Four online retail pioneers
Four mini-case studies, each looking at a retailer who made their mark online.
ASOS: Pioneers of social shopping
More than just an online fashion outlet for twentysomethings, ASOS has pioneered social shopping.
ASOS is currently one of the most successful UK-founded online fashion retailers offering tens of thousands of branded and own-label fashion items to millions of twentysomething men and women around the globe. But when the company was first established in the year 2000, the outlook for online businesses selling clothing was bleak. Boo.com—the online retailer heralded to change the way we shop—was on the verge of collapse, the dotcom bubble was about to burst, and to make matters worse, the word on the digital high street was that no-one is going to buy fashion items online anyway.
Nick Robertson and Quinten Griffiths, founders of As Seen On Screen (ASOS), were obviously not deterred by this gloomy outlook. Inspired by watching American TV series Friends Nick and Quinten set about building a web site that could sell items that potential customers had seen on television. Initially, ASOS sold copies of clothing worn by celebrities but soon the company began developing its own brand. This focus enabled the company to start to build a reputation that was attractive to young fashion shoppers. By 2004 they had introduced their own-label womenswear and in 2006 were the first company in the UK to launch online catwalk shows. By 2010 ASOS began expanding into European markets and currently the company has offices in Sydney, New York, France, Germany and Russia.
ASOS has contributed a great deal to the digital high-street. Apart from showing that it is possible to sell fashion online profitably, the company has also pioneered social shopping, where customers use social networks to share product ideas before they buy. ASOS has successfully used social media to build a community of fashionistas who are prepared to share their views and opinions on Facebook, Twitter and Google+, and to share ideas of what to wear, giving its young shoppers fashion inspiration.
Approaching 5 million followers on social media sites, ASOS has a large target audience for their products and they are able to communicate new product ideas easily. This is a massive growth area and social shopping is likely to continue to reshape the way we shop for the foreseeable future.
Next: From printed catalogue to e-commerce site
Quality online and quality offline, Next does not deviate from its core values
In the early 1980s the tailor Hepworth & Son acquired Kendall & Sons, a Leicester-based ladies fashion company, with the intention of reimagining the stores as a new womenswear chain. George Davis was recruited to oversee the transfornation.
Davis spotted a gap in the fashion market. He established the Next brand from the existing Kendall's brand and stores by marketing quality clothing to professional working women. He brought the new concept to market in a few short months and Next never looked back. The design and quality ethos driving the growth of the company was used to develop ranges in menswear, childrenswear and home products.
By 1988, the company launched the Next Directory. This catalogue clearly differentiated itself from other catalogue retailers, both in terms of the quality of products and the catalogue itself. The directory was filled with full-colour photographs, encouraging shopping from home, but proving (for a while) to be a barrier to the development of the Next website.
In the mid-1990s as competing retailers like Debenhams, Principles, Dorothy Perkins were setting up shop online, Next held back. A key reason for this was the issue of quality, so until it was possible to offer the experience of full-colour images of a glossy magazine provided in the directory, Next stayed offline. However during this period technology was quickly advancing and it was not long before next.co.uk was launched in 1999.
The successful operation of the Next Directory meant that the company was well-placed to meet the operational demands of running an e-commerce website. Once established, the site enabled the company to be a pioneer in multichannel retailing, with customers able to shop in-store, by phone and online. But perhaps the biggest contribution to the development of online retailing is the service level agreement Next has with its customers. Since 2001 Next has promised to deliver its customers’ orders the following day. So if you place your order by 9pm, you will have the goods the following day. Over 3 million loyal customer do just that via the site.
Next has brought quality products and customer service agreements to market and constantly seeks to raise the standards of its online offer.
GUS: Doing more with customer data
The power of information; it’s not the data you hold, but what you do with it that counts.
Great Universal Stores (GUS) is over a century old and one of the forerunners of large-scale mail-order catalogue retailing in the UK. Founded in 1900, for over half a century the business expanded and acquired other catalogue operations, furniture stores, and well-known fashion brands, e.g., Burberry.
