Well I was about to publish an article for this blog about click and collect grocery when someone rang up and offered to pay me to do exactly the same thing as I was already doing for their magazine...
So of course I sold out :-)
Here's the outline link, although you'll find you have to subscribe to their magazine to see the actual article. I guess at a safe distance in time they'll open up the link.
http://www.esmmagazine.com/201403302354/Technology/ESM-Magazine-The-Technology-Issue.html
Showing posts with label Click-and-Collect. Show all posts
Showing posts with label Click-and-Collect. Show all posts
Friday, 4 April 2014
Monday, 4 November 2013
Sharing the credit - the enemy within
Continuing my series briefly looking at organisational impacts of multichannel.
In a previous post I took a look at the basic stages of organisational development as a retailer becomes "more multichannel". On of the first aspects of this journey that typically needs attacking - and realigning - is the question of incentives and KPIs. Put more crudely: "whose sale is it anyway?" This is part of a wider topic of avoiding "channel conflict" i.e. ensuring that your channels collaborate and not compete. Incentivising appropriate behaviour throughout your organisation forms an essential part of a channel conflict avoidance strategy.
Firstly, let's take a look at how NOT to do it. Apologies for a screenshot in German, but I think it's pretty clear what's going on:
Ah yes, we have stores. And it's not fair if the website "steals their sales" so let's make sure that we show a more expensive price online than for the stores, and so defeat this invading enemy. Plausible, except that our brand slogan is "I'm not stupid" (because I shop here and it's great value); and now you can see quite how stupid you would be to shop online. And in fact, the site let you change your home store and see that the price was different in Vienna than in Salzburg. As you can imagine, this concept (Media Markt Austria in early 2010) didn't last all that long.
I'm not entirely sure why they needed expensive consultants to tell them this wasn't sensible, and in fact that the answer was fairly simple: whenever a sale gets made online, a store should get the credit. Different clients I've worked with use slightly different rules, but the basics are always the same: online sales are split, usually geographically by delivery postcode, and the benefit from those sales, either directly as increased sales/margin or indirectly in some sort of "commission", is allocated to the nearest store.
This has the benefit of neatly dealing with all those cross-channel stories too. Online sale, return to store? No longer does it make the store look bad, because the store "got" the sale in the first place. (OK, you might have to increase the acceptable KPI for stores because online sale typically generate proportionately more returns, especially in categories like fashion). Similarly collect-in-store is dealt with. Whose sale was it? Obviously the store where the collection took place.
Such approaches do need a little bit of dexterity in back-end accounting. Typically this is done by treating the website sales as "virtual". In other words, any ecommerce team-members that might be targeted on online sales still get credited for their efforts by accumulating the sales which pass through the website, but these sales are not rolled-up into the overall P/L (because the store sales are used for this), they are just tracked for KPI purposes.
Overall, it's another big change from traditional brick-and-mortar only: store managers and store staff need to really care about the website and regard it as their friend not their enemy.
Firstly, let's take a look at how NOT to do it. Apologies for a screenshot in German, but I think it's pretty clear what's going on:
Ah yes, we have stores. And it's not fair if the website "steals their sales" so let's make sure that we show a more expensive price online than for the stores, and so defeat this invading enemy. Plausible, except that our brand slogan is "I'm not stupid" (because I shop here and it's great value); and now you can see quite how stupid you would be to shop online. And in fact, the site let you change your home store and see that the price was different in Vienna than in Salzburg. As you can imagine, this concept (Media Markt Austria in early 2010) didn't last all that long.
I'm not entirely sure why they needed expensive consultants to tell them this wasn't sensible, and in fact that the answer was fairly simple: whenever a sale gets made online, a store should get the credit. Different clients I've worked with use slightly different rules, but the basics are always the same: online sales are split, usually geographically by delivery postcode, and the benefit from those sales, either directly as increased sales/margin or indirectly in some sort of "commission", is allocated to the nearest store.
