Case Study: Refining the online customer experience at dabs.

com
This case study highlights the importance placed on web site design as part of the customer experience by dabs.com who are one of the UK's leading internet retailer 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 dot-com boom, but unlike many dot-com startup 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.coms 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, so would not be an early candidate 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 5,000 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. Wall 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 ensure 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, says Wall. 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, says Wall. And we really see the effect of that in the way our buyers and merchandisers approach the market.' Dabs.com switched 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 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 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 December the 5th it read: 1,098,412 customers 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. Although the previous site was only updated 2 years ago, he describes the need to keep ahead of competitors as a cat and mouse thing. But new site advances must be combined with competitive prices, Wall says: 'Online customers are price-loyal, not retailer-loyal. The customer is only as loyal as the cheapest price they can pay for a product. It means your competitors are only ever one click away. We have to do everything to keep our customers on our site. Getting them to pay that price to you, rather than

your competitor, means that you'll need to exploit the constantly-evolving benefits of digital technology to make their buying experience on your site as fluent and satisfactory as possible.

On-site search capabilities

Part of the new site, is improved on-site search capabilities from Endeca, which powers the search of Walmart and Circuit City sites in the US. Search is important to increasing conversion rates, and so increasing sales, since if a user is not-presented with a relevant product when they search, they are likely to try another retailer. The search capability should strike a balance between delivering too many results and too few. Channel Register (2005) reports that dabs.com hopes to increase conversion rate by up to 50% by updating the sites search and navigation features. Current conversion rate is 3.5% and it is hoped this will be increased to nearer 5%. Endeca's new search allows users to select products by attributes including price, brand and even size and weight. This method of narrowing down the search should result in the customer being left to choose from a list of 10 or 20 products rather than hundreds. Another aspect of the business case for the new site is to ensure the customer makes the right decision since product returns are costly for dabs.com and annoying for the customer. dabs.com marketing director Jonathan Wall explained: When we launched the website in 1999 people knew what they wanted. Now we find a large tranche of customers might know the type of product they want to buy but not which model they want. The new site is about guiding them through the process.

Accessibility
Since dabs.com has tech-savvy customers, it has to support them as they adopt new ways of browsing. Dabs.com found that by 1995 nearly a fifth of its users were using the Mozilla Firefox browser, so a further requirement for the new site was to make it accessible to users browsing with a range of browsers such as Firefox, Opera and Apples Safari.

Marketing communications
Marketing communications approaches used by dabs.com is summarized in Chapter 8 in the Mini-case Electronic retailers cut-back on their E-communications spend. For customer acquisition, the main communications tools that are used are: Search engine marketing (the main investment) Referrals from affiliates (this has been reduced) Online display advertising on third party sites (limited) PR Sponsorship (Shirt sponsorship for Premiership team Fulham)

Sources: Channel Register (2005), IT Week (2003), NCC (2005) Channel Register (2005) dabs.com in 500K www.channelregister.co.uk, John Leyden, 2nd September. makeover, Channel Register,

IT Week (2003) E-shop adds to attractions. By David Neal, IT Week 12-09-2003, p24, www.itweek.co.uk. NCC (2005) dabs.com benefits from innovative approach. Principia. NCC members magazine. Issue37,May/June. http://www.nccmembership.co.uk/pooled/articles/BF_WEBART/view.asp?Q=BF_WEBART_16 2441

Questions
1. The management of Dabs.com have invested in several major upgrades to its online presence in order to improve the online customer experience. Assess the reasons for the need to invest in site upgrades by referring to the dabs.com example. To what extent do you think major, regular site upgrades are inevitable? 2. Compare the quality of the online customer experience of dabs.com by visiting the site and those of its competitors such as www.ebuyer.com and www.euroffice.com. Explain the categories of criteria you have used to make your assessment.