The BOSS and BOPS of holiday season online shopping

Quick, what is the first thing when you see the term “BOSS?” Well, if you are on this site, there is more than a decent chance you are a retail shipper already are familiar with BOSS (hint: it is not the person you may report to at work), which is shorthand for the myriad buy-online/ship-to-store programs from retailers that are very popular and have picked up steam, especially in recent years, due, in large part, to the ongoing advent of all things e-commerce-related, with a heavy focus on how that relates to the supply chain. In other words, this is another move by retailers to be the “boss” of their own shopping experiences.

Well, with the holiday shopping season, if not in full swing, then very close to it, BOSS will become even more of a normal part of everyday life for many consumers.

That was a key takeaway from the annual “Holiday Retail Trends Guide” issued this week by industrial real estate firmCBRE.

One key difference between BOSS and another fun acronym, BOPS (buy-online/pickup-in-store) cited by CBRE is that with BOPS online orders are picked up in store, whereas with BOSS, retailers ship items to stores that are not regularly stocked in stores.

BOSS programs implemented by retailers appear to be picking up steam, too, with CBRE pointing to Macy’s, Michaels, and Kohl’s all having these programs, with Kohl’s having it in 20 stores and plans to have it in all of its stores in the coming months.

And it added that Michaels estimates that its respective BOSS and BOPS programs will account for nearly half of its online sales for this year’s holiday season, adding that the increase of e-commerce activity in recent years has made deliveries to customers “costly and complex.”

In the report, CBRE noted that as omni-channel shopping continues to gain further traction, retailers should prepare for this year’s holiday season hit an all-time high in terms of being interconnected, with a large number of retailers expected to leverage BOSS and BOPS to help them in various ways, including: lower delivery costs; increase in-store attachment sales; and provide a seamless in-store customer experience.

While BOSS and BOPS may be the current terms,Joe Dunlap, Managing Director of Supply Chain Advisory at CBRE, cautioned that the ship-to-store concepts and methods have been around as along as e-commerce has, with retailers focusing more on it now than in the past for a few different reasons.

“One main reason has to do with shipping costs for shipping to a consumer’s home, and clearly there is evidence to show the potential of a larger market basket of additional sales when a consumer walks into a store to pick up an item,” he explained. “And when a consumer tries to curb costs, the consumer that happens to be close to a store can benefit from that…and where the retailer was subsidizing those costs, the retailer can benefit from cheaper costs as well. There are a number of reasons that are creating sort of a ‘double-down’ emphasis on it as a way to increase margin, as well as increase top-line growth.”

So, what does the future look like for BOSS- and BOPS-related endeavors, especially as it relates to both the consumer shopping experience and the retail supply chain?

Dunlap said that it can vary very widely, based on the retailers’ value of goods, adding that it is important to note there is a difference in ship-to-store versus what is either delivered to the home or happens to already be in the store and buying items off the shelf.

“That speaks to the several different channels within the ‘alphabet soup’ of omni-channel that we talk about,” he noted. “The room to run here is based on the value of goods. A $10 item or an order placed online may have the consumer paying $5 to have to deliver to home or the retailer having to subsidize that $5 shipping fee. There is an incentive on both sides of that transaction to minimize shipping costs and force some of those retailers, where you can buy online and ship to the store the next day, to take advantage of it and that will probably increase. Conversely, a lot of retailers with high-dollar items (like a cell phone) that easily ship to my home and do so for free may not have the same pressures to come pick it up in the store as other retailers might.”

That led to another direct question for Dunlap: how do these efforts lower delivery costs for retail shippers, with consumers going to stores to pick up ordered items?

“The savings here for the transportation moves, which are typically parcel and LTL (less-than-truckload) are the big savings,” he said. “Otherwise, there are reasons for which you could argue why it might ride for free to the store…because I have another trailer taking replenishment loads to the store already. So, you could argue that what arrives in outbound in parcel shipments is relatively free to the consumer and to the retailer, but the handling costs inside the warehouse does not necessarily go away relative to other e-commerce orders. The big savings with this is transportation and the top-line growth is when customers come to pick orders up and purchases something else in store that they may not have otherwise purchased or the frequency or the frequency of the purchase increased because they were in the store already. Those are the things the retailers will really benefit from most.”

Looking at the emergence of BOSS and BOPS over the years, Dunlap described it as something that has had a slow and emerging emphasis from a retail supply chain perspective, given that both practices have been intact and leveraged by retailers for a number of years. And he noted that supply chain professionals have had to enable it along the way, coupled with retailers having gotten smarter in various ways to meet consumer orders.

What’s more, and perhaps most important, he said, is that this is getting increased attention from C-level leadership that are seeing the benefits from both an operational and financial perspective, and not just the supply chain practitioners that enable all of it.