Twitter
Facebook
Linked In
RSS
Login or Register
New to InternetRetailing?
Register Now
Internet Retailing
You are in: > Home > Magazine > Magazine Articles

This is your 1 complimentary article for this month

Become a member for unlimited and immediate access.


Register
Already a member? Log in here

Shop Direct: making good things easily accessible to more people (IRM53)

Linked InTwitterFacebookeCard

Announcing the end of the Littlewoods catalogue, Shop Direct has called time on an eighty-year history while fully opening the door to 1:1 digital personalisation.

Emma Herrod speaks to the company’s Deputy CEO, Gareth Jones, about the changes.



Shop Direct has grown out of the catalogue businesses of the Littlewoods and GUS groups, which offered credit facilities that enabled shoppers to buy items and pay off a set amount each week. From 15 contact centres, 17 brand fascias and lots of employees across different headquarters, the company has undergone a major transformation in recent years.

Brands have been integrated, contact centres closed and the headquarters of what has become the Shop Direct Group centred on a former aircraft hangar at Liverpool’s old Speke airport. By 2010, 75% of the company’s sales came from online and the migration of customers to digital channels has continued apace. It has since replatformed to ATG10, and mobile has taken over from desktop with more than 70% of traffic now coming via this channel and over half of sales.

The company launched the Very.co.uk digital department store back in 2009. It has been developing the brand and during London Fashion week in February this year unveiled Very Exclusive to bring top-end high street and aspirational labels to its credit customers. With a more inspirational, content-heavy approach, the site – which is completely new and different to its others – includes items from 150 brands including Marc by Marc Jacobs, Karl Lagerfeld, Joseph and Karen Millen. According to Gareth Jones, Deputy CEO and Group Chief Operating Officer at Shop Direct, it has been well received by shoppers: “It’s going well, as planned: it’s working.”

He adds that the company continues to review the assortment; designer handbags, shoes, belts and scarves are all selling well.

Brands are queuing up to come onboard; Whistles, LK Bennett and Paul Smith are the latest names to appear on Very Exclusive for the autumn season. “We’re surprised at how well it has been received by brands,” says Jones, who reveals that they’ve had to turn down some labels wanting their merchandise to be offered on the site.

Shop Direct is coming into its own as a go-to retailer rather than being seen as a necessary place to shop by consumers needing its credit offering. Although its origins are in the credit market, it is now seeing an increase in ‘cash’ customers – those who pay via debit or credit card or PayPal – with most new ones paying for their purchases as they place their order. “It’s the biggest part of new business,” says Jones, adding: “It’s no surprise people are turning up with their debit cards as we become a better retailer.”

MISS VERY

As with every retailer today, Jones says that the customer is at the heart of everything it does. That customer even has a name – Miss Very – and she, along with various other personas, is displayed around Shop Direct’s offices to remind everyone of who they are and to strengthen their connection with them. Miss Very herself is in her mid-twenties upwards with a household income of between £17,000 and £27,000. She buys for her family and home before herself but loves brands, which is why the company continues to increase the number available via its Very.co.uk site. It’s part of its mantra of ‘selling good things, easily accessible to more people’ as Shop Direct works towards becoming a world-class digital retailer. “Everything we do relates back to it,” says Jones of the company’s promise to its customers.

KNOWING THE CUSTOMER

The big push at the moment relates to the ‘easily accessible’ part and is what Jones refers to as “the secret sauce going forward”; using the data it holds on customers to personalise the experience – not just in terms of navigation, products shown, messaging and recommendations but the journey itself and all in real time.

Shop Direct knows a lot about its five million customers. “We know who they are and how they pay,” says Jones. The company also knows how much they can afford to spend – especially with new affordability rules governing how financial companies assess whether shoppers can be given credit, how much and whether they are able to pay it back.

Using a cloud-based Hadoop data environment, which the company refers to as its Data Hub and was developed in-house by its IT team, Shop Direct will be utilising the information to increasingly personalise the service for customers. Jones explains that it has travelled to Israel and Silicon Valley to consult leading tech companies while also speaking with people in industries that are “born out of data,” such as gambling and telecoms. Because the Data Hub is based in the cloud it means that it’s free and agile enough to be pulled into the front end.

