November 2000

Making a go of the online market means knowing your own industry ­ and also knowing when to outsource. Lens-online.com seems to have struck the right balance, says Peter Rowlands

You might think spectacle lenses were a highly bespoke commodity, not something you could buy pre-configured over the Internet. After all, most spectacle wearers go and have their eyes tested by an optician, and are then issued with lenses specific to them.

The reality is slightly different. It's quite true that the lenses you get following an eye test are matched to your own requirements; but in practice, 65 per cent of them can be fulfilled from a standard range of specifications.

That fact has been the key to an imaginative Internet sales operation launched this autumn by two entrepreneurs, Neil Appleton and Alan Edwards, with a long history in the ophthalmic industry. Lens-online.com started trading in October, and according to finance director Alan Edwards, "we're increasing sales every week."

It's a business-to-business enterprise, not business-to-consumer, but there are many similarities. The customer (in this case a high street optician's) can go to the lens-online.com site, build up a "shopping basket" of lenses for the day (or week, or whatever), transact online, and in most cases expect the lenses to be delivered next day.

It sounds simple, but it represents a radical departure from the industry's traditional supply model. Until now opticians have tended to obtain their lenses through vertical channels, buying from laboratories or specialist suppliers. A handful of international giants dominate the lens market itself, although in practice supply lines tend to be national or even local in character.

Neil Appleton and Alan Edwards, who had both held senior positions at SOLA (one of the majors), saw an opportunity to create a new horizontal ophthalmic lens market, selling over the Internet ­ nationwide to begin with, and then internationally. Benefits for the customers included simplicity, speed of delivery, price savings ­ and crucially for these markets, consistency of prices.

They were buoyed up in their ambitions by the knowledge that this is a big market. Well over half of all Britons use spectacles or contact lenses at one time or another, and around 16 million pairs of lenses are sold every year.

Over the past ten years there has been rapid expansion among the national chains of high street opticians, but the independent sector has continued to thrive alongside them. There are now around 6,500 retail opticians' outlets in Britain, of which 4,000 are in small groups or independent. The lens-online team calculated that if they could reach even a modest proportion of those independents (and some franchised outlets in the national chains as well), they could be on a winner.

"We've concentrated on the sixty-five per cent of lenses that can be fulfilled from stock," Edwards emphasises. "We wanted to keep the proposition straightforward and manageable." The company has left the other 35 per cent to the specialist laboratories, which hold stocks of semi-finished lenses that require further work to meet individual prescriptions.

Sourcing the lenses apparently present no problem. There are a number of ISO registered producers around the world, including some particularly active operations in the Far East. "In many respects finished lenses are a commodity product," Edwards says, "although the suppliers use some pretty sophisticated technology to manufacture and coat them."

Designing the Web site itself was important, he says, since it would be the interface between the company and its customers. "We didn't want a glitzy front end, we wanted something smart and practical. New customers may browse round the site to get the feel of it, but after that they'll tend to go straight to the ordering screens, so we asked our developers to make the site as fast and accessible as possible."

Once in the secure ordering section of the site, users are taken through a simple process of specifying the lens material and range for each order, and stating the lens power in both sphere and cylinder format. From what seems at first sight a relatively modest range, a vast array of permutations is possible.

Fulfilment was the real challenge, as Edwards is the first to admit. "We reviewed a selection of logistics companies, and to be fair they did a good job, but mostly they couldn't get their minds round what we needed. They tended to think in terms of vast warehouses and pallet-loads, and couldn't take in the need to pick individual lenses." H

is team were beginning to think they might have to handle their own fulfilment when they encountered Tibbett & Britten's e-commerce operation at Telford, previously known better under the Track One name.

"Within fifteen minutes the managing director, Tony Baxter, was ahead of us in what we were asking," Alan Edwards says. "He explained that Tibbett & Britten was developing a sophisticated model for e-commerce sector, and told us he was willing to ease the operation forward gradually, reviewing the scale as we moved forward.

"This was music to our ears. We'd been faced with taking on a warehouse far in excess of our needs, and carrying a wasted overhead until we had the throughput to fill it. The scalability of the Tibbett & Britten offering was a major benefit."

