Dive Brief:

• BJ's Wholesale Club's use of in-store employees in the same-day delivery process is improving its e-commerce customers' experience, EVP and Chief Digital Officer Monica Schwartz said during an investor day presentation earlier this month.
• The club retailer created "a last mile delivery model," in which BJ's employees pick the orders and hand them off to a third-party courier, following the launch of its Same-Day Select service in 2022, Schwartz told investors.
• "By leveraging our club labor, each order results in a more accurate, higher quality fresh pick while also offering substitutions to our members," Schwartz said. "This reduces cancellations, maximizing sales and improving member satisfaction."

Dive Insight:

BJ's growth in online sales underscores the importance of strengthening its fulfillment process for same-day orders, especially as it works with new delivery partners and introduces more offerings for e-commerce customers.

The company's digitally enabled sales — which include in-store pickup for online orders, curbside pickup, same-day delivery and ship-to-home — surged from $200 million in fiscal year 2018 to $1.4 billion in FY 2022, per an investor presentation.

Although e-commerce demand accelerated in the early stages of the COVID-19 pandemic, Schwartz noted that the company laid the foundation for digital sales growth and same-day delivery before then. BJ's began offering same-day delivery through Instacart in 2015, a partnership that expanded to all clubs in 2018.

The retailer then rolled out same-day delivery on its own site and app during the pandemic, which is available for customers living within 15 to 20 minutes from a selected store location. The company notes on its website that it's not available in all ZIP codes, and there is a flat fee of $14.99 for the service.

"This powered a convenient, full-service model for same-day [delivery] to all of our members," said Schwartz, former vice president of online merchandising at The Home Depot. "However, there were still some risks and limitations with this model, including costs, delivery zones and ownership of the end-to-end member experience."

BJ's expanded on its same-day offerings by launching Same-Day Select last year, in which members can receive unlimited same-day delivery for a $100 annual fee, or 12 same-day deliveries for $55. This encourages repeat deliveries and fuels new shopping habits, Schwartz said.

The last-mile delivery model is used for deliveries with partners DoorDash and UPS-owned Roadie, according to a company spokesperson. Each delivery provider comes with its own strengths and capabilities — Roadie, for example, enables BJ’s to offer same-day delivery for larger items like televisions and patio sets. This mix of options also allows the company to route an order to the partner offering the best price and delivery performance in that market.

"This new model extends our delivery coverage area while reducing our costs and risks," Schwartz said. "Soon, we will be able to expand our service to even more merchant categories."

The company still offers an assortment of its products on Instacart and DoorDash's marketplaces, as the additional reach drives incremental sales, brand awareness and member acquisition while having low customer overlap, Schwartz said.