By 1983, GUS was operating mail order catalogues, high street stores and manufacturing operations; providing clothing household goods, finance products, property investment and travel service. GUS was an early adopter of e-commerce and it was well-placed to deal with the operational logistics of distance selling as this was something the company had been excelling at for nearly a century. However, in the early days of online retailing payment methods were a problem for this retailer.
Typically, catalogue shoppers would make a number of equal weekly payments in person to a catalogue agent, who would visit the shopper’s home, take orders and payments and deliver the goods. This arrangement suited many of GUS’s customers as they were typically from low-income families, often with limited finances available for premium goods. But this method of payment was not suited to the world of online shopping, where the only method of payment in the early days was by credit card. But GUS was able to use its information resource to assess the credit worthiness of its customers, a process, which would prove to be very valuable in the future.
By 1998, the GUS had acquired Argos (at the time, the UK’s second largest online retailer) and its own online operation was performing successfully. But what set GUS apart from the rest of the online retailers was access to its rich resource of personal data. Analysing the shopping data of millions of shoppers produced vast stores of useful information and in doing so gave unique insight into the behaviour of shoppers and their financial profiles.
In 2006, GUS PLC was split into two businesses, Home Retail Group and Experian. The Home Retail Group operates the high street brands Argos and Homebase. Collectively these brands offer over 65,000 products through over 1000 retail outlets, which makes the business one of the UK’s leading home and general merchandise retailers. Experian drives the online economy by providing background checks on consumers’ financial track record and processing online transactions, as well as providing market intelligence for internet companies, financial information for the mortgage and financial services industry in the UK and around the globe.
From its early beginnings of selling products door-to-door, GUS and then Experian developed the lubricant which enables the smooth operation of the online economy: customer information.
Iceland: A retail pioneer
Iceland Frozen Foods is a fighter brand and retail pioneer—first to nationwide delivery.
Iceland Frozen Foods was founded by Malcom Walker on a budget of less than you buy a decent meal for two for today. In 1970, in a shop in Oswestry, Shropshire, with his business partner Peter Hinchcliffe, Malcolm put down one month’s rent and started selling frozen food by the bag full. The guiding principles of this business were to offer customers value-for-money, good quality frozen food. This offer hit the spot with the customers who typically only had a small freezer compartment in the fridge, as they could buy the right quantity of frozen, peas, beans and lots of other foodstuffs.
The business grew steadily and by the mid-1970s North Wales had over 15 Iceland stores. The business carried on expanding and by 1989 it acquired Bejam and significantly increased the size of the business. It also was a leader in the selling of organic frozen food.
However, Iceland did not just revolutionise frozen food sales; it was also a pioneer in online grocer retailing. Iceland was the first retailer to offer a nationwide delivery for orders made throught its website. What Malcom and his team had realised was one of the major challenges for high street retailers selling online was the logistical challenges of getting the goods to the consumers in a decent state. The delivery of frozen foods is particularly challenging as frozen groceries have to be kept at a constant low temperature until they arrive at the customer doorstep.
Iceland took a phased approach; firstly inviting customers to shop in-store, and if they spent over £25 they could have their goods delivery to their home. Iceland had a fleet of vehiclaes and staff liveried with Iceland's bright red and orange logo, helping them to establish that is was possible to operate this way.
The next phase, in 1999, was to launch the site and invite customers to shop online. Iceland beat all of the other major supermarkets by offering online delivery for web shoppers. The problem was that many typical Iceland shoppers were not online and so eventually Iceland stopped selling online but continued with the home delivery service.
Currently, Malcolm Walker is back at the helm of Iceland and an online shopping service is on the point of being launched. Iceland is a company which invests in serving its customers and providing its staff with a great place to work, and it continue to adhere to the values established in the original store in Oswestry: value-for-money, good quality frozen food.
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