Click and collect is convenient, but can it be profitable?

Its an easy e-commerce entry point, but overcoming added costs and competition is proving to be a challenge

For supermarkets struggling to balance in-store sales with the growing demand for online shopping, click and collect seems to offer the best of both worlds.

By getting shoppers to order online and pick up at the store, retailers can dip their toe in the e-commerce realm without fundamentally altering the way they do business. It’s also cheaper and less complicated to operate than home delivery, and offers a chance for customers to add incremental purchases inside stores.

Perhaps most importantly, click and collect offers an additional revenue stream for retailers in an industry where growth is hard to come by.

But despite its seemingly overwhelming benefits, consultants and analysts say the platform may not be as lucrative to retailers as it may seem.

For as much value as click and collect services can add to stores, they also add costs that make turning a profit difficult. And with more companies adding the service, digital retailing is quickly becoming just as crowded as brick-and-mortar. For many retailers, click and collect could eventually become just another cost of doing business.

“When you’re working on penny margins, adding in 10 bucks of labor per order doesn’t make financial success unless you can drive top line sales,” Chris Kelly, director at management consulting firm Connors Group, told Food Dive.

The labor question

European retailers including Tesco and Sainsbury’s are early click and collect adopters, offering nimble online and mobile platforms to go along with advanced pickup options like dedicated kiosks that hold orders closer to the consumer. Companies found they could save money by working together. In England, John Lewis, an upscale home and fashion retailer, and supermarket retailer Waitrose, offer joint click and collect service.

American grocers are quickly catching up to their counterparts across the pond. Wal-Mart is spending a collective $2 billion in 2016-17 to offer home delivery and in-store pickup. In eight U.S. cities, the company offers free curbside pickup of online orders. Kroger, meanwhile, has rapidly expanded its Click List service, which also offers curbside order pickup, to more than 600 company stores.


Along with home delivery services, click and collect is projected to contribute significantly to the $100 billion grocery e-commerce market predicted for 2025 by the Food Marketing Institute and Nielsen. According to a Nielsen report from 2015, 9% of consumers say they pick up online grocery orders in store, while 57% of those polled say they’d like to utilize this service.

Shoppers enjoy the convenience and time flexibility that comes with store pickup. But that convenience comes at a price for supermarkets. In addition to all the usual costs of running the store, retailers must add dedicated workers to collect and box products, and often help deliver them to the customers’ cars. If a retailer isn’t seeing a steady stream of orders, those labor costs can make the service a money-losing endeavor.

Even with a high volume of orders, grocery click and collect can struggle to overcome the economics of picking and packing large quantities of low-margin goods.

“Grocery orders with multiple, often low-value items, are much more time-consuming and costly for the retailer to fulfill than general merchandise,” Danny Silverman, head of product strategy at e-commerce consulting firm Clavis Insight, told Food Dive.

“Grocery orders with multiple, often low-value items, are much more time-consuming and costly for the retailer to fulfill than general merchandise.”

Danny Silverman

Head of product strategy at Clavis Insight

Training workers to execute order collection accurately and efficiently is essential. In addition, stores need to figure out optimal shift schedules to meet online demand, which isn’t as predictable as it is in the store.

“You may find that you have to schedule the hours and shifts in ways that purely financially isn’t optimal,” Keith Anderson, senior vice president of strategy and insights with e-commerce strategy firm Profitero. “You may also find that during the overlap in peak demand, you have uniformed employees picking and packing orders in the aisles while you’ve got shoppers trying to navigate those same aisles.”

To minimize labor costs and still have the flexibility to handle a sudden spike in online orders, many retailers cross-train cashiers and other store workers to step in as click and collect pickers and assemblers. Retailers have also implemented efficiency measures, like having workers pick by store zones during busy times.

“Instead of walking the entire store to pick one order, can you walk the entire store to pick four orders?” Kelly said​. “They really need to multiply their efficiency.”

Building orders

Operating efficiencies aside, getting existing customers to make their usual purchases online won’t drive profitability for click and collect services, sources say. To move into the black, retailers need to draw in new customers and get existing ones to make more of their purchases with them.

“What excites the grocer is the idea of, instead of that consumer hitting three, four, five locations, they order everything online from that grocer because it’s so easy,” said Kelly. “The convenience factor is what makes it so special.”

Overcoming the sort of fragmented buying that has been the bane of supermarkets’ existence in recent years is one of the promises of e-commerce. And with its ease of use and wide availability of products on any given platform, online shopping is conducive to the large fill-in trip. For consumers loyal to one retailer, e-commerce can encourage them to build bigger baskets by recommending products, running digital ads, saving past orders, among a host of other features.