Sitting on top of this is a data scientist sandpit from which the in-house team can look for patterns. Jones explains how Shop Direct has invested in SAS Analytics from which it can build algorithms to work with the granular level of data it holds in order to develop the customer experience. The company has also invested in a SAS rules-based engine. His view is that while the technology is available to everyone, the secrets are within the algorithms and the responses to them. By building and testing the algorithms themselves, he believes that Shop Direct will be 2 – 3 years ahead of the rest of the industry.

The company plans to use this data to offer the world’s most personalised digital stores, giving customers a better experience in real-time, initially when they visit the Very site but ultimately across all communications and touchpoints.

PERSONALISATION

Alongside the data team, a personalisation acceleration team was put into place eighteen months ago to work on specific issues on Very. The team, which comprises staff from head office, IT, marketing, ecommerce and data, have worked on a project that’s resulted in each customer being served up one of 1.2 million different homepages when they visit the site. A large amount of testing and learning has been carried out and this is now ready to be taken into real-time personalisation online.

Everything from messaging, to navigation order, categories, brands, delivery and sizes displayed is personalised to the user, along with the actual assortment on gallery pages and product recommendations. Even the customer journey can be personalised to an extent.

This means that the twenty-something who mostly shops with Very for fashion items will be greeted with their favourite brands on the homepage whilst another shopper who has recently been purchasing homeware will see electrical and homeware offers. The 1.2 million versions of the homepage that it can serve up to its customers is based on which of the Very suite of promotional messages is used and in what position.

Even something as simple as the weather is used along with a person’s name, if it’s known. By the end of 2015, the number of possible homepages will have risen to 3.5 million. It’s all based on segmentation and propensity models with the algorithm producing 200 million promotion affinity scores which rank the relevance of offers for each customer.

Tailored homepages are just one part of Shop Direct’s major push into personalisation. The navigation across all of its websites alters according to the browsing behaviour and purchase history of individual customers, so they see an order to the different department categories based on their relevance to them. Customers who regularly search its sites for children’s items, for example, will be presented first with the toys and the child and baby categories, at the far left of the navigation panel.

This initiative alone has delivered a significant uplift in conversion and has added £5m to its top line in its current financial year.

In addition, Shop Direct’s suite of algorithms also recommends categories that the customer is likely to be interested in based on the behaviour of similar shoppers. For example, customers who browse furniture regularly could see the homewares category prominently, regardless of whether they’ve shopped it before, because it has proved popular with similar shoppers.

Also, the assortment shown on gallery pages is personalised to each customer with Very able to get down to a one-to-one level with customers. “Customers are drowning in choice,” says Jones. They end up having to wade through many dresses on a page to find the exact red dress they want to buy, only to find out that it’s out of stock in their size once they’ve clicked through to the product page. Personalisation, therefore, is tackling a real customer problem and Very aims to make it easier for everyone to find what they are looking for. If the shopper’s clothing size is known, then items which aren’t available in their size don’t appear; if their preferred brands are known, then items from those brands are shown first.

Obviously, it’s easier to provide personalisation if the customer has signed in since the system can use all the information it has about them. Shop Direct is also working with cookie and IP data to personalise the experience for every shopper to some extent. Plus it uses retargeting through the myThings mobile-compatible ad platform, so it can collect more data from shoppers based on how they responded to this.

Shoppers can therefore be tracked across device, using myThings and the Speed-Trap data capture system from Celebrus Technologies to append IP addresses.

The personalisation initiatives are expected to add over £20m in sales for Shop Direct in its current financial year.

Jones warns, though, that the profitability of a customer cannot be used as the main KPI. “Engagement means happier customers,” he says, and improving the customer experience and removing friction means customers are more satisfied. “Lifetime value is a goal, but we do need to make sure we are using data to create an experience that’s more personalised to give a better experience.”

Where Shop Direct is changing customer journeys it is asking them to rate the new experience by picking a face from a series of images with expressions ranging from frowning to smiling. Jones believes that ultimately a better experience in the long term leads to increased profits.

TESTING

Shop Direct isn’t leaving anything to chance or to gut feeling. In January 2014, it set up its own UX lab at its Liverpool head office so it could bring testing in house and ramp it up. The lab comprises two rooms connected by a one-way mirror and equipped with cameras and microphones. On one side of the mirror is a room set designed to make the customer feel at home. It includes a sofa, TV and desk with laptop computer. Shop Direct people can watch them from the other room, see closely what they are doing with the keyboard, use eye tracking to discover what they are looking at or turn on the TV and watch them second screening from the sofa. What is also making a big difference is that the project owner can be involved in the tests, watching and listening to customers.

