The UK Online Market
Research shows that more British food shoppers have been converted to online grocery shopping than in any other country. However, Internet sales still represent a tiny, although growing, percentage of the overall UK grocery market. Most people use the Internet as a way of gathering information on products and making price comparisons before visiting their local store. Tesco was the first grocery retailer to introduce online shopping and is now the world’s biggest Internet grocer.
Question 1
Means of capturing information for use in e-business processes
Organisations are increasingly using databases to manage customer relationships to increase both sales and customer satisfaction. A database can help you identify key trends and important information such as your most and least profitable customers.
Waitrose E-CRM programme (E-Customer Resource Management)
The E-CRM programme aims to build awareness and generate customer interaction with the Waitrose brand both in-branch and on Waitrose.com.
Waitrose provides customers with monthly email communications, which will provide a platform to keep Waitrose front of mind, whilst reminding customers of their full range of services. The emails include information specifically tailored to the customer on seasonal foods arriving in branch, targeted special offers, new recipes and information on food suppliers. The emails are refreshed each month to give customers new ideas from Waitrose by analysing their shopping data.
Waitrose.com has become recognised as one of the leading UK portals for food lovers, and the emails enable customers to click to the site to learn more about Waitrose food, offers or search for recipes and shopping lists.
Visitors to the site can also find a selection of menu ideas and tips on preparing food, plus nutrition and wine experts can be emailed for individual advice.
Ocado
Waitrose uses an e-GRM programme to boost loyalty among early adopters of its online home delivery store Ocado.
Waitrose Partnership Account Card
The Partnership Card from John Lewis and a Waitrose credit card that earns customers vouchers when they spend.
The Partnership Card allows customers to earn points towards vouchers. Waitrose sends vouchers directly to their customers three times a year.
They can be spent on products in John Lewis, Waitrose and at Ocado.com.
The Partnership Card entitles customers to receive exclusive theatre ticket promotions and invitations to special events such as summer concerts and country shows.
Waitrose Quick Check
Waitrose provides their customers with the option of using the Quick Check service, which allows customers to scan goods while they shop using a handheld scanner and then the ability to pay quickly at a special desk. When customers sign up to this service their details will automatically be transferred onto a database, where Waitrose can keep a track on their buying habbits, how much they are spending per week and their favorite products.
Internal Databases Within Waitrose
Waitrose has many Internal databases used by different business functions that they use to hold information.
Human Resources
The human resource department will have information on a database of their employees. The information that is kept on employees will help Waitrose to carry out appraisals, when reviewing pay and paying wages and giving references to other employees.
Sales
Waitrose will keep information on the sales of products in their store. The information will be able to tell Waitrose what their best selling lines are, what products sells best, what products aren’t selling that well and may need to be discontinued. From the information Waitrose will be able to position certain products as required such as best selling products getting the best positions.
Stock
Waitrose will keep information on the stock they keep and how much of each product they have. The information will help Waitrose when bringing in new lines and discontinuing products.
Store Layout
Waitrose will have information on the layout of the store and where certain products are kept this may be important if they are moving products around or when bringing in new product lines and deciding on where to put them.
Marketing
The marketing department will have information on prices of products this made help them decide whether prices need to change for example to compete with competitors. They will also keep information on promotions online and in store this will help Waitrose to see when promotions need to be updated and what other products may need to be promoted.
Buying
Waitrose will keep information on what they buy and where they buy from, they will communicate with suppliers to tell them what stock they need and when they are going to need it.
Example of how the information gets onto the database using sales. The barcode is scanned through the till which goes to the EPOS. The information may be replayed to the partnership card/ marketing via the LAN.
The role of digital information in informing business decision-making
This diagram is showing how the role of digital information is helping Waitrose business decision-making.
The Diagram below has been spilt up into five different areas showing the different stages in communication and business decision-making.
1. In Store Communication – The EPOS (electronic point of sale) systems will be able to tell Waitrose what products are top sellers and which ones aren’t selling as well, this will help them make decisions on where to put certain items. They could put top selling products in a better shelf space and maybe promote the items that aren’t selling or discontinue them.
2. Databases - When the data has been collected in store or online the information is sent to the centre and then stored in the databases. Head office will use this information for making decisions on things like store replenishment, store layout, staffing and promotions.