There were others, too, he says. For instance, Tibbett & Britten uses the high-end PkMS warehouse management system from Manhattan Associates, which has emerged as a front runner for e-commerce fulfilment operations. "It can group orders together and batch them in to waves, and allows multi-order picking on a single run. We'd never previously worked with such a sophisticated system, and couldn't have justified it for the scale of our operation on its own."

The arrival of lens-online.com on the scene was equally timely for Tibbett & Britten. Having launched its initial e-fulfilment product more than a year before, originally using Track One branding, the group was ready to ratchet up its offering to a new level, and lens-online.com offered the opportunity to serve as a pilot operation. As Tony Baxter explains: "We aim to offer a comprehensive range of services, from Web design and hosting through call centre management and transaction processing to physical fulfilment, delivery and returns management."

 

By no means all these services will be provided by Tibbett & Britten itself (see panel on page 30), but the group aims to marshal its own and external resources to present e-commerce customers with a one-stop shop offering. In this case, it has also managed the project and provided the systems integration skills.

So far lens-online is using only a selection of the full range of services on offer; but being a startup, it is a prime candidate to take advantage of additional resources as it grows. Already there has been preliminary discussion about the possibility of T&B later taking responsibility for other aspects of its operations.

The lens-online fulfilment service is based at Tibbett & Britten's existing 12,700 sq m distribution centre at Telford in Shropshire. Lens-online's third member, Gary Lee, has taken on the role of logistics director and based himself here, where he can keep constantly on top of the fulfilment operation.

Lens-online.com accepts orders by Internet or fax, and they can be placed up to 5.30pm for next-day delivery. They are then batched and picked from dedicated shelving, where radio-frequency handheld terminals interact with the PkMS warehouse management system.

Final delivery is handled by Hays DX, which operates a specialist optical courier system based on a hub at Tipton in the West Midlands (a location within convenient reach of Telford). It collects the consignments from Telford in bulk, sorts them for trunking at Tipton, then delivers them from local bases next morning. Tibbett & Britten has no current ambitions to run a courier or home delivery service of its own, and already uses a selection of external carriers for other clients.

So how has the service worked so far? "Pretty much according to plan," Alan Edwards says. In fact initial targets have already been exceeded. Meanwhile, the international market also beckons. There may be 6,500 retail outlets in Britain, but in the European Union as a whole there are close to 50,000.

This European angle was another aspect of the lens-online proposition that attracted Tibbett & Britten to the operation in the first place. The T&B group is in the process of linking one of its existing e-fulfilment sites in mainland Europe to the UK operation, and plans by this means to create the nucleus of an integrated European e-fulfilment network.

Its aim is to be able to offer customers full visibility of product in the supply chain, and eliminate the need for them to hold stocks in several different countries. Lens-online.com will not necessarily be rushing into wider markets. Alan Edwards admits that addressing that such expansion might take some cultural changes, and could cause a stir in areas where ophthalmic lenses are not as keenly priced as in the UK. However, the lens-online team are confident that the sheer size of the market and the continually-growing Internet usage offer enormous potential.

Tibbett & Britten's one-stop e-commerce service, announced this month, offers a comprehensive range of services including Web design, order management, payment processing and customer contact management, as well as warehousing, pick and pack, delivery and returns management.

It has been built round the group's existing e-fulfilment operations, which started in January last year and now include a range of e-commerce customers such as SF Cody, Linguaphone, Sega, Startle, Cucina Direct and Presents Direct.

Tibbett & Britten will be providing the new service in association with various partners, among whom the principal is Vertex Data Science. Vertex was created in the late 1990s by United Utilities to take on call centre and customer relationship management for its parent's subsidiaries (these include companies such as North West Water and Norweb Distribution).

It has since been growing aggressively, and has acquired a number external customers including Cable & Wireless, Littlewoods Direct and Eastern Energy. It has a staff of 7,000, and is reckoned to be Britain's biggest CRM outsourcing business.

Tibbett & Britten also has some other tricks up its sleeve. For instance, it recently developed what is known as the DataMart system as an added-value service for clients. This Web-enabled business intelligence tool integrates with operational systems to provide management information on all aspects of the business, from sales and stock analysis to CRM.