Easi-Order
It's a sophisticated home-shopping service -- three years ahead of rivals -- that's drawing good reviews from British customers.
March 20, 2000 (Computerworld)
BASINGSTOKE, Hampshire, England -- Anita Morgan thinks of her monthly grocery order as originating in her kitchen here, where she ticks off items on a personal digital assistant (PDA). But her order really begins its long journey in a huge database on a mainframe at Safeway PLC headquarters in Hayes, Middlesex, 50 miles away. Software written for Safeway by IBM reckons that Morgan's family of four will need two loaves of Hovis Crusty White Bread, a bottle of Safeway spray starch, a box of Home Pride flour, a box of Five Alive fruit juice and dozens of other items, in an order that will bring the grocery chain some $300. It remembers those details from Morgan's past orders, as it remembers every item bought from an inventory of 22,000 products by 10 million British shoppers over the past four years -- some 3 terabytes (TB) of grocery-buying intelligence.
And the software, knowing that Morgan recently bought hot-cross buns individually, now suggests that she spring for a "cluster" of hot-cross buns -- very helpful to her and revenue-enhancing for the grocery chain.
The draft order, which was transmitted to her Palm III PDA the last time she connected it by telephone to Safeway, also suggests that she try Oracle toothpaste. "That's Safeway's own brand. That's why they've put that on there," Morgan surmises.
Of course, Morgan sometimes wants to buy something she hasn't ordered before or something she bought so long ago the Safeway computer figures she's lost interest in it. Not to worry. If she has an empty box or wrapper for the item, she swipes its bar code with a scanner built into the PDA for Safeway. Presto -- it's now part of her electronic order.
If she doesn't have one of the items on hand or if it has no bar code -- say, a cucumber -- she just describes the item in a free-format field that turns into e-mail to Safeway: "Three large cucumbers."
When Morgan has finished editing her order, she attaches the PDA to the telephone in her living room and dials up an IBM server in Warwick, 100 miles northeast of her bungalow here on Myllord Close. This midtier computer is a Java-based intranet server that connects to Safeway's S/390 mainframe in Hayes. Morgan sends her order to the server along with a note saying she'll pick up her groceries at the nearby Basingstoke store the next day between 2 p.m. and 4 p.m.
Safeway's Easi-Order isn't the only home-based grocery shopping service. But it's the only one to use PDAs and the only one backed by such sophisticated data mining, says Gene Alvarez, an analyst at Meta Group Inc. in Stamford, Conn. Other services in the U.S. and abroad use faxes or PCs connected to the Internet to send in orders, and the underlying data mining is product-specific, not customer-specific, he says.
"The PC is usually not in the right room," Alvarez says of these competing services. "It's not next to your refrigerator, in the bathroom or next to the linen closet. So the handheld scanning device allows the consumer to walk around the house to where the items are."
Most of the Basingstoke store's 500 Easi-Order customers use the service weekly. Morgan says she prefers to buy a month's worth of nonperishable items with Easi-Order and shop weekly for other items in the conventional way. "I like to be able to pick up my own apples and my own oranges," she explains.
A Real Time-Saver
But Morgan, who has two young boys and works at a local college, says she's sold on the electronic ordering service for the time it saves. "I can go in and out of the store in about 15 minutes because I've gotten all these other items through Easi-Order," she says. "I must admit, going round the supermarket is not my favorite job."
The following morning, Safeway Easi-Order specialist Helen Irving arrives at the Basingstoke store, logs on to the Warwick server and prints out all the orders, including Morgan's, that are scheduled for pickup that day.
One Easi-Order shopper has used the e-mail feature to add this item to her order: "Husband requests Claudia Schiffer" -- a British supermodel. Irving appends her reply in the area reserved for out-of-stock notification: "Sorry, she's out of store."
Sometime before the scheduled pickup, Irving will go up and down the store's aisles filling a shopping cart with Morgan's order. But there's no need for Irving -- or, later, for Morgan -- to go through a checkout line. Irving logs each item by scanning its bar code with a handheld scanner as she puts it into the basket.
When Irving has completed the order, she brings it to a holding area at the front of the store. The scanner is plugged into a docking station that reads the order and holds the information until the shopper arrives.
When Morgan comes in two hours later, she'll swipe her Safeway account card at the same station, and the system will match the order data with her customer data and send both back to the Warwick server, and from there to the 3TB DB2 database at Safeway's data center in Hayes. There it will rest until Morgan next connects her PDA and obtains a new suggested order.
