Will better distribution help eCommerce in Scotland?

If you live in Scotland, and in particular the West Coast of Scotland from the Clyde Estuary up to the Hebrides, you will no-doubt have seen the Oban Express van as it whizzed past.*


However last week logistics group John Menzies acquired Oban Express with the wonderful claim that it could “transform e-commerce in remote parts of Scotland”.
http://www.scotsman.com/news/transport/menzies-expands-parcel-delivery-with-oban-takeover-1-3960262


The aim is that this take-over should give this large facilities and distribution company a greater geographical reach, by including the 45-strong vehicle fleet that typically runs between Glasgow and the West. This acquisition, driven by online retailing, also follows the purchase in June of this year of AJG Parcels of Inverness.The integration of both companies into the group should apparently "help keep down the cost of deliveries on behalf of national carriers to more isolated areas".


However, in my opinion, there can only be a truly better ecommerce delivery approach in Scotland if:

1. Companies such as Menzies invest in these recent purchases and grow the capacity of their operations in remote areas.
2. Travel networks (e.g. roads) are improved
   E.g. it doesn't matter how far or fast the van goes, if it is stuck behind a slow driver on the single-carriage all the way up to Fort William or waiting for a land-slide to be cleared on the Inveraray road.
3. Big and small ecommerce companies alike stop charging unfair amounts for deliveries to the Scottish Highlands and Islands.
   E.g. I live 12 miles from Glasgow and was recently charged a premium by one company for shipping a small parcel (a mobile phone)!
4. This is accompanied by the roll-out of decent broadband internet, which is still incredibly patchy across a lot of the land north of the English border.

* Dear Top Gear, here's an idea. Stop featuring bloody Italian supercars or unobtainable Aston Martins on your programme and do a piece on the amazing handling & performance characteristics of the Ford Transit and Iveco vans driven by the courier services to the North of Glasgow!

Understanding the eCommerce Opportunity

I've been asked to give presentations to different companies & organisations around Scotland on the 'Opportunities for eCommerce'.

The following is therefore my generic set of slides that I have already started to deliver in various locations. The presentation is meant to cover the key industries of Travel & Tourism and Food & Drink.

 

Understanding the eCommerce Opportunity from Hayden Sutherland

British Airways pricing might need work

The other day I was buying a flight down to London to see a client and used the British Airways website to book. I looked at various options to get the cheapest flight, but was a little surprised to see that the cost of flying from Glasgow to Gatwick costs more when you take less baggage.
Yes that's right, to fly with a suitcase up to 23kg in weight is £11 cheaper than just travelling with hand luggage.

Note: I know that BA's digital revenue management team can't be expected to get pricing exactly right and that errors will occur. However on this occasion I did book the cheap ticket and simply 'forgot' to take my large bag.

Hilton website shows failed users the door

When using the Hilton hotel website tonight, I had a problem. After entering all my details I waited for several minutes while a spinning icon continued to do nothing. Try as I might, the site wouldn't accept the booking for myself and colleague on our forthcoming room  our overnight business trip.

Instead, and after what seemed like a long wait (although it may have been only a few minutes), I was given the image below:

To some users, this may seem like a well-designed error page, something that shows that Hilton cares about such eventualities. But for me, this wasn't the message I took away. Instead all I saw was a closed door with the handle down and the online equivalent of a 'do not disturb' sign hanging there.

Was this really the message Hilton wants to give users who have already had poor site experience?

Aggregator Maturity

Recently I've been posting my thoughts on the online aggregation services, including the more mathematical Herfindahl Index.Last month I was attempting to explain to someone how aggregation got more technically complex as the product or service became more complex and I quickly drew out a table that explained it. So now I have put it up online to shame and to get feedback.Aggregator Maturity

View more PowerPoint from Hayden Sutherland

As always, I see this as 'work in progress' and never a definitive completed concept.

Aggregation and the Herfindahl index

The Herfindahl Index (AKA the Hirschman-Herfindahl Index or HHI) is a measurement of the competitiveness of a particular industry. The index gives a figure between 0 and 1, with those markets closest to zero being more competitive and those closest to 1 being an (almost) monopoly.


An increase in the index typically means that there’s been a decrease in competition and therefore greater market power to those still operating. Whereas a decrease towards zero indicates more companies fighting over the same customer base and therefore the existence of a more ‘perfect’ and competitive market.
So why is the Herfindahl Index important in the online aggregators markets? Well, over the last decade, the appearance of aggregators in different online markets has created a more level playing field for customers; by collating the rates and fees for different suppliers and presenting them to the online user in an easy-to-compare format. Therefore in those markets where price is so-often the defining decision factor, such as utilities, financial services and travel, the use of aggregators increases competition and pushes the Herfindahl Index figure closer to zero.

