Delivering e-business success

Sainsbury’s
to You – the supermarket’s online shopping facility – survived the burst of the
dotcom bubble, and its tills are still ringing. Claire McCartney looks at how
the company picked the right HR recipe to deliver online success.

Background

Sainsbury’s
has been involved in e-business and home-shopping development for six years. It
began experimentally and took time to develop a strategy to roll out.

“There
were huge costs involved and an enormous amount of uncertainty – use of the
internet wasn’t that great and there was more of a market for telephone sales.
There were massive predictions about the size of the market, but at that time
it wasn’t actually happening.”

However,
an e-business strategy was developed and finalised and Sainsbury’s to You
(previously called Orderline) relaunched in April 2000. This coincided with a
rebranding scheme, a new website and the development of a picking centre, and
finally a store-based home-shopping solution covering the rest of the big
metropolitan areas of the UK, started to roll-out later that year.

Positioning

Sainsbury’s
to You and the concept of e-business are strategically important to the
organisation, and part of a process which promises great potential for the
future. The organisation regards e-commerce as another channel for its
customers, and feels that it is about offering choices for busy lifestyles.
Sainsbury’s was aware from customer feedback and market research that an online
shopping channel was something its customers wanted, and failure to incorporate
one into its business strategy would risk losing customers to competitors.

Structure

Sainsbury’s
to You consists of two dedicated picking centres that are not open to the
public, and in-store picking, which takes place in 50 stores. The business has
a department at head office which supports the marketing, strategic
development, ranging, merchandising, and costing of products. In addition, a
number of staff work in the field supporting the stores. Hundreds of staff at
all levels are involved with Sainsbury’s to You. A large proportion of the
‘pickers’ work flexible hours and part-time shifts to cover the extended
opening hours required by all retail organisations.

Employee
mix

Although
some employees transferred from the traditional side of the business, a number
were recruited externally. Recruitment for the new skills required was a real
issue for the business during the dotcom boom. A key challenge at that time was
the need to attract and entice people from web companies with the necessary
skills. However, as confidence in e-business diminished, the security offered
by a large firm became attractive. Sainsbury’s to You formed a team that
blended people with web and marketing skills alongside those who had worked for
Sainsbury’s in retail and in the supply chain and understood the logistics of
the business. Inevitably, this created a melting pot of very different skills,
perspectives and priorities. The biggest issue was getting the team to value
other people’s perspectives and create a climate where all were valued.

“It
was very much about setting this environment up as part of our own. Trying to
create something which was seen to be a bit different from the main part of the
business to stretch the employees, but also giving them more latitude and
opportunity.”

Sainsbury’s
to You transitioned the skills of current employees by conducting training
around working in teams and learning cross-functionally to educate people on
e-business and to bring them up to speed.

Redundancy

Redundancy
is usually commonplace within most e-commerce environments, but it has not been
an issue within Sainsbury’s to You.

“I
guess that is another advantage of being part of a larger organisation. When
we’ve had peaks of activity we’ve been able to move resource, but you have
somewhere to move it back to when things calm down.”

Being
part of a traditional organisation has provided the online business with the
flexibility to borrow or second workers from the main business and then return
them.

Environment
and culture

In
the development phase of the business, Sainsbury’s to You occupied a separate
building. This gave the team a lot of freedom: the dress code was relaxed,
there was a CD player to help creative thinking and an environment more akin to
dotcom start-ups was created.

In
addition to a slight change in terms and conditions, this environment also
attracted talent to the team. However, Sainsbury’s to You didn’t completely
‘spin off’ and become a separate company because the main purpose was to
deliver shopping – and Sainsbury’s’ knowledge in this area is invaluable. The
business needed to be associated with the strength and security of a strong
brand.

It
was important for the business not to lose sight of the fact that they were
part of the wider organisation, and with Sainsbury’s’ recent move to a new head
office, the online business has now been integrated into the same building.

Tensions

Initially,
tensions between the online shopping unit and the parent organisation arose
because it received a great deal of resource and investment. From a short-term perspective,
the size of the website’s market compared with the main grocery market is tiny.

There
is also a sense that the online business must continually justify itself
because of the amount of finance it is given.

Senior-level
support

Sainsbury’s
to You had strong support from the board and senior management were keen for
the traditional side of the business not to slow the project down. There was
recognition that having decided upon a strategy, the unit needed to move
quickly. Significantly, the appointment of a new CEO at Sainsbury’s, with
previous experience of e-business and a desire to push home shopping forward,
cemented this support.

“There
were a lot of challenges around the whole business model and from analysts
about investment. There was also some negative PR, so it was very important to
have that support.”

