April 2001

As Boots' and Granada Media's well-publicised Wellbeing.com Web site goes live, e.logistics magazine takes a detailed look at the e-fulfilment service set up for it by MetaPack

When the Wellbeing.com health and beauty Web site went live this March, it sent some significant messages both to the e-tailing world and to the e-fulfilment market.

As a joint venture between Boots and Granada Media, it reaffirmed that while dotcoms may have fallen from favour in financial circles, the big guns of retail and broadcasting are taking a longer view. By linking online and interactive TV interests with established Boots brand names, Wellbeing.com creates a true multimedia venture ­ and one whose success will therefore be watched attentively by both supporters and sceptics of the e-commerce revolution.

The operation is also significant in the way it has approached fulfilment. While Boots has a long-established and mature logistics capability of its own, the group has taken a policy decision to keep its e-tail fulfilment operations separate. Moreover, it decided last summer to contract them to a hitherto unknown company ­ a new start-up called MetaPack, which rode into the market on the wave of interest in e-fulfilment.

So what were the credentials that persuaded the joint venture to opt for MetaPack's offering? Mark Knowles, head of fulfilment at Boots Internet Ventures, singles out the company's consumer focus, its combined systems and operational capabilities, and its commitment to delivering the service as promised.

He admits the Wellbeing goals for multi-channel shopping were ambitious. "We're not in the business of disappointing customers," he says. "We want to impress them with faultless delivery and excellent service."

MetaPack certainly had the right experience for the task. Two key members of the launch team in particular came from the direct retail world ­ operations director Iain Beveridge, who had previously worked for catalogue retailer N Brown, and network director William Alexander, who had been worldwide manager for retail supply solutions at IBM.

Development phase

There was never any intention for MetaPack to run its own warehouses or truck fleets. Its objective all along was to act as a kind of combined project coordinator, systems developer, integrator and "fourth-party" logistics management specialist. Well over

a third of its team were developers, so its whole structure favoured this approach.

Once the terms of the deal with Boots and Granada were agreed, MetaPack embarked on a months-long development phase, during which it created a bespoke management system for the operation. This is built round Hewlett Packard and Sun servers, and acts as a central hub ­ linking warehouse, contact centre, payment system and carrier management system.

It also interfaces with Boots' existing e-commerce infrastructure, which includes the Web-based MySAP corporate management system. Scaleability had to be a key ingredient. There was no past history on key issues such as seasonality, optimum stockholding levels or the kind of delivery option customers would choose. In the early days, even the eventual product line had not been finally agreed. Such uncertainties have been typical, of course, of the world of dotcom start-ups, but for an established retailer such as Boots they were bound to present an unfamiliar element of risk; so the system had to cope with them.

Boots' Mark Knowles pays tribute to the future-proofing aspect of the MetaPack offering. "MetaPack is building a solution on good, strong foundations that will differentiate us from our competitors," he says.

As a base for the warehousing and despatch operations, Boots earmarked an existing 6,000 sq m warehouse at Acton Road, Nottingham. This had previously handled fulfilment for the company's Mother & Baby Catalogue, and later for the Boots.co.uk Web site, which was launched in 1999. (This has since been absorbed into the larger Wellbeing.com service.)

Product originates from the main Boots site in another part of Nottingham, and is shuttled over to the Acton Road warehouse by Boots' own BTC Logistics operation. Here it is picked and packed by Boots staff under instruction from MetaPack. The warehouse has been reconfigured and re-equipped to suit the MetaPack operation, and the company has supplied a local manager, who oversees the picking and despatch operations and provides a point of contact with Boots staff. The rest of the MetaPack team are based at its head office near Grays Inn Road in London.

To run the operation MetaPack chose the PkMS warehouse management system from Manhattan Associates, a company which has developed special expertise in singles-picking e-fulfilment operations. Manhattan has supplied its distributed N-Tier solution, which handles the whole gamut of warehousing functions at Nottingham and drives a radio-frequency data system based on LXE RF terminals. Capabilities include stock put-away, replenishment and picking route optimisation.

To keep movements in the warehouse to a minimum, MetaPack was attracted to PkMS's ability to handle multiple orders within a single picking trolley, and to allow a pick-direct-to-carton operation. It even handles carton sizing to ensure that individual consignments fit the allocated container. Packaging specialist Danisco is supplying the expandable cartons, which come in six different sizes.

Part of the Boots proposition is to give online customers an enjoyable and satisfactory shopping experience, and that includes offering a range of delivery options. The standard service is two-day delivery, while other options include next-day delivery, evening delivery (defined as between 4pm and 9pm) and Saturday delivery.

