Profitability of different "click and collect" models in egrocery: A logistics perspective

B2c e-commerce has become a mainstream sale channel, often merged with traditional stores in an omnichannel perspective. In this context, "Click and Collect" (C&C) is gaining importance, especially in the grocery industry, where big retailers including Auchan, Carrefour, Tesco, and Walmart have introduced it. However, despite the increasing diffusion of this model, little knowledge exists regarding its actual profitability. This paper aims to investigate this aspect by comparing the costs and investments required to implement C&C and by deriving the break-even point of different C&C configurations. More in detail, the authors analyse the "Click and Drive" (C&D) and the "Click and Store" (C&S) models. In both cases, the order is placed online and physically collected by the customer. C&D implies the customer does not get off the car while the order is loaded directly in the back of the car. Conversely, in the C&S model the customer enters the store. Due to the novelty of this phenomenon, the study has an empirical nature: 15 interviews with top grocery retailers, on-field visits, and mystery shopping activities have been performed to map existing C&C models. Collected information was inputted into a cost and investment quantification model developed by the authors. Results show that the C&D implies higher investments than C&S, especially if it uses a separate dark-store for conducting the picking activity. The profitability of the models requiring separate investments (e.g. a dark-store in C&D or a separate collection point in C&S) depends on the additional volumes such solutions can generate. This paper makes a first step into the analysis of emerging omni-channel (OC) models in the grocery industry thus contributing to the fragmented literature on the theme, while providing useful insights to retailers interested in approaching these solutions.