UK department store John Lewis has set the ball BLL +1.41% rolling by introducing charges for click and collect services and other retailers, including Tesco , are poised to follow suit.
John Lewis is introducing a £2.00 charge for orders below £30.00 from 28 July; while Tesco is increasing its minimum basket spend from £25.00 to £40.00 for free grocery click and collect orders from 23 July. It applies a £4.00 charge for orders below this amount.
Darryl Adie, managing director  at e-commerce agency Ampersand, anticipated similar reactions from other retail operators.
“Retailers often look to the ‘pillars’ of British retail for best practices and delivery is no exception. For many, John Lewis has set consumer expectations around the cost of delivery, especially by offering click and collect as a free option,” he said.

Adie rightly suggests click and collect services, which have traditionally allowed shoppers to order online and have goods delivered to a local store for free, are unsustainable.
“In reality, click and collect is not free and many retailers are feeling the strain  of having to operate as both a retailer and a logistics company ,” he said. “Despite the customer service benefits of owning the ‘final mile’, running a successful logistics business can be very costly.
“Unless you are Amazon and can subsidise delivery costs or one of the big four supermarkets which view low-cost delivery as a loss leader, then it has been difficult for many retailers to compete with the likes of John Lewis on its free collection offer. This is especially true if you are shipping collection orders from warehouse to store, rather than picking-up direct from store.”
According to Adie, retailers should view this announcement as an opportunity to ensure their delivery strategy complements their business as a whole. “For retailers, this isn’t just about reducing costs, it is also an opportunity to explore how to best use the ‘final mile’ in order to offer a unique value proposition to customers,” he said.
“Whether consumers continue to use John Lewis’ click and collect option, despite the charge, will be an indication of the true consumer appetite for click and collect and an eye-opener for the industry and its approach to fulfilment.”
Alastair Lockhart, insight director at shopper marketing agency Savvy, claimed the charges would be unpalatable: “While it’s clear that retailers are having to adjust their business models to suit the economic realities of an increasingly multi-channel world, this will be a bitter pill to swallow for many shoppers ,” he said.
Lockhart said Savvy research shows shoppers typically expect to pay for home delivery but are less willing to pay for click and collect since they are largely unaware of the cost of the service to retailers.
“It’s an interesting move at a time when most food retailers are fighting hard to maintain store footfall,” he said.
Iain Devine, commercial director at global commerce provider, Salmon, agreed that retailers were finding the current click and collect model unsustainable.
“Click and collect services are meant to be more to be convenient for the customer and, with this in mind, retailers are going to need find a happy medium that fulfils the needs of customers for free delivery and convenience and the retailer’s commercial return,” he said.
Devine said retailers need to utilise the transactional data of their customers and technology that will enable staff to create a more personalised service for customers.Harnessing customer data, such as other products the customer viewed before they purchased; previous purchasing history and combining this with predictions that are already common online, such as what other items buyers purchased or promotions; in order to upsell, could help to negate the cost of free delivery for the retailer.
“The multi-channel approach to retail is here to stay and will only continue to become more integrated. The key to commercialisation of such services is harnessing data and new technology to enrich the customer’s experience,” Devine said.
“Brands that put in place such charges run the risk of discouraging customers from using multi-channel services, which ultimately are aimed at making their shopping experience more convenient.”
Tim Robinson, CEO at parcel delivery service, Doddle, agreed the customer experience has to come front and centre and claimed his company has a role to play.
“Having built 35 purpose built click and collect stores and counting, Doddle has been able to consolidate the cost of offering click and collect amongst multiple retailers while ensuring click and collect is delivered as a customer-first service,” he said.
“While there are challenges and costs to retailers offering click and collect on a large scale, we firmly believe Doddle is the solution to help them keep up with the demand and ensure the customer experience isn’t compromised.”