This has the benefit of neatly dealing with all those cross-channel stories too. Online sale, return to store? No longer does it make the store look bad, because the store "got" the sale in the first place. (OK, you might have to increase the acceptable KPI for stores because online sale typically generate proportionately more returns, especially in categories like fashion). Similarly collect-in-store is dealt with. Whose sale was it? Obviously the store where the collection took place.
Such approaches do need a little bit of dexterity in back-end accounting. Typically this is done by treating the website sales as "virtual". In other words, any ecommerce team-members that might be targeted on online sales still get credited for their efforts by accumulating the sales which pass through the website, but these sales are not rolled-up into the overall P/L (because the store sales are used for this), they are just tracked for KPI purposes.
Overall, it's another big change from traditional brick-and-mortar only: store managers and store staff need to really care about the website and regard it as their friend not their enemy.
Friday, 1 March 2013
Lessons from the carnage? After the sale.
The BBC has helpfully published this list of UK high street retail failures in the last 12 months: Republic, Blockbuster, HMV, Jessops, Comet, JJB, Clinton Cards, Aquascutum, Ellie Louise, Game, Peacocks, Pumpkin Patch, Past Times, Hawkins Bazaar. Actually the BBC list goes on back into 2011, but 12 months of depressing news seems enough for one paragraph. Is it possible to derive any general lessons from the list?
The first group is fairly obvious: Blockbuster, HMV, Clinton Cards, Game. In all these cases, the high street business model is simply obsolete, overwhelmed by the internet. Why rent a DVD from the tiny selection in a Blockbuster store when you can choose from practically every film ever made online? Why buy music or a video-game in store when you can download it cheaper - or more likely unofficially free - track by track? Who wants a bog-standard greetings card when you can design your own online?
A second group is more interesting. Retailers such as Hawkins Bazaar and Past Times are (or rather were) primarily plays on unorthodox assortment. In theory unorthodox assortment should be relatively immune to the depradations of internet retail. In practice, this is only so if your products are genuinely unique - and you are the only stockist. Otherwise, online is the natural place nowadays to start hunting for unusual items. Almost certainly you will find a much wider choice online, and non-unique products will probably be cheaper there too.
A third group - JJB, Peacocks, and a number of smaller players - simply drowned in debt following ill-conceived refinancing. Online isn't really responsible, although it's probably a contributing factor.
A fourth group - Republic, Ellie Louise, Aquascutum - goes to prove that a fashion retailer still needs to sell stuff that people actually want to wear. Although there's no evidence to support this, I can't help feeling that the continued growth of Asos, whose outstanding site makes it extremely easy to find something you really want to wear, is a contributing factor. It is steadily becoming a category killer, and you could argue that these are the early signs of it doing some killing. Asos can't be the only factor though, and what then of Comet or Jessops? How come Dixons Group is posting its first real profits for years while Comet is going bust? Or Jessops (a specialist photography retailer) - seemingly doing the right strategic things - good service, plausible prices, online channel doubling sales in the past year? Why is Waterstones (books) still trading at all?
One possible answer lurks in the announcement that John Lewis, still a case-study for successful multichannel retail, has appointed the former CEO of Collect+ as Multichannel Director. John Lewis appears to be making a statement here: they've appointed an expert making stuff happen for the customer after the sale.
Back to Asos for a moment. Yes, their website is very good, their assortment excellent, and their marketing outstanding. But their prices are nothing special, and if you start looking for testimonials online - trawl the blogosphere for example - what do you typically find? Tributes to their Returns process/policy. I know this isn't a very statistical data point, but try it for yourself. Once again, it's all about after the sale.
Dixons' (PCWorld) "KnowHow". Yes, their increasingly predatory sales-floor staff do appear to know their stuff, but KnowHow itself - it's an after sale proposition.
What about all those coffee shops? There's one just opened in my nearest PCWorld, there's a Costa in the local Waterstones, and don't forget how long this has been a successful formula: anyone know the date the first IKEA restaurant opened? Actually it was 1960. Do you actually go into an IKEA restaurant first, before going round the store? Thought not. You view your main purchase-under-consideration, collapse into the restaurant/coffee-shop, and then suitably fortified return to the store to make a purchase. Maybe not the main item, but still a purchase.