Through click and collect, supermarkets are able to reach price-conscious consumers who value time flexibility. According to a recent poll by trade publication Internet Retailer, 73% of consumers who said they’d picked up a product in store did so to avoid shipping fees, while 30% said they couldn’t wait around for delivery.  

Where many retailers struggle, however, is in standing out from the competition. Bill Bishop, chief architect of consulting firm Brick Meets Click, said shoppers tend to migrate to the first retailer in a given market that offers click and collect e-commerce. Those that follow often struggle to offer a better model, or spend too much to acquire customers.

“Once you get to the second or third retailer the options are more ubiquitous, and it’s really just an additional cost of doing business,” Bishop told Food Dive.

So how can retailers build sales and draw in new customers? Understanding key demographics is an important first step. Silverman said millennials — 62% of which shop online weekly, according to one estimate — are beginning to see the upside of click and collect as services proliferate and innovate.

“Until recently, home delivery was favored by younger urbanites who didn’t own a car,” he said. “However, with the introduction of more click and collect options — such as kiosks and pick-ups from smaller format stores — the younger shopper is also more likely to opt to pick up an order from a click and collect point on the way home from the office.”

Kelly said online execution is key. Retailers need to invest in platforms that can analyze consumer browsing and purchases, and offer targeted recommendations along with special offers. It also helps, he said, if the site can tie in with a customer’s loyalty card.

“What excites the grocer is the idea of, instead of that consumer hitting three, four, five locations, they order everything online from that grocer because it’s so easy. The convenience factor is what makes it so special.”

Chris Kelly

Director at management consulting firm Connors Group

“When I’ve got you on my site, I’ve got an opportunity to upsell you, to cross-sell you, to promote items that you otherwise may have forgotten about or aren’t buying from me,” Kelly said.

According to Anderson, retailers need to leverage e-commerce’s ability to upsell customers on niche items that might be in demand but difficult to find in-store. Profitero’s research shows premium products like organic and gluten-free tend to perform well through product searches.

“The items that in your overall physical store assortment may not be bestsellers can have renewed life or can outperform because of that search pathway to finding them online,” said Anderson.

Future clicks

For those retailers that do achieve profitability with their click and collect platforms, including British pioneers like Tesco and Sainsbury's, challenges still loom. Coordinating inventory to meet both online and store demand has evolved considerably in recent years, Anderson noted, but high-turnover goods remain problematic.

“You only have so much space to maintain inventory in stores,” said Anderson. “It’s not a big issue with low velocity items. But it’s a very big issue with highest velocity items that are popular with both in-store and online shoppers.”

Stores that do a high-volume click and collect business also risk eroding the in-store experience. Lots of orders means lots of store workers crowding the aisles as they pick out products — a situation that could frustrate and confuse customers.

As click and collect reaches 10% of a retailer’s overall sales, it may be time to consider alternative storage facilities, sources said. In England, Tesco and other retailers utilize so-called “dark stores” — locations that are closed off to the public and optimized for click and collect order fulfillment. To minimize disruption, companies will often turn locations that haven’t yet opened into dark stores.

shopping carts

The biggest challenge retailers will face in the coming years is the growth of e-commerce giant Amazon. Currently, the e-tailer accounts for a quarter of online grocery sales, a figure that is expected to grow as it moves into more markets with its Prime Now and Fresh services. Amazon also is investing in formats that take the fight directly to supermarkets. In addition to the checkout-free Amazon Go store, the company has been unmasked as the developer behind four dedicated click and collect stores in Seattle and Silicon Valley.

Despite Amazon’s formidable capabilities, sources believe supermarkets can compete with a well-executed click and collect offering.

“Grocers understand the complexities that come with fresh product,” said Kelly. “Amazon is going to figure out how to do fresh product at some point, but in the meantime, that’s the grocer's core business.”

Bishop, meanwhile, said he expects innovations to drive growth in click and collect services. Already, grocers are winning with mobile ordering, faster pickup times, and targeted promotions around prepared foods and other high-demand items. In the future, he said some retailers are working on programs that connect shoppers with order pickers — a move that could build trust in addition to giving shoppers more input on item selection, particularly in fresh departments.

Ultimately, Bishop said click and collect is in its early stages and will likely evolve as supermarket retailers learn more about the e-commerce market.

“It’s the lowest cost way in which grocers could satisfy the needs of their customers, and I think it’s only the first generation of online grocery shopping for retailers,” he said.

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Filed Under: Grocery Corporate Marketing
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