Take the UK motor insurance market right now. As you will see from the diagram below (sourced from Towers Watson’s report ‘why aren’t we making money’
www.towerswatson.com/assets/.../Why-arent-we-making-money.pdf

In the last 10 years (really since the appearance of confused.com which was the first UK motor insurance aggregator) the HHI has moved closer to zero.

So what are the implications of this? Well, if anything is predictable, it is that the UK motor insurance market is going to get more (not less) price sensitive over the next few years, becoming more like the oil and airline industry in its competitiveness, unless something happens to interrupt this trend……

Aggregators - why they exist in specific markets

Meta search and aggregation (for the purpose of this article I'm saying these two are the same thing, although some may claim there are subtle differences) have grown over the last few years to be a dominant acquisiton force in a number of important online vertical markets.

Financial services, from credit cards through to insurance, are now subject to aggressive aggregation from a handful of major players such as: compare the market, go compare and moneysupermarket.

Utilities including: gas, electricity, mobile phone tariffs and broadband access are now compared online. In fact a lot of fuss and claims are made by the market leaders in this sector that they are championing your consumer cause (without obviously stating that your business with them helps their financial cause).

And travel has its obvious aggregation in the form of meta searches for: car hire, hotels, flights, etc.

Each aggregated vertical has its specific nuances and intricacies, plus each its own referral & commission structures, but in essence the the business model is the same:
a. Collate as many similar products or services as you can
b. Provide a single interface that qualifies the visitor's choice (usually by a series of form fields common to all parties)
c. Deliver the results in a consistent and comparable manner (usually cheapest first, but also allowing the user to filter some options)

Aggregators exist because two simple facts:
1. customers do not believe that they always get the cheapest rate for all products from one supplier
2. customers do not want to spend the time completing the same form on numerous sites

But why don't aggregators exist in other markets... such as fashion or FMCG products (e.g. washing powder and chocolate bars)?

Well, for fashion products, the usual reason is that products are exclusive to the manufacturer. Therefore because the channels to market are all protected (e.g. the manufacturer has some level of control over price and/or distribution) there is no real flexibility in the price. Then (assuming the brand site has eCommerce functionality), it is then typically just as cheap for users to shop from the brand site as it from a re-seller.

For FMCG the lack of aggregation is a different one, that of convenience. Most shoppers, when looking to source FMCG products go to a grocery store or supermarket. They also assume that the shop has done some sort of price comparison with the competition, so they don't have to (although prices may only be matched for the core 'basket' of goods and other less common items are still priced to maximize profits). Although sites such as http://www.mysupermarket.co.uk have sprung up to allow web users to compare grocery and health & beauty products from the leading retailers, people still either only visit one store or use one online supermarket at a time.

The question I have is... are there any remaining markets where aggregation is possible but has yet to take off?

Instant eCommerce

We have been asked to build an instant eCommerce presence for the launch of Tanya Rose's new book 'Travel Secrets'

If you want to buy the book in advance of the launch on Monday, just click the PayPal button below

Update 7 December:

The website is now up and running at http://www.masonrosepublishing.com/

Increasing customer value on travel websites

Having worked on a number of travel sites in my career, it is surprising to see that some travel companies still aren’t looking to maximise online customer value at every opportunity.

However, there are different ways of doing this online, each with their own merits, approaches and supporting technologies:

1. Increasing customer revenue per transaction

This is the strategy of trying to get as much out of each online customer order as possible. In ecommerce terms this is known as AOV (Average Order Value) and is a key metric that most travel websites live & breath.

The enabler of this maximisation is a decent user experience within the booking process that should give the visitor enough information to make all the booking decisions they need and presenting the relevant opportunities for:

• up-selling: trying to get the customer to order the better option of what they have selected (e.g. room upgrade)
• cross-selling: trying to get the customer to buy additional items that enhance their stay (e.g. car hire, excursions, etc.)

2. Increasing customer revenue per complete booking cycle

Once the customer has done their booking and left the site, that’s not the end of the sales relationship with them… that’s the beginning. The opportunities to increase the value from each customer will depend upon their budget, circumstances and how they want to spend their holiday (relaxing, touring, playing badminton, etc.). But failing to recognise these opportunities is potential lost revenue and may actually mean the customer misses out on something they didn’t know about.

