Shaun Ryan: [00:00:00] Hi I’m Shaun Ryan from SLI Systems and this is the eCommerce Podcast. Today I’m talking to Luke Hilton from Dick Smith Australia. Hi, Luke.

Luke Hilton: [00:00:09] How are you going, Shaun?

Shaun: [00:00:10] Good. So, Luke, traditional first question: what’s the first thing you ever bought online?

Luke: [00:00:15] If I remember correctly it was a book from Amazon. It was a book about Windows 2000, and I was thinking about becoming a Microsoft certified professional.

Shaun: [00:00:29] Did you ever do that?

Luke: [00:00:32] I bought the book, I didn’t get the certification.

Shaun: [00:00:36] Great. A book from Amazon’s a very common answer for the first thing you bought online. What was the most recent thing you bought online?

Luke: [00:00:44] It might sound like a bit of a blatant plug, but it was a microwave from dicksmith.com.au. They had a staff sale, and I needed a microwave.

Shaun: [00:00:55] Great, great, great. So you’re drinking the Kool-Aid. So can you give me a little bit of background on yourself?

Luke: [00:01:03] Yeah, sure. I’ve been with Dick Smith since January 2008. My team is responsible for dicksmith.com.au, as well as handy.com.au and the focus very much being dicksmith.com.au over the last year. I’ve been working web for about 10 years now, mainly in the banking and finance, and media and entertainment centers. Retail is new for me. I started back originally with Axel Australia, which is formally National Mutual as a content management developer. I was doing that for a few years.

[00:01:43] Moved over seas with my wife and working out of Europe for the last seven years. Main at Dublin, the Bank of Ireland as a content management tool development team leader. Then after that living in Amsterdam for the last four years working as an IT/web manager for a media and entertainment company that had a comedy television show there. I’ve moved around worked in a number of different areas.

Shaun: [00:02:12] You definitely have got a broad range of experience there. Your role at Dick Smith now is what?

Luke: [00:02:21] As I said web manager, so the day-to-day things I look after is all things online. We coordinate all onsite development for dicksmith.com.au. All the coordination about SCM campaigns, any SEO work come out of my team, also we look after all the email marketing. We do a fortnightly, you can say, email blast as well.

Shaun: [00:02:51] Great. So tell me a little bit about Dick Smith, a lot of our listeners are not from Australia so if you can just give us a bit of background about the company and what you’re doing.

Luke: [00:03:03] Sure, so Dick Smith is a retailer of computer communications, electronics, entertainment products, so that’s a good broad range of consumer electronics. The company has been around since 1968, it was started by a gentleman called Dick Smith, funny enough. He owned and ran the business until the 80’s, he sold a portion of his company to Woolworth’s in the 80’s and then sold the balance of the company to Woolworths in the mid 80’s. It’s now completely controlled and owned by Woolworth’s Limited.

[00:03:47] It’s kind of funny, though, when he originally started it he was basically started off doing radio, power radio installations. That kind of grew into 20 businesses and now it’s owned by Woolworth’s and opening a lot more stores as well. There’s nearly 400 stores under the Dick Smith and Handy brands around Australia and New Zealand.

Shaun: [00:04:12] Wow 400 stores is a lot.

Luke: [00:04:15] Yes and it’s growing as well. It’s always been know as Dick Smith’s Electronics, recently it went under a rebirth as the company’s no longer called Dick Smith’s Electronics, it’s called Dick Smith’s. They have a new tagline “off to the texperts” a completely new brand, a completely new contemporary look and feel, and that’s being rolled out to all our stores in Australia. Started about three months ago, and they’re about 80 percent finished at the moment. So it’s a very exciting time.

Shaun: [00:04:49] Great and I presume that re-branding’s already gone through on the website, has it?

Luke: [00:04:53] Yep, two weeks ago we were the first touchpoint actually to have it done. Start of November last year.

Shaun: [00:05:01] So you’re obviously a traditional retailer with a strong online presence. Can you reveal anything about the proportion of revenue that goes through your online stores? You mentioned you can’t reveal how much you’re selling online per month, but can you just give us an idea of the magnitude?

Luke: [00:05:25] I suppose one of the things with dicksmith.com.au they do, and attracted me to the roll was just seeing the vast potential. The level of extreme electronics websites from brick and mortar retailers in Australia is quite immature. So looking at the actual KPIs when I was interviewing for the job and also, I suppose, calculating the conversion rate that’s there at present. That’s one of the areas that’s underperforming.

[00:05:55] So as ties with percentage of sales, the website and for the company is less than half a percent. So it’s really, at the moment, the tip of the iceberg. So there’s vast, vast, vast potential for the website.

