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Carphone Warehouse Europe: Simpler, Faster, Cheaper

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Andrew Harrison, CEO of Carphone Warehouse Europe, speaks to Internet Retailing about his ‘digital awakening’ and how other CEOs should avoid missing the mobile wave.

CUSTOMERS  want  things  “simpler,  faster  and cheaper”  and  if  you  can  “crack  all  three  you’ll  have a  winning  business  model,”  Carphone  Warehouse Europe  CEO  Andrew  Harrison  told  retailers  at  the recent  Internet  Retailing  conference. In  an  industry  in  which  “80%  of  retailers  don’t have  a  mobile-optimised  site,  while  others  are seeing  300%  year-on-year  growth,”  he  warned delegates  that  they  needed  to  make  sure  they were  selling  in  the  way  that  customers  wanted  to buy,  which  is  through  any  channel  at  any  time.

However,  to  achieve  true  multichannel  retailing,  he said  retailers  needed  to  take  responsibility  at  board level,  and  that  meant  “making  sure  you  have  online first  as  a  real  philosophy  in  the  business”. Harrison  said  that  many  chief  executives  do  not understand  multichannel,  but  that  needed  to change,  not  only  because  it  is  the  way  that customers  shop  but  also  because  it  is  where  retail businesses  are  now  spending  their  money.  He added:  “The  web  team  may  no  longer  be  in  the corner,  they  need  to  be  at  the  forefront.” As  to  why  the  web  team  should  be  front  of  stage, Harrison  said  it  was  because  they  are  spending your  money.  “That  web  team  [that  was  once  seen by  the  board  to  be  running  an  ‘alternate  channel’] has  created  an  economic  system  that  means Google  will  take  over  the  world,”  since  every  time someone  clicks,  “I  give  Google  money.”  It  is companies  such  as  Google  –  and  affiliates  –  that are  changing  the  world  around  us  and  taking away  margin.  “They’ve  started  with  a  blank  page and  are  taking  business  away  from  traditional retailers,”  he  added.

Using  Carphone  Warehouse  Europe  and  its customers  as  an  example,  he  revealed  that:
  •  0%  of  all  our  journeys  start  online;

  • 13  –  14%  transact  online;

  •  10  pieces  on  content  are  consumed  per purchase;

  • People start thinking about changing their phone 33 days before their contract expires or a new phone is launched;

  • For every one sale online, four are made in the high street.


In his opinion, there needs to be a real dawn of enlightenment that “this isn’t about how you do multichannel. It has to be about the way you run your business. It has to be something that starts at the board.” But he warned: “This awakening hasn’t happened everywhere.” Retailing doesn’t stand still and Harrison said mobile will change everything again. “It will have eclipsed everything in two or three years,” he believes. Everyone will have the power in their hands and this provides the “biggest opportunity and the biggest threat to your business”. To highlight the disparity between customer experiences online he brandished two identical sets of tennis balls – one bought in just 27 seconds from Amazon for £8 and the other from a leading sports retailer for £11.99 in a transaction that took 13 minutes! “I want to be able to buy anything from us in less than 30 seconds,” he said of the challenge he had set the Carphone Warehouse business.

INSTANT MOBILE CHECKOUT

The company met this challenge by incorporating an instant mobile checkout powered by Mobile Money Network’s Simply Tap into its m-commerce site in April. Simply Tap enables customers to drop products straight into the mobile checkout at the push of a button and make a purchase instantly. However, the challenge didn’t cover purchases from a website alone, but also included offline transactions. This has resulted in customers being able to purchase from their mobile phone using a seven-digit code or via a QR code printed offline in newspapers or on posters such as those in stores. In effect, the firm is making traditional media work harder. A mobile checkout app has been available since August in the guise of the Carphone Warehouse Mobile Checkout – again powered by Simply Tap. Once customers register, they can shop anytime, in any Carphone Warehouse channel, from the store, catalogue, web and mobile web.

Carphone Warehouse is a large stakeholder in Simply Tap creator Mobile Money Network, which has spent the past couple of years developing mobile payment solutions and aims to integrate as many ways as possible to initiate payment in any channel through mobile devices. Harrison said that ironically for someone who sells mobile phones, he hadn’t realised how powerful they’d become until he started to immerse himself in Carphone Warehouse’s mobile operations and could see then “all the things we were doing wrong” as a multichannel business. In fact, 17% of the firm’s entire traffic comes from mobile.

DIGITAL AWAKENING

Harrison admitted that he’d had a “digital awakening”, more so in the past 12 months and particularly with regards to mobile. He said he wanted other CEOs to “really probe, ask questions and put this onto the main board agenda”. He appreciated that stores still accounted for the majority of retail sales and so were a CEO’s focus. “There are things you forget when 90% of your entire revenues come from store,” he said. He explained that the danger was, that if ecommerce accounted for 10% of all sales and mobile commerce was just 10% of that, only 1% of a retailer’s sales today were from m-commerce and that was why it was quite easy for it to be ignored. His message was that this was “exactly what you probably said as a CEO about the internet all those years ago, so now’s your big chance to get behind m-commerce and make it incredibly important to you”.

