The supermarket, which is the last of the big four UK supermarkets to sell groceries over the internet, will launch its own Morrisons.com grocery website in January, deliver through its own Morrisons’ branded fleet but fulfilment will be via Ocado’s new Dordon Customer Fulfilment Centre in the Midlands.

“This agreement,” said Dalton Philips, chief executive of Morrisons, “is a significant strategic step for Morrisons. From a standing start, Morrisons will be competing in the fast-growing online channel by the end of this year with a really compelling proposition. The customer gets our affordable fresh food delivered by Ocado’s state of the art distribution system. I’m confident that Morrisons.com will grow over time to be an operation of real scale and significance while creating meaningful long-term value for Morrisons shareholders.”

Morrisons is to spend £170m buying the Dordon customer fulfilment centre (CFC) and related equipment, and the rights to half of the existing capacity. It will invest £46m on expanding the centre to accommodate its range, integrating it with Morrisons’ systems, and setting up a network of delivery spokes. It has also licensed Ocado technology, logistics and distribution services on a 25-year agreement. The agreement also allows for jointly-developed new CFCs in the future.

The supermarket also expects to spend a further £25m in development costs during the year, taking its total new business development costs for the year to £65m, and its full-year debt guidance to £2.7bn.

Tim Steiner, chief executive of Ocado, said the deal would strengthen its balance sheet and share the costs of its fulfilment centre.  He said: “Morrisons’ desire to offer its customers the choice of online shopping illustrates the structural shift we are seeing in favour of the channel. We see Morrisons’ decision to adopt our model to drive its online launch as a further endorsement of our technological and logistical excellence.

“This validation should support the internationalisation of our model as well as the growth of our UK business by increased market use of our operating model, enhancing capital efficiency and improving returns.”

Waitrose had been reported to have concerns about Ocado’s involvement in Morrisons’ online grocery service. But today Ocado’s Tim Steiner said Ocado’s other customers would not be affected by the deal.

“Our customers will see no change to the service they receive from Ocado as a result of this agreement. We will continue to source products under our long-term agreement with Waitrose and our customers will continue to benefit from the existing high levels of service, wide range of products and competitive prices that they currently enjoy.”

Commenting on the deal, Sam Fuller, UK head of consumer and leisure at international investment bank Altium, said: “On paper the Morrisons deal looks like an excellent one for Ocado and a ringing endorsement of its platform and business model. Morrisons is one of the big four supermarket chains but its lack of online service and local convenience stores has put it at a disadvantage to its rivals.

“The terms of the 25-year agreement will offer Morrisons much more visibility in the marketplace and provides Ocado with the security it needs by generating a welcome chunk of funds for the firm to pay down debt. Morrisons, which is strong in the north of England, also offers Ocado a counterbalance to its deal with Waitrose, which is much stronger in the south.

“That said, Waitrose has made some ominous noises about a potential tie-up with Morrisons and its reaction to it. At best it is likely to annoy Waitrose. At worst it could result in legal action to try to prevent the Ocado-Morrisons tie-up happening before Ocado’s contract with Waitrose comes to an end in 2017.”

“This represents a strong performance in what remains a very tough market,” said Asda president and chief executive Andy Clarke. “Despite a difficult environment for our customers, we have continued to achieve growth on growth by lowering the prices of essentials and investing in technology to make shopping more convenient.”

He said Asda was about keeping prices down, driving “real loyalty”. “We are unwavering in this commitment to low prices and will continue to invest to allow our customers to shop when, where and how they want, safe in the knowledge that they will always get the best prices when they shop with Asda.”

The supermarket has previously said it would invest £700m into its clicks and bricks strategy. This week it said it would be trialling Scan and Go technology in a number of stores over coming months, following testing in its US Walmart stores. The Scan & Go app enables customers to use their smartphones scan and pack their groceries as they shop, paying at the end of the journey at automated checkouts. Benefits for the customer include saving time and knowing exactly how much they have spent before they get to the checkout, while Asda, which has no customer loyalty card, will benefit from the customer data captured by the app.

