Black Friday Shoppers Beware: Online Shopping Gets More Complicated

By Suzanne Kapner and Khadeeja Safdar 

As Americans gear up for the year-end shopping spree that marks its start with Black Friday, those who order online will have some tough choices to make.

They can pick up items in a local store, or have them delivered to their car in the parking lot. They can reserve clothing online and have it waiting in a fitting room to try on. Or they can take advantage of an expanding menu of free shipping choices, some with guaranteed next-day delivery in a direct challenge to Amazon.com Inc.

Retailers, from Walmart Inc. to Nordstrom Inc., say the burgeoning number of choices are designed to allow shoppers to get their purchases in whatever way is most convenient for them. But the new services, particularly those that encourage shoppers to retrieve online orders in stores, also are aimed at defraying shipping costs, reducing returns and boosting sales.

"Fulfillment, years ago, was done in bulk and just from a store point of view," said Blake Nordstrom, co-president of the eponymous chain. "And now it's about niches. It's about anywhere the customer wants to be able to buy it or return it."

Research from consulting firm AlixPartners says the most profitable transaction for retailers is when shoppers make purchases the old-fashioned way, by visiting a store. That is no longer the preferred option for many people.

This holiday, U.S. online sales are expected to increase 15% from last year to $124.1 billion, according to Adobe Analytics, which analyzes visits to retail websites. Overall, holiday sales are expected to rise as much as 4.8% to $721 billion, according to the National Retail Federation, a trade group.

Retailers reap some benefits from the new methods. Macy's Inc. says shoppers who pick up online orders in stores spend an additional 25% while they are there. Shipping online orders from stores rather than from a distribution center saves money, Target Corp. says, because the stores are closer to people's homes. And Walmart says the fulfillment options have helped it compete with online rivals, which have fewer delivery choices.

One catch for shoppers: The method they choose often determines whether they have access to a retailer's full selection or a more limited offering. At Macy's, for instance, shoppers who elect to buy online and pick up in store are choosing just from the merchandise available in that particular location. But if they buy online and have the goods shipped to a store, all the offerings in the Macy's system are available to them.

The myriad choices each have their own shorthand -- there is Skip the Line, Drive Up and Get It Fast, to name a few -- which can be confusing. Many consumers say they aren't aware of all the options.

"It's so overwhelming, and they don't do a good job of explaining them," said Melissa Bergsteinsson, a 28-year-old teacher in San Ramon, Calif. Even though she searches for deals and products on the web before visiting stores, pickup options for online orders don't appeal to her. "If you're driving all the way to the store," she said, "you might as well go in and look around."

That hasn't stopped retailers from rolling out more choices. Target is making no fewer than six fulfillment options available this holiday season, including free curbside pickup, which it calls Drive Up, and free in-store pickup, branded as Order Pickup.

Target shoppers in some urban markets also can have in-store purchases delivered home the same day for a $7 fee, a service the company calls Delivery From Store. Or, shoppers nationwide can pay $99 a year for another same-day service via a startup it owns called Shipt, which uses contractors to buy products at various stores and bring them to customers.

John Mulligan, chief operating officer at Target, said he expects shoppers to use all of the new options. He said Order Pickup could be more popular on Thanksgiving when shoppers want to snatch special deals. Customers can take advantage of two-day shipping around Cyber Monday and then Drive Up closer to Christmas, when time has run out, he said.

"We think this is really an advantage for us," Mr. Mulligan said. "It provides great flexibility entering the holiday season."

Even shoppers who purchase items in a store will have to decide whether to wait in line for a cashier or check out themselves using a mobile app. Walmart and Target are introducing services that let shoppers skip the checkout line and pay for items anywhere in the store on hand-held devices carried by employees.

Macy's is rolling out mobile checkout to all of its stores. After scanning and paying on a smartphone app, shoppers stop by a mobile-checkout counter, where employees verify the purchase, remove security tags and bag the items.

Walmart, too, offers various free pickup services for online orders, including Grocery Pickup to receive groceries from the parking lot, Pickup Today to get items the same day inside the store and Pickup Discount to attain cheaper prices for the same goods in the store than with home delivery.

For online orders, Walmart is protecting its profit margins by requiring shoppers have a $35 minimum order to qualify for free two-day shipping over the holidays. Target and Amazon, however, have dropped minimum purchases for free shipping on many items this season.

Nordstrom has introduced Get It Fast to the Los Angeles area, offering free next-day delivery for orders placed by noon. Shoppers also have the option of picking those orders up at one of Nordstrom's four department stores or three smaller-format Local stores in the area. The chain says there has been a 50% increase in shoppers who buy online and pick up in store in the Los Angeles area since it launched the service in October.

Dakota Curfman, who lives in Yuma, Ariz., said she usually relies on free shipping through her Amazon Prime membership, though she prefers to visit physical stores. This year, the 24-year-old mother of three children said she's making time to do her gift buying in person. "I like the experience of shopping," she said. "I guess you could say I'm old-fashioned."

Sarah Nassauer contributed to this article.

Write to Suzanne Kapner at [e-mail] and Khadeeja Safdar at [e-mail]

(END) Dow Jones Newswires

November 18, 2018 11:14 ET (16:14 GMT)

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