Tim Curtis has been at Mothercare Direct for five years now, helping the company shift towards multichannel retail and more recently overseeing its switch to Amazon Services’ e-commerce platform.
We asked him a few questions about the challenges of integrating different channels within Mothercare, and what opportunities there are for retailers within Web 2.0, mobile and digital TV.
Our online sales are growing much faster than 15%, but Direct (home shopping) revenue includes a significant proportion of mail and telephone orders, which are growing less quickly.
Since August, we’ve been exceeding 1m unique visitors a month to the website and, having benchmarked our conversion rate and average transaction value (ATV), we believe these are in line with other multi-channel retailers in our categories.
I’m a bit wary of what I can put into the public domain, but by looking at the amount of time people are spending on the site and the number of pages they are visiting, it’s very clear that they are using the site extensively for research. We also know from online surveys that 30% of visitors have no intention of purchasing online.
How has the structure of your team had to change as you have become more multichannel focused?
The Mothercare Direct division was originally set up in 2000 as a stand-alone business, so we have our own processes and systems, but everything we’ve done in the five years I’ve been with Mothercare has been to pursue a strategy of greater integration as we have become more of a multichannel retailer.
When it comes to buying, for example, we source through core buying and we are progressively trying to encourage our buying and merchandising teams to do their range planning on a multichannel basis. We’re trying to ensure that the buyers and merchandisers are thinking in a multichannel way, because we know that our customers are multichannel customers.
How challenging has that process been?
When you start to introduce long tail thinking into retail, it’s quite a challenge to the planning norms in normal retail businesses.
We’re in the early stages of it, but people understand the economics of home delivery are very different. You don’t have to think about the space products take up in 250 stores, you have to think about the products’ handling characteristics for home delivery.
There are some similarities – something that is large will take a lot of space in stores and tend to be more expensive to ship for home delivery – but your stock investment costs are much lower.
You can operate on lower margins than with a high street chain, so you can introduce a greater selection. That’s the principle of long tail. One of the secrets of online trading is to have the best selection, and category by category, we are progressively ensuring that our online range is the widest available. I’m not saying we have achieved it yet, but that’s our intention.
Organisationally, we are going for greater integration. We have our own distribution centre but we want to make sure stock management is optimised in conjunction with the stores’ distribution centre and our supply base. We are going for greater integration in IT so we have a single view of our customers, and we introduced a new e-commerce platform recently to support this.
We enabled ordering via the website in stores three years ago, and the new in-store application means that customers who order in-store can track their orders from home. It’s the same system as that used by the contact centre so if anyone rings up, all the information is on the web platform. It takes administration out of the stores.
How close are you to being fully integrated and multi-channel, would you say?
I believe we’ve been a multi-channel retailer for a good three years, but we are getting better at it. I would say it would take us another year to achieve our goals.
What were the reasons behind your move to Amazon Services’ platform last year, and what effects has it had?
There were a number of reasons. We wanted to increase our online range, and given the traffic we were getting, we knew we needed to invest in upgrading our technology.
We needed guaranteed scaleability, and the performance improvements we’ve got as a result of trading on the Amazon platform are demonstrable. Response times, resilience, availability – they have been absolutely world class.
We also wanted to make sure that certain functional developments happened in a very tight timeframe, and Amazon has a very significant level of technical development resource. From signing the deal to going live with the site took six months, which is quite impressive. It’s given us the certainty and speed we were looking for.
In terms of results, we’ve seen material improvements in ATV and conversion, in line with our expectations. When I see in the paper that someone’s struck this type of deal and doubled their conversion, I think that they must have been pretty crap before. We haven’t done anything like that as our conversion rate was already quite good. We’ve been at this game a long time and our last site was very well optimised.
Considering you’ve got over 1m uniques a month, your conversion rate can’t be that high can it?
No, the conversion rate is in single figures. In some product categories such as pushchairs it’s very low, but we’re confident that’s because people are using the site for research.
If that’s the case, do have you any plans for a reserve and collect service?
We do have plans to introduce one in the foreseeable future, but need to complete the back-end Amazon implementation to ensure we can deliver a quality experience to our customers.
Looking through the site, we were quite impressed with your PPC landing pages. Is PPC something you’ve been working on recently?
Yes, it is. When we implemented the Amazon platform in November, we completely changed our arrangements on PPC.
We achieved quite good results on PPC on the old platform, and having changed, we’ve started to get back to levels we saw before – very low cost per acquisition. Now we’ve seen what we can do, it is encouraging us to invest more time and money in paid acquisition.
How’s your affiliate programme going? And what’s your view on some of the more contentious issues around affiliate marketing, like brand-bidding?
Our affiliate trade is very buoyant and they’ve responded very well to the new platform as well.
The one thing we won’t allow is anyone bidding on the brand name, nor on other people’s brand names. We observe affiliate behaviour and it often informs us about what we should be doing.
We are as supportive as possible. If you asked our affiliates, they would probably say we could do more, in terms of providing them with product feeds for example, but equally we let them get on with it.
Every now and again an affiliate does something stupid and we’re very sharp on picking up on it, but we’re not that controlling.
What opportunities do you see in the realm of social media and online communities?
We believe that community is hugely important, especially in our market. With the Amazon platform, we have a much better system for producing customer reviews and there is a huge amount of content in our Resource Centre on the site we can use.
It’s interesting – when Mothercare.com first launched, we had chat rooms and message boards, and they just weren’t used. We were too early to market from a community point of view, and now I think we’re behind, so we have long term plans to build community on the Amazon platform.
We would love to be hosting blogs, offering podcasts etc and we hope to get there in the next twelve months but, in terms of commercial priorities, we will be building more on the shopping side than the community side in the immediate future.
What about mobile?
I’ve been looking at mobile concepts for a good three years, on and off. It always seems to have been something that’s coming but hasn’t arrived.
The only thing we will be doing in the year ahead is providing text confirmation of certain things, like when your order ships.
Do you think it works better for customer retention than acquisition?
Yes. Interestingly, we did look at it as a customer acquisition mechanism. But when you have things working very well for you already and you have limited resources, it’s difficult to justify going after something that will not produce so much uplift in the short term. For the moment, a mobile channel, for example, is some way off.
We’ve considered using texts for generating catalogue requests. In texting, there will be developments in the year ahead, but in terms of a real mobile channel, I still think that until 3G coverage is out there and a critical mass of users has been achieved, we’ll remain focused on building online.
In terms of new channels, I suspect digital TV will be a higher priority.