The supermarket also said this week that Click & Collect for George clothing and general merchandise were now in place in all its 568 stores, and, as previously said, will be in place for grocery at 200 outlets by the end of this year.

The term ‘Big Data’ has become a key marketing buzzword over the past twelve months. But while there has been much rhetoric about its potential benefits, what does it mean in practice?

Big Data is a term applied to describe data sets whose size exceeds the ability of software tools to capture, manage and process information within a reasonable time frame. The size of Big Data can range from a few dozen terabytes to multiple petabytes of information in a single data set. For marketers, Big Data can deliver huge volumes of information regarding their interactions with prospective customers, yielding insights that help create strategies to optimise marketing performance. As a result, many companies want to be first in the queue to harness Big Data for competitive advantage – and the rise of marketing attribution technology makes the handling of this data fairly routine.

Sampling solutions
Marketing attribution has completely transformed the analytics landscape by enabling marketers to move away from more traditional methods of understanding data segments and patterns. Traditional data analytics processes involved creating a representative group from the total universe of available data, which was an extremely time-consuming and arduous task that could result in multiple iterations of data sets. It also ran the risk of creating and analysing a sample group that may not have been representative of the entire universe of users.

However, there is no longer a compelling reason why a business would take shortcuts in performing attribution or other data analytics that involve Big Data. With advanced marketing attribution technology, the entire universe of available data can be used to analyse and yield the insights that translate into actionable steps to optimise marketing performance.

New approach; compelling results
So how do traditional analytics methodologies differ from marketing attribution that is Big-Data capable?  The traditional route involves creating a test group from a subset of data by subjectively applying a number of filtering criteria. For example, if a financial services company wanted to identify a group of potential customers who will churn within the next month, the data set could be limited to include only those accounts that:

• Are behind on payments
• Have a last customer touchpoint within 10 days of the account falling behind on payments
• Have an outstanding amount of £50 or more
• Have a credit score of less than 500

The issue, however, with narrowing down the with narrowing down the universe of data to a manageable and actionable subset is that subjective decisions are made about the elements included in the data group. This runs the risk that essential elements – of which the business may be unaware – may not have been factored in. As a result, this selected dataset could be systematically biased, and if used to do analysis, could lead to spurious conclusions.

By contrast, the Big Data marketing attribution approach to the same issue is very different. Instead of using a subset of accounts, the entire universe of users is segmented into different ‘buckets’ by a defined range within each of these groups, and an analysis is then undertaken to explore what is discovered about each range and in combination within individual buckets. Examples of some of the criteria for the buckets in this example could include:

• Account status within the past month
• Amount that account is behind on payments
• Last touchpoint frequency
• Last touchpoint type (e.g. bill payment)
• Last touchpoint recency

Once multiple groups have been created from all the available data, more advanced questions can be asked of the data set, including:Which of the buckets yields the highest levels of customer churn?

• What combination of factors yields the highest churn rate, i.e. credit score, amount and length of time that account has been behind on payments?
• Of those customers that churned, did any have a specific touchpoint that could be highlighted? For example, a complaint with a high frequency (>3) within a certain time period of cancellation (<10 days).

When selecting a technology to perform marketing attribution, it’s essential that it is Big-Data-capable so your business can benefit from the advantages it delivers including the speed, accuracy, objectivity and multi-dimensionality of its analysis. Big Data offers an array of benefits when it comes to ensuring your marketing optimisation decisions can achieve a competitive edge, most important of which is seeing the bigger picture.

Adit Abhyankar is executive director of Visual IQ

Today’s guest comment is from Adit Abhyankar, executive director of Visual IQ, taking a look at how and why retailers can start to analyse their Big Data to improve their online and multichannel operations.

Remember that tickets for the Internet Retailing Awards (more info here) are now available to book.

And a reminder too that it’s catch up time for anyone who missed that vital briefing at Internet Retailing Expo (2013). Presentations and panels from the across the six conferences of the event, the workshops and Innovation TV Studio are now available to view online at InternetRetailingExpo.com.