Everything is now tested before it goes live on the site. With mobile accounting for over three quarters of traffic and more than half of sales, Jones explains that the company runs a mobile first testing strategy. Jones also points out that 50% of what happens on mobile is on the product page.

Rather than testing a number of changes with customers in one session, each one is tested individually, followed by A/B testing before anything goes live on the site. Around 100 tests are run each month with one customer being monitored in the UX lab at a time. Although when looking at furniture on the site, the UX team bought in couples so that their interactions could be viewed together since that is how many furniture purchases are made. One thousand tests will have been run by the end of this year and testing will be ramped up to 150 a month over the next financial year.

“It takes away ambiguity,” says Jones of the testing, while also removing ‘hippo’ (highest paid person’s opinion) decisions. The only person whose opinion matters is Miss Very, the core Very customer. Even then, sometimes what Miss Very says she does is different to how she actually behaves online.

Gut feel and opinions are what has driven the tests to be run in the first place but now the company always has the facts to back up those opinions. The UX lab throws up issues that haven’t been spotted elsewhere while testing other parts of the site, so there’s a continual list of things that could be tested that need to be prioritised. “About a third of tests win, one third fail and a third are inconclusive,” comments Jones.

FUTURE

Moving forward, Shop Direct is strengthening its branded product offering by adding new names to Very as it strives to keep market share and head off its main competitors, Next and Argos. Warehouse, Coast, River Island, Wallis and Miss Selfridge are the latest to join the 900 brands sold on Very, and Very Exclusive is fulfilling expectations, according to Jones.

Business focus is now firmly on the two main brands of Very and Littlewoods as it “manages the decline across some of the other heritage brands”.

Jones says that the company has no plans to open physical stores, saying “we’ve not been encouraged by what we’ve heard from others”. The company has a big opportunity in the UK. It kick-started its transformation from a catalogue business into a world-class digital retailer two years ago and the strategy has been paying dividends; the retailer recorded a 512% jump in pre-tax profits to £40.4m in its last financial year. The growth is driven by the performance of Very.co.uk, which now turns over more than £800m per annum.

Over the past 12 months, the combined effects of personalisation and the connected programme of testing has led to an increase in sales of close to £32m. This has now switched to real-time and the company aims to keep site speed under the two-second load time. It already has plenty of chances to communicate with customers on an individual basis when it thanks them for their order, keeps them apprised of their delivery and talks to them about their account, and personalisation will take everything to a new level with personalised messaging seen as a major opportunity.

Shop Direct’s customers are happy for it to use the information they hold on them to ease their journey and set default options but, as Jones explains, the company is wary of the fact that they don’t want this journey interrupted. “They just want the right experience from day one,” he says, so it has to get it right first time. With eighty years’ experience and the customer driving every change, it looks like Shop Direct is well on its way to meeting its digital ambitions.

Hear more from Gareth Jones when he’s joined by fellow Shop Direct Directors Jonathan Wall, Director – eCommerce and Dan Rubel, Group Strategy & Communications Director, in a unique three-way Keynote to open the inaugural eDelivery Conference on 13 October. Discover more at www.edeliveryexpo.com






Additional Information:

THE FINAL CURTAIN

Woolworths, the brand that Shop Direct bought in 2009 and relaunched as on online-only brand, is being wound down with customer accounts moved across to Very as the company focuses on investing in its bigger brands. While Woolworths has grown steadily under Shop Direct’s ownership, it is its smallest digital department store and there’s a crossover between the two brands with more than a third of Woolworths customers holding a Very.co.uk account.

Ladybird has helped make Shop Direct’s digital department stores a destination for mums, says the company. It is the group’s largest childrenswear brand with sales soaring under its ownership.

Growth has been driven by its performance at Very.co.uk, where Ladybird sales have surged 200% since the acquisition.

Linked InTwitterFacebookeCard

Become a Member

Create your own public-facing profile
Gain access to all Top500 research
Personalise your experience on IR.net
Internet Retailing
We are the magazine, portal and research source for European ecommerce and multichannel retail, hosting the board-level conversation for retailers, pureplays and brands across all of our platforms. Join the conversation.

© InternetRetailing Media

Latest Tweet

Internet Retailing
Tamebay
eDelivery
Twitter
Facebook
Linked In
Youtube
RSS
RSS
Youtube
Google
Linked In
Facebook
Twitter