AO.com: ‘Supply chain tech is essential to cope with coronavirus challenges’

In our Your Story series, we speak to business owners about the challenges they’re facing and the steps they’re taking to overcome them. CEO John Roberts shares how AO.com‘s analytical technologies are providing an agile customer service, and shares some tips that could help your business.

I had an idea 20 years ago that we could change the way that white goods are bought using the internet. In the pub one Christmas Eve, a friend bet me £1 that I wouldn’t give up my job at the time and actually do it – and now here we are.

In a nutshell, my hunch paid off.

Manufacturers and third-party retailers quickly saw the value of selling white goods online, bringing us on board to supply and deliver these products and to instil top-quality customer service. In 2014, AO World PLC floated on the London Stock Exchange.

No business in the world could have planned entirely for coronavirus (COVID-19). The situation is globally unprecedented. You can have a disaster recovery plan, but you can’t necessarily plan for the scale of the situation that we have.

It’s a very fast-moving situation and so we’ve had to change lots of physical operations across the business.

But the critical thing as a retailer is to position ourselves for where the customer is going to be – how consumers and customers think about things, and what can we do to help them.

Customer needs should drive new services and capabilities where possible

Customers tell us that as an online electrical retailer, we’re an essential service for them during this pandemic.

Products that we sell, such as fridges, freezers, cookers and washing machines, are vital to people, particularly now that homes have become offices and schools.

On the high street, retail was a very challenging place to be before coronavirus, so it’s not just coronavirus that has caused problems for retailers.

Much-needed change to support our sector’s future that might have taken five years to develop has been accelerated and condensed into these past few weeks.

Nobody could have possibly imagined that 100% of retail would go online – yes, this is a false market due to coronavirus – but that is the reality.

Customers are finding new ways to buy and look for products. Take takeaway food. People are discovering options and delivery services they might not have tried before.

Businesses are finding new ways to do things – organic farmers are finding a way to go direct to consumers, for example.

“Nobody could have possibly imagined that 100% of retail would go online”

And when they see a better way, they do not usually go back to old habits that are not as good. But then again, everybody has a different metric of what excellent retail service is.

Retailers need to have the online services they offer in good working order.

In October 2019, I went all around the world, meeting leaders of all the major technology brands we work with, and there was no doubt whatsoever – the consumer direction of travel is online and all the data supports that.

In our space, we’ve grown market share and seen increased demand and sales across all categories since the lockdown came into force.

What this shows is that in our market, customers can be entirely fulfilled online.

Offline retailers should undoubtedly look to expand the services that they offer. We’ve been able to manage coronavirus well because we have a logistics network, a robust infrastructure and different capabilities across the business.

Get your supply chain technology right – look externally if necessary

In terms of our suppliers and the state of our supply chains, there were indeed some challenges and difficulties we needed to deal with, primarily as we work with international manufacturing suppliers.

We have excellent, deep relationships with all the major brands, so we’re in a strong position to work that through with them.

Our logistics head office and distribution centres are in Crewe, where products from suppliers are stored, organised and loaded for distribution. These supply goods to outbases, which allows us to offer next-day delivery.

Technology is essential to us. We built most of our core systems in-house, but we do have external specialist supply chain technology that boosts our analytical capabilities and manages inventory.

We put in a new system that will allow us to address the challenges we face with demand forecasting, replenishment, promotions and product lifecycle management decisions.

It’s also scalable as we expand into new territories and extend the product range into new categories.

The supply chain is such an integral part of the business that we needed to get this part right. Indeed, we could have built something in-house, but it would have taken a very long time to do and a lot of resources – and there was an effective solution already out there.

Adapt and add to your retail services depending on demand

We suspended most of our installation services at the start of the pandemic to keep our people and customers safe, which means we will by default, offer doorstep delivery.

However, we continued to offer services on cooking products and some types of fridge that require qualified people to install them, and are beginning to slowly add other specialist services safely.

Our drivers and engineers have reduced the time they spend in homes by 95%, and wherever possible, they stay two metres apart – when deliveries are completed, they wait at least two metres away.

“Customers might forget exactly what you did, but they remember how you made them feel”

If we’re installing anything, people must remain in another room and follow social distancing guidelines. Customers do not need to sign any paperwork, and we recommend they clean surfaces and handles once any installation is complete.

In terms of our vehicles, we keep them restocked with hand sanitiser and wipes, and deep-clean them each week. As heavy appliances and installations require two people, we keep the same partnerships and where possible the same household.

Bring your staff on-board with technology

Our culture is extremely important to us and something we’ve nurtured and invested in carefully over the past few years. It’s played a huge part in how we’ve addressed the current challenges.

Everybody in our offices, including our contact centre teams, are working at home. It took us less than a week to make this transition from the first days we trialled it to the point where everybody was home-based.

We regularly communicate with people about the latest government guidance.

It’s obviously a challenge for people used to working in an office environment, so we’re supporting our employees in every way we can. For example, we offer flexible working, which is particularly necessary for people with children or vulnerable people to look after.

Technology is essential in a situation like this, so we’ve equipped everybody with the hardware and software needed to work at home, which includes Voice over Internet Protocol (VoIP) systems for contact centre agents.

We completed a full risk assessment to ensure all our customer data was protected. We were already using a paperless process in line with GDPR, with systems only accessible over password-protected wi-fi and multi-factor authentication in place on phones.

My top three takeaways

Here’s what worked best for our business.

1. Create memorable customer service

We have record net promoter scores on the service that we’re currently offering to customers, and we’ve had the highest percentage of new customers to the business that we’ve had in a long time.

Customers might forget exactly what you did, but they remember how you made them feel.

So this is a real opportunity for us to celebrate our customer service and bring that to more customers at a time when their need for services like ours has gone exponential.

2. Be agile

We’ve had to manage a significant sales increase at a time where you’re having to put entirely new working methods in, with a complete change of perception from customers around how deliveries should work.

You’ve got to be agile to make that happen.

In terms of looking forward, these changes do make our operations less efficient, so we will want to address them again as soon as the government says it is OK to do so. But I do not see this happening for some time.

3. Believe in your culture

I’m a great believer in the value of culture in a business.

In times of difficulty like now, it’s a critical time to get the benefits of it. You’ve got to have a workforce that is engaged in the pace of the change you need to make, which understands why you need to make them.

We’ve believed for 20 years that empowering our people to be able to make decisions based on an individual customer’s need is essential – it’s not one size fits all.

John Roberts was talking to Sage Advice’s Asavin Wattanajantra.