During the launch phase, shoppers were offered free delivery if they ordered goods worth more than £10 and accepted the standard two-day service. Those persistent enough to pursue orders worth less than £10 to the point of checkout found that in some cases these, too, were delivered free. It is not clear what the eventual charge for this service will be.

The premium delivery options each add £5 to the delivery charge. Not all options are offered to all shoppers; availability depends on postcode.

Wellbeing is prepared to leave goods with a neighbour or elsewhere if instructed by the customer, but not if a signature is required on delivery (as is the case with any order worth over £100, and also with all the enhanced-delivery options).

Flexible options

It seems likely that the organisation will want to formalise this flexible approach and make it more widely available, although at this stage it is guarded about revealing specific plans. However, MetaPack itself is already working on a range of more flexible options. These include "express" delivery (which could mean within the day); delivery in nominated time slots; delivery to alternative addresses (which could be the customer's work place, a collection point or a drop-box); and delivery on forward shipping dates (a facility already available for Saturday deliveries).

Presumably as these options are rolled out, the Wellbeing.com team will consider which of them would add value for its own customers.

Perhaps surprisingly, the decision to offer a range of delivery options has resulted in the appointment of no fewer than four carriers to handle final deliveries. The first choice is Royal Mail, which is handling consignments small enough to fit through a letterbox. Where the package is too big, three other companies come into play. Business Express is handling standard two-day deliveries; Securicor is doing next-day and evening deliveries; and Parcelforce Worldwide is handling Saturday deliveries. MetaPack says it has divided its business in this way to reflect the range of features offered by the individual carriers ­ including for instance their pricing structure, service levels and contingency planning capabilities. It was "a complex decision", the company says.

It acknowledges that working with a number of carriers "can present problems," but has aimed to overcome these as far as possible through standardising the presentation of consignments. For example, it has developed a 6in by 4in label with uniform Wellbeing branding for all packages, but made this adaptable in order to meet the requirements of individual carriers. There is provision to display the carrier's own unique references and sort code, as well as a free text space for special delivery instructions. Another customer-friendly element of the operation is the ability for customers to track and trace their consignments right up to the time of delivery. The MetaPack management system feeds real-time stock and delivery information directly to the Wellbeing.com Web site.

Returns handling has been given particular emphasis. Returns documentation is included with every consignment, including pre-printed and pre-paid delivery labels, and customers are encouraged where possible to return unwanted goods themselves through the Post Office.

The object here has been to avoid the need for them to use the Wellbeing contact centre, keeping processing costs down. The returned goods are evaluated when they arrive at the warehouse, and a refund or replacement procedure is activated. The long start-up phase is now complete, and the operation went live as planned in early spring. Clearly both organisations are still going through a learning process, and both are committed to further expansion.

Resources for that expansion will presumably depend on the success of the enterprise, but with a reported £18 million already allocated to the project, its sponsors are clearly committed to the long haul, and as the habit of home shopping becomes more established, they should be well placed to take advantage of it.

Established values mirrored on the Web

"We want to use new media to develop a trustworthy, enticing and reliable service to mirror the values of the Boots and Granada brands." That is how Mark Knowles, head of fulfilment at Boots Internet Ventures, sums up the philosophy behind the Wellbeing.com e-tail venture.

The Wellbeing operation was announced last year, replacing Boots' previous in-house e-tail operation, Boots.co.uk. It is a 60-40 joint venture between Boots and Granada Media, the leading broadcaster and TV production company, which is also a co-owner of the ONdigital terrestrial digital broadcasting platform.

The development reflects a drive by Granada to exploit new media opportunities, especially through joint ventures with existing brand-holders in key business sectors. Last summer, to spearhead this drive it formed a new subsidiary, Granada Broadband, and has since also struck deals in the sporting sector with Liverpool FC and Arsenal FC. Boots and Granada also cooperate in a 30-minute television show, The Interactive Health Show, which is broadcast across ITV's northern England regions.

Wellbeing.com offers a range of 10,000 products in eight main categories ­ health, beauty, personal care, fitness, nutrition, mother and baby, men and gifts. Around 4,000 items are exclusive either to the Wellbeing site or to Boots' high-street stores. The service is promoted extensively in the Boots Health and Beauty magazine, which is said to have a circulation of 2 million. According to recent reports, Boots is also considering using the Wellbeing brand more visibly in its retail empire, completing a "virtuous loop" linking its bricks and mortar operations with its Web presence.