The Past, Present & Future of Online Pickup

Convenience has been a driving factor in the launch and adoption of online shopping, not just in the U.S. but across the world. From parents not having to get their children out of the car to get groceries, to making sure their size is available to try on when they reach the store, consumers have come to love the convenience of shopping online with same-day or next-day pickup in-store.

Contact us to learn how we can help with designing solutions for your online pickup program.

The origins of online shopping

The first online grocery order occurred in 1989[1]. Yes, you read that right. In 1989, brothers Thomas and Andrew Parkinson founded Peapod when only 15%[2] of U.S. households had personal computers and even fewer had access to the internet. Because shopping online via an internet browser wasn’t yet an option, Peapod required users to download a program on their computers from CD-ROMs. They pioneered many of the features that we use today in online shopping, including sorting by price, description, and size. But this was 1989, computer graphics were just beginning, and it was a slow, cumbersome process. After you submitted your order, they would then shop for you and deliver your grocery order to your door.

Online shopping slowly took off during the dot-com era of the mid-90s, with consumers questioning how it would work and concerned about everything from payments to making sure they would get what they ordered. During this time, tech companies saw an opportunity to revolutionize an industry that had been mostly the same for decades. They scrambled to bring the grocery world into the age of the internet with online grocery stores. Many failed to take into consideration the high start-up costs of launching something of this magnitude and the typically low margins for the grocery industry.

The 90s also saw the rise of online restaurant orders. Pizza Hut[3] became the first restaurant to offer an online platform to order pizza for delivery and pickup in 1994. Both Amazon and eBay launched their first iterations in 1995, though they looked much different than they do today.

By 2001, when the dot-com era was busting, most tech companies that had helped pioneer online-only grocery sales had been bought out or filed bankruptcy[4]. The exception being a handful of companies that partnered with local grocery stores to offer grocery delivery. Even Peapod, still in business today, was struggling at that time. Royal Ahold, a Netherlands-based supermarket retailer, bought out the company by August 2001.

Online shopping evolution

Since the dot-com era bust, online shopping has continued to grow, generating more revenue each year. Before the global pandemic, 15.5%[5] of total retail revenue sales worldwide were predicted to be from online sales in 2020.

The rollout of online pickup has seen multiple iterations as companies test to see what consumers will use the most. From pickup at a customer service desk to towers located near the store entrance, from curbside pickup to dedicated parking spaces, retailers have been testing what works best for them and their customers for years.

The current iteration of online grocery pickup has had a rapid rollout from companies like Walmart and Kroger, with adoption by customers based mostly on convenience. Where the early iteration of online grocery shopping may not have worked well due to high start-up costs and low margins, these companies already have stores that house groceries, making the transition much more manageable.

Whether it’s because some customers find it difficult to get around the store or because they like the convenience of not having to get out of their cars with children, online shopping for groceries has continued growing due to customer demand. Even retailers that don’t traditionally have space to have a robust online pickup program are incorporating online pickup into their stores. ALDI has partnered with InstaCart to provide grocery pickup and delivery for their customers.

Online shopping is also helping bring groceries into food deserts. Retailers like Walmart are purchasing empty buildings to use strictly as online pickup hubs. With numerous delivery options available as well, those living within food deserts have more options available to get groceries.

But grocery stores aren’t the only places online shopping has taken off. Whether you’re looking to have your lunch delivered today, or receive your latest purchase of clothing, electronics, car parts, or pet supplies, from DoorDash to UberEats, from InstaCart to Walmart Pickup, from pickup in-store to standard shipping, the options are nearly limitless.

Expanding online pickup

Whereas online shoppers of groceries want someone to bring their groceries to them, those shopping online for clothing may want to pick it up in-store. Nobody likes getting to the store to try on a new pair of pants only to realize they don’t have their size in-store. In light of this, more people are ordering the size they think they need to pickup in stores, so they can try it on in store and exchange it for the size they do need if it didn’t fit.

With that in mind, there isn’t a one-size-fits-all approach to designing for online pickup. Your customers’ habits and needs will dictate how it will work best. If you’re adding curbside pickup to an existing store, one of your concerns may be traffic flow. You don’t want your online pickup customers blocking the front of your store, causing a backup of traffic and safety concerns for pedestrians. Analyzing customer shopping patterns in and around your store will help determine the best location for reserved parking spots or stalls for pickup.

After pickup has caught on in the store, some stores have moved the pickup location across the store, based on how and where customers were naturally going to pick up their orders. In other locations, pickup has been expanded to account for high customer demand.

Another concern for adding pickup to an existing location could be adding more refrigeration units. Not only will it take up more space within your store, but it will change how you need to heat and cool your building. Additional or upgraded HVAC units may be required to account for the additional heat generated by the refrigeration units. If you’re adding additional refrigeration units to your site to house pickup orders outside, a possible solution is to use modular construction units that have built-in refrigeration.

As online pickup continues to expand rapidly, we’ve run into some jurisdictions where local codes haven’t caught up to include online pickup programs. We’ve worked with the jurisdictions to apply appropriate definitions to help move the projects forward. Some jurisdictions have been concerned with accessibility issues, wanting to ensure that everyone can be served. Other jurisdictions are more concerned with traffic flow within the property.

Are there best practices for online pickup?

  1. Choose the proper location within a building to house your online pickup orders in relation to where your customers will be.
  2. Pay attention to what your customers per location are doing to make decisions about future plans.

Even though there isn’t a single best solution, there are a few best practices to keep in mind while setting up your stores.  It’s all about increasing efficiency through better planning.

One of the biggest things to keep in mind is the location of storage in relation to where your customers will be waiting for pickup. Planning the shortest, most direct route between storage and customers, increases efficiencies, and decreases customer irritation. The smoother you can make the experience, the more likely they are to use the service.

Another thing to keep in mind is that after your customers are familiar with picking up their orders at your locations, you may need to make changes to individual locations to account for customer demand. One location may need to triple the number of pickup locations, while another only needs to keep a few, based on use at each location.

How will online pickup be different post COVID-19?

Right now, there’s an increase in demand for online pickup and delivery. As we move past the worst of the COVID-19 pandemic, the way we shop is undoubtedly changing. But what does that mean for online pickup post COVID-19?

Some things are continuing in the same direction. Efficiency is still the name of the game, maybe even more so now than before with supply-chain disruptions and product delivery timelines. Over the past few years, retailers like Kroger[6] & Amazon[7] have been incorporating automation into their warehouses as a way to make delivery quicker for customers and more efficient for their employees.

Some technologies may see a faster rate of adoption than before, as people are more concerned about touching things in general. We’ll likely see higher adoption of touchless technology, from contactless payments[8] to more voice technology[9].

Regardless of technological changes on a large scale, a one-size-fits-all approach isn’t likely because we don’t shop for all things the same way,  and because building solutions vary from site to site. With experience in hundreds of variations of pickup models, SGA Design Group is here to help you evaluate, design, and execute whichever solution meets your needs.