The two enablers of this activity are:

1. Marketing to the customer and informing them of the relevant opportunities you offer (e.g. via email, telephone, etc,)
2. Allowing the customer to return to the site to easily upgrade and to incrementally buy items they want by themselves.

Care should obviously be taken not to bombard your customers with too much or unnecessary messaging and don’t forget that each different type of person will be have their own decision cycle/timings.

Hint: The idea is to understand these different customer types and be able to market to them in a better & better revenue-generating way as they lead up to their eventual stay.

Also, you have to make the self-service functionality of you website easy enough to be used by anyone… if it becomes a complex application that only a travel agent with a PHD* could understand, then you will unsurprisingly find that this service isn’t used very often. (* and there aren’t too many of them around)

3. Increasing lifetime customer value

A person booking with your site once is a sale, a person booking twice is a retained online customer. In my experience, marketing to the retained travel customers is usually easier than marketing to a new customer…. They have previously used your services and you know information about them that will help you speak to them in more relevant and effective way (assuming they didn’t get a completely negative experience previously).

Therefore it should be in very travel website’s interest to encourage existing customers to book more often that they currently do and to try to increase their order value each time. Eventually you should get to calculate / measure the value of a customer over the entire time they want to do business with you (their CLV or customer lifetime value )

For this you need to consider using CRM systems and processes which pull together customer information such as purchase history, AOV, etc. and then need integration into online systems for personal emails, etc.

Travel and Social Media - Part 2

It was over 3 weeks ago now that I attended to Tnooz Barcamp 2 following the Travel technology Show at Earls Court in London. It was then I promised in a short blog posting (written on the way home from that event) on the use of Social Media in the travel market.
This is that eventual article.

Now the main purpose of an company using social media must be to create a dialogue with customers (past, current and potential).

Top of all the social media use by travel companies must come blogs. The web log (hence 'blog) was meant as a living diary of things done, so it comes as no suprise that trabel and blogs go hand-in-hand. In fact blogs now contain thousands of travel commentaries and reports from travellers who provide open, eye-witness and contemporary review points.

I'll not try and list my own favourites, so here's travelblog's list of the Top 100 Travel Blogs this month:
http://travelblogsites.com/2010/03/03/travel-blog-top-100-march-03-2010/

Note:
Its therefore a little hard to understand why the Travel Social Nework 'Where are you Now?' (http://www.wayn.com/) isn't more popular than it is. However it seems that during 2009 new registrations to WAYN grew significantly and new registrations in the site reached nearly 10,000 in December.

And suprisingly some of the other social networks I would have expected to have been popular with travellers, such as Twitter and Flickr (the most popular photo sharing site, now owned by Yahoo). These two sites came comparatively low down the ranks of usage when compared to the giants of Facebook and video sharing YouTube in a recent Hotelworld survey;
http://www.tnooz.com/2010/02/23/news/twitter-way-down-list-of-social-media-sites-used-by-budget-travellers/

So what's next for Travel and Social Media? Well... I've a hunch its going to involve innovations such as real-time geolocation based services (e.g. foursquare.com, where you tell friends where you are right now) or even the new planning / event / location based service http://plancast.com/

Travel and Social Media

We've been speaking to quite a few companies in the Travel space recently about their Social Media plans for 2010.

I've actually been struck by the openness and transparency of their efforts. Its not just been a case of 'Damage 'Limitation' but what they can learn about this evolving communication medium, but also how they can leverage it for brand value and even sales... Hurrah!

Subsequent note on 10 Feb 2010:
I will be writing a longer post some time soon on my attendance at Tnooz barcamp last night;
http://www.tnooz.com/tnooz-tcamp2/

Top travel website for usability is 3 years old

Its not often that something on the web stands the test of time for longer than a year or so.New technologies, design influences, changing stakeholder opinions and a number of other factors all contribute significantly to change a website over time, so that it eventually morphs way beyond how it looked and possibly worked at launch.

So its actually good to see that over 3 years on, something I had a large hand in is still leading the pack in virtually the same guise it started out.

In a recent eDigital Research Travel Benchmark the P&O Ferries website still ranks as the most usable travel website:http://econsultancy.com/blog/4287-p-o-comes-top-of-travel-website-usability-study

UK online retail & travel future looks rosy

According to Forrester's research report, the future of online travel and retail in the UK looks quite good.
http://www.forrester.com/Research/Document/Excerpt/0,7211,45345,00.html

"Despite the current recession, we expect online retail and travel sales in the UK to continue growing strongly over the next six years as consumers move their spending online. By 2014, 37 million UK online buyers will spend £56 billion online "