Specific challenges confronting the creation of the online shop include defining its scope and function, working out the logistics of delivery and supply, costing the shop, defining risks, and risk management strategies, and engaging the local community. We discuss each of these below. As above, quotes are drawn from board members who attended the workshops (real names are not used, though they do reflect the participant’s actual genders).
Defining the scope and function of the online shop
Defining the scope and function of the online shop is in many respects about defining the business model that should be implemented and its purpose. Not surprisingly a range of models were proposed. The first of these represents a simple extension of the existing town market, shifting the market traders online to extend customer access from one day a week. Accompanying this were ideas for speciality boxes and ready meals, all of which were considered to be reasonable starting points but not sufficient in the longer term. The idea of a ‘core shop’ emerged as an alternative, premised on the recognition that most people routinely buy a core set of things on a regular basis (bread, meat, vegetables, etc.), but again this was seen as problematic:
Susan: The supermarkets have got it right, and if you can’t beat them, join them; you have to play them at their own game … the customer—they expect to get everything they want in one stop, in one place—so if we could offer as much as we can without going completely over the top, you know, all the shopkeepers would jump at the chance.
James: We’re talking about our own supermarket, really.
Susan: Yes, the independent republic of 4CG.
James: We could call it CBay.]
While appealing, nailing down the actual scope of a local online supermarket directly competing with national chains was also problematic:
William: I think the main thing we want to achieve is to help the High Street … because they’re struggling. If we had a delivery-type of system … and include all the shops on the High Street, then at the end of the day we’d be helping them to basically survive.
Sarah: That’s definitive, is it? It is for the High Street? Do you mean every single shop? So we’re talking about the butchers and the bakers …
William: The pharmacies as well, I’d say.
Susan: I think if you take all of the local shops in Cardigan, you know, what else do we need? You’re looking at local chemists, hardware stores, butchers …
William: The thing is it’s not just limited to the High Street, other people—fishermen—you know…
William: Farmers—if somebody wants half a cow.
James: I’ve got a sheep with only three legs if anybody wants it?
Sarah: I just don’t think we’ve defined what we’re trying to do.
William: Well yes, but that’s what we’re here for, I think.
James: We have to be able to cater for whatever it is people want.
Susan: We need to be able to deliver almost everything.
Gordon: It’s a tall order though, isn’t it?
Tall order or not, each of the business models proposed was construed of under the same functional auspices: to enhance and not compete with local trade. Whether extending access to the town market and the products it supplies, supporting the core shop or creating a full-blown supermarket, all parties felt it important that whatever model was adopted it should not impact negatively on any of the local traders and producers.
A key issue that occupied the board members in their discussion of the online shop was delivering local products to customers. This was seen to be more than simply a logistical matter, but a primary way in which 4CG could itself add value to the local economy:
Sarah: I think coordinating deliveries—take that as a starting point—is a good idea actually. What does 4CG add to what exists currently? I think coordinating deliveries is quite a good starting point to think about what role the organisation could play.
Coordinating delivery would enable the organisation to act as an intermediary and facilitator to local trade, though of course the questions arose as to just how it should fulfil this role and actually do the delivering? Several mechanisms were proposed and considered, along with a number of practical concerns.
In the first instance ‘piggy-backing’ on local traders was considered as key means of coordination:
Sarah: It’s the logistics of it, isn’t it?
Susan: Dewi Jones delivers. Keith delivers. Why do we have all these individual trades-people deliver?
Sarah: The chemists deliver prescriptions. They’re all set up for that sort of thing already.
Susan: If Keith is delivering his meat plus—what we want—he’s delivering somebody else’s potatoes, something from the chemist … you know. If we can get them to work together, to pull together, then you use one delivery for everything.
Richard Jones: To get everyone together, yes.
Susan: That’s a tall order though.
Given the tallness of the order, alternatives were considered including hiring vehicles locally and a do-it-yourself solution. With respect to the costs associated with the latter, of buying and maintaining a vehicle and employing a driver, the idea was also floated of using electric vehicles and setting up the infrastructure to recharge them in order to reduce long term costs.