Jumpstart events

Internet Retailing’s signature JumpStart events offer a chance for retailers to get quickly up to speed on the latest developments in a given area, hearing directly from expert suppliers and identifying and presenting the key questions retailers need to ask when procuring their own systems. Each full-morning event is held in Tower 42, 25 Old Broad Street, London and retailers can register to attend for free here.

On May 29, International and cross border trade is under examination. UK companies are seeing significant growth from trading internationally (outside the EU) and cross border (within the EU) and it’s never been easier to extend your online trading. Presenters at the Jumpstart will highlight the areas of concern, the pitfalls to avoid, as well as new opportunities in an event that will feature leading vendors in areas from multilingual to localisation, from payments to local customs and from logistics to usability.Find out more and register to attend here.

Cross-channel is the subject for the JumpStart event of June 5, where the focus will be on the customer, how they use as many touch points and channels as we’re willing and able to offer and how we combine behavioural data with service values, technology, people and process to deliver for them. Delegates will take away ideas, examples and case studies to extend selling activities beyond the web interface. Find out more and register to attend here.

The customer experience is in focus for the event of June 19, when we’ll be looking at how to provide an enhanced customer experience, not only optimising each channel but also considering how to bridge the experience over time and across channels. Topics will include interaction design, service planning, testing and customer service, delivery and logistics, and extend to how best practice analytics and behavioural tracking can help us towards that elusive ‘single view of the customer’ in order to sell more effectively. Find out more and register to attend here.

Today’s stories

Morrisons to use Ocado infrastructure to deliver its online grocery service in January

Asda reports 16% growth in online sales as it gets set to launch Scan & Go trials in the UK

GUEST COMMENT Big Data and marketing attribution reveal the bigger picture

Dixons Retail set to ‘flourish in an internet world’

Thomas Cook launches personalised holiday partnership as part of plan to become leading ecommerce tour operator

UK online sales grew by 16% as April temperatures rose

The retailer, which trades in the UK primarily as Currys and PC World, said in a full-year and fourth quarter trading statement that its UK and Ireland, Northern and Southern European multichannel businesses saw like-for-like sales growth of 7% during the year to April 30. In the fourth quarter alone, like-for-like sales grew by 11%. In the UK and Ireland market, like-for-like sales grew by 13% “following the demise of competitors” such as Comet.

However Dixons Retail said it continued to act to turn around “very challenging” trading at its PIXmania business. It has closed all PIXmania’s stores, quit half the countries it operates in and moved out of non-core categories since taking full control of the business in August 2012.

The company also said that group underlying full-year profit was expected to come in at between £75m to £85m.
Chief executive Sebastian James said: “This strong year puts Dixons in the best position it has been in for many years.  We have worked hard to improve the conversation that we have with our customers and to improve our shops and our prices.  This is paying off as customers increasingly choose us when they need electrical products, and – more importantly – tell us that they like what we are doing.”

He continued: “I am very pleased to see us gaining share in nearly all of our multichannel businesses across Europe and could not be more excited or proud to be part of this team.

“It has been a busy time with the start of a profound restructuring of parts of the portfolio, major changes in the competitive landscape, significant cost savings achieved and with the continued drive to transform our stores.  But there is still lots to do – we are continuing with more customer initiatives across our brands, online and in all of our services operations to make Dixons an even better place to shop.”

The deal with Triporati would, said the holiday company, help it solve a problem thrown up by its own research: half of travellers feel “overwhelmed by the amount of information and choice when booking,” while two-thirds want help choosing a holiday. “We believe Triporati will provide our customers with an online answer to these needs that is easy to use and will help them select their ideal holiday from a range of specifically targeted options,” said Thomas Cook in its half-year results, which showed a dip in revenues but narrowing losses.

The holiday company’s deal with Silicon Valley-based Triporati comes months after the company launched a digital advisory board with the brief to develop “strategic digital innovations” across the new group as part of a ‘high touch high tech’ strategy. As part of that strategy Thomas Cook has also appointed key team members including a global head of web and a chief technology officer. It has also launched a listening lab with a social media listening team that aims to learn from customers’ social sentiment, improve marketing strategies and build stronger customer relations.

In March the holiday company said that 34% of its business was booked online. Today, it said, that percentage had already grown, with a “very encouraging rise in the number of passengers booking online with Thomas Cook.”