Developing my "Logistics is the New Marketing" theme a little further, perhaps it should be "After Sales is the New Marketing".
And if you are a small high street retailer, feeling the squeeze and wondering how anything in the Portas report is relevant to you, maybe stop reading it and start using the time more constructively calling your customers a few days after they bought something to check it's all OK. And if it isn't, pop round and fix it. That's a service that Amazon are never going to offer.
What does it mean for the bigger retailer? After Sales is complicated and difficult to train in a purely process way. The situations that arise are more unique to each customer. Which means, inevitably, that you need more sophisticated staff, operating under more flexible policies. Goodbye McJobs, hello iJobs (or should that be Steve Jobs).
The first group is fairly obvious: Blockbuster, HMV, Clinton Cards, Game. In all these cases, the high street business model is simply obsolete, overwhelmed by the internet. Why rent a DVD from the tiny selection in a Blockbuster store when you can choose from practically every film ever made online? Why buy music or a video-game in store when you can download it cheaper - or more likely unofficially free - track by track? Who wants a bog-standard greetings card when you can design your own online?
A second group is more interesting. Retailers such as Hawkins Bazaar and Past Times are (or rather were) primarily plays on unorthodox assortment. In theory unorthodox assortment should be relatively immune to the depradations of internet retail. In practice, this is only so if your products are genuinely unique - and you are the only stockist. Otherwise, online is the natural place nowadays to start hunting for unusual items. Almost certainly you will find a much wider choice online, and non-unique products will probably be cheaper there too.
A third group - JJB, Peacocks, and a number of smaller players - simply drowned in debt following ill-conceived refinancing. Online isn't really responsible, although it's probably a contributing factor.
A fourth group - Republic, Ellie Louise, Aquascutum - goes to prove that a fashion retailer still needs to sell stuff that people actually want to wear. Although there's no evidence to support this, I can't help feeling that the continued growth of Asos, whose outstanding site makes it extremely easy to find something you really want to wear, is a contributing factor. It is steadily becoming a category killer, and you could argue that these are the early signs of it doing some killing. Asos can't be the only factor though, and what then of Comet or Jessops? How come Dixons Group is posting its first real profits for years while Comet is going bust? Or Jessops (a specialist photography retailer) - seemingly doing the right strategic things - good service, plausible prices, online channel doubling sales in the past year? Why is Waterstones (books) still trading at all?
One possible answer lurks in the announcement that John Lewis, still a case-study for successful multichannel retail, has appointed the former CEO of Collect+ as Multichannel Director. John Lewis appears to be making a statement here: they've appointed an expert making stuff happen for the customer after the sale.
Back to Asos for a moment. Yes, their website is very good, their assortment excellent, and their marketing outstanding. But their prices are nothing special, and if you start looking for testimonials online - trawl the blogosphere for example - what do you typically find? Tributes to their Returns process/policy. I know this isn't a very statistical data point, but try it for yourself. Once again, it's all about after the sale.
Dixons' (PCWorld) "KnowHow". Yes, their increasingly predatory sales-floor staff do appear to know their stuff, but KnowHow itself - it's an after sale proposition.
What about all those coffee shops? There's one just opened in my nearest PCWorld, there's a Costa in the local Waterstones, and don't forget how long this has been a successful formula: anyone know the date the first IKEA restaurant opened? Actually it was 1960. Do you actually go into an IKEA restaurant first, before going round the store? Thought not. You view your main purchase-under-consideration, collapse into the restaurant/coffee-shop, and then suitably fortified return to the store to make a purchase. Maybe not the main item, but still a purchase.
Developing my "Logistics is the New Marketing" theme a little further, perhaps it should be "After Sales is the New Marketing".
And if you are a small high street retailer, feeling the squeeze and wondering how anything in the Portas report is relevant to you, maybe stop reading it and start using the time more constructively calling your customers a few days after they bought something to check it's all OK. And if it isn't, pop round and fix it. That's a service that Amazon are never going to offer.
What does it mean for the bigger retailer? After Sales is complicated and difficult to train in a purely process way. The situations that arise are more unique to each customer. Which means, inevitably, that you need more sophisticated staff, operating under more flexible policies. Goodbye McJobs, hello iJobs (or should that be Steve Jobs).