Then there was the issue of frequency: how often to do delivery? Everyday, three times a week, once a week? There was no clear answer but the dilemma was clear:
William: One of the reasons Pembrokeshire Farmers failed was because they were only delivering once or twice a week … if you want something normally you need it … within 24 h.
James: I don’t know—if you haven’t got toilet paper you want it now …
Gordon: It’s urgent.
Susan: I think that would be above and beyond the call of duty.
So how often to do deliveries? More than once or twice a week, probably within 24 h, but not same day.
Cost was a reoccurring issue in the delivery discussion. A range of potential solutions that revolved around the notion of ‘collection points’ rather than door-to-door delivery were proposed to mitigate delivery costs. Potential solutions included setting up a central collection point:
Susan: Yes, a convenient central point, easy parking.
James: Or someone loads you.
Gordon: And you scrub their car-park ticket if they’re only there for five minutes.
William: Or like McDonalds, like a drive-through. Can you imagine if you’ve got a couple of smallish kids in the back, in the chairs or whatever, you don’t want to have to go to the High Street, you just drive through, there’s a little kind of small area where you just grab the box, put it in the back and just drive home.
Community satellites were also considered—where deliveries for a group of people would be dropped off at one place for collection—as were post offices and shops in the outlying areas around the town:
William: Instead of delivering to the actual customer … we deliver to say the local post office and they have a bank of lockers where you have your own locker. So you just deliver it, put it in there, lock it and then the customer just picks it up at his own leisurely time. That would be attractive to the local shop because that in itself brings customers to the shop—and we save money on delivery, we don’t have to go round all the houses; so we could make the delivery cost that much cheaper … In recent years a lot of post offices have shut in rural villages and that might just make the difference to them staying open.
Accompanying and extending this idea was that of the bespoke unit, such as a container, that could be situated alongside rural shops or other venues ‘like they do in Canada and Australia’ so as to handle anticipated storage problems in village shops, which are typically quite small. This in turn prompted discussion of the delivery boxes:
Susan: How big is a box of your weekly shop?
Gordon: Well imagine how much you put in a trolley.
Susan: So we’d need a selection of boxes—like the family box, couples, and singles.
It was not just the size of the delivery boxes that was of concern, but food safety was a key issue too:
Sarah: I was just wondering about the freshness of stuff—if you order meat …
William: It would have to be chilled.
Susan: You can get boxes that stay below a certain temperature for 24 h—even with frozen goods.
James: The only thing is for something that’s frozen you need something sealed.
As the above vignettes make clear, delivery is in many and varied ways a challenging matter, especially when consumer choice is entered to the equation and discounts are attached to various methods such as the group shop and personal collection. Nevertheless, coordinating delivery is seen as the key way in which 4CG can add value to the local economy.
Coordinating the supply of goods was also a major discussion topic. This largely revolved around two main means of coordination: traders supplying goods to 4CG and 4CG collecting goods from traders. Both were seen to have their pros and cons, and both traded on an underlying vision of the shopping system:
William: The traders … would … register their produce, with particular barcodes, online. So they take pictures of their produce—we’d supply barcodes somehow—which they’d put on—the way I would see it is if somebody actually made an order, an email would go to each trader with the actual order and then they would get the barcodes, put them on whatever produce and then box that ready to go. How that box gets down to our stores or our van calls round and picks them up I don’t know.
The first posited coordination mechanism would involve 4CG setting up a ‘central warehouse’, where traders would deposit bar-coded boxes. The perceived advantage of the warehouse was that it provides a store for non-perishable goods:
Susan: We’d have a selection of what they sell in the shops; we’d have it in our warehouse ready to go, with their barcodes on. Say Keith brings down a pallet full of baked beans and they’re all bar-coded. Every time someone wants baked beans, right, great, click—well that’s credited to his account.
The downside of this solution is the costs that inevitably accompany setting up and running a warehouse:
William: You’d have to set up all these racks; you’d need staff there mornings and afternoons.
Sarah: There’s quite a lot of manpower involved putting together different boxes. It would be quite labour-intensive.
Gordon: Security, blah, blah, blah.
William: It’s a lot of additional—too much cost, I would say.
