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Buy online, pick up in-store grows rapidly, expands into events

The popularity of curbside pick up will probably last well beyond the pandemic

Summary

The pandemic has led to a huge increase in popularity of curbside pickup. This purchasing trend is likely here to stay.

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A coronavirus-related innovation which I think will stick around once the pandemic mercifully fades is curbside pickup, sometimes known as buy online, pick up in-store. While it’s not an entirely new concept, it has exploded in popularity over the past year.

For example, during Target’s most recent earnings call, CEO John Mulligan reported, “In the third quarter, our same-day services grew well over 200% compared with last year, adding more than $1 billion of incremental sales. Nearly $700 million of this growth was from our drive-up service alone, which increased more than 500% compared with last year. Amazingly, this growth was not at the expense of in-store pickup, which increased more than 50%.”

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Large retailers like Target, Starbucks, Best Buy and Walmart have cutting-edge mobile apps which make it easy to pick up your items quickly and safely. Some small businesses are doing it the old-fashioned way by fielding phone calls and emails, while others are tapping into more sophisticated e-commerce platforms.

See related: How COVID-19 is possibly leading the cashless revolution

The Amazon effect

Target’s fulfillment cost is 90% lower when a consumer picks up their items, compared with shipping them from a warehouse to the customer’s home. In a way, this is positioning Target’s 1,900 stores as public-facing distribution centers. Three out of every four Americans live within 10 miles of a Target location.

As good as Amazon is at logistics, most customers need to wait at least a day or two for their purchases to arrive. With some competitors, you could blend the convenience of online ordering with the immediacy of getting those items in minutes or hours if you’re willing to drive to the store to pick it up. Amazon has been able to achieve something similar with groceries through its acquisition of Whole Foods.

Remote ordering at events

In 2019, Square began working with the Washington Nationals to help fans purchase refreshments more efficiently. They can use the Caviar app to place an order, receive an alert when it’s ready and then pick it up from a designated stand without waiting in line. Plus, roving concessions hawkers at Nationals Park now carry Square credit and debit card readers, so stadium goers can pay for hot dogs, beer and the like without fumbling for cash, waiting for change or even leaving their seats.

Unfortunately, COVID has put a hold on most of these large gatherings. But when they return, I believe there will be more demand than ever for a streamlined guest experience. We’ve learned to expect it from retailers, and events will probably be a natural extension. Even during the pandemic, some sports teams are welcoming limited numbers of fans, which provides a strong case for remote ordering as a means of social distancing.

See related: Events canceled due to coronavirus: How to get your money back

Case in point: Super Bowl LV will be played on Feb. 7 in front of 22,000 spectators in Tampa, roughly one-third of the stadium’s capacity. The National Football League and Visa reached an agreement to make this the first cashless Super Bowl. NFL executive vice president and chief revenue officer Renie Anderson explained that the pandemic accelerated the league’s plans to go cash-free at its signature event.

This should reduce wait times and eliminate the need to touch payment terminals. For attendees who prefer to pay with cash, there will be eight “reverse ATMs” on site that will help them load paper money onto prepaid cards. It’s an extreme example, but the pandemic is clearly contributing to the overall migration away from cash in a myriad of ways, and there’s no turning back.

See related: Grocery shopping and COVID-19: What’s changed and how to save money

Bottom line

Curbside pickup and picking up online orders in the store gained a widespread following as a pandemic-inspired way to avoid human contact. Yet for retailers and consumers, there’s a long-term appeal to blending the online and physical worlds.

Have a question about credit cards? E-mail me at ted.rossman@creditcards.com and I’d be happy to help.

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