Shop Direct believes that fostering a culture of experimentation and failing fast has helped transform the former catalogue business into a leading digital retailer.
The retailer, which owns the brands Very.co.uk and Littlewoods, started to move from being a catalogue to an online retailer in 2007. At the time, just 20 percent of sales were from online, and the company sent out 25 million catalogues a year. The company was also "business-led", the company's head of ecommerce, Paul Hornby, told an Oracle Retail conference in London.
Today, Shop Direct reports annual sales of £1.7 billion, with 84 percent of sales from online. Some 44 percent of sales are made via mobile, it counts 950,000 visits to its website each day and sends out two million catalogues a year. The business is also now "customer-centric" and reported its first profit in a decade in October last year.
"The biggest thing we needed to do was move away from the business-led and to this customer-led strategy," Hornby said.
"One of the big things of the culture change was recording the impact of what we do. We try to validate the impact of what we do and we decided to run experimentation to do that."
He added: "When it was business-driven, failure was not an option. Now, we genuinely encourage this culture of fast-fail. We develop as a far smaller piece of work, understand impact on customer and measure that."
This way of working is a significant change to the traditional waterfall approach that Shop Direct used to have, which involved developing large, 18-month projects for the business' internal stakeholders, and spending just 15 days retrofitting the user experience to what customers might want.
Shop Direct runs 55 experiments, which it refers to as 'challengers', a month on its website as part of its "desire to remove friction for the customer". It plans to increase this to 140 challengers a month by July 2016, which is more than a consumer would see on a competitor's website in a year, Hornby said.
It does this by coming up with hypotheses in advance, and splitting the web traffic, for example, via A/B testing, to try out a change to the website.
Examples of this include replacing pagination with scrolling (expected to be positive, but in testing failed) and showing a pop-up window displaying a discount or offer if a customer appeared to be abandoning the website. This experiment failed because customers were being interrupted when they may have just been opening a new tab to copy and paste the link, rather than to leave the site. Hornby described this experiment, which was live for just a day or two, as an example of a "fast fail".
"We find a third of all our experiments are positive, a third are flat, and a third fail," he said.
When the company moves to increase the number of monthly experiments, Hornby cited the low success rates of Google's internal tech experiments to explain why he expects the proportion of successful experiments to fall.
In the past, the company sub-contracted a validation lab study one to three times a year.
As part of its digital transformation, one of the most recent investments that Shop Direct made to support its experimental and customer-centric culture was the building of a £100,000 user experience lab right in the heart of its headquarters, which opened in January.
The lab, which is set up like a living room, with cameras, eye-tracking technology and double-sided mirrors, is where Shop Direct invites customers to come into each fortnight "to get under the skin of how customers respond to new things that we do," said Hornby. One lab study is carried out every other week alongside split testing of the website.
Other investments that Shop Direct made as part of its digital transformation were in people and technology.
Hornby heads up an ecommerce team of 65 people, which sits separately from IT. This is up from just 10 people in ecommerce in 2006.
"We invested in front end development skills, how to be more agile, interactive design, how to design things with the customer at the heart, and usability, how to get physically close to the customer," he said.
He also said that Shop Direct's "biggest and most successful" investment was made on replatforming on Oracle.
"We were originally on a home-grown, not fit-for-purpose platform. We use Oracle ATG Web commerce, which provides the solid foundation we needed to support everything on top," he said.
Shop Direct also works with a number of smaller companies, including a start-up called Qubit, which provides an integrated platform for tag management, A/B testing and visitor analytics, personalised display advertising solutions provider myThings and UserZoom, a software to test user experience.
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