Shop direct cut 1,500 jobs - the internet finally takes its toll

It was bad news last week for a lot of people when Shop Direct (one of the UK's largest catalogue retailers) announced that it was cutting 1,500 jobs in its call centres. This is another very big cut, as it was only a year ago that Shop Direct cut 1,150 jobs from their warehousing operations.

The sad thing is that some of these job losses were, perhaps to a certain extent, inevitable.

I was always interested to see how much of their business was phone based (I did do a little work with them some years back). The management at the time told me that for the demographics they targeted with their catalogue the phone was the primary channel of communication. Most of these demographics were mid to lower income people and as a result they did not use the internet extensively and preferred to phone in their orders when a physical catalogue arrived.

I was dubious that this was sustainable indefinitely, but even in the mid-2000s, the primacy of the phone channel seemed to be holding true. It's very interesting therefore to read that in five years the proportion of online sales has gone from 18% to 60%.

My suspicion is that an aggressive bundling of internet and TV solutions by UK service providers (such as Sky and Virgin) has increased internet penetration into demographics where previously internet was seen as either unnecessary or too expensive. The steady fall in price of PCs also probably helps, but I suspect that it is the role of UK service providers that has so fundamentally changed the channel mix for firms that do indirect and distance selling.

The one thing that could have changed some of this is the integration of the contact centre with the web channel. Co-browsing technology is well established, as is click to call and other ways of assisting customers on the web site. There are some startling statistics (anything from 40% - 70%) of the number of shoppers who start to fill a basket on a website but then don't go through to checkout. Offering them help if they get stuck, or an easy way to ask a question, could dramatically improve the number of completed transactions in the web channel. It doesn't necessarily require a huge contact centre but is an example of how a contact centre that adds business value is still very necessary for a business that has the internet at the core of its channel sales strategy.