Refining the online customer experience at dabscom

This case study highlights the importance placed on web site design as part of the customer experience by dabs.com which is one of the UK's leading Internet retailers of IT and technology products from manufacturers such as Sony, Hewlett-Packard, Toshiba and Microsoft.

Company background and history

Dabs.com was originally created by entrepreneur David Atherton in partnership with writer Bruce Smith (the name 'dabs' comes from the combined initials of their two names). Their first venture, Dabs Press was a publisher of technology books. Although David and Bruce remain firm friends, Dabs has been 100% owned by David since 1990.

Dabs Direct was launched in 1990, as a mail-order firm which mainly promoted itself through ads in home technology magazines such as Personal Computer World and Computer Shopper.

Dabs.com was launched in 1999 at the height of the dotcom boom, but unlike many dot-com start-up businesses, dabs.com was based on an existing offline business.

In its first year, dabs.com was loss-making with £1.2 million lost in 2000-1; this was partly due to including free delivery as part of the proposition to acquire new customers.

In 2003, the company opened its first 'bricks and mortar' store at Liverpool John Lennon Airport and it has also opened an operation in France (www.dabs.fr). The

French site remains, but the retail strategy has now ended since margins were too low, despite a positive effect in building awareness of the brand in retail locations.

Strategy

The importance that dabs.com owners place on customer experience and usability is suggested by their mission statement, which places customer experience at its core together with choice and price. Dabs.com's mission is:

to provide customers with a quick and easy way of buying the products they want, at the most competitive prices around, delivered directly to their door.

Growth has been conservatively managed, since as a privately held company dabs.com has to grow profitably rather than take on debts. Dabs.com has reviewed the potential of other European countries for distribution and may select a country where broadband access is high such as Sweden or the Netherlands. Countries such as Italy where consumers traditionally prefer face-to-face sales would not be early candidates to target for an opening.

In terms of products, dabs.com has focused on computers and related products, but is considering expanding into new categories or even ranges. Initially these will be related to what computer users need while they are working.

Dabs.com in 2005

In 2005, dabs.com is a £200 million company with 235 staff, holding 15,000 lines for a customer base of almost 1.5 million and processing around 5000 customer orders every day. Dabs.com has 8m visits a month from around 750,000 unique users. Its catalogue contains 20,000 products with laptops, LCD monitors and external hard drives among the main sales lines.

NCC (2005) reports that dabs.com believes that what its customers require is a dynamic site that provides comprehensive information on its product ranges, delivery charges, returns policy, financing services and rewards scheme. It also provides dabs.tv, a video service that allows customers to see more complex products in greater detail.

Jonathan Wall, Dab's marketing director, sees security as important as part of the customer experience, and to protect the business, he says:

We were one of the first e-businesses to adopt Visa's 'Verified by Visa' 3D secure payment authentication system and we've also implemented MasterCard's SecureCode variant. We've always worked closely with both credit card companies and it's a concern that dates back to our mail order side. The threat of being attacked and defrauded is always in the forefront of our thoughts.

Delivery

To en sure delivery as promised, Jonathan Wall explains the importance dabs.com attach to IT:

We invest as much in our highly automated warehouse as we do in our marketing. Our systems use a sophisticated combination of dynamic bins and unique product numbering. A lot of the management team come from technical backgrounds. Our back office system was written in OpenVMS by our IT director. Our sales processing system was written in-house.

Staffing

According to NCC (2005), staff skills are viewed as important from technology staff, to product buyers. Wall says:

We pay a higher than average salary, and that means we get a higher level of staff. And we really see the effect of that in the way our buyers and merchandisers approach the market.

Dabs.com ended offline sales in September 2001, after online sales reached half of turnover. This enabled it to reduce costs. Although its consumer sales are online, dabs.com does retain a call centre for customer service and account management services for its business clients who spend £15,000 or more per year. Excellence in customer service is also seen as part of the customer experience and helps dabs.com reduce complaints to trading standards officers compared to some of its online rivals such as eBuyer.com.

Europe is the next challenge: the company launched Dabs.fr in France in 2004. But all will depend on its ability to adapt quickly to any changes in customer behaviour.

The 2003 site update

In 2003, dabs.com achieved a year-on-year profits rise from £2.5m to £5.1m and sales rise from £150m to £200m. It predicted the growth will continue, with sales reaching £350m in 2005. Dabs has about one million unique visitors monthly and adds a further 30,000 new users every month. This success has been achieved in just 4 years from the launch of its first transactional site in 1999. The site reassures each visitor, by the scale of its success. On 5 December it read:

• 37,093 orders in December

• 21,289 products available for sale.

Dabs's marketing director, Jonathan Wall, talking to IT Week (2003) explained how the initial growth occurred, and how future growth will be sustained: 'We dominate the PC hobbyist/ IT professional sector, but our business must evolve. We want to cast our net further so that we are appealing to people who are interested in technology as a whole. New customers need a new approach. We have built a new environment and a new web site for this target audience.'

In mid-2003 dabs.com launched a site to help it achieve sales to the new audience. Research was used to help develop the new site. The usability of the existing web site was tested and the new concept was also shown to a focus group. After analysing the responses Dabs created a pilot site, which the same focus group then approved. In total, the new site took 10 months to develop and was an investment of £750,000.

The 2005 site update

NCC (2005) says Wall makes the business case for the new site as follows:

Our new site will take us right up there to the top of the field, you have to try and stay ahead. We'll have guided navigation, still quite rare on a UK site, which will help customers to find what they're looking for more intuitively. Early e-commerce customers knew that they specifically wanted a Sony Vaio laptop, for example. New customers just know that they want a laptop that's small and fast and costs less than £1,000. Guided navigation means they can search according to a product's attributes rather than specific brands and models.

Since the average selling price of laptops is going down, slim margins are decreased further. Wall says: 'Selling electronic equipment on the web has traditionally been passive but by redesigning our site we'll be able to show customers what another extra £50 spent on a laptop will buy them.'

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