipping costs compared to home deliveries requiring third-party carriers.

What about the benefits for customers? For urban dwellers, for instance, the ability to pick up items efficiently at their convenience—such as during a commute—is a significant advantage. Some electronics retailers even offer 24-hour pickup counters. Let's examine some concrete examples.

Customer Benefits: Case Study of a Brand Handling Daily Necessities, Clothing, and Food
1. Expanded Payment Options
This brand offers the benefit of expanded payment options when using BOPIS, as customers can pay either during online ordering or upon in-store pickup.

2. Reduced Waiting Time
If the ordered item is in stock at the designated pickup store, the system holds that store inventory. This allows customers to receive their items quickly, without waiting for delivery days.

3. Avoiding the Return Process
When ordering clothing via BOPIS, customers can try items on in-store before deciding to purchase. If an item doesn't fit, it can be canceled on the spot (for in-store payments), eliminating the hassle of returning it later.

Additionally, the growing popularity of BOPIS can be attributed to the pandemic-driven desire to "avoid crowds." By ordering online in advance, customers reduce time spent waiting in line or queues, minimizing their stay in busy stores. Pre-order systems, primarily used in restaurants, are also gaining traction because they streamline the process from order to pickup, regardless of store crowding levels.

It is precisely because this system offers benefits for both businesses and customers that the adoption and use of BOPIS are advancing.

BOPIS Accelerates the Integration of Online and Offline Business

As mentioned in the previous chapter, BOPIS is a system that not only solves the last-mile problem but also brings numerous benefits to both businesses and customers. Finally, let's consider how the adoption of BOPIS will contribute to future business revitalization.

From a data utilization perspective, BOPIS also offers advantages. Since customers who purchase products online via e-commerce visit physical stores, BOPIS can facilitate the linking of customer data obtained offline with that obtained online.

This can be linked to the "OMO (Online Merges with Offline)" strategy, which aims to fuse online and offline experiences.While "O2O (Online to Offline)" refers to one-way customer guidance from online to offline—such as using internet ads or SNS to disseminate information and drive traffic to stores—OMO is a marketing strategy that comprehensively utilizes all customer touchpoints (physical stores, company websites, catalogs, SNS, call centers, etc.). Its goal is to enable customers to purchase or experience products/services seamlessly, without perceiving a distinction between online and offline.

In OMO, integrating online and offline data to enhance its accuracy enables more effective customer communication. BOPIS is considered to contribute significantly to this data integration. Specifically, offline (store) data provides "POS data" detailing "when," "where," "what," and "how much" a customer purchased. Online (e-commerce), meanwhile, captures information like names and addresses registered when customers use the e-commerce site.When customers use BOPIS and visit physical stores, the data collected from each channel can be linked. Centrally managing and analyzing this integrated data enables communications like recommending products on the e-commerce site that match items purchased in-store. This leads to improved recommendation accuracy and service quality. For more on POS data, see this article.

In this way, BOPIS, which has been anticipated as a potential solution to the last-mile problem, may serve as one element of an integrated online-offline strategy, helping to drive the OMO transformation for businesses.

The rise of BOPIS reveals how societal changes and the resulting challenges can sometimes spread new business practices and consumer behaviors. Leveraging this effectively could lead not only to solving the original problem but also to positive outcomes like increased sales and enhanced customer experiences. This series of initiatives could offer valuable insights not just for logistics and retail, but for various businesses.

To learn about trending terms like the "2024 Problem," please also refer to this resource.