Apple To Rip Up In-Store, Mobile Channels

Written by Frank Hayes
November 3rd, 2011

Apple is about to complete its conversion to a merged-channel retailer—and maybe put its first stake in the ground for mobile payments, too. On November 3, Apple is expected to roll out a new system that will merge its in-store and mobile-commerce channels, offer a 12-minute turnaround time for M-Commerce orders and reward brick-and-mortar stores for pushing customers to shop online and pick up in-store. And—as you may have heard—it’s letting customers do self-checkout, too.

If that sounds like an afterthought, it very nearly is, even though self-checkout alone would be a big deal for most chains. What Apple is primarily trying to do is demolish the wall between stores and M-Commerce. It may not work—that 12-minute turnaround promise may just be impossible, and some of Apple’s plans for prioritizing customers can collapse when things get busy. But if it does work, it may also represent Apple’s demonstration of how it plans to offer mobile payments to other retailers—without either NFC or mimicking a plastic card.

According to sources quoted by the mobile and gadget blog BGR, what Apple will officially unveil is a new app for its mobile devices that will let customers do in-store pickup of M-Commerce orders, in addition to self-checkout for products the customer scans while inside a store.

Nice as those features are—and yes, self-checkout that actually works is a big deal—what’s more important to both Apple and other chains is what Apple is doing under the covers. For the site-to-store feature, Apple is reportedly promising a turnaround time of 12 minutes (three to forward the order to the store, two for associates to set aside the item and an extra seven just in case things get busy). If true, that almost makes self-checkout irrelevant, since it takes some customers 12 minutes just to get the attention of an Apple Store associate to check them out.

(To be clear, that’s for items that are in-stock and don’t require special handling in some way. A customer who wants to buy an iPhone case can pick it up in 12 minutes. The iPhone itself still requires all the activation song-and-dance, which takes longer.)

But the shift in Apple’s retail model doesn’t stop there. Customers using their iPhones to order will reportedly get priority in the store over walk-in customers. (That sounds like the perfect way to drive off new customers, and it’s one of the more questionable items in Apple’s new approach.)

And pick-up-in-store sales will be credited as revenue to the store where the item is picked up, not to Apple’s E-Commerce operation. That resolves one of the nastiest problems dogging merged-channel efforts: the fact that fulfilling a site-to-store order costs the store in labor but doesn’t show up as sales to make the store manager look good.

That was the Amazon model—E-Commerce separate from and competing with in-store—that chains have been trying to make work for a decade. The result has been dueling online and in-store inventories, site-to-store that takes days instead of minutes and zero reason for store managers (and even division executives) to make merged-channel work.

Apple’s change to that model appears to be very simple: The sale is credited not to the division that collects the money but to whoever actually delivers the product.


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