Shaun: [00:06:14] And because you had so many retail stores, you must have this phenomenon of online shopping, offline buying. You know someone goes to the website, finds what they look for, then goes down to the store on the corner and buys it. Do you track that sort of behavior or do you as the business unit for the website get any credit for that sort of behavior?

Luke: [00:06:32] We don’t get credit at present, but we definitely do – If you’re comparing the website sales to, for example the amount of gaming products that we sell on the website compared to the amount of gaming products sold in the country. It’s not a fair competition. So we like to stack ourselves up to our actual stores. They’re extremely profitable compared to stores. We’re not number one, but we’re definitely number one in virtual foot traffic.

[00:07:07] So we know that the impression that people get when they come to dicksmith.com.au they view has a lasting impression. As well as we know with some of the recent retail studies as well, up to 60, 70 percent of the people buying offline have previously researched online so it’s-

Shaun: [00:07:27] Sorry, is that information about the industry, or was that information that you guys found about your customers?

Luke: [00:07:36] That’s industry information that was a study done, part of Monarch University retail business studies. I’ve got some more stats, think I could call them up I’ve got you on the phone. But for us, we definitely know, one of the things we do kind of early on as well, is because we’re looking not only for buying from our business as far as making sure we have the right product, the right merchandise on our side, but also being able to prove this is a channel for our venders as well.

[00:08:15] We’re a bricks and mortar retailer; we traditionally do traditional forms of advertising as well. So do PBCs, press, we have about a 6.5 million paper catalogues per month as well. So we’re spending a lot of money in that area. But one of the things we actually do quite early on is when we re-skin the website, we do some quite detailed changes to our product pages and then we went with a tap design for our product information so you’ll have the marketing spiel, detailed feature text for example. That’s all tabbed with set on click events for attracting AdWords.

[00:09:01] And for Google and Google analytics that track exactly how many people a day came from an SEM campaign, landed on a product page then clicked on the availability tab to find out what store that product was available. Or came to our product page and printed on the email page link or print page button.

[00:09:23] So you can actually truly see and actually have a dollar value to that. As a way of trying to calculate, I mean we can see how SEM through the online conversions are turning. But if you have a model in place, you can actually show offline conversion, log on effect.

Shaun: [00:09:44] Right. So, but capturing those, you’ve got some non purchase targets for your campaigns.

Luke: [00:09:51] Exactly. I mean we use that as a way, at the moment what we do is we fund out a portion of our SEM campaigns. But we use this information as a way of getting vendor funding. Quite regularly we do a dollar for dollar match for vendor funding.

Shaun: [00:10:11] Ah, so that’s interesting. So a vendor who is wanting you to promote their goods will help you with the search, with your search marketing campaign.

Luke: [00:10:23Exactly.

Shaun: [00:10:24] Yep. That’s really interesting. Now can you tell me a little bit – the online store has been around a long time. How fast are you growing at the moment? Or are you growing at the moment?

Luke: [00:10:38] Yeah, I suppose that when I joined the company back in January 2008, the Dick Smith website had been around a very long time. I think it’s been over eight years now.

[00:10:53] It’s actually been selling online for most of that time. So it was really one of the original e-commerce websites in Australia. The focus shifted from both the bricks and mortar stores as well as the website to just the bricks and mortar store, so it kind of just sat there and gathered dust.

[00:11:14] It wasn’t any real significant investment as far as development goes. The look and feel wasn’t updated, so we found we had to shift from the actual the look and feel of our online, of our offline marketing where our brand was heading. And the website was basically stagnant and sitting there not doing anything.

[00:11:38] So in the last year the plan was really to upgrade the look and feel. Upgrade the infrastructure as well upgrade the band width so we could actually handle the capacity. We were finding that during promotional periods like Christmas, we were actually reaching capacity as far as our hardware could handle and our band width could handle.

[00:11:59] So what we’ve actually done in the last year is I suppose shored up that leaky ship. Invested quite heavily in our technology base. We re-skinned back in August 1, 2008 and since then, the growth has been actually astonishing. So, we’re nearly averaging a million visits a month.

Shaun: [00:12:23] Wow.

Luke: [00:12:24] And the unique visits is up around 600, 000 unique visits a month. We’re getting about 8.8 million page views. Averages for onsite pages per visitor is about 8.9 pages. And we’re averaging about five and a half minutes per visitor. So as far as that growth goes, it’s been fantastic and there’s no real comparisons between same time last year. It’s 100 percent growth across the board.

Shaun: [00:12:57] That’s fantastic. And to put those numbers in perspective, what’s the population of Australia? 20 million or something, is it?

Luke: [00:13:05] Yeah, it’s 20 million.

Shaun: [00:13:06] Yes. So having 600, 000 uniques in a month is actually a reasonable portion of the Australian population.