THE CUSTOMER JOURNEY

He said he believed that it was easier to be a multichannel retailer than a traditional retailer with silos. “You can start to get your arms around the process all the way through,” he said. There’s the immediacy of response, you can test, see if it works or not, get a feel for your business before you’ve gone into your main sales drive, get customers to rate products to help stock forecasting and so on. “If you treat it as silos it is hard.” He advised retailers to “take everyone on the journey” and explained that your business was this journey end-to-end and was pervasive, it ran through it and alongside it. “Once you get it, it’s easier,” he added.

What has come out of this is the Carphone Warehouse philosophy of ‘Online First’ through which the business is changing itself around the customer: customer journeys are being plotted and the business is being organised around these rather than channels.

Taking his example of the date that customers start thinking about changing their phone as minus 33 days, rather than on the day a new phone launches, he cited the movie industry, which will start marketing a film two years before it is released. Every step, from purchasing the film rights, to hiring the actors, starting filming and handing the finished product over to the distributors, all helped to create excitement ahead of the launch.

Harrison said Carphone Warehouse wants to create buzz and excitement around every launch. Instead of having 3,600 shops, it works as if it has 35 million shop fronts since mobile phones enable the company to engage with customers wherever they are. “Every sofa, bus, train is a shop front as people are looking at their phones,” said Harrison.

He added that retailers needed to ask: “How do we use the phone to lead our business?” Mobile is incredibly important to Carphone Warehouse, and not just as a product attached to a two-year contract. According to its annual report, increasing visibility of customer behaviour beyond the initial contract period had “resulted in higher revenues being recognised at the initial point of connection”. Harrison explained how the company can use customer behaviour to help people and engage with them better during the contract. The company can see how many minutes of airtime people are using so could put things on their phones to help them with their contract, for example. “We’re the last people to touch the customer’s phone,” he explained, “so how can we engage with customers and how much can they engage with us – and not just in a transactional way?”

There is still a place for stores in the future and they have an important part to play in the customer’s journey. For every sale completed online at Carphone Warehouse, four more are made in store. The company has invested in making the retail environment more exciting for customers and “invested incredibly in understanding multichannel journeys and the numerous touchpoints off and online”. “The more complicated a sale, the more people will want to talk to someone,” said Harrison. The number, size and makeup of those stores may change though, and he said the firm planned to constantly review the number it had and needed. Carphone Warehouse sees considerable growth potential in the sale of connected products and services, and consumer demand for the ‘connected world’.

According to its annual report, it has the opportunity to broaden its product ranges to areas outside of its core mobile phone offering, to transform it into “the home of technology”. Its new format Wireless World stores are built around the central theme of connectivity. They offer a wider range of mobile and other connected devices and an enhanced level of service.

By the end of March 2012, the format had been rolled out to 392 stores, and the company has plans for a further 150-200 by March 2013. It anticipates that the majority of its UK stores will adopt the new format within the next two to three years, and it will continue converting its outlets in mainland Europe. It all comes down to making the retail environment more interactive and creative, according to Harrison. He said the new stores had enabled Carphone Warehouse to show off the phones and tablets and how they worked, as well as accessories and, increasingly, “app-cessories – things that work with the phone or tablet and an app, that is, those that count how many steps you’ve taken or what you’ve eaten”. By putting connectivity at the heart of the business, the firm claims that it is now committed to helping people experience and buy the best range of hardware, accessories, connections and services available to suit their individual needs – and walk out of one of its stores with their device set up and working. There is also a big opportunity to make the store environment quicker and faster and to provide customers with a better service; in essence, taking some of the hard work out of shops by using different channels and technology. Harrison gave the example of a new customer having to wait for up to 20 minutes for a credit check to be run, something that could be enabled in another way.

FUTURE PLANS

Going forward, Harrison said Carphone Warehouse is working on creating global m-commerce networks for accessory manufacturers – basically a store on a phone which can be skinned as anyone else’s. The firm will also “play a big part in security data” such as making sure that when a customer is downloading an app it is the real app, not a fake one through which someone can take their details. He explained that this world of apps and open platforms came with many challenges around the use of data, trojans and people’s information being scanned. He said he wanted Carphone Warehouse to be a pioneer in the m-commerce space and added that “whilst ecommerce has always been important, m-commerce gives a new opportunity to really pioneer it and we should be doing that”.

Harrison explained that half of all searches for the iPhone 5, for example, were made from a mobile, and “largely from iPhone 4 customers”. For him, it had been an amazing revelation that the company is selling two-year mobile phone contracts from mobile phones. And this is what he is building a business on – this and mobile customer behaviour. However, he won’t be losing sight of other channels and customers’ journeys across off- and online. He urged others to meet customers where they are, embrace new ways of working including collaboration – such as its own links with Virgin Group in France, Best Buy and established retailers in other territories. The future is “not internet retailing, it’s retailing” said Harrison. “If you’ve missed the first wave, don’t miss the mobile wave.”

 
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