For CVS And Walmart, Curbside Pickup May Be A Great Idea That Customers Don’t Want

CVS Health announced a partnership Tuesday with start-up Curbside to offer pickup services in nearly all of its stores by year end. CVS also is taking an undisclosed stake in the company as well.

This announcement comes at the heels of Wal-Mart Stores announcing a dramatic expansion of its grocery pickup service for fulfillment of online orders. Kroger is also quickly expanding its own similar service, called ClickList.

All of these retailers are embracing an “omnichannel” approach, wisely attempting to leverage their brick and mortar locations as a strategic asset in the battle against Amazon, which is focused on immediacy of delivery through growth of its Prime Now service.

Whether it’s called Buy Online, Pickup in Store (BOPIS), Click and Collect, or another name, the notion that physical retailers can provide customers immediacy of products, confirmation of in-stock and quick service is definitely intriguing as a way for physical retailers to blunt the online edge. Yet, questions remain about the viability, profitability and productivity of these efforts.

• From a viability standpoint, there has been significant success establishing buy online and pickup in store in multiple markets in Europe. This has been a huge source of revenue in France and the United Kingdom. However, every market in e-commerce develops differently and the U.S. is no exception. To date, delivery to home seems like a much preferred option here, with in-store pickup a small part of the business. CVS claims that customers don’t know they want the service yet. Or, they might find that home delivery is really the ultimate convenience.
• Profitability seems an enormous issue. In Curbside’s original model, the software would trigger a dedicated employee to bring the item to a car. And Curbside would earn a cut of the transaction. Great for customers but the economic model is challenging, particularly during non-peak times (which are frequent in the world of retail). Referencing point one, demand needs to be strong in order to justify the model.
• Finally, productivity in the retail stores themselves needs to be considered. I have experienced mostly poor execution from retailers who attempt to offer in-store pickup. They lack training, dedicated associates who know what to do, clear communications on where customers are supposed to go and areas to effectively and properly store merchandise (which needs to account for frozen and refrigerated product). And, in-store systems need to be better calibrated to not only indicate that a store has a product in-stock but where it is (backroom versus a shelf). With retailers already running lean staffs, this is yet another function that needs to be properly accounted for from an operations perspective. In CVS’s case, Curbside’s technology could be a competitive advantage.

This is a program that sounds great on the surface but has a variety of complications once you dig deeper. If they build this, will customers come?  They might or this may be another effort that is ahead of a customer need.

Neil Stern for Forbes