Luke: [00:13:13] That’s one of the things we know we are a good brand. We’ve been around for a very long time. I suppose we’re trying to make as a company to no longer be known as Dick Smith Electronics, the bits and bobs retailer. Traditionally, we were cables, kit sets, build your own home radio.

[00:13:37] What we’re actually trying to be known for these days is more high end consumer electronics like flat panels, GPS navigators, laptops, et cetera. Games, gaming consoles, so that’s one of the challenges we have as a business. Is to get our brand back out there, attract potentially a new demographic as well. And the growth that we’re seeing just seems to, since the rebound is fantastic.

Shaun: [00:14:08] Yeah. Those are fantastic results. Now can you tell me a little bit about the technologies you’re using to run the online store?

Luke: [00:14:15] Yeah, so we use a content management tool called e-pages. It’s a German product. We’re using the SME version and originally we’re using Intershop. We’re using e-pages at the moment. We use 2point solutions with their content management tool. We use an email marketing tool called Vision6 which is a great system and we also use SLI systems for our search.

Shaun: [00:14:47] So the email marketing tool Vision6, is that an Australian company?

Luke: [00:14:51] Yes it is. It’s very interesting, actually. I started looking for an email; we weren’t really doing any forms of online marketing at all. So the plan when I first started was a source of Internet marketing tool. We were in a position to go with a fully out sourced model, so we actually created a long list and a short list of companies.

[00:15:21] And a few of those were the leading and I was looking internationally, not just within Australia. And Vision6 was the only local tool that I chose. It’s extremely easy to use.

[00:15:32] You could really put someone who has never done email marketing before, and as far as the process for creating an email, it’s exceptionally easy. It’s nice and quick as well. And, as I said, we now do that internally. We’re doing a fortnight beta email, a monthly beta B email.

Shaun: [00:15:51] Are you personalizing that, those emails at all? Or is it the same one going out to everyone?

Luke: [00:15:58] Yeah, we are guilty of doing the generic send at the moment. But I suppose watch this space. We are doing some pretty detailed worked about our acquisitions and segmentation. And we do A/B split testing on all our emails.

[00:16:15] Just to send out, but usually that’s just around subject titles. The next transition of that is just making sure that we just only sell. I mean you indicate that you are a Nintendo Wii fan, then you’re going to be getting targeted offers for your preference and your browsing behavior.

Shaun: [00:16:35] OK, great. Those sort of targeted campaigns can have fantastic returns, I’ve heard. So tell me, you’ve mentioned the email in your search marketing campaigns. Are there any other marketing campaigns that you’re particularly proud of?

Luke: [00:16:50] One of the things, this is another example of an email marketing campaign, but quite early on we viral mechanic building tool in our campaign for any of the game of chance competitions that require permits, et cetera. The tendency to have higher prize value. We always have a friend element in there. One of the first ones we did was right around the launch of the iPhone.

[00:17:22] So giving away, it was a competition to win one of three iPhones. And we had a viral send a friend element, if you sent it to a friend you were given, and that friend then entered the competition, you would be given an additional entry in the competition.

Shaun: [00:17:38] OK, that’s great.

Luke: [00:17:39] We ran that for three weeks and we got 68, 000 entries and it was about ten and a half thousand send a friends. So it was, once we actually got out of all the dodgy entries. We had about 25, 000 legitimate new contacts from that database.

Shaun: [00:18:03] From one campaign? That’s fantastic! Isn’t it?

Luke: [00:18:07] Yes, that’s great. I mean, it’s a different thing. It really shows you… Looking back, I am not going to claim that I knew this from the start, but I was really leveraging off an extremely buzzy product at the time. Everyone wondering about us only a few months ago, and this was the result.

Shaun: [00:18:28] Yes. I think it is difficult to design those viral campaigns that actually do go viral and perform like that. So that’s quite an achievement. Well done! [00:18:42] Now, what do you think of the biggest opportunities you have now?

Luke: [00:18:48] If I was retail folks basically, it is really… I think data segmentation driving really used to be my marketing. It can be extremely good for your conversion rates.

[00:19:05] I am a big believer in email marketing. So a lot of the changes that we will be doing will be about growing our email database. Now looking at leveraging user-generated content as well, in the retail network, obviously things like user-generated technical support.

[00:19:25] One tool we have discovered recently that I really love is getsatisfaction.com. It is a fantastic user-generated technical support talk as well as obviously it is not newbie user-generated. The product reviews are fantastic as well. These are the things that we will be rolling out in the near future.

Shaun: [00:19:47] So you don’t have the reviews on your site at the moment?

Luke: [00:19:51] No, we don’t. Not at present.

Shaun: [00:19:53] But that is coming up. Then the user-generated customer support is really interesting as well, because it can save you money as well as creating content that can help drive more people to your site.

