On target

John Lewis was set on establishing an online brand, but not at cost to the high-street business. Ross Bentley finds out how this...

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?

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