Five Minutes with Andrew Cooper, CEO of dStore

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In a recent conversation with dStore’s owner Andrew Cooper, I asked him to shed some light on how online businesses were coping with the stresses imposed by the "Global Financial Crisis".

In a recent conversation with dStore’s owner Andrew Cooper, I asked him to shed some light on how online businesses were coping with the stresses imposed by the "Global Financial Crisis". In times when credit is tight and consumers and businesses are all paring back discretionary spending, it is necessary for proprietors to be more inventive with the strategies they adopt. This is what the owner ofone of Australia’s largest online storeshad to say.

Brightlabs: How do you see dStore performing over the next 12 months?
Andrew: At the moment, retailers across the board are experiencing very challenging economic conditions. dStore is tracking to budget but we have made adjustments to take into account the lack of buoyancy in the market. We expect retailers won’t get the usual Christmas kicker to earnings that they have often experienced in the past. As for dStore, we’re going to continue with our strategic plan and brace for the long haul out of the financial quagmire.

Brightlabs: What strategies are you using to mitigate the effect of the poor economic conditions? For example, increasing marketing spend, adding product lines, or reducing costs.
Andrew: What we’ve been doing is gradually changing the mix of our marketing spend to ensure we strengthen relationships with existing customers and reduce our focus on customer acquisition. We’ve found that pay per click marketing has become less and less effective as the cost of customer acquisition rises and the lifetime value of a customer falls- you’re getting a lot less “bang for your marketing buck” so the return on investment is not as compelling as it used to be. To maintain growth, we’ve looked to our existing customers. We’ve been investing heavily in data monitoring and statistical software so we can build up behavioural profiles of each customer- we use a combination of data they have entered on registering with dStore as well as their interactions with the website and their purchasing decisions to determine how dStore should interact with them to get the most effective result.

What we’ve found is that latency (average time between transactions) is a useful indication of how much interaction a customer desires with the brand. So, we cross reference this with categories in which they’ve made purchases and their personal data to develop what we believe is a highly effective targeted marketing campaign. In essence, data on individual customers will dictate the way the system interacts with them. This is our competitive advantage.

Brightlabs: I have read about dStore’s plans to become a multichannel retailer by opening traditional retail outlets. How have business conditions effected the timing of this strategy?
Andrew: There has been far less pressure on us to make decisions rapidly. Twelve months ago, if an opportunity for the ideal warehousing and retail space became available, we would have had to move quickly to secure a lease. These days, a lease on a great space will go for weeks, if not months, without anyone picking it up. The opportunity cost of not expanding to capture new markets is also lower. Consumers just aren’t spending as much so these days and we’re able to take our time. It’s disappointing because we’ll miss Christmas but it makes more sense to wait until March or April next year.

Brightlabs: How has the activity of traditional retailers (Myer, Kmart, Target, perhaps Harvey Norman) shaped your own plans, particularly in relation to the marketing strategy adopted?
Andrew: It’s been business as usual for us in this respect. The large retailers offer great deals. There are always going to be great deals and the big retailers are always competitive. They can effectively capture new business with this tactic but there’s always a price associated with deep discounting. We tend not to compete with them at this game because it’s not a strategy we feel is in line with our brand proposition. As I mentioned earlier, our competitive advantage is in the data we gather and the analysis of this data. At dStore, we offer a unique customer experience at every point of contact. We have earned the trust of our customers and this is why they keep coming back.

Brightlabs: Thanks for your time Andrew.
Andrew: My pleasure!