Understanding BOPIS (Buy Online, Pick Up In-Store) and Fraud

Buy Online, Pick Up In Store (BOPIS) has become a popular ecommerce strategy for merchants of all sizes. And its evolution has been amazing to see.

What used to be managed from a customer service desk with long lines of impatient customers is now a well-oiled, automated process that puts consumers in control of when they receive their purchases.

While this strategy continues to offer new opportunities for retailers, it does come with its fair share of challenges – not the least of which is fraud. In this blog, we’ll take a look at BOPIS, how it works, and what merchants need to know to protect their business and their customers.

You can listen to the audio version of the article by clicking on the player below. 

How Has BOPIS Grown as an Ecommerce Strategy?

In the early days of ordering ahead and picking up in-store, merchants could take their time preparing orders – there wasn’t a sense of urgency. Fast forward to the growth of ecommerce, as the pandemic forced consumers to order practically everything online. Merchants had to adapt and the “click and collect” era of ecommerce began.

Now, consumers can shop online for the products they want and choose exactly when and where they want to pick them up – assuming fulfillment processes are running at full speed.

BOPIS Success With Enterprise Retailers

For enterprise ecommerce merchants, BOPIS strategies helped increase online sales during the pandemic. In fact, BOPIS and curbside pickup order volume grew by more than 500% from March through June 2020.

BOPIS and curbside pickup order volume grew by more than 500% from March through June 2020.

And this strategy continues to pay off for ecommerce merchants: Nearly 60% of consumers say they are willing to shop using a BOPIS option and 30% of customers who are BOPIS shoppers said they took the leap during the pandemic.

Nearly 60% of consumers say they are willing to shop using a BOPIS option.

BOPIS has been embraced by enterprise brands like Target, Home Depot, Dollar General, and Petco. Other household brands like Walgreens, CVS, Sephora, Walmart and Whole Foods have been implementing BOPIS strategies successfully as well.

BOPIS Is for Small Business Too

Small business ecommerce merchants have also hopped on the BOPIS bandwagon. Speedy delivery can be a difficult thing for smaller businesses with lower margins to offer, while BOPIS is attainable even for tiny sole proprietorships.

Now let’s take a look at how BOPIS works.

How Does BOPIS Shopping Work?

BOPIS delivers the best of both worlds to customers because it’s easy, convenient and fast.

Step 1: The Customer Places an Order

The customer shops online for the products they want and fills up their cart for check out, paying attention to when their products will be available for pickup. (Tip: Make sure your BOPIS service is integrated with real-time inventory tracking, so customers can choose a pickup time that works best for them.)

After the customer’s payment is processed, they’ll get an order confirmation – ideally, they get to choose whether they want this confirmation via text, email or push notification. The confirmation will have a unique number, bar code or QR code that will identify the order at pickup.

Confirmation messages should give customers instructions for pickup, including where to go, when the purchased item will be ready and any other procedures to be followed. During the pandemic, this could include a reminder to wear a mask.

In the meantime, the order is processed.

Step 2: The Merchant Fulfills the Order

Retailers often use automation and internal apps to make the order fulfilment process run smoothly and quickly – automation can speed things up by about 28%. For example, Walmart used automation to improve fulfillment speed by a whopping 60%.

Once team members get a notification that an order has been placed, they scan products to update inventory numbers and print labels to make it easier to match the order to the customer.

The last step is what the customer has been waiting for – the pickup.

Step 3: The Customer Picks up the Order

While the BOPIS process was fairly unstructured for many retailers before the pandemic, plenty of them have gotten it down to a science. This model makes it possible to pick up and order with little contact or hassle:

• The customer pulls into a parking space designated for pickup – usually with an assigned number.
• They use the retailer’s app or a dedicated phone number to “check in” and notify staff they’ve arrived.
• A staff member comes out of the store, checks identification and places the customer’s order in their vehicle.

Advantages of Implementing a BOPIS Strategy

BOPIS has become a nonnegotiable for many ecommerce businesses. The good news is there are several advantages to implementing a BOPIS strategy.

Nearly 70% of BOPIS shoppers buy additional items when picking up their original order.

BOPIS bridges the gap between in-store shopping and ecommerce convenience, offering the best of both worlds:

• More Customer Convenience: 70% of customers say that BOPIS offers a better shopping experience because they can shop for and pick up products when they want.
• More Impulse Purchases: Nearly 70% of BOPIS shoppers buy additional items when picking up their original order.
• No Shipping Fees: 35% of consumers prefer picking up items in-store because they don’t have to pay for shipping. And it eliminates the shipping costs for retailers as well.
• Less Cart Abandonment: Two of the biggest reasons for cart abandonment are shipping costs (50%) and delivery times (40%).

BOPIS Challenges

While BOPIS (when done well) is incredibly easy and convenient, there are some challenges ecommerce businesses must consider.

Challenge #1: Timely Order Fulfillment

If a customer comes into the store to pick up their order at the designated time and it’s not ready, they’ll be irritated. And depending on how long they must wait, they may complain on social media since they have their phones in hand already.

While this isn’t a massive problem – only about 24% of BOPIS orders are not ready for pick up when they were supposed to be – it can turn into a headache if not handled with an eye toward the customer experience.

Solution: Process optimization is key, especially during the holidays or other retail surges, so design (and test) your BOPIS processes early and often to make sure customers get a great experience year-round. Consider assigning BOPIS orders to specific, well-trained employees and create designated parking spaces or an area in your store where people can go to collect their purchases.

