January 2001

As one of the longest-established direct PC sales organisations, Watford Electronics knew exactly what it wanted in its consumer Web site. e.logistics magazine hears how it set about providing it

Avid readers of computer magazines will immediately recognise the name Watford Electronics, which has been a high-profile advertiser in the specialist press for many years. The company sells a wide range of computer hardware, software and peripherals both by retail and via direct channels. They include its own-brand Aries range of PCs. It can trace its origins back 28 years, which in such a fast-moving market seems like the equivalent of several lifetimes.

In common with other big players in this market, Watford recognised the need to establish a Web retail presence, and well over two years ago it started development work on its Saverstore venture (as it became known internally). What began as a modest trial culminated in the launch last year of a brand new Web site, whose rapid success has more than justified the investment. The company says online transactions now account for 40 per cent of its total.

In such a young market there were no set guidelines for Web development, and the route taken by Watford Electronics is instructive. Perhaps most radically, it has opted for a system in which all fulfilment is handled directly by the suppliers. The Savastore company holds no stock at all.

Instead, partnerships have been arranged with suppliers, who ship direct from their stock, and Savastore handles all trading with them electronically. The group says this helps it to sell goods at very low margins; it has none of the usual overheads of conventional companies such as warehouse space, stock forecasting and obsolescence, booking in stock, despatching the stock or staff training.

A fundamental tenet of the site design was that it should be generic and configurable. Nowhere in the front- or back-end systems was anything to be hard-coded. This has meant Savastore can offer hosting services for other companies that want a Web presence but don't have the resources to develop a sophisticated system of their own. It also means that if it wants to, Watford Electronics can open up new stores that sell totally different goods without any re-design work or coding.

Another feature of the Web design policy was that key suppliers should be allocated their own "shop-in-shop" within the site. Clearly this has reinforced their presence on the site, and no doubt has helped encourage them to take an active role in the fulfilment functions inherent in the site's philosophy.

The Watford Electronics branding is maintained consistently through the site, even in the dedicated areas, and product searches range over the entire 5,000-product stock list; so consumers are not required to distinguish between supplier areas and the general Watford Electronics areas. But the suppliers are given a somewhat higher profile than they would be on a site with only e-tailer branding.

Arriving at Web retailing from a background in direct selling, Watford was able to anticipate many of the demands it was likely to encounter with the new service. That experience was augmented by feedback from customers. According to managing director Nazir Jessa: "We listened to and implemented ideas that were sent to us."

The company was therefore able to draw up a check list of services that it had to provide. These included customer and account enquiries; online sales; returns management; a help desk; access to suppliers' stock lists; and a product catalogue that would be regenerated automatically by the back-office system.

As far as the customer is concerned, the object was to provide a seamless buying experience, in which most functions would be executed online in real time, and unusually generous provision could be made for order enquiries and access to other information. When the customer joins, his or her postcode is validated online. When the order is being placed and the credit card has passed the usual modulus 10 check, the credit card is authorised online. Information is then passed to the back office and a sales order is created, and the order number is passed back and displayed on the page for the customer. One relatively advanced feature that seems calculated to provide customer reassurance is the fact that a returns module is also provided online. This allows customers to arrange for a refund or exchange online at any time of day. Return policies and procedures are validated from the information provided by the customer. The options available to the customer are controlled by the back office system.

Customers are kept informed about their orders via email at different stages of the order life cycle, and can also track orders online. EDI messages from suppliers update the back-office system with delivery details and/or expected delivery dates, and this information is instantly available to view online. Customers can also drill down from the order itself to delivery information, and even to the courier's site, which should provide information about who signed for items and at what time.

The company decided to offer a "configure" option for items such as PCs, and was able to include this in this system too. Customers can pick and choose what features they require and see the result re-priced online. Options are taken from the back-office system and can be changed "on the fly"; and significantly, these changes are reflected on the Web pages without any code changes.

The company has also incorporated a few other consumer-oriented tricks. For instance, there is a downloadable "price check" feature, which allows customers to check the Watford price for an item, regardless of what site they are on at the time. Downloadable "skins" for Internet Explorer are also offered to allow users to customise the look of their browser.

Managing director Nazir Jessa is happy to put a measure on the success of the new Web site. When we contacted him late last year, he told us the number of orders taken online had grown from an initial 440 a month to 3,500 a month. The revenue generated from these orders had increased from £57,000 to £500,000.

He adds: "We have also noticed that we have a core of customers who are loyal to us and visit every week to review our offers."

Looking ahead, Jessa points out that the company has been developing a WAP site (this can be viewed at www.watford.co.uk/wap). Again, all the information is configurable from the back-office system, removing the need to code any pages for the site. Already weekly offers can be viewed on the WAP site. The company is also developing the site to work with Web-TV.

System specification was clearly going to be fundamental to the success of Watford Electronics' Web site. To underpin the operation, it opted for an enterprise resource planning system called Ability. This links to a Universe multi-dimensional database from Informix, and data is passed between them by Informix's Redback Objects querying system. The hardware choice was an IBM RS6000 Unix-based system, which was favoured for its fault-tolerance and high availability. Web server functionality is provided by IBM's RS6000 H80 Web server, supported by nine Netfinity PCs for load balancing. Altogether, hardware investment amounted to £500,000.

The Ability suite implemented at Watford Electronics is a 200-user system, and includes integrated modules for accounts payable and receivable, purchasing, sales, service management, project costing, fixed assets, marketing, POS data capture, event tracking and production. This integration allows Watford to support mail-order, telesales and shop activities, as well as maintaining a database for analysing sales and payments. The Ability system's role is pivotal. It automatically imports customer orders from the Web site and exports customer details. Once the orders are in the system, an electronic message is sent to suppliers with instructions on where to drop-ship the goods.

Credit-card authorisation is performed on the back-office system, which uses Checkline authorisation charging and software. EDI functionality was provided by Sterling Commerce. When an EDI message is received from suppliers confirming the despatch of the items, the credit card is charged. The accounts receivables module of Ability also handles transactions for on-account customers.