Phases
of implementation

Initially
in the first six months of the project the team had to work on a day-by-day
basis, scoping out issues and problems as they went along. However, the
business is now at a stage where this process can be refined.

“In
the beginning it was about flexibility, and being comfortable with not actually
knowing what was happening.”

Working
within such an environment of constant change proved challenging. When people
were recruited they were given an idea about what their job might entail and
how it could be developed. This contrasted greatly with the main side of the
business, where work roles and processes are more structured and defined.

“We
had to define jobs as we went along and I can’t think of anyone who left
because they didn’t like that. I think they looked upon it is as a challenge
and good experience.”

Management
styles

At
the start of the project in the separate building, a more informal management style
was encouraged. A matrix management model was developed which included
substantial cross-functional working.

“We
had to be comfortable with blurry lines, and some of the jobs are much more
cross-functional as opposed to hierarchically defined.”

Sainsbury’s
to You represents a microcosm of the whole company, retaining many of the same
functions, but on a reduced level.

Competencies

The
online business has developed a set of competencies and it recruits according
to this criteria, but these were developed over time. Throughout the initial
stages of the project, appointments were made more on gut feeling and instinct.
Desirable candidates are flexible, resilient and adaptable to change, team
players, and are comfortable within a ‘blurry’ organisation rather than wanting
a specific, clearly defined role.

Boosting
staff morale

There
is a definite need to boost staff confidence and morale at various stages of
development. The unpredictability of the business means that two things can
affect employee morale.

“Firstly,
if we get the forecast wrong and under-deliver, then they can become
demotivated, but also when we over-deliver, we make it quite hard work for
everybody.”

The
key to boosting morale at Sainsbury’s to You centres on communication and
celebrating successes. In such a busy business environment such things are
quite easy to overlook, so these practices must be reinforced.

“It
is crucial to share information with employees. So, if sales are lower than
expected, for example, explain why that it is.”

Employee
buy-in

Employees
are bought into the project and motivated by the promise of e-commerce and what
it means to the business in the future. They are also motivated by being part
of something new and exciting that has great potential. Employees personally
benefit from working in this kind of environment by learning new skills,
gaining experience and working in a setting where change is constant.

Measuring
success

The
business has several ways of measuring its success. Firstly, customer feedback
is a useful indication of service quality collected through customer surveys,
online surveys, usability studies and a mystery shopper programme. Success can
also be measured by analysts’ opinions of the business. With a large firm it is
crucial to manage relations with analysts. Success is measured by analysts
perceiving the organisation’s strategy to be relevant and successful for the
business.

Advantages
of traditional organisations

The
advantages of being part of a traditional organisation are persuasive: brand awareness,
trust, familiarity and knowing the products in advance. As one manager
suggests, combining services leads to greater market growth.

“People
don’t shop online exclusively. Most people mix and match. By having both, you are
actually getting all that share of the customer’s money and you can continue to
grow with that.”

Having
a parent organisation that understands the process of running a supermarket and
the food retail business is a definite advantage. In addition, having the
support and buying power of a large supermarket organisation is also important.

Disadvantages
of traditional organisations

Initially,
recruitment was difficult because the business was competing with smaller,
innovative companies, offering the opportunity for people to be millionaires by
the time they were 25. But following the burst of the dotcom bubble, this is no
longer the case. Being tied into corporate planning cycles is also problematic
for Sainsbury’s to You as they do not fit with the often unpredictable and
changing nature of the business, and this needs to be recognised by the
traditional business.

Key
enablers of e-success: the biggest issues in enabling success


Getting the buy-in and support from the rest of the business
● Recognising that ordering online is just another way of shopping, so it
uses many skills the organisation already has
● Not reinventing the wheel where it isn’t necessary
● Recognising where the skill gaps are and recruiting externally
● Building internal confidence when there is uncertainty about the
e-commerce market
● Being bold enough to change plans and forecasts and realigning people’s
targets to meet them

Key
learning points


Not losing sight of what you’re in business for – Sainsbury’s to You is about
selling food and making it easy for customers to buy it. It is not about having
the flashiest website
● Understanding your business and then securing the right people.  Sainsbury’s to You is a food business so a
lot of people who work in the organisation are appropriately skilled – ‘it’s
not all about computer whiz-kids and programmers’.
● Outsource what you’re not good at – Sainsbury’s outsourced its IT – and
recognise what your capabilities are.
● Apart from having more accurate market predictions the online business
has no regrets

E-business:
What are the Human Implications of Transformation?
by Claire McCartney is
available from Roffey Park priced £30.00. Contact Pauline Hinds on 01293 851644
or e-mail: pauline.hinds@roffeypark.com.
To purchase the report online please visit: www.roffeypark.com

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