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STUDY: Asda builds up e-commerce success

STUDY: Asda builds up e-commerce success
Wednesday December 18 2013

E-commerce infrastructure and management services prove essential for UK supermarket to build a successful online business that has grown since its launch in 2008

In 2008, Asda decided that it wanted to take its Asda Direct and George Clothing business online, to reflect growing demand from its 18 million store customers. The goals were simple – establish an online business that helped Asda to generate more turnover and profit, reinforce the relationship with existing customers and attract new ones.

At the time, Asda did not have the IT infrastructure in place to take its business online, but specified in a formal procurement process an aggressive timetable that it wanted its e-commerce channel up and running within six months.

This short deadline caused attrition among the many bidders, most of whom were unable to agree to such a timescale. But specialist integrator eCommera and its cloud based, e-commerce DynamicCommerce platform accepted the challenge and delivered against the plan within the six-month period.

Stephen Langford, Asda e-commerce trading director, explained: “Speed to market was the absolute priority in all the developments we planned. We believed that, within a rapidly changing market, we did not have the capability or appetite to do everything ourselves. The flexibility and speed to market that eCommera provided us was critical to the success of going online as we didn't have a huge amount of knowledge or skillset.”

Rapid implementation and development

In taking the business online, Asda chose eCommera’s DynamicCommerce, powered by Demandware’s e-commerce technology platform, as its foundation for meeting its immediate goal of trading online, as well as its longer-term aspirations. 

Delivered as software-as-a-service (SaaS), DynamicCommerce enabled Asda to benefit from a pre-built infrastructure. The flexible nature of the platform, together with pre-built integrations into areas such as social networks, site content management and payment gateways meant that much of the basic implementation work had already been done. 

This left Asda free to concentrate on innovation; to really exploit the opportunity eCommera said it worked with the retailer in a way that rejected the conventional vendor/supplier management model typically used to run IT projects. Instead the two companies agreed to work together in a more agile and dynamic fashion, which also reflected the way Asda works on the retail operational side.

Asda and eCommera adopted the iterative and incremental agile software development framework for managing software projects for product or application deployment, known as Scrum methodology. It focuses on a flexible, holistic product approach to customisation, where an implementation team works as a unit to reach a common goal. This allowed the companies to deliver developments more quickly than by using a traditional, sequential approach.

The Asda and eCommera teams meet at the beginning of each week to discuss projects in hand and what needs to be achieved by the end of the week. While the meeting formats and timings are formal, eCommera said that the execution is anything but. Technical and operational teams from both the retailer and the supplier collaborate intensively on software projects, as a much quicker way to develop innovative functionality that can even be delivered in as little as a day.

Building on early online success

The two companies have worked over four years to build the supermarket’s successful online presence. More specifically, 2013 has seen even more success, highlighted through a number of projects, such as the expansion of the George.com business. As well as being recognised as the UK’s fastest growing online fashion retailer, George has expanded delivery options to customers in ten countries on mainland Europe including Belgium, France, Italy and Spain and recently signed a new distribution centre (DC) warehouse management contract in support.

Asda has also been able to respond to customer demands to shop online and collect instore. The e-commerce supplier implemented a ‘click & collect’ capability for Asda and today, on average, 60% of online orders are collected in store. This figure is higher for clothing and rises to 70% in the fourth quarter of the year when customers often make their buying decision primarily on convenience of access to purchases.

Click & collect has also been a catalyst for growth by driving higher store traffic, as well as new initiative using tube stations as pick-up points. Langford said: “We look at the value of the customer, not each order. Store managers like click & collect because it brings people into the store. With 200 more parcels into a store each day come 200 more customers who may buy. In fact, we have discovered that each click & collect customer spends on average an additional £9 in store as part of that journey.”

Taking payments into account

Asda also thought that PayPal, as a mechanism for mobile payments, could be an opportunity to increase revenue. To enable this popular payment method Asda worked with eCommera to offer it to its customers. The supplier managed the PayPal implementation, with a priority to ensure absolute security of customer data in all transactions. A huge amount of testing was involved to guarantee this and ensure everything worked on day one.

Langford commented: “We saw immediate uplifts after releasing the PayPal option. We'd been talking about it for a while and it always seemed too difficult. There were complex decisions to be taken - should we do it, is it the right thing to do, will it impact our other projects? However, once the team and eCommera had been given the green light that it was the right thing to do, implementation happened at pace and did not disrupt existing projects. Soon we were taking in real money.”

Following the increase in sales online, Asda also expanded its dropship vendor programme, where customer orders are fulfilled directly by suppliers, not by Asda. This dropship model has enabled Asda to offer an extended range and more choice to customers. “Thanks to eCommera we now have the ability to directly dispatch product from a supplier to home. That's an example of how we have created real value for customers and new opportunities for us,” Langford added.

Relationship pays dividends

Asda acknowledged that the way it has developed its e-commerce business has produced dramatic results. “We achieved fantastic results by moving to an approach of continuous change and innovation,” continued Langford. 

“Four years into the relationship with eCommera, it has flourished from tactical to strategic. We have a very flexible platform in DynamicCommerce and we have transitioned from a static IT waterfall approach to implementation to one that is agile and encourages innovation. With eCommera we can deliver more capability, faster and more robustly.

“There are very few suppliers that we work with today using this less traditional project delivery approach. We've seen some fantastic results in moving to a more fluid approach and we deliver change on a regular basis. The advantages are clearly visible to the rest of the business, particularly within our IT-led areas. As a result of the success with eCommera we are introducing new approaches across other development projects.”

“So much of what we do with eCommera is around delivering change. Today in retail most change is IT dependent and the method of delivery is the key, especially when it comes to managing risk. We have learnt that, by working with a trusted partner, we can advance the business through a more agile approach that creates value and reduces risk. It clearly creates a good test case or a good case study for other parts of business.”

Laying foundations for the future 

Langford said the supermarket has avoided being down to a hard and fast long-term plan. “I think the best thing about an agile approach is that you don't know what's coming and you shouldn't have your roadmap fully defined for the next year; if you have, then you're very unlikely to be agile, and will be unable to react to changing market opportunities,” he explained. 

“We do have some significant changes to manage over the next year as we start to incorporate some new back-end systems, but we will manage that while we're still innovating and making changes for the customer.”

He concluded: “I think that the key questions for success over the next 12 months will be, how do we keep moving the customer experience on? How do we start to blur the lines between our George.com, our general merchandise experience, and our grocery experience as well, and start to put them all on a path that starts making it a lot easier for our customers to shop across the various Asda offers? That's our challenge for this year. There’s a lot of thinking to be done. One thing is clear though, we could not have done this without eCommera and they are an integral part of our success.” 

Tagged as: Asda | supermarket | George at Asda | online | e-commerce | SaaS | development | Scrum | DC | warehouse | dropship | click & collect | PayPal | Demandware | eCommera