The alternative—collecting from traders—mitigates some of the perceived costs, but not all; a vehicle is required, someone to collect orders, and then there is the problem of actually coordinating collection in an orderly rather than haphazard manner if costs are to be kept under control. Complicating matters here is the distinction between perishable and non-perishable goods, the latter having to be collected on the day of delivery, which suggests that a combination of methods is required.
Costs, as can be seen above, are a recurrent theme in the board’s discussions, and they extend beyond issues to do with delivery and supply. The principle concern about cost, and one that drives various substantive considerations (cost of delivery, cost of supply, etc.) is to do with the sustainability of the proposed venture:
William: It’s got to be sustainable, we’ve got to cover our costs at the end of the day, we can’t just live on grass, so whatever the model we come up with—say the delivery vans and employees down here—then it has to be sustainable so the margin we would take from each shopper on each produce would cover our costs.
The concern with sustainability manifests itself in various ways, ranging across cost calculations to equipment:
William: We’ve got to calculate—we haven’t even worked out what kind of anticipated figures are. We haven’t worked out cost estimations—what the delivery costs are … the volumes … how we can deliver it, how many people you need to deliver it, how much admin staff, software back-up support. Calculate the value for that first and then you work out—see the way I see it there would be a transaction for say delivery, to say 4CG because they’re doing the delivery, and then your additional costs, and then the rest of the monies would be distributed back to the traders.
Sarah: If we’ve got to start buying chilled boxes and …
James: I had a chat with Wynn and he was quoting about £8000 to £9000 for a van with a refrigerated compartment inside it.
William: With these kinds of things, see, normally you do market research and find a figure on what percentage of the local population would actually use this service, what’s the volume and the value they would actually spend and what percentage of that we would get back, and we could work out then whether that equates to the costs we’ve got down here.
Anticipated volumes, delivery costs, staff, technical support, transaction charges, hardware and transport costs, etc., all have to be taken into account and calculated before any decision to invest in an online shop can be reached, and cost considerations need to balanced alongside the perceived risks of the enterprise.
Risk visibly permeated the board’s discussions in the constant vying of options and alternatives: which business model to adopt, which delivery mechanisms, which supply mechanisms, etc.? Consideration of each of these substantive issues and more were driven by an inherent sense of risk. They are complemented by concerns with the impact of the proposed venture on the social fabric:
Sarah: I’m involved with … a food cooperative … people pre-order a bag of vegetables, or a bag of salad, or a bag of fruit; they have to come to the village hall to pick it up and in itself that creates some social contact … We also do local meat … fish as well … fresh bread, fresh cakes, craft stuff and you can have a cup of tea. The point is because people come and pick up their bag they have to have some social interaction, and that’s what you’re talking about, is having that.
The impact of online shopping on social interaction was manifest in various ways, but it was not felt to be a major risk in itself. As one board member put it, ‘you can build up a relationship even if it is over the internet’. More serious were the perceived scope of the online shop and the complex array of challenges involved in federating a broad cohort of independent traders.
A key concern with respect to this was the ability of traders to meet demand. This manifested itself in two ways: one with respect to supply failure (i.e. what happens if a trader doesn’t deliver?) and the other with potential underlying causes that could have catastrophic effect:
James: What about volumes? If it’s high volumes—is the website going to be able to cope with all these orders coming in? These people at Glebelands [for example], how much are they going to produce? It’s going to be first-come, first-served, you know; if this takes off, all the production they can do there will be sold by the end of the week—it’s economies of scale.
Williams: I think it goes back to the sustainability thing at the end of the day and you need the volume.
As these two extracts make clear, volume is a tricky matter, a doubled-edged sword. On the one hand, it can be the source of failure due to there being a level of demand that exceeds the volumes local traders can deliver. On the other hand, it can be the source of failure due to there being too little demand and not enough turn over of produce and goods. Striking the balance and managing risk are key.