Monday, 24 September 2012
Click & Collect - Calling Time On Store Space?
Philip Clarke, Tesco's CEO, made a speech last week stating that: "...we’ve called time on the old retail 'space race'. We’ve recently opened our 1,000th click and collect collection point..." Is click-and-collect really quite so game-changing?
Well actually, maybe... But it's multichannel game-changing, not necessarily traditional retail-space game-changing by itself.
Not all top UK retailers publish the data, but from those that do, we can see that customers really like this clicks-then-bricks option:
** of eligible General Merchandise sales (i.e. excluding food and impossible items like washing machines and sofas)
* John Lewis state that 34% of John Lewis sales are collected in Waitrose Stores! So actually their figure is probably higher in total. Click-and-collect was offered at 97 Waitrose's and 35 John Lewis's
The latest published data from IMRG indicates that over 10% of all online transactions are now collected in store (up from 7.4% in the previous quarter): more and more major retailers are introducing it, and the take-up is often dramatic.
Some published commentaries are also quite illuminating. First of all this quote from Halfords annual report:
"Our product mix lends itself to a multi-channel offer as customers often want further advice, a demonstration or fitting. Online purchasing patterns reflect this, with 86% of sales on Halfords.com reserved and then collected from a store"
In other words, these customers are basically using the Halfords website as a place to guarantee that the item they want is definitely in stock in a nearby store when the customer makes their visit. Once at the store, the store has little value as a showroom or place to transact, but very high value as a place to get added services impossible to execute online. Interestingly this tends to help validate the KnowHow based strategy for PCWorld and Currys - but it does require your products to be difficult for customers to just point-and-shoot in the first place. These Halfords customers aren't using the store-advice to choose their item, they are using it afterwards to configure it. This is a great differentiator against the online pureplays for bikes, and probably therefore also for laptops, but less good news for e.g. TVs.
Secondly, a note from Sainsburys:
"Customers use Click & Collect for about half of all online general merchandise orders – a figure which rose to 75% for the week before Christmas 2011."
Or in other words, if you could only trust the postal service, then click-and-collect might be less attractive. An alternative explanation is also possible: click-and-collect is almost always offered for free. Customers hate paying delivery charges, and faced with the option of a free collection service compared to a paid delivery, have a natural bias towards the perceived free service, even when there is a hidden travel/time cost. Of major UK retailers, only TopShop seems to be attempting to charge the same for click-and-collect as it does for home delivery. Unfortunately they don't publish statistics indicating how the take-up varies with these fees.
Another quote from John Lewis tends to suggest this TopShop approach is seriously misguided anyway. This, to me, is the most significant data point in the whole click-and-collect space:
“We are seeing about 34% of those visits translating into additional sales in shop and that number is growing exponentially at the moment. It’s typically or increasingly for purchases that the customer didn’t think they would make. So it is quite outwith whatever they were going to collect.”
Customers want to click-and-collect, and then when they do, they find themselves buying extras in the store as well. Sounds like the ultimate retailer win-win.
It's noticeable that fashion retailers are lagging behind this curve. M&S, New Look and TopShop do, but surprisingly few others. Possibly this reflects the in-store space challenges, but Tesco's 1000 Click-and-Collect points now include quite a few Express and Metro stores, especially in central London. If Tesco can fit a collection point in an Express store for awkward boxed items like PCs, then surely it can't be so hard to fit a few parcels in e.g. a River Island store. In fashion, with its high returns rates for home-delivered orders, bringing the customer to store to a) spend more; b) try on, and return or exchange in the store environment must surely make sense?
Perhaps the most interesting experiment in this area in the UK right now is House of Fraser's Buy & Collect only store in Aberdeen.
"...its new 1,500 sq ft House of Fraser.com shop is the first to offer purely a Buy & Collect service... The new format, merchandise-free, store has opened in Aberdeen’s Union Square. Instead of stocking goods that shoppers can take away with them, the emphasis [...] is on personal customer service. Goods ordered from the more than 1,000 brands it stocks can then be delivered the next day to either the customer’s home or to the store for collection."
