What it means
The idea took hold when online-only retailers discovered that physical space is useful and traditional chains discovered that a website is not optional. Each side had something the other wanted: shops offer immediate collection, easy returns and human help, while websites offer unlimited range and a lower cost to serve.
The commercial argument rests on the store doing more than one job. A shop that is also a small warehouse, a collection point and a returns desk earns revenue from stock it already holds and cuts the cost of shipping from a distant depot.
Making it work is mostly an inventory and systems problem. The business needs one honest view of stock across every location, so a customer can be told truthfully whether an item is available today and where it sits.
Measurement causes real internal arguments. When an online order is picked from a store, someone has to decide which channel is credited with the sale, and a badly designed bonus scheme can leave store managers actively unhelpful to online customers.
The model is not automatically better than either extreme. Property is expensive, and a chain carrying too many shops in the wrong locations can find that its online business is quietly subsidising leases it would be better off exiting.
In practice
Real-world examples.
Example
A fashion chain lets customers reserve items online and try them in store before paying. Roughly a third of reservations convert to a sale, and because nothing is shipped or returned by post, the cost to serve is a fraction of a normal online order.
Example
A hardware retailer turns the back of each store into a local fulfilment hub. Same-day delivery within five miles becomes possible without a single new warehouse, and delivery costs fall because the average journey is under twenty minutes.
Example
An online spectacles brand opens fifteen small showrooms purely for eye tests and fittings. The showrooms lose money on their own trading accounts but lift online orders in their catchment areas by enough to more than cover the rent.
Formula
Calculation
Contribution per order = (average order value x gross margin %) - fulfilment cost per order
Attachment contribution = orders x attachment rate x attachment value x gross margin %
A retailer takes 4,000 click and collect orders a month. The average order value is $60 at a 40% gross margin, giving $60 x 0.40 = $24 of gross profit per order. Picking and holding the order in a store costs $4, against $9 to pack and ship the same order from a central warehouse.
Fulfilled from the store, contribution is 4,000 x ($24 - $4) = $80,000 a month. Fulfilled from the warehouse it would be 4,000 x ($24 - $9) = $60,000.
On top of that, 30% of collecting customers buy something else while they are in the shop, spending an average of $18 at the same 40% margin. That adds 4,000 x 0.30 x $18 x 0.40 = $8,640, so the store route is worth $80,000 + $8,640 = $88,640 a month, an uplift of $88,640 - $60,000 = $28,640 over shipping, or $343,680 a year.Case study
Seen in the real world.
The following is an illustrative and entirely fictional example. Thornbury Home, an invented homeware chain with 60 stores, had a website that behaved as though the shops did not exist. Online stock was held in one warehouse, store stock was invisible to the website, and around 18% of online orders were cancelled because the item had sold out after the order was placed.
Thornbury spent $2,100,000 on a single stock ledger covering every store and the warehouse, plus in-store picking stations and a returns desk that could accept web orders. Within a year, 4,000 orders a month were being collected in store rather than shipped, worth roughly $28,600 a month in fulfilment savings and attachment sales, and the cancellation rate fell from 18% to 3%.
In this fictional scenario the payback was slower than the board expected on the cost savings alone, at about six years, but the recovered orders changed the picture. On a base of roughly 6,000 online orders a month, the 15 percentage point improvement in cancellations restored about 900 orders at $24 of gross profit each, or $21,600 a month, and once that was counted the investment paid back in under four years.
Watch out
Common mistakes.
- Treating the website and the shops as separate businesses with separate targets, which makes staff compete with each other instead of with rivals.
- Launching click and collect without accurate real-time stock data, which produces cancelled orders and customers who wasted a journey.
- Judging a store only on its own till receipts and closing branches that quietly drive a great deal of online demand nearby.
Questions
People also ask.
Is click and mortar the same as omnichannel?
They overlap heavily, though omnichannel is the broader term covering every route to the customer, including marketplaces, apps and phone orders.
Does having shops make an online business less profitable?
Not necessarily, since stores cut delivery and returns costs and win customers who will not buy sight unseen, but only if the property portfolio is the right size.
How should a click and collect sale be reported?
Most retailers credit the sale to the channel where the order was placed and separately track the store's fulfilment and attachment contribution, so both parties get recognition.
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