The Pickup Premium: How BOPIS Quietly Raises Your Price

Based on the research ofTang, Chen, and Raghunathan, "Buy Online, Pick Up, or Deliver from Store: Why Would an Online Retail Platform with Third-Party Sellers Offer It?," Information Systems Research, 2026

The Shipping Label That Hides Everyone's Address

Traditional online selling on a marketplace runs on a kind of blindness that works in the shopper's favor. When a third-party seller lists a product on a platform and ships it from a warehouse, that seller has no idea whether the buyer lives four miles away or four states away, and neither does any rival seller of the same item. Every seller on the platform is, functionally, competing for every shopper on the platform, because location has been engineered out of the transaction. That symmetry is what keeps prices honest: a seller who tries to charge more than a rival loses the sale to an anonymous stranger it will never meet, with no geographic excuse available to either side.

Ping Tang, Jianqing Chen, and Srinivasan Raghunathan, in a paper newly published in Information Systems Research, model exactly this baseline and then ask an odd question: why would a platform ever give it up? Local selling, letting a consumer pick up an online order at a third-party seller's physical store or have that seller deliver it directly, means the platform forfeits the shipping and fulfillment revenue it would otherwise earn by handling the order itself. On the surface, that looks like the platform simply doing shoppers a favor at its own expense. The paper's answer is that it isn't a favor at all. It is a different way to make money, and it runs through the seller's pricing power, not the platform's delivery fleet.

What Local Pickup Actually Tells a Seller

The mechanism is almost mechanically simple once you see it. The instant a shopper chooses to pick up from, or be delivered by, a specific seller's storefront, that seller learns something it never knew before: this particular customer is close enough to visit. Sellers farther away learn the mirror image, that they were never really in contention for this shopper's pickup order in the first place. Location, which anonymous shipping had erased, becomes common knowledge, and it splits what had been one undifferentiated national market into a patchwork of local ones.

That patchwork is where the pricing changes. A nearby seller no longer has to price as if it were fighting an identical, invisible rival for every single shopper; it can price knowing that its most convenient customers are, to a meaningful degree, already spoken for by geography. The authors describe this precisely: traditional online selling "masks the underlying heterogeneity of consumers' locations, making sellers undifferentiated on the location dimension," while local selling "exposes consumers' location heterogeneity, enabling sellers to exploit the inherent location differentiation to alleviate price competition between them." Softer competition among sellers means higher average prices, and because the platform typically earns its money as a commission on the price of the sale, a higher price means a bigger cut for the platform, even without touching a single package. The paper finds the platform can come out ahead this way despite giving up fulfillment revenue entirely, precisely because the commission gain from softened competition can exceed what shipping the order itself would have earned.

Crucially, the authors do not claim this is automatic. The degree to which local selling reveals useful location information, and therefore how much it softens competition, depends on the product and the market: how spread out sellers' stores are, how substitutable the product is, how much shoppers actually value the pickup option versus shipping. Local selling always benefits the sellers who adopt it. It does not always hurt consumers, and it does not always help them either; the paper's headline finding is that "consumers do not necessarily benefit from it despite their enhanced ability to make a rational fulfillment choice." More options did not automatically mean a better deal, because the option itself changed what price gets set in the first place.

Amazon, Walmart, and the Race to "Local Selling"

This is not a hypothetical strategy waiting to be discovered. Amazon built and named it. In October 2021, at its Accelerate conference for sellers, Amazon launched "Amazon Local Selling," a program letting third-party sellers offer same-day in-store pickup or fast local delivery for products listed on Amazon.com. More than half of everything purchased on Amazon comes from third-party sellers, most of them small and mid-sized businesses, which is exactly the seller population the paper's model describes. Jim Adkins, Amazon's vice president overseeing the category, explained the company's rationale for the launch in terms that read as pure convenience marketing: "Our research shows that many customers will opt for local pickup when given the choice." What that framing leaves out is what the paper supplies: giving customers that choice also tells nearby sellers who those customers are, and tells distant sellers they were never really competing for them.

Walmart followed the same playbook three years later. In August 2024, at its Marketplace Seller Summit, Walmart previewed Walmart LocalFinds, which the company described as connecting shoppers with local retailers through Walmart's digital channels and offering "direct pickup and delivery from sellers' physical stores." The program launched that fall in Atlanta and Dallas, with 1-800-Flowers.com as its first nationwide participating seller and an open invitation for hundreds of local stores to join as it expanded to more cities. The name alone gives away the strategic intent: this is not "faster shipping," it is explicitly local, built around the geography the paper says platforms have an incentive to expose.

The scale behind these programs is not small. By 2025, U.S. buy-online-pickup-in-store retail sales totaled an estimated $154.3 billion, roughly 87 percent of U.S. retailers offered some form of it, and about 97.2 million Americans, 34.2 percent of consumers, used it regularly, with roughly half of them describing it as simply "a convenient way to shop." None of the industry statistics built around BOPIS talk about seller competition or commission rates. They talk about convenience, speed, and avoiding shipping fees, because that is the shopper-facing story that makes the feature easy to adopt. The pricing mechanics run underneath it, unadvertised.

Why More Fulfillment Options Didn't Make You Better Off

The Tang, Chen, and Raghunathan model is not the only theoretical work landing on this conclusion. A separate analysis by Zonghuo Li, Shanliang Li, and Wanxia Mei, published in Electronic Commerce Research, models a buy-online-pickup-in-store contract between a manufacturer and a retailer and finds that adding the pickup option raises the online price, and raises the offline store price too when the retailer's cost of running pickup is low. Two independent theoretical models, built on different market structures, both arrive at the same uncomfortable answer: the fulfillment option marketed as a pure convenience upgrade is also a price lever, and it tends to point in one direction.

None of this means buy-online-pickup-in-store is a scam, or that every retailer offering it is scheming against its customers. Target's stores-as-hubs strategy, for instance, leans on the same infrastructure mostly to move packages faster and more cheaply through its own supply chain, and same-day pickup genuinely does save some shoppers a shipping fee or a day of waiting. The point the research makes is narrower and sharper: when a platform hosts competing third-party sellers rather than selling everything itself, giving shoppers a reason to reveal where they live is not a neutral act. It changes what those sellers know about each other, and what they know about each other changes what they charge. A feature that looks like it exists entirely for your benefit can be earning the platform money precisely because you used it.

Local pickup reveals the one thing anonymous shipping was built to hide: exactly which seller has you cornered.

The next time a marketplace nudges you toward "free local pickup available," it's worth asking a second question after "how much do I save." Ask who else just learned where you live, and what they're now free to do about it.