In the meantime, Christine Mullord, whose husband ordered the supermodel, arrives for her pickup. "I think Easi-Order is brilliant," she says. She says her shopping trips have shrunk from 1.5 hours -- "sometimes with children in tow" -- to 20 minutes. And she says she likes being able to prepare her order at home while watching TV.
Asked about the order for Claudia Schiffer, Mullord reddens and will only say, "It just happened last night." Everyone laughs.
Amid the banter, it becomes clear that Easi-Order has sidestepped a problem that many e-commerce services face: Some users will avoid technology that removes the human touch. Mullord and Morgan say they've become friends with the two clerks who process their orders -- something that wasn't possible previously when they saw a different checkout clerk each time they shopped. Says Morgan, "I know them, they know me and they know the boys. It's nice, actually."
Safeway Gives Away the PDA, Cements Customer Loyalty
Meta Group analyst Gene Alvarez says Safeway has trumped other grocery chains that try to hook shoppers with product discounts and "loyalty" cards. "With those, you're buying loyalty with margin," he says. "I'm loyal for this transaction only."
Safeway also has discount-based loyalty cards, but its PDA adds "service-based loyalty," a concept Alvarez predicts will become more common in U.S. retail chains during the next three years. That brand of loyalty is more long-lived because the PDA enhances the entire shopping experience every time, not just for specific discounted items, he says. And the data mining, which builds the timesaving customer-order profiles, introduces in the shopper's mind a "switching cost" that inhibits a move to competitors.
Safeway thinks of its PDA technology not just as a way to collect orders but as a way to communicate with customers. "When IBM Research and I sat down to design Easi-Order, we wanted something available to anybody, anytime," says Mike Winch, CIO at $14 billion, U.K.-based Safeway PLC, which is no longer associated with U.S.-based Safeway Inc. "We wanted an easy way for customers to communicate with Safeway and us to them. And we didn't want the complication of PCs or logging on to the Internet." This customer communication is highly personalized, Winch adds. Easi-Order customers see on their PDA screens suggested orders based on past purchases. But they also see suggested buys tailored to demographic data collected by Safeway. "We don't present meat promotions to vegetarians or baby products to pensioners," he says.
Winch says the Easi-Order PDA will someday morph into a PC-less Internet portal. "We will go beyond Safeway's product portfolio, and whether you want theater tickets, airline tickets or information about a particular area of interest, we'll make that available."
"The strategy of most retailers today is a product-push strategy," says Christian Nivoix, worldwide general manager for IBM's distribution sector. Now a few companies are adding a complementary customer-pull strategy in which customers are pulled into the store or coaxed into ordering specific items, based on knowledge of their preferences and demographics, he says.
Safeway is ahead of the game because it started to build a repository of customer data five years ago -- something competitors can't quickly match, Nivoix says. "This push-pull strategy is the strategic thrust that will make the difference between winners and losers in the near future in the retail industry," he says.
Easi-Order was developed jointly by Safeway and IBM's research laboratory in Hawthorne, N.Y., in an IBM program called First of Its Kind. Now available in the Basingstoke store only, Easi-Order will be in some 200 stores around the U.K. within three years, says Jeremy Wyman, Safeway's business solutions manager.
Some of the challenges of implementing the systems are surprisingly mundane, such as building the special Easi-Order processing areas in the stores. They require a special service desk, computer terminals, printers and refrigerators for holding the orders. "It's not always easy to get a plumber, carpenter and electrician working together," Wyman explains.
And there's the cost of the PDAs, which Safeway gives away. With the built-in scanner, they cost Safeway $400 each in low volumes. Making matters worse, a number of customers apparently use them as electronic organizers, with no intention of ordering through them. Wyman says the cost will come down with higher-volume buys, and Safeway is considering other schemes -- such as carrying paid advertising -- to offset the cost.
Another worry is that Easi-Order will reduce impulse buys. Several customers told Computerworld that they're now less likely to buy things they don't really need. Safeway's response: to use those smart data-mining techniques to tempt shoppers with promotional items they just can't refuse. For example, Safeway pushes baby products to new mothers through Easi-Order, based on birth notices obtained from a government health agency.
There are some compensating factors to a possible loss of impulse sales. Graham Rutt-Mouret, who does all the shopping and cooking for his family of four, says he spends about $130 per week via Easi-Order. He says Safeway ought to waive the $5.75 per order charge it tacks on. But he says he feels he's joined an elite class of shoppers because he no longer has to queue up at the checkout counter. He says he's less likely now to shop at Safeway's competitors' stores. "I see myself as a different kind of customer now," he says.
Says Alvarez: "That's exactly the kind of feeling you want to generate from a good customer relationship management strategy."