Challenge #2: Integration Issues That Hamper the Customer Experience

Let’s say a customer receives a notification that their order is ready for pickup. They hop in their car and drive to the retailer’s store only to discover the location doesn’t open for another half-hour. That’s a recipe for customer complaints.

Solution: Look at the entire process through the eyes of the customer and make sure they won’t encounter any surprises. Notifications for pickup should remind customers about store hours, pickup locations and any other pertinent information. The more you inform your customer, the happier they will be.

Challenge #3: Space and Inventory Issues

One of the biggest BOPIS challenges affecting small and medium businesses the most is having the real estate to store products, process orders and get them into the hands or cars of their customers.

The same goes for inventory. Nearly half of all small businesses don’t track inventory or they do so manually. You need real-time information about what’s available and be sure to lean on barcodes and cloud computing to make managing BOPIS from anywhere easy.

Solution: Plan the logistics of fulfillment before investing in a BOPIS strategy – and have up-to-date ordering practices to prevent stockouts.

Before merchants implement a BOPIS strategy, there’s still one more consideration – fraud.

What Are the Fraud Risks of BOPIS Transactions?

While BOPIS has plenty of strong points, it does expose merchants and customers to fraud risks for many of the same reasons that traditional ecommerce does.

ATO Fraud

ClearSale’s Executive Vice President and Partner, Rafael Lourenco predicted early in 2021 that account takeover (ATO) fraud would be a persistent problem, partially due to the rising popularity of BOPIS as a go-to strategy.

With the increasing number of BOPIS transactions, fraudsters have the opportunity to speed up how quickly they can get stolen goods – what used to take a day or two to ship can now be picked up curbside. That makes catching a fraudster more difficult. Fighting this type of fraud requires a sophisticated – and speedy – approach.

“Fighting ATO ecommerce fraud requires evaluating each order location and comparing that location to the country of origin for the card or account, plus analysis of behavioral biometrics, the customer’s purchase history and velocity on the account.” - Rafael Lourenco, Executive Vice President and Partner, ClearSale

CNP Fraud

CNP fraud is like ATO fraud except it involves stolen credit card information that is usually sold over the dark web. Major security breaches, like the recent Facebook breach, puts thousands of records in the hands of fraudsters. They use stolen credit card information to make purchases online and through omnichannel strategies like BOPIS.

And because of the speed of BOPIS, odds are high that the fraudster will be long gone with the stolen goods well before the cardholder notices the fraudulent transaction.

Digital Wallets

Similar to ATO and CNP fraud, digital wallets present another potential issue for BOPIS transactions – especially when nearly one-third of all 2020 ecommerce payments in the UK were made using digital wallets. Fraudsters are getting more opportunity than ever to exploit this payment method using counterfeit or tampered IDs to create illegal digital wallet accounts.

SIM Swap Fraud

A newer type of fraud causing concern among fraud analysists is SIM swap fraud (or SIM hijacking). This type of fraud happens when scammers take control of consumers' phone numbers. From there, they can steal user credentials, take over online accounts, change passwords and more.

In February 2021, a data breach impacted an unknown number of T-Mobile users’ phones and compromised their account information, personal info and personal identification numbers (PINs).

Malware/Ransomware

Another form of fraud involves malware or ransomware like the breach that impacted audio giant, Bose’s “environment." The malware/ransomware was detected in March 2021 and has the potential to compromise purchases made through voice commerce.

How to Prevent BOPIS Fraud

So, how can merchants protect themselves from BOPIS-related fraud?

As this way of shopping continues to deepen and develop, fraudsters will take advantage of the digital technologies that enable BOPIS strategy. For that reason, merchants need to improve their fraud prevention processes.

1.      Automate and Integrate Systems

Retailers need a way to automatically verify transaction details, confirm that customers are who they say they are, and flag fraudulent orders placed in their BOPIS system. By upgrading and integrating technology, merchants can track and analyze which devices are used to place orders, where the customer is located, if they have purchase history, and even specific behaviors. All of this data is essential to distinguishing fraudulent version legitimate transactions.

2.      Validate Customers at Pickup

This seems like a no-brainer, right? Of course you’re going to make sure the customer is who they say they are when they come to pick up their order. That doesn’t always happen and it exposes both the retailer and credit card or bank account owner to fraud.

Retailers should consider having the purchaser do the pickup. They can also ask to see ID and the credit card used for purchase – or the digital wallet app used. Another way to confirm the customer is by asking to see the “order is ready” screen or email on the customer’s phone.

3.      Implement a Comprehensive Fraud Prevention Solution

Fraudsters are constantly looking for new ways to exploit ecommerce and brick-and-mortar retailers. Merchants need to make sure their fraud prevention strategies can thoroughly analyze each transaction — detecting instances of fraud that simple filters or busy business owners can’t catch on their own.

A fraud prevention solution that can evaluate every transaction – whether it is traditional ecommerce or omnichannel commerce like BOPIS – is the best way to protect yourself and your business from fraud.

Make Sure Your BOPIS Strategy Protects Your Revenue

BOPIS is a strategy that every merchant needs to consider and potentially implement as a bridge between in-store and ecommerce shopping.

At the same time, merchants also must have a plan in place to prevent and protect against fraud.

At ClearSale, we have the industry intelligence to help merchants understand their fraud risk and implement a strategy to mitigate that risk, protecting their bottom line. For more information about our service, contact one of our fraud experts.