Boots Wellbeing, the online joint venture between pharmacy chain Boots and Granada Media, is on track to get "complete return on investment" on its major IT spend for the year to March 2003 and to turn in a profit by March 2004 - three years after its launch, according to its chief operating officer Mark Dearnley.
"We see a solid route to make money, and then to make considerable amounts of money, and to turn this into a really good business," said Dearnley. "We'll break even in line with the original business plan," he said.
The ride has not been trouble free, however. The slow take-up of broadband and poor advertising revenue forced the company to axe the interactive digital TV channel linked to the site at the end of last year.
"It did not do what we expected," admitted Dearnley. "The market's still not ready for it - but when it is we'll be there."
But this year the company, one of the UK's leading retailers, is confident that Boots Wellbeing's investment in an integrated IT infrastructure based on SAP software will pay off. It has implemented mySAP customer relationship management (CRM) and business intelligence units, as well as customer interaction centre software at its contact centre, to support the core mySAP retail software - all of which sit on a SAP R/3 platform.
Dearnley said the SAP suite results in lower cost of ownership and has led to business process re-engineering and changes in people management which have had a major impact on returns on investment. The company also expects to boost its growth by better targeting its products and promotions via e-mail.
Having initially focused on surviving and getting the business up and running, then putting the building blocks in place, Boots Wellbeing is now keen to optimise the way it interacts with its 450,000 customers.
"We have CRM capability, the challenge is to work out how to use it," said systems architect Jon Longstaff. Over the next few months the company will roll out a new personalisation model, My Promotions, which will see the company start to add value by directly targeting individual customers with products and offers based on their profiles.
Boots Wellbeing has been using its CRM system and the business warehouse component of its business intelligence software to sift through customer data and sort customers into groups for targeted offerings since it went live last October, but until now this has been limited to sending out regular e-mails. "We are getting to the point where we can present the customer with an offer we think is really good for them," said Longstaff.
Two months ago the company went live with SAP's customer interaction centre software in its call centre to give its sales agents a single view of the customer. Next year it plans to integrate this with the e-mail system.
The implementation is a good example of where the company is getting return on investment. Last Christmas Boots Wellbeing had 30 customer sales agents. If it had not switched it would have needed 64 agents by December. But after implementing SAP's customer interaction centre package and re-engineering business processes that requirement will fall to 25 agents, said Dearnley.
Boots Wellbeing has just gone live with the functionality for its 2002 Christmas Web site, having completely rewritten the search facility and the help section. Following a review of its performance last Christmas it has also spent time load-testing systems and processes, said Dearnley.
In addition to the software implementation it has completely overhauled its warehouse operations to ramp up for the Christmas rush, when it expects to handle 10 times as much traffic as it is getting now. The company is also using Webcollage software to tie in with the Web sites of companies offering high-class gifts, like perfume manufacturers Chanel and Lancome.
There is still a lot of work to be done, though. Boots Wellbeing aims to grow its customer base to one million by this time next year, which will necessitate a programme of systems upgrades and adding more processes.
"We're still learning and experimenting," said Dearnley. With the company's track record for return on investment and growth so far he does not foresee any problems in securing funding for further projects. "If we have twice as many customers we'll also have twice as much revenue - it's not a big issue."
Boots Wellbeing develops online channel
March 2001 Launch of the Boots Wellbeing Internet site, linked to an interactive digital TV channel, claimed to be the UK's most integrated television and Internet operation
November 2001 The digital TV channel is shelved, following slow uptake of broadband and poor advertising revenue
October 2001 Investment in mySAP customer relationship management (CRM) and business intelligence (BI) software
July 2002 Implementation of customer information control contact centre software to give sales agents a single view of customers
Future Plans to further integrate systems and leverage CRM and BI software to increase personalisation and target customers more effectively. Target: one million customers by this time next year.
Boots Wellbeing is a joint venture between retailer Boots and Granada Media and offers a range of beauty, baby, nutrition, healthcare and gift products. It has 450,000 registered users.