Richard Harrison, Founder & Principal Advisor of Orec, in the late 90s was the GM Ecommerce at Woolworths NZ, helping establish New Zealand's first online supermarket; the platform now underpins Woolworths New Zealand and Australia.
Harrison said it started with the customer, not the technology.
“We could see how households were changing: more dual-income families, longer working hours, busy parents, and less free time,” he said.
“The weekly shop was a chore that took a big chunk out of the weekend. So the question we asked wasn't "how do we put a supermarket on a computer?" It was "how do we give time back to busy customers?" The technology was only ever the means to that.”
Customers were sent the catalogue on disk and installed it on their home computer. It later grew into a program called "The Mall", where Woolworths sat alongside partners such as BNZ, Courier Post and Telecom.
Customers browsed the store aisle by aisle (fruit and vegetables, deli, meat, bakery and so on) and built their list. Then they chose a delivery day and time, said whether they would accept substitutions, and added special instructions, such as "please ring the buzzer at the side gate". After that, they sent their order to Woolworths.
Early data showed that the top-selling lines were almost all fresh: bananas, broccoli, lettuce, carrots, eggs, mince, and strawberries. However, building trust took some time as customers doubted they could order online and thought someone else would pick their bananas the way they would.
“An obvious worry was that we'd simply move existing customers online and add cost. At one point, our then-owner, Dairy Farm, put a one-year moratorium on further development. We won the argument with evidence,” said Harrison.
“When we looked at where our online shoppers had previously done their main shop, 82 percent of online customers had come from competitors. That made it new business, not cannibalisation. We also measured profitability customer by customer every week, which kept us honest about what each order really cost to serve.”
Other practical challenges included picking and delivering accurately, and prices and specials changing every week, but a disk didn't. Plus, few homes had a computer, and the ones that did were slow.
Learnings from the first online customers were quite valuable and taught Woolworths that "convenience" means different things to different people; even though core customers were families with children aged 25 to 54, each group valued something slightly different.
For one customer it was speed. For another, it meant shopping at 10 pm from the office, or without dragging the kids round the aisles. Some liked checking the cupboards as they shopped; others liked sticking to a budget; and nearly all valued having it delivered to the door.
Understanding each customer type's value proposition, and then delivering on it, was the key to the whole thing. That meant the technology had to keep improving. It had to get faster, simpler and more intuitive, and above all it had to save the customer time.
Saved shopping lists, one-click reordering from past orders, and a "Quick List" where customers typed their list, and the site found the products, all came straight from customer feedback.
Out-of-stocks and substitutions were the biggest frustration. When the Woolworths team analysed them, most turned out to be ordering and supply errors upstream, not picker errors; so fixing the experience meant fixing the operation.
Just as important was delivering the service without high cost.
Richard Harrison, Founder & Principal Advisor of Orec
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