Luke: [00:20:06] Exactly. It really can. And we have this thing at the moment, our new mantra, our new tagline, is “talk to the techxperts”. It really gives you that opportunity to … I mean, we have 400 stores. We have a hell of a lot of “techxperts” within those stores. Obviously, assigning these people as “techxperts,” I suppose deputizing them as “techxperts” or people from our general public as “techxperts”.

[00:20:36] It is amazing how much you can see your return rates drop off because you have literally, at product level, seen the most common questions and answers to those questions that most people have. “What is the cable I use with this? Why can’t I get my true high definition on this set-top box?” Whatever those questions might be. Really helping your customer help themselves.

[00:21:00] The more popular it gets, you can start incentivizing people as well for their assistance; be it point schemes that can actually be reused back for discounts off purchases. Actually, we can go on that with different directions. It’s really exciting to have the user-generated content in the retail space.

Shaun: [00:21:21] Yes, and that’s great. So Luke, tell me, what are your biggest headaches at the moment?

Luke: [00:21:26] Biggest headaches? I suppose it is the lack of maturity of the retail bricks and mortar market in Australia. [00:21:37] I think Australia seems to think they are somehow unique, as far as bricks and mortar goes. And then I think, really, the adoption of ecommerce in Australia. You see pure-play ecommerce companies, dealsdirectoo.com.au, Cachetfly, are actually going gangbusters. You still see that the brick and mortar retailers are quite hesitant to really invest. Bricks and mortar retail industry still see online as being potential cannibalized out of offline sales.

[00:21:19] All the data for multi-ecommerce state in the UK, which are the leaders, are showing it actually complements. The better your online experience, the more rich your product information is, makes people more inclined to actually purchase offline with you or online.

[00:22:40] That’s one of the frustrating things. I was a bit naive as to the state of ecommerce in Australia, having worked in Europe for so long. It’s a softly, softly approach, but we are definitely making headway.

Shaun: [00:22:54] Yes. I suppose, leaders like Dick Smith are going to help change the industry’s opinion on that, when they see it working so well for someone like you.

Luke: [00:23:05] Yes. I think you will see in the next year some pretty major changes in the industry. JB Harford is extremely active these days. Harvey Norman is not selling online at the moment, but I don’t think it will be very difficult for them to begin selling online.

[00:23:22] Obviously, we are hell of a lot more active. I think you will see, over the next year, some pretty big changes. There is a new – rentals. I am not sure if they are in New Zealand, but they are bricks and mortar, which has launched what I think is probably the best site in Australia. It’s bricks and mortar retailer’s bigbrownbox.com.au.

Shaun: [00:23:44] I will have to check it out.

Luke: [00:23:46] Yes. It is a nice end-to-end site. It is obviously a trying time at the moment with the economy.

Shaun: [00:23:54] So on that topic, you have obviously seen growth in visitors to your store, even though the recession happening. I believe Australia is in recession as well. How is the economic downturn impacting you?

Luke: [00:24:14] It doesn’t seem to be at the moment. Over the last four months – January was fantastic, February was fantastic. November and December, like everyone else, we had a great couple of months. Woolworth’s and Dick Smith, these companies are doing extremely well.

[00:24:33] I think it is a bit of an unfair comparison, in one sense, to sit there and say, look, how fantastic we are now compared to the previous year because we were so under-performing. I am more interested in calling up my… being able to compare next year to where we are now, because I say the site is just starting to reach its potential.

[00:24:58] But as far as how we are going, I mean, we are doing very well. I think people are just a little bit more inclined to shop around. If you provide them with good user experience, provide them with good customer product information, and comparative prices, I think we have a pretty good chance of capturing that online conversion.

Shaun: [00:25:20] Yes, fantastic. Now, just to wrap up. Obviously, ecommerce is dynamic. It is continually changing. How do you keep up with the latest trends?

Luke: [00:25:32] Yes, I suppose I am a bit of a sponge of information. I am pretty active out there, trying to be an area doctor as far as industry trends go. I am a mender of Ecommerce Networks, Net Retailing, E-tail, Pro-Marketers. I used things like the LinkedIn Q&A section as a great source of information. I have asked quite a few questions there. Other things, as far as Twitter, I follow a number of people on Twitter as well. Having a stylesheet with Ockham’s Razor as well, which is a great source of analytics information.

[00:26:25] I suppose it is a system that is — you are constantly trying to learn. Web is a very dynamic area. You can’t be familiar with all of it, that’s for sure.

Shaun: [00:26:34] Yes. That’s great. You have given us some really interesting information. I really appreciate it. Thank you very much for coming on.

Luke: [00:26:41] Thanks very much, I had a good time Shaun. All the best.

Shaun: [00:26:44] I am Shaun Ryan from SLI Systems, and that was the Ecommerce Podcast. Tune in next time. [ending music]