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Convenience Commerce

‘Order for Pickup’ First-Timers: A Look into Pandemic-Inspired Behavior Shows More Consumers are Buying Online and Picking up in Store

by Rakuten Intelligence - October 02, 2020

Image credit: Photo by Sunyu Kim on Unsplash

As merchants continue to shift their business models and add contactless experiences to meet the changing demands of the COVID-19 era, ‘click and collect,’ or online ‘Order for Pickup,’ has not only become widely available, but increasingly more popular.  

This change in consumer behavior has led to a historic rise in online Order for Pickup orders, with many trying it for the first time. From March through May alone, ‘click and collect’ order volume was up 202 percent, with almost 30 percent of all orders being driven by consumers who are new to using Order for Pickup services, or “first-timers”.

Rakuten Intelligence data uncovers who these first-time online Order for Pickup customers are in the COVID-19 era, and how the demographics of the ‘click and collect’ customer are evolving. We also turned to our sister company, Rakuten Ready, to get more insight into these trends, and how merchants are responding.   

For our purposes, we define a “first-time customer” as anyone who had not placed an online Order for Pickup order during the tracked time period, which began January 2018. The data is through June 30, 2020.

There are more first-time Order for Pickup customers now than during the Holiday season

Usually, merchants can rely on the Holiday season for the biggest influx of new Order for Pickup customers because the service offers convenience and time savings to consumers who might need a last-minute purchase or don’t want to deal with crowds. 

However, Jaron Waldman, CEO and Co-founder of Rakuten Ready, says buying behavior has been altered dramatically since the start of the pandemic. 

“Consumers are leveraging Order for Pickup not only for convenience but also as a contactless solution that they expect to lower their risk when shopping at a merchant,” according to Waldman. “The ability to balance flexibility and social distancing is appealing to these new customers, and, as a result, we’re seeing Order for Pickup adopted by “first-timers” at historic levels.”   

Out of all click and collect customers since January 2018, 3.5 percent made their first click and collect in the first full month of shelter-in-place (April 2020), even beating out the typical Holiday season peak of first-time customers in December 2019 at 3.4 percent.

The trend has continued to catch on with consumers. The Order for Pickup cohort in May 2020 reached  23.1 percent of all online buyers, representing just over a 1.5x increase over February 2020 (14.4 percent), and again, beating out the December 2019 Holiday cohort of 21.3 percent. The Order for Pickup cohort dipped slightly in June 2020 to 20 percent.

Demographics of first-time customers holds some surprises

New customers cut across all income levels, however, over 62 percent of first-time Order for Pickup customers come from households with an income of less than $75,000, while those with an income above $100,000 make up only 24 percent of first-time orders. Basically, first-time customers with lower incomes have started using Order for Pickup more heavily than those with higher incomes. 

Among first-time Order for Pickup customers, those annually making between $25,000-$50,000 are the biggest segment, making up about 29 percent of dollars, items and orders.

The data shows the change in behavior also means an influx of younger Gen Z (18-24) and older Senior (65+) consumers are beginning to use online Order for Pickup.

Millennials (25-34) drove the most first-time Order for Pickup dollar spend (20.6 percent) while Seniors (65+) bought the most items per order (23 percent). In addition, Seniors (65+) have started using Order for Pickup just as much as Gen Z (18-24), with each group representing 22 percent of all online Order for Pickup buyers.

Seniors and Gen Z buyers have had the highest rates of first-timers during COVID-19

Percent of First-Time Customers, by Age Group across Order for Pickup

First-time customers also heavily skew towards males who are spending almost 2X more than females when ordering, however, the mix is a much different story when looking at all Order for Pickup orders, with females (59 percent) spending much more than males (41 percent).

Waldman also noted, “It is important businesses know more about these first-time customers since they are not necessarily the same demographic that was ordering for pickup prior to the pandemic.  Merchants need to take advantage of the opportunity in this fast-growing channel to better understand these customers and align their long-term operating, marketing, and communication strategies to include them.” 

Top First-Timer markets

While we expected to see an alignment in regions with the most Order for Pickup first-timers and the regions where lockdown was most significant, the top 10 regions for new Order for Pickup shoppers were less predictable than we thought, representing most regions across the country – the South, East, West and Midwest.

            1. Toledo, OH - 26.1%

            2. El Paso, TX - 25.9%

            3. Santa Rosa, CA - 24.4%

            4. Lansing-East Lansing, MI - 23.6%

            5. Buffalo-Cheektowaga-Niagara Falls, NY - 23.5%

            6. Winston-Salem, NC - 23.2%

            7. Syracuse, NY - 22.9%

            8. Seattle-Tacoma-Bellevue, WA - 22.8%

            9. Tucson, AZ - 22.7%

            10. Portland-South Portland, ME - 22.7%

Potential for staying power

With the surge of first-time users amidst the pandemic, it’s likely that the uptick in Order for Pickup has some staying power. As first-timers become accustomed to the convenience of getting their orders on-demand while avoiding in-store crowds and social distancing, it’s positioned to attract some long-term loyalty.

“The growing Order for Pickup trend is influenced not only by consumers, but how brands react as well. Kroger has opened a pickup-only store, Chipotle is going all-in on mobile drive-thru lanes and you can now get your dog food with curbside pickup at Petco. Increasingly, we are seeing retailers adapt their business models to recognize this trend and work hard to improve the Order for Pickup experience for these consumers,” says Waldman.

About the data

With a panel of more than a million online shoppers, Rakuten Intelligence gives the most detailed, and accurate digital commerce data available, and is reported daily.

Rakuten Intelligence is the only service to measure digital commerce directly from the consumer, across all retailers, at the item level, and over time. Our retailer-independent methodology precisely measures commerce as it happens. By extracting detailed information from hundreds of millions of aggregated and anonymized e-receipts, Rakuten Intelligence can map the entire Purchase Graph, connecting each and every consumer to all their purchases.

Rakuten Intelligence gets its data from e-receipts – not a browser, app or software installed by the end-user – so its measurement reflects comprehensive shopping behavior across multiple devices, over time, which are key in an increasingly omnichannel retail world.