How to be different when you're the same
Lessons from AO.com founder and CEO John Roberts
The twists and turns of a founder’s journey, are always fascinating. Building a business, brand and operation while navigating emerging tech adds to the intrigue. Rory Sutherland’s interview with AO.com founder and CEO John Roberts is packed with learnings learnt the hard way.
From starting the business as the result of a bet (!) and choosing perhaps the most difficult category to establish in e-commerce (electricals and, yes, it was that long ago), the story begins with a fair amount of ‘fake it till you make it’ and shares some tricks to make them seem more established than they were.
AO.com introduced services like next-day and weekend delivery options. Choosing a difficult category is a double-edged sword, of course, it made it hard to build the operation, but - Roberts argues - provided a significant barrier to entry, keeping AO.com ahead of the competition.
Working back from the customer
Of course, delivery is one of the key concerns for people buying white goods. They tend to have strong preferences on when and how things are delivered. Focusing his business around the customer’s perspective is a recurring theme, along with the observation that often “the thing that’s missing from logistics is logic”. He reasons that Sunday is a better day to do deliveries, because the roads are clearer and people are more likely to be in.
Working back from the customer - rather than what’s convenient for the logistics operation - led to a different way of thinking. Ultimately, what customers want is for their delivery to go smoothly and reliably. He highlights their investment in a high-quality, empowered service team but points out that it’s much better for everyone if they don’t have to get involved. Not just from a financial point of view, but also from a customer satisfaction perspective. Every time they need to intervene in a customer delivery, it costs in terms of money but also in brand and experience terms too.
So every week Roberts leads a weekly meeting where they review customer issues and walk through everything that went wrong. The results is “thousands and thousands of iterations systemically that we’ve done to make those things work properly.”
What differentiates you?
Why is this so important to AO.com?
They offer next-day delivery, but so do their competitors.
They have a big range; but so do their competitors.
They offer keen prices and a price match promise, but so does everyone else.
How they do it, is what differentiates them.
So obsessing about the experience is what sets them apart. That extends to their delivery experience. Roberts shares how they have Smile Police auditors who will visit a customer ahead of the delivery to rate the doorstep experience. The aim is to make sure that, no matter how the driver’s day is going, he’s positive with the customer and doesn’t just rush in and dump the appliance.
Why is that important? Because the reality is that the customer will forget all about the experience if it goes to plan. “Nobody gets up in the morning thinking the way they buy electricals is a problem,” say Roberts. “The terror only manifests itself because you’ve got it all wrong.”
It’s all about the repeat rates
Repeat rates in electricals are much, much lower than for groceries or smaller purchases. AO.com’s repeat rates increase dramatically as the customer buys for a second or third time, so getting the repeat purchase is absolutely critical. And that’s why you invest more in making everything just work, over trying to put things right when they’ve gone wrong.
There’s a wealth of other fascinating nuggets in the interview including what they paid to move to a two-letter domain and the initial downsides of doing so. Check out On Brand with ALF and Rory Sutherland, S3 E6.