3. Buy-Side collaboration – buying from suppliers, suppliers will communicate with head office. Waitrose will need to tell suppliers what they want them to supply and when they want them to supply it.
Waitrose will decide what products they are going to store and where they are going to be positioned in store. Decisions on pricing may also change due to promotions or other forms of marketing.
Waitrose needs to insure that they have the right amount of stock on their shelves to meet consumer demands. Waitrose uses hand held guns which allow labels on the shelves to be scanned which allows the employee to see how much stock they have. The stock is electronically stored and connected to a server, which will tell the employees how much of certain products they have allowing them to decide when to place an order.
4. The communication between banks and stores for purchases made buy customers, the banks will need to authorise the credit or debit card when customers uses the chip and pin systems. The card will be checked to make sure that it isn’t stolen and then the card will be authorised if no problems occur.
5. Sell-Side E-Commerce – Waitrose website, when customers access Waitrose online and purchases goods through the internet information is collected on those customers, Waitrose will be able to see the location of the customer, what they are buying and how much they spend. They can use this information to their advantage buy sending the customer offers or vouchers on their favourite products so that they shop again with Waitrose or purchase more than they would normally. Waitrose could also suggest a store close to them, as looking around a supermarket will attract customers to impulse buy which will boost Waitrose products.
Waitrose Telecommunications
In branch view of telecommunications
In store communications, employees will communicate in store via the LAN (Local Area Network) an internal link. Waitrose has mobile telephones to communicate around store using extension numbers to contact different sections.
A tannoy is also used in store which allows the company to talk to the whole store at one time, for example when making announcements to customers such as the store is closing or to ask an employee to go to a certain section.
Externally a switchboard is used so if a call is coming in from out side the company they will then be transferred to the person or section they want to speak to. If a number of calls are incoming at the same time they will be put on hold and then transferred once the line is free.
Waitrose will also communicate to head office via the WAN (World-Wide Area Network) voice and data can be communicated.
Question 2
Internet technologies in the organisation
Waitrose EPOS Systems
Waitrose updated its existing 12-year-old EPOS system which was dated and slow. Waitrose selected touch screen EPOS terminals running VBS by PCMS and featuring Epson's printers. The systems were updated and installed in December 2007 their ambition was to make the tills as easy to operate as they could, so that cashiers could concentrate on helping the customer. To give customers the best possible Waitrose shopping experience, they wanted to develop more flexible and customer-focused systems.
The selection of the Wincor Nixdorf BEETLE tills was based on both price and on flexibility. The BEETLE range offered a resilient, secure EPOS solution that could meet Waitrose’s demands for quality and customer-focused service.
The user-friendly touch screen displays, fully-integrated EPOS systems and advanced POS printers, for example, can help to increase competitive edge, improve sales, maximise productivity and enhance the customer experience.
There are a number of benefits with the new systems for example it does not matter how you hold the barcode against the scanner it will always scan, which saves time when scanning customers shopping. With the system being easy to use staff training time will also be reduced. The new system provides Waitrose with greater flexibility, which helps to ensure that new applications are trained quickly and with ease in the future.
Epson’s multifunction printer, the TM-H6000 was chosen by Waitrose due to its impressive speed, performance and reliability. The Epson printer met and exceeded all of their requirements and expectations. It out-performed the competition and is also very user-friendly with its drop-in paper load function, which makes changing the receipt roll quick and easy, which is vital in any busy environment such Waitrose as it avoids hold-ups and helps reduce queuing time.
WAP-enabled mobile phone
Waitrose offers customers the chance to purchase goods and services over a WAP-enabled mobile phones.
Much of Waitrose wireless trade is of last minute, emergency purchases. The service will allow customers to purchase flowers and wine, locate their nearest store and receive a recipe a day.
Waitrose online
Waitrose expanded its online selling to its customers, ocado being the main seller of Waitrose grocies Waitrose decide to expaned its offering to customers via Waitrose.com which nows offers groceries, flowers and wine to customers but has no plans for a full grocery delivery service.
SAS System
Waitrose uses SAS (a business intelligence vendor) systems to help them stock shelves.
The software analyses past product history mainly based on seasonal variables, this includes public holidays and major events to see what effect these have on our shopping habits.
