Why Pickup Wins on Cost, Timeliness

Time and money. Those perennial considerations are the chief drivers of grocery pickup, new research affirms.

According to a survey released by Mercatus and conducted in August by Brick Meets Click, consumers opt for pickup mainly because of lower service fees and because they don’t want to wait at home for orders to arrive. The lower-fee choice was consistent across all age groups, while the convenience of pickup resonated most strongly with Millennial consumers between the ages of 30 and 44.

[Read more: "Majority of Shoppers Say Grocery Delivery Is Too Expensive: Report"]

Pickup remains a popular mode of receiving grocery orders, the survey confirmed. The latest findings show that 60% of U.S. households have used pickup during the past 12 months.

The researchers concluded that grocers can maximize e-commerce profitability by offering a variable service fee structure to consumers increasingly mindful of costs. "We know that many grocery customers consciously opt to use pickup and avoid using delivery because of all the explicit and additional costs,” said Mark Fairhurst, VP of marketing at Mercatus. “It turns out that by giving customers a choice about the cost they’re willing to pay to use pickup, retailers also gain the opportunity to lower the cost-to-serve aspects of online shopping for both themselves and their customers.”

Added David Bishop of Brick Meets Click: “The findings highlight that paying less is more important than receiving the order as fast as possible. The tradeoff that the customer makes means the retailer can realize significant labor savings by batching out more orders together during the assembly stage.”

In addition to the desire to avoid paying for and waiting for deliveries, the survey underscored other aspects of convenience. More than 70% of shoppers who purchased groceries for pickup received their most recent order while remaining in their vehicle and half used the respective retailer’s app to inform the store of their arrival at a pickup location.

If waiting is important in choosing between pickup and delivery, it’s also crucial in the pickup process. While wait time for pickup averaged between five and six minutes, shoppers' satisfaction dropped consistently and significantly the longer they waited to receive their order, ranging from 81% for under a two-minute wait to -38% for over 10 minutes.

“When it comes to pickup, linking order staging readiness with geolocation notifications triggered automatically by the retailer’s branded mobile app is an effective way to streamline the pickup experience into a faster, hassle-free experience,” remarked Sylvain Perrier, president and CEO of Mercatus. “Shorter wait times at pickup can have a dramatic effect on customer perception and brand affinity and will go a long way to encouraging repeat customer behavior.”

This recent research is the second in a three-part series from Mercatus and Brick Meets Click on omnichannel shopper behavior.