John Lewis was set on establishing an online brand, but not at cost
to the high-street business. Ross Bentley finds out how this was
achieved.
Murray Hennessy, managing director of John Lewis' online operation,
John Lewis Direct, can be happy with his year's work.
Having joined the company in February 2001 he has overseen what he
describes as "a massive effort by everyone involved" to launch John
Lewis Direct by October of last year.
But the story of John Lewis' e-commerce presence goes back a year
before Hennessy's arrival, to a small four-person team heading up a
pilot project call John Lewis Now. "We learnt a lot from the work
done in those early days," says Hennessy "Firstly and most
importantly, we learnt that there was a demand from John Lewis
customers to shop online. This we gauged from the many emailed
requests along the lines of 'I wanted to shop online but you don't
have this and so on.
"We also learnt a lot about the basics of co-ordinating an online
operation within a large established retail organisation such as
how best to photograph and present products online and what content
to use alongside the image."
While the pilot website was running the team also carried out an
extensive survey of John Lewis' customers. The findings served only
to substantiate the feeling that a full-blown e-commerce offering
would be greeted with enthusiasm by John Lewis' clientele.
The research found that, in general, a John Lewis customer is
affluent and lives in the South East. More importantly, it found
that a John Lewis customer is two to three-times more likely to
have home access to the Internet than the average person.
"There was a strong inkling that the company was ripe for an online
operation," continues Hennessy. "We have a strong brand but very
few outlet stores. At the time we had 25 stores and we are unlikely
to ever have more than 29 or 30 stores because each one requires a
large area of population to serve it.
"So you have a situation where everyone knows John Lewis but not
everyone can get there. An e-business operation would allow us to
distribute nationally. We needed to do it to remain
competitive."
By the end of February 2001, the pilot scheme had proved to be a
success. The team redirected all their energy and revenues into a
relaunch of the site. The new site would be significantly bigger
and with more functionality such as delivery options and enhanced
search facilities. But a number of issues had to be addressed
before the project could proceed. (see"Bricks to Clicks" checklist,
below.)
In order to get the right technology, John Lewis acquired the
Buy.com UK business, which sold IT hardware online to consumers and
small businesses; at the time the site was the second biggest
online retailer in the US after Amazon.com.
It was at this juncture that Hennessy joined the venture as
managing director of John Lewis Direct; he was formerly CEO of
Buy.com.
Hennessy says: "Buy.com had technology that was ahead of the market
- it was hugely scalable and had an order management system and
contact management system integrated into the package.
"It was also a flexible technology that allowed us to integrate
with new partners and distributors. The acquisition also
incorporated a management team who had a good understanding of the
ins and outs of e-tailing; with the acquisition of Buy.com John
Lewis Direct bought a ready-made team of 70 to 80 people."
As for the delivery of goods bought online, John Lewis Direct
partnered with specialists I-Force, a pick-and-pack warehouse
operation based near Birmingham. With the pilot scheme deliveries
had been made using John Lewis' own green van fleet, but because of
the scale of the relaunched online operation this facet was
outsourced.
Hennessy reiterates that one of his main concerns was to avoid
disrupting the established business, which has built a huge
reputation for customer service. Rather than cannibalise the mother
business, Hennessy says the aim of the John Lewis Direct business
model was to take the level of service that exists off-line and
duplicate it on-line.
The issue of customer service was also central in John Lewis
Direct's decision to partner with a specialist call centre provider
Clientlogic, which is based in Exeter. The company went to great
lengths to ensure customers would receive the same care and
attention online as they would if they dealt direct with a John
Lewis store.
Furthermore, all the telephone reps were taken for training courses
inside a John Lewis store to engender the same ethos of customer
service that exists among the in-house salespeople.
Hennessy says that at present he has over-staffed the call centre
to ensure that customers are not kept waiting to speak to someone,
but he believes that, in time, the reliance on the call centre will
diminish as people feel more confident with shopping online.
John Lewis.com went live on 8 October 2001 and a week later the
company launched its first homeware catalogue. "This is the
beginning of our multi-channel strategy," says Hennessy.
"You had people looking at the catalogue then ordering online,
people walking round the store with the catalogue and people
browsing online then buying in-store."
Another aspect of the multi-channel strategy is to allow customers
to return items bought online back to the high-street stores. "It
gives them reassurance and is important psychologically that it is
[seen as] an extension of the off-line world, says Hennessy.
As far as integration with the off-line business, John Lewis Direct
is simply registered as another store - with its fulfilment
outsourced there is no real burden on the mother business.
Hennessy's hunch about a pent-up demand for the service proved spot
on as over the last Christmas period the site received over 1,000
shoppers a day who dropped an average three items into their
shopping basket.
As for the future, Hennessy has many plans: "We have only just
started," he says. "There is always stuff to do. We will look at
different categories of goods to sell such as sports and fitness.
We will be putting more functionality on the site, but at the same
we must make sure it doesn't get too complicated. Then we will be
taking cost out, improving bits"
Bricks to clicks checklist
- We need online expertise - how do we put together a management
team
- How do we fill all the necessary roles such as Web design,
marketing, operations?
- We need to protect the base brand - not just capitalise on
it
- We don't want to disrupt the operation of the main company - do
we need to set up a separate delivery channel, van fleet
etc?