Risk management revolved around two key issues: market research, and roll-out or deployment strategy for the online shop. Market research covered two areas: understanding just what goods the local shops could provide, and understanding just what services customers would want the online shop to provide. The latter included consideration of who the core customers would be: locals or tourists who, as noted above, are key contributors to the local economy. It was felt that the local cohort was the primary target. A ‘visioning day’—i.e. on open day hosted by 4CG—was planned to present ideas for the online shop to the local populace, to be complemented by a questionnaire to assess potential customer buy-in, evaluate proposals, and define how the shop should operate.
The bulk of discussion regarding risk management revolved around roll-out and focused on piloting the online shop. This involved a number of distinct considerations: the initial reach of the shop, the nature of the pilot and the trader and customer cohorts involved. The board members felt it important to constrain roll-out:
Sarah: I think to start it all-singing, all-dancing, straight across the board is not going to be right.
William: We need to keep the model as simple as possible to start with.
James: Define simple.
William: Well a simpler model, I think, is—you have a zone, don’t you?
In addition to limiting the reach of the shop, and thereby constraining it to a clearly defined geographical area, piloting the shop was also considered to be an important step to take:
Sarah: You’ve got to run a trial, I think, first. You can’t just jump in.
William: … maybe just have a fixed customer-base for a period of time, say a month. You only allow say 100 customers to have a look at it, so you’re keeping the numbers to a minimum—that allows us time to sort our problems out.
James: Keep it simple to start with and then just see where things go afterwards
Sarah: It might be better to try it for one day a week and make it a Thursday or a Friday when people know what they’re going to want for the weekend. Pilot it on a fairly small basis initially … then see if it’s successful and scale it up accordingly.
As the above vignette makes visible, the number of participants, duration and frequency of the pilot are all important ingredients in managing risk.
Defining the trader and customer cohorts matters too:
William: We need about ten traders for this—we need enough choice, but not too much to swamp the system. The one advantage that we have with 4CG is that … we have a level of trust, I think, from some on the High Street. So I think if we did start up something I think quite a few of them would trust us enough to give it a go anyway.
While nailing down the trader cohort was relatively unproblematic, defining the customer cohort for the pilot was more of a challenge:
Sarah: I think you need to do a prototype. You need to have it running for a finite period of time with a finite number of people and just say to them look, would you just mind being guinea pigs? You know problems will show up then but they won’t kill the project because the people involved will be more tolerant.
William: You want people who are tolerant to start off with.
Susan: We could ask the shareholders. If the shareholders think it—if it works well with a few shareholders—we could handpick a few shareholders that would be willing to help us pilot this.
James: You could always do like a PR thing. Like you have it only delivered for one day a week, but then you could say oh because there’s been so much we’re now going to have to deliver on two days a week.
Susan: It would be quite interesting if we could get somewhere up in Maesglas, you know, there’s a big estate at the top of Cardigan—if we could get from five to ten people, families up there, which would just help us pilot this. Ideally we’d have a pocket with about ten families there.
William: On one street or something?
Susan: Definitely one estate where you could pilot this to see how it worked and what they need and if we could do it; and expand from there then.
Risk management is, as can be seen, a complex matter centred on creating as safe a base as possible to assess the viability of the proposal, to identify and iron out problems, and to attract broader community interest in the scheme.
Engaging the local community
In addition to the proposed visioning day, the effort to attract broad community interest in the online shop was also a matter for technical discussion. The issues here were to do with reflecting the local character of the online shop as a feature of the shop itself, and were manifest in two particular ways. One, by displaying the locality of goods sold through the online shop, and two, by reflecting the local economic benefit accrued through use of the shop. It was projected that the first of these issues could be addressed by labelling products with different categories of ‘localness’—e.g. that a product was grown or made locally. The second pillar of engagement involved representing the value of consumer spending to the local economy:
William: It would be interesting if you could have some kind of a gauge on the website—a bar chart or a figure—which showed how much of the money you spent remains locally, and what it means to the local economy. How you actually present that I don’t know but if you had a cumulative figure that would give people a warmer feeling—a kind of feel-good factor—it’s a way of reflecting its usefulness back to the user.
Both methods were considered to be important ways of engaging the local community with the online shop, with the latter in particular conveying a concrete sense that customers would be ‘doing something useful and beneficial to society’.