In the wake of Superdrug launching its own marketplace last month, Chloe Rigby spoke to Andrew Cobb, IT director at the health and beauty retailer to find out more about the move.
Superdrug has become the latest retailer to make the move to offer goods from a wider range of brands via its own marketplace. In doing so, it has in effect become a platform that brands can use to sell their own products. But why is a health and beauty retailer a good fit for a marketplace? For Andrew Cobb, IT director at Superdrug, the answer is because health and beauty products are “naturally interesting.” He says: “If you’re into health, wellness and cosmetics, you’re going to spend some time browsing. When we see people in the stores, there are some who are mission-focused – I want that and I’ll search for it – but there are others who are browsing. Online, hopefully people will spend time on the website and look around.”
The superdrug.com website sees about three million visitors a day, who can now browse a range that currently offers about 5,000 more products as a result of the marketplace launch – taking it to a total of about 20,000 SKUs (stock keeping units). Currently, those products are sold by 300 sellers – ahead of Superdrug’s initial expectations for its marketplace launch. Beauty brand Wonderskin, sustainable brand Truthbrush and inclusive ethical brand OPV Beauty are among the brands now selling on the marketplace. Superdrug expects to add more sellers over time, and is targeting a range of about 40,000 SKUs.
In doing so the retailer aims to become a destination along the lines of US retailer Ulta Beauty. In doing so, it can also harness a potential powerful network effect.
“Everybody who’s active in this marketplace could use this as an initial selling tool to help get their brand known,” says Cobb. “And that’s why I think it will work. We have a community on the website of 27,000 active customers who are doing peer-to-peer sharing. When we did that, we had no idea whether that would really take off, but we just let it. it’s kind of an organic thing and we just let that take off. And that generates some energy and some interesting insights. We don’t necessarily mine that data. But we’ve definitely got an active group of customers that everyone sort of helping each other and talking about products and sharing recommendations. And that’s really good to see.”
Superdrug’s beauty community broadly reflects its target customers of women aged between 18 and 30. Its Health & Beautycard loyalty scheme, meanwhile, has a larger membership of about 16m members, offering insights into a wide and diverse group of customers. “That’s really helped us get insight into people such as our VIP customers, who are highly engaged buying lots of product and spend quite a bit of money per annum, as well as people who just shop maybe once every couple of months and buy routine beauty products, or just healthcare or personal care products. Then we have people who only shop at Christmas for presents, gift sets and things like that,” says Cobb. “We’re famous for Dove and Lynx but this year we have also been able to focus on some of the more prestige brands, both in skincare and also cosmetics and fragrance. We have this concept of ‘masstige’, which is an increased prestige set of products for customers, which has been going well.”
When I speak to Cobb, it’s less than a full week since the marketplace was launched to its customers, having previously been tested by family and friends, so it’s not yet possible to see in practice what effect the marketplace has had on customer behaviour. But the retailer is detecting an initial positive response from shoppers. “I think it’s definitely starting to get noticed,” says Cobb. “The more we can put into the marketing around it and into digital marketing, that will help us get the message out there, and the community will pick up on it.”
Planning a marketplace
The marketplace has been about two years in the planning. Cobb was among the team that put forward the business case to Superdrug’s parent company AS Watson in Hong Kong. “We felt that the network essentially of peer-to-peer selling was where internet retailing was going to go,” says Cobb. “That’s where you get the multiplicative effect, and marketplaces were in that category as being the next kind of thing that people were doing.”
The plan was approved about a year ago, and the last year has been spent putting the marketplace in place. The marketplace itself is from Mirakl, and has been implemented through its ecommerce platform SAP, working with integrator KPS. A team – bringing together Superdrug in Croydon and Milan, KPS in the UK and Mirakl in Paris – was in place by February, first developing its design before the build started in July. One challenging part of the build was integrating the marketplace functionality into existing finance processes via Oracle and adding an escrow account to deal with marketplace payments via Mangopay. Technical delivery was achieved by September before a commissioning and validation period that ran through October. The marketplace itself went live to the public in mid-November. “That gave us the opportunity to go live before Christmas, which was what we’d always wanted to do,” says Cobb. “So we kept to the plan and we delivered pretty much on time and actually under budget, which is great.”
Once a seller brand is accepted and onboarded by the Superdrug marketplace team, each brand uploads its own product listings to the website. They are automatically pushed by the marketplace system into their correct place in the site taxonomy, where they can be found by shoppers, either through search or by browsing. “We don’t favour them in the search systems, we don’t promote them,” says Cobb. “It’s all very organic so if they become popular it’s because they’ve got a great product and people are interested. Nature Spell, for example, is one brand that we’re seeing going pretty well right now.”
When an item is sold, payment goes into a holding account and is released to the brand via Mangopay once shipping is confirmed. Brands handle their own shipping, and Superdrug earns commission on each transaction with the aim of earning back its costs over three years.
Where it goes from here
So far the marketplace is up and running on the main Superdrug website, which sells only to the UK. The next steps are to add it to the Superdrug mobile app and to enable in-store ordering of marketplace items for home delivery or click and collect.
Supporting all of that is an IT team of about 120 people, of whom around 30 are on the digital team. Today, says Cobb, the role of that team has evolved from its roots. “The IT team is very focused on selling. We’re not a traditional back-end function any more, we really do have a lot of focus on both in the store and online. And it’s all about making sure that we support the business.”
Superdrug is a Top150 retailer in RXUK Top500 research