Basically the system will make sure Waitrose has enough turkeys at Christmas, enough Pimms in the summer and enough roses on Valentines Day. While these items are common sense additions to any well-stocked supermarket, with thousands of other items from asparagus to zinfandel (variety of red grape) on the shelves the process requires a large amount of technology to ensure supply and demand across all products are met.
Rob Thompson, head of supply chain at Waitrose, said “he expects the investment to repay itself through savings on wastage because, while supermarkets may fear running out of stock and disenfranchising customers, footing the bill for removing out of date foods from their shelves is hardly an appealing alternative.”
Saving on wastage will also help Waitrose in the long term as this will not only save them money but the environmental issues that are constantly put onto supermarkets by the government and changing times will be addressed, as wastage will be at a minimum which will contributed to growing environmental concerns.
The Benefits of Online Shopping
Purchasing goods online has its limitations such as being unable to touch, feel, smell and taste products. Another negative for customers is the lack of security that currently cannot be avoided.
Boston Matrix
The Boston Matrix is showing where Waitrose stands against other competitors in the market.
Waitrose is a small Company in a big market, which is very competitive, which categorises them as the question marks in the Boston Matrix.
Waitrose being in Partnership with John Lewis has a major effect on them and without this Partnership they may not have been able to survive. If it wasn’t for John Lewis’s financial power Waitrose may not have been where it is today.
Positioning Map -Waitrose Competitors – Price and Quality
The positioning map is showing Waitrose main competitors. Waitrose is positioned quite high up in quality and price, which shows that they segmentation towards higher income earners. These customers would be quality conscious, with price being less important to them.
From the positioning map you can see that Tesco, Sainsbury’s and ASDA are all positioned very close to each other indicating the enormous amount of competition through price and quality. All three retailers segment themselves towards new and growing families, as they are a huge sector of the market, with much money to be made from. As you can also see Marks and Spencer’s is positioned at the top end of the scale for both price and quality, showing that they are perceived as a grocery retailer, which provides a high standard of products at high prices, segmenting themselves as a sophisticated grocery retailer. Waitrose is aiming at a niche area being high-income earners, this will reduce the number of customers who use and buy Waitrose products. Many people believe that it is cheaper to shop at one of Waitrose’s competitors such as Tesco. This can create a bad stigma and put many people off shopping at Waitrose. If Waitrose were to lower their prices but keep the same standard of quality they could gain a better position in the market and may take over rivals such as Tesco who are not producing food at that high quality standard.
Where does Waitrose stand in online market against competitors?
Graph taken from:
Waitrose has a very small percentage of the online market compared to their competitors. Tesco is the market leader by far with most online sales. Tesco’s low prices, broad range of products and wide geographic reach are their competitive advantage.
Asda is competing entirely on price by selling online goods the same price as in store, their prices tend to be the lowest compared to other supermarkets. Asda also charge five pounds for delivery.
Sainsbury’s was unable to fulfil all online orders due not having enough stores, however to overcome this they built a new warehouse where they did not have as many stores to meet demands.
The majority of the competition is competing on price whereas Waitrose is targeting people at the top end of the market with high quality products due to there being low competition in this area Waitrose could prove to take over competition.
Future use of e-Commerce
Ansoff Matrix
Introduce Loyalty Cards
Waitrose currently has a partnership card, which is a credit card that has a system that allows customers to earn points when spending on it. These points then turn into Waitrose and John Lewis vouchers which are sent to the customers address. Waitrose targets middle aged people with high incomes and there E-Commerce systems reflect that as we can see from the Partnership Card. Due this being a credit card with high interest payments younger people with smaller incomes may not be targeted or drawn towards using one. If Waitrose were to introduce a loyalty card similar to Tesco’s where you hand it over every time to earn points they could attract a younger market and be able to gain the information about their buying patterns.
Update Website
To also appeal to a younger audience they could update their website giving it a younger and fresher feel.
Expand Selection Offering on website
Waitrose is one of the supermarkets that only sell groceries to its consumers; other leading supermarkets such as Tesco have the competitive edge over Waitrose selling a wide range of products including clothes and televisions. Waitrose could expand its current offerings on there website and introduce a clothes line selling on their website. They could also use branding to attract new customers for example introducing a new brand name for example Waitrose Young.
References:
accessed 7/3/08
Meeting with Mr Ben Brown conducted on 21/2/08
StudyNet Slides
accessed on 6/3/08