Another similar shop (in Liverpool) is on the way, suggesting that the first pilot must be going pretty well. Other retailers, watch this space!
Well actually, maybe... But it's multichannel game-changing, not necessarily traditional retail-space game-changing by itself.
Not all top UK retailers publish the data, but from those that do, we can see that customers really like this clicks-then-bricks option:
** of eligible General Merchandise sales (i.e. excluding food and impossible items like washing machines and sofas)
* John Lewis state that 34% of John Lewis sales are collected in Waitrose Stores! So actually their figure is probably higher in total. Click-and-collect was offered at 97 Waitrose's and 35 John Lewis's
The latest published data from IMRG indicates that over 10% of all online transactions are now collected in store (up from 7.4% in the previous quarter): more and more major retailers are introducing it, and the take-up is often dramatic.
Some published commentaries are also quite illuminating. First of all this quote from Halfords annual report:
"Our product mix lends itself to a multi-channel offer as customers often want further advice, a demonstration or fitting. Online purchasing patterns reflect this, with 86% of sales on Halfords.com reserved and then collected from a store"
In other words, these customers are basically using the Halfords website as a place to guarantee that the item they want is definitely in stock in a nearby store when the customer makes their visit. Once at the store, the store has little value as a showroom or place to transact, but very high value as a place to get added services impossible to execute online. Interestingly this tends to help validate the KnowHow based strategy for PCWorld and Currys - but it does require your products to be difficult for customers to just point-and-shoot in the first place. These Halfords customers aren't using the store-advice to choose their item, they are using it afterwards to configure it. This is a great differentiator against the online pureplays for bikes, and probably therefore also for laptops, but less good news for e.g. TVs.
Secondly, a note from Sainsburys:
"Customers use Click & Collect for about half of all online general merchandise orders – a figure which rose to 75% for the week before Christmas 2011."
Or in other words, if you could only trust the postal service, then click-and-collect might be less attractive. An alternative explanation is also possible: click-and-collect is almost always offered for free. Customers hate paying delivery charges, and faced with the option of a free collection service compared to a paid delivery, have a natural bias towards the perceived free service, even when there is a hidden travel/time cost. Of major UK retailers, only TopShop seems to be attempting to charge the same for click-and-collect as it does for home delivery. Unfortunately they don't publish statistics indicating how the take-up varies with these fees.
Another quote from John Lewis tends to suggest this TopShop approach is seriously misguided anyway. This, to me, is the most significant data point in the whole click-and-collect space:
“We are seeing about 34% of those visits translating into additional sales in shop and that number is growing exponentially at the moment. It’s typically or increasingly for purchases that the customer didn’t think they would make. So it is quite outwith whatever they were going to collect.”
Customers want to click-and-collect, and then when they do, they find themselves buying extras in the store as well. Sounds like the ultimate retailer win-win.
It's noticeable that fashion retailers are lagging behind this curve. M&S, New Look and TopShop do, but surprisingly few others. Possibly this reflects the in-store space challenges, but Tesco's 1000 Click-and-Collect points now include quite a few Express and Metro stores, especially in central London. If Tesco can fit a collection point in an Express store for awkward boxed items like PCs, then surely it can't be so hard to fit a few parcels in e.g. a River Island store. In fashion, with its high returns rates for home-delivered orders, bringing the customer to store to a) spend more; b) try on, and return or exchange in the store environment must surely make sense?
Perhaps the most interesting experiment in this area in the UK right now is House of Fraser's Buy & Collect only store in Aberdeen.
"...its new 1,500 sq ft House of Fraser.com shop is the first to offer purely a Buy & Collect service... The new format, merchandise-free, store has opened in Aberdeen’s Union Square. Instead of stocking goods that shoppers can take away with them, the emphasis [...] is on personal customer service. Goods ordered from the more than 1,000 brands it stocks can then be delivered the next day to either the customer’s home or to the store for collection."
Another similar shop (in Liverpool) is on the way, suggesting that the first pilot must be going pretty well. Other retailers, watch this space!
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