It continued: “With our growing team of entrepreneurial digital talent, further strengthened by the appointment of John Straw as global head of web, Tomasz Smaczny in a new role as chief technology officer and our new Digital Advisory Board, we have every confidence of realising our vision of having the highest share of bookings online for a major tour operator over the next five years.”

The news came as Thomas Cook released half-year results showing a dip revenue, which fell to £3.2bn in the six months to March 31, from £3.3bn over the same period last year. Pre-tax losses narrowed to £390.9m from £584.1m.

Business highlights also unveiled today included a capital refinancing of its debt, the sale of its North American business and higher than predicted cost savings from its UK turnaround programme. The company also aims to grow sales by an average 3.5% a year by building new products and services, and rolling out an exclusive concept hotel programme.

Chief executive Harriet Green said: “We look forward to continuing the rapid transformation of the group so that we fulfil the potential of the Thomas Cook brand for our customers, suppliers and employees.”

The IMRG Capgemini e-Retail Sales Index recorded the rise, compared to last April, after warm weather and Easter holidays fell during the month. Mobile commerce also continued to grow during the period, up by 131% year-on-year. The figures also show pureplay traders benefiting from a stronger lift than their multichannel rivals, continuing a trend detected last year. Online-only traders enjoyed annual growth of 20% compared to the 14% growth seen by their high street rivals.

This suggests, said IMRG, that shoppers are becoming more confident in shopping over the internet, thanks to the new technologies and services, such as mobile devices and social media, introduced by pureplay traders.

“Now that the green shoots of economic recovery have arrived with a (now distant) spell of sunshine, the momentum of online shopping in the second quarter is even more evident,” said Tina Spooner, chief information officer at IMRG [IRDX VIMR].

“The solid index performance in April is ahead of our 12% e-retail growth forecast for 2013, resulting in average growth of 15% year-to-date. We expect UK.com to continue to dominate the retail picture as the recovery gathers greater momentum.”

Categories which saw growth during the month included travel, up by 16%, year-on-year, and beer, wines and spirits, up by 19%. But eletricals sales dipped 3% to an average basket value of £167.

Chris Webster, VP, head of retail consulting and technology at Capgemini, said: “April’s results revealed the influence the shift in temperature and school holidays can have on the retail sector. With the holiday period falling at the start of April and warm weather following in the second half, we have seen uplifts in holidays, home and garden, alcohol and apparel driving the index.”

He said that mobile sales were still growing as retailers invested in personalising the shopping experience, albeit at a slower rate than previously. “A rise in conversion rates suggests that consumers are using mobile devices to research and purchase goods online while on the move,” he said.

Oliver Ripley, mobile product manager at eCommera, commented on figures that showed while mobile commerce grew by 131%, grew more strongly, at 172%, when travel-related services were included. The 41% difference could be ascribed to mobile purchases of travel services.

“Travel remains one of the key growth areas for mobile commerce,” he said, “as, by definition, travellers are away from home when abroad yet still want to have access to services that not only allow them to plan trips but also to help them enjoy their destinations.

“Frequently the mobile device is their sole access to the internet during a trip and is therefore crucial in delivering services that help them enjoy their time abroad. Travel related retailers should now think about what travel mobile services they can deliver to take advantage of the growth in travel m-commerce.”

As regular readers of my outpourings in this newsletter can attest, I am getting more and more frustrated with how rubbish mobile networks are. OK, so 4G is on the cards, but that’ll cost more and once everyone is on it, it’ll be as shonky as 3G is now. I want to use my iPhone for everything all the time, yet in most places I can’t because the networks are slow and the wifi ponderous or non-existant.

But rolling out wifi in public spaces will really help that. The fact that a council is doing it really speaks to my socialist principles too. However, the real boon here is that it will likely as not really help the businesses in Camden to really start to use mobile: and that means retailers are going to get a much needed fillip.

One of the key areas where mobile can deliver huge benefits is in getting people to visit independent high street stores: it is key to making the high street a real destination. As research out this week from Udozi suggests, many consumers want to use high street ’boutiques’ to buy things, only they can’t find them as they have no mobile presence.

