Low service fees and customers not wanting to wait for a delivery order are the two reasons why shoppers choose grocery pickup over delivery, according to customer research from Mercatus. Within this subset, half of grocery pickup customers would opt for next-day pickup if it meant paying an even lower fee.
"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, in a statement. “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.”
Mercatus’ research suggests that a variable service fee that enables customers to control their additional costs can be used to improve retailer profitability.
“Since time is money, a structure that flexes fees based on when someone picks up an order benefits both customers and retailers,” said David Bishop of Brick Meets Click, the company that conducted the research for Mercatus, in a statement. “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.”
Grocery pickup has seen recent success. The research found that 60 percent of households use grocery pickup. Of the households trying pickup, 80 percent tried either Walmart's or Target’s service.
Related: Online Grocery Sales Decline, Use Remains High; Self-Checkout Gains Ground