E-tail: retail for the online age

Investors are calling it ‘e-tail’; retail for the online age. It is a powerful new force, and for graduates from a whole host of different disciplines, it could be their life’s work.

Fashion retailer ASOS is a runaway success story, largely due to word of mouth. Its revenue for the financial year 2010-11 was nearly £340 million and founder Nick Robertson received an OBE in the Queen’s birthday honours.

Online book retailer Amazon is growing faster than ever, despite the decline of high street competitors such as Borders. It is now competing with technology firms such as Apple, Google and Samsung in the handheld device markets.

And Ocado? Ocado is a relatively young online supermarket, stealing its way into markets that are dominated by giants that have been around for decades.

Broad technology

According to Simon Belsham, head of non-food sales at Ocado, e-tail is all about being there for the consumer. ‘The opportunity for retailers is to embrace the way that customers are changing the way that they shop, and adjusting their business models to do that.’

This doesn’t just mean desktop PCs either: ‘The role of mobiles, iPads, et cetera means that people are shopping across channels much more than they ever used to,’ says Simon. ‘I think it’s really about understanding and going on the journey with customers.’

This new approach is affecting tactics within the business too. Most e-tailers built their empires online rather than on the high street, and only a few are bothering to move back.

Being a new fish

One of the particular strengths of the e-tail sector is that most of the particularly successful companies have come from a start-up background. In sharp contrast with the big retailers who have tried to move online, e-tail start-ups tend to have a small management structure and an open approach to innovation.

Our scheduling system for the vans was put together by a developer who came in one day and said 'I can see a better way of doing this'

Simon gives a good example of this: ‘Our scheduling system for the vans was put together by a developer who came in one day and said “I can see a better way of doing this”. He came up with an idea that was much better than the van scheduling system we had before and we now run it across our fleet of hundreds and hundreds of vans.’ This attitude means that any graduates joining the company can have a significant effect on the way it is run in future. ‘Because we have our own proprietary software we can be very flexible about the things that we develop.’

Role of graduates

With the growth of multiple channel retailing, employers desperately need people who understand the mindset. They need people who use the technology every day and can keep the more experienced staff in touch.

People who really understand how customers are shopping and where the world is going are important

Simon explains, ‘Graduates understand how customers use new technologies a lot more than people who have been in the retail industry for 30 years or 40 years.

‘There are lots of opportunities for technology graduates and for computer science and mathematics graduates to come in here, more so than there would be in a traditional retailer. But I think also people who really understand how customers are shopping and where the world is going are important. People who have that sort of drive and appetite to learn and adapt the business, based on the opportunities that the world is throwing up.’

For Ocado's ideal candidate ‘some understanding of, and interest in, technology is important – although not essential’.

Skills needed

It is technology start-up-minded graduates that e-tailers are keen to recruit. ‘The skillset within retail that was traditionally needed is different from what we’ll need in the future,’ he suggests. ‘Graduates can bring in a different skill set to help businesses adjust.

The businesses that will win in the future are the ones that can make the smartest decisions

‘You know, technology is our real estate, if you think about our web shop, the systems we use to run our warehouse and supply chain.’ He points out that online retail is not constrained by physical considerations such as the size of stores.

‘Retail in the future – and really Amazon exemplifies this – is not constricted or restricted by the size of a store any more. It’s about long tail retailing, it’s about analysis, it is really about understanding customers, and how customers shop.’ For that, you need analysts, and information, lots of information.

‘We’re in a world now where we have more data than we have ever had before,’ Simon explains. ‘The businesses that will win in the future are the ones that can make the smartest decisions.’ This is apparently why Amazon has been so successful. They have been able to handle their supply chain incredibly efficiently because they analyse and act on data from Google, from customers and from their website.

The growth of the e-tail sector is also having an effect on the earlier stages of the retail process. Because supply and demand is speeding up, many sectors are moving away from China and the Far East and back towards Europe. ‘We’re going to see more and more manufacturing and design and some of those traditional industries come back closer to home,’ says Simon. ‘Those are the areas that I would want to encourage graduates to start thinking about getting into.’

Going global

One of the biggest challenges for retailers is taking on international markets. This should be pretty easy for a website, because after all, the internet is global. Indeed, Amazon has taken this in its stride, and ASOS became so popular overseas that it is currently revamping infrastructure to cope with demand.

The internet provides a cheap way of learning about a country, and that is the traditional risk factor when brick and mortar retailers want to go abroad

However, supermarkets have traditionally found it very hard to cross borders. Simon explains why: ‘When you look at traditional retail it is a big investment to go into a foreign country. It is risky – especially in food retailing – when you’re learning about local tastes the way that people shop.’ Large British retailers have struggled again and again to make an impact on foreign markets. Even Wal-Mart, the biggest retailer in the world, settled for taking over ASDA rather than trying to compete directly in British markets.

This certainly isn’t on the cards for Ocado just yet, but it should find it easier than its high street competitors. ‘The internet provides a cheap way of learning about a country, and that is the traditional risk factor when brick and mortar retailers want to go abroad,’ says Simon. ‘The opportunity will be for retailers to adopt all the channels to serve customers’ needs.’

Posted by Ross_TARGETjobs on 19 December 2011

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