They have no mobile presence, because right now the economics of investing in it just don’t add up. But if councils across the UK follow Camden’s lead and start to pop free (well for the first 30 minutes) all over the place, it suddenly becomes worth small high street shops investing in location based vouchering, targetted SMS ads and all the other things mobile can bring.

And it makes sense to the councils to do this too. They can cover the cost of installation through sign up fees for those that want more than 30 minute slots, they can sell advertising on the landing page, and, in theory at least, they will garner better business rates from their high street shops through bigger sales. It also puts local government at the heart of delivering connectivity: something that, to my mind, the corporate world is increasingly failing to deliver – certainly to anyone who isn’t a reasonable to high earner.

Network technology – the very connectivity – is the bedrock of m-commerce and it needs to work, for everyone, for m-commerce to prosper. Now is the time to start looking at who delivers this and how – and perhaps it isn’t always the network operators who know best?

Also speaking in the hour-long event, Marketing optimisation for online retailers, was Andrew Mackie, ecommerce manager at BGL Group.

“I think we’d all agree that if we knew our customers better we could market to them more effectively,” said Will Cook, VP, multichannel at HP Autonomy, opening a recent Internet Retailing webinar, Marketing optimisation for online retailers. But the challenge for retailers is how to get the data they need in order to gain that understanding.

Today’s consumers work across a range of devices and online resources, in both their personal and business lives. For a retailer, said Mackie, it’s not easy to piece together all the data they have collected on each individual. Taking a typical consumer, Rachel Sterling, as an example, he said: “The trick is figuring out exactly what Rachel needs, making sure she finds your site and then you serve her up a customer experience that’s meaningful, targeted, and based on everything you know about Rachel that will drive her to buy from you.”

It’s important, he said, because customers have high expectations. “Customers are in the driving seat and they expect a uniformly meaningful experience wherever they encounter your business,” he said. “As marketers we’re constantly trying to catch up or anticipate these consumer demands.”

However, most businesses have customer data, from CRM to social media and beyond, in different silos, stretched across the company. Asked in a poll how siloed their data was, 28% of the participants in the webinar said their data was siloed, 60% said they could link together some data repositories but not others and 12% said different data repositories were communicating well.

A multidimensional view
Until recently businesses aspired to a 360 degree view of the customer. Cook argues, however, that they now need to look for a multidimensional view in order to gain a competitive advantage. A reputation for great customer service, he said, attracts new customers. By delivering multidimensional experiences, businesses can also learn from the behaviour of their visitors.

Attraction
That experience starts with attracting the visitor to the store – by delivering relevant and cost-effective results for their original search through sophisticated search engine optimisation. That content should be mirrored once the visitor arrives at the site itself. All of this starts to build up the picture of the visitor. Returning to ‘Rachel’, by learning from the search journey, in which she is looking for a ‘London wedding store’, the retailer would already know her location, what site and keyword led her to their site, and the time of day at which this happened.

Engagement
At this point, the retailer has seconds to engage the visitor with the site. Rachel’s search within the wedding site she has found can start to reveal useful profile and behavioural information. The information gained so far allows the retailer to present to different visitor segments, based on their geography and their level of expertise.

Asked in a poll if they had a personalisation solution in place, 4% of webinar participants said they did, 4% were budgeted, 39% said it was on their radar, and 52% said it was interesting and they’d like to know more.

Conversion
Website optimisation learns from visitor interaction and behaviour to improve the content of the website. Tactics include A/B testing, multivariate testing, or segmentation, targeting and ultimately personalisation. But while multivariate testing is rated the most valuable of these, it is also the most difficult.

One discount airline customer wanted to encourage passengers to upgrade to priority boarding. It tested the headline, image, main copy and the placement of action buttons, using Autonomy solutions, and combined the variables into different combinations for testing. The winning creative increased the upgrade acceptance rate by 60%, equivalent to revenue of $40,600 a month.

