Way back in 1983, I bought a modem for my BBC micro, and subscribed to BT's Prestel service. I got some useful information, including how to negotiate cheaper holiday car hire prices, and downloaded reference material from Lockheed Dialog, Swiss Radio DataStar and other services. There were some basic shopping services, for example Interflora, and I wondered how these could be developed. The outline proposal that follows was worked on by myself, the Clydesdale Bank, and Wm. Low & Company plc (later taken over by Safeway (now part of Morrisons)), but it was too far ahead of its time. Tesco Direct shows how it should be done.  WebVan (Google still produces results), which went bust in July 2001, showed how not to do it. 

 

 

 

A proposal to set up a -

'Home Shopping Service' based on Prestel.

 

Introduction.

 

The idea of a 'Home Shopping' service is that people can order goods which they use regularly, and/or are heavy or bulky, and have them delivered to their door. Such services already exist for items for which people will accept a delivery time of 2 - 3 weeks, and are based on the postal system. They are not satisfactory for food and other items required relatively quickly. Basing the service on the use of Prestel, British Telecom's viewdata service, would permit a local operator to offer a turn-round time between order and delivery of approx 12 hours. Two Prestel based services exist, and there is the potential for one in the Glasgow area. The principal selling points for such a service are that it saves time, avoids the 'hassle' of visiting a supermarket, and also saves any transport cost. The principal parameter controlling whether or not such a service would be profitable is the number of people who would use it. This and other issues are examined in this document.

 

1. Potential Turnover.

 

1.1. Number of Subscribers.

British Telecom do not provide a breakdown of Prestel subscribers by region or area. The only figure they provide is the national total of approximately 60,000 subscribers to Prestel.

The firm that has recently set up a home shopping service in London estimates that there are 8,000 subscribers to Prestel in central and west London. Club 403, the Prestel based home shopping service in the Birmingham area has 1,500 customers. The population of the U.K. is approx 55 million ; of Scotland, approx 5 million ; and of the Greater Glasgow Area, approx 1.5 million. The population of the area around Birmingham is similar to that of Glasgow.

It is reasonable to assume therefore that there might be approx 1,500 Prestel subscribers in the Greater Glasgow area. Approx half of these would be business users such as travel agents. This leaves approx 750 private subscribers, a figure that corresponds with those in rumours attributed to well informed sources.

 

1.2. Number that would use a ‘Home Shopping' Service.

It is unrealistic to expect that all Prestel subscribers would use a 'Home Shopping' Service.

If there were to be an additional subscription charge for the right to use the 'Home Shopping' Service this might deter some potential users.

 

1.3. New Subscribers.

It is difficult to estimate how many people would become Prestel subscribers so that they could use a 'Home Shopping' Service. The experience in the Birmingham area and of the Bank of Scotland would provide a basis for a prediction. The initial cost of the equipment is the main stumbling block ; it comprises a computer, a modem and software, a suitable telephone socket, and the Prestel subscription charge. People with a home computer are obviously a reasonable marketing prospect.

 

1.4. Order frequency and value.

People using the service are unlikely to order more often than weekly, and hopefully not less frequently than monthly. It would be necessary to have a minimum order value, to avoid the necessity to charge for delivery. The figures used by existing services is £35, and their average order values are reported to be £38 and £40. A table showing the interaction of some of these factors is attached as fig.1.

 

2. Delivery.

There would need to be a number of fixed time periods during which deliveries would be made, so that customers could arrange to be at home ready to receive their orders. Three periods might be sufficient, 10.00 - 13.00, 13.00 - 17.30, 17.30 - 20.00.

The area to be covered could extend from Dumbarton to Airdrie and Hamilton to Paisley, and it could take over an hour to drive from one extreme point to the opposite extreme. If however customers live relatively close to each other then journey times would not be long and 10 or more deliveries could be made per hour. It is however difficult to determine how any vans would be required in view of the probability that there will not be an even pattern of addresses or of preferred times for deliveries. The deliveries would be made by van ; the vans could be rented ; and could be staffed by part-time staff. There may have to be two employees on each van to limit the possibility of 'fiddling', both by employees and by customers.

The effect of these parameters is illustrated in the table attached as fig.2.

An alternative arrangement would be to contract the delivery to an organisation that already does 'home deliveries'

Customers could be required to pay by cheque, supported by a guarantee card ( bearing in mind £50 limit ) ; or perhaps credit card, but the card companies commission makes this less attractive ; probably not by cash, to avoid 'security' problems.

 

3. Computer Equipment.

The equipment necessary to operate the service should be specified on the basis of the requirements that it will have to meet.

A computer system is required a) to prepare the 'catalogue' of items that are on offer, in the format for transmission to the Prestel system, and b) to collect the customers orders from the Prestel system. It should also be capable of doing all stock control and pricing of orders etc..

A Prestel 'frame', i.e. page of information, is 20 lines of 40 characters. The goods offered for sale will have to described and have an ordering code and price. It might be possible to have an average of 10 items per 'frame'. If there were 3,000 items on offer then there would be a requirement for 300 Prestel frames.

It is unlikely that there would a requirement for more than one operator to be working with the system at any given time.

A 'fast' printer will be required for printing out orders and other documents, and a slower printer with colour capability would be useful for printing copies of the Prestel frames.

These parameters will be sufficient to permit an estimate of the cost of the equipment to be calculated.

 

4. Subscription Charge and User Authorisation.

It will be necessary to have some idea of the credit worthiness of people who wish to place orders, and some check that they are the people to whom goods are going to be delivered.

A subscription fee could be charged, for the right to use the 'Home Shopping' Service. The service in the London Area does not ; the one in the Birmingham Area did during its first years, but does not now. The advantage of a fee is that it provides additional income and covers some of the administration costs. The disadvantage is that it almost certainly would discourage some people from making use of the service.

The procedure for registering as a "User" should be made as simple as possible.

 

5. Marketing and Advertising.

There are essentially 3 target groups ; a) existing Prestel Subscribers who do not need to spend any more money to be able to use the service, b) people who own a microcomputer but are not yet Prestel Subscribers and might spend a little more to be able to use the service, and c) the rest of the population.

Direct mail would work for group a), they could be sent a catalogue listing the goods on offer and outlining the service. It would also be possible to contact them using the Prestel mail service, and they could reasonably be expected to see an advert on Prestel.

Group b) could be covered by direct mail, or by advertising in appropriate specialist magazines.

Group c) can only be reached by media advertising or door to door leaflets.

 

6. Range of goods.

The items on offer should be both necessities and luxuries, and should be equivalent to those on offer in a supermarket with the addition of some more durable items such as small electrical goods and household ironmongery. They should include bulky things such as soap powder, cereals, toilet rolls and disposable nappies. There may be a problem with fresh products such as eat, cheese and butter, fresh fruit and vegetables, and with chilled and frozen foods ; it may be necessary to have 'cool boxes' available for the storage of such goods whilst in transit. Delivering alcohol products might cause problems, but should be possible.

It is very important that the bulk of the items should not cost any more than in a typical supermarket, and that it should be relatively easy for people to exceed the minimum order value without having to buy things that they might not otherwise have purchased.

 

7. Catalogue.

There is a requirement for a catalogue ; a) to describe the goods on offer in more detail than can be provided on a Prestel 'frame', and b) to provide instructions and other information for people wishing to place orders. It would also be useful as a marketing tool.

Whether or not it should list prices for the goods is not clear ; if it does, it will require frequent amendment ; if it does not, potential customers could be discouraged.

 

8. Future Developments.

Cable