Returning to Rachel, still browsing the wedding shop ecommerce site, she is presented with a registration form that testing has shown is more likely to be successfully completed then the other variants by visitors hailing, as she does, from London. Once complete, the form gives the information the retailer wants to learn from her in order to improve the customer experience, adding information about meaning and sentiment to further details on her profile and behaviour. “Hopefully we are beginning to see that as our view of Rachel and our understanding of her needs improves, the value of this information is starting to grow as well.”

Retention
Using a multidimensional customer view can boost retention. When speaking to a call centre, for example, information gained on the website is available to staff in the centre, giving them the insight to be able to serve the customer well. The same is true of other touchpoints.

In a case study, Cook explained how US grocer Safeway brought together the data from across its channels to improve the customer experience. He moved on to introduce the HP Marketing Performance Suite, and Autonomy, the company behind it.

Case study interview
Andrew Mackie, ecommerce manager at BGL Group

BGL Group, an HP Autonomy customer, runs a number of general insurance brands through its Frontline business, Budget and Dial Direct. Within that business, Andrew Mackie runs a team responsible for the analysis and online optimisation of customer journeys. “Most of our work,” he said, “is focused on price comparison sites, and we’ve been working with Autonomy for two and a half years now.”
It uses A/B and multivariate testing to understand, analyse and optimise journeys through the sales funnel, as well as other aspects of customer experience, such as providing insurance documents or the online customer service area.

“We’ve learned a lot in three years,” he said. “One of the big things was I would have integrated the Autonomy account managers closer into my ecommerce team. We were probably slower than we should have been to utilize the experience of those account managers. We certainly saw a big improvement once we started working more collaboratively.” Wins included selling the customer optimisation journey across the business. “That gives the business the confidence of going in the right direction and everyone is involved in our progress,” said Mackie.

What is the most important thing to do when it comes to website optimisation? Keep tests well-thought out relevant in order to gain the most benefit, said Mackie, adding: “Be prepared that some tests won’t work – and manage that expectation with stakeholders up front.” He added: “Our tests are aligned closely with our KPI reporting, and that’s worked really well.” The team now has quarterly meetings to design tests that will be relevant to its KPIs and boost its business.

The following question and answer session covered questions ranging from HP Autonomy’s case study on Nikon to the skill sets required in order to deliver optimisation projects, to the difficulty of combining creative design with optimisation.

To hear the webinar for yourself, to view the accompanying slides and hear the question and answer session in full, visit the HP Autonomy webinar page. For details of our other webinars visit our webinars page.

This year’s awards are in eight categories: The Innovation Award; the Omni Award; the M-Retailing Award; the IRIS Award for Internet Retailing In-Store; the Customer Award; the Capability Award; the International Awards and the Global Award. Then there are also two overall judges’ awards: the Judges’ Award and the Internet Retailing Award 2013.

From a mobile point of view, the nominations for the M-Retailing Award cover a broad range of services, but the thrust of the criteria for entry is that retailers have to demonstrate more than just rolling out some apps and hoping for the best. Mobile has moved on, and it forms the centrepiece of a more joined up digital engagement strategy. And we expect the judges shortlist out next Tuesday to reflect this.

The 18-strong judging panel includes key multichannel retailers, vendors and industry analysts, who will face the challenge of assessing the nominations in order to come up with a list of commended retailers. The judges hail from a wide variety of businesses, among them M&S, Selfridges, House of Fraser, Asos, Morrisons/Kiddicare, B&Q, as well as Venda, Kurt Salmon, and Shop.org. They will be meeting online or in person in London this afternoon in order to make their decisions.

Thanks to Internet Retailing readers who made their nominations alongside the title’s editors, the judges say they have a strong line-up to consider.

Internet Retailing editor-in-chief Ian Jindal thanked those who took the time to make their nominations. He said: “It’s no surprise to see the major retailers being nominated strongly. But our readers and editors have also looked broadly for exemplary companies under each of the categories.”

We hope to be able to share the list of Commended retailers, from whom the overall winners will be announced on the night of the awards, next Tuesday. For live updates, follow @etail #theawards.

The Internet Retailing Awards ceremony itself will be held on June 26, at the SushiSamba restaurant at Heron Tower in the City of London.
For more information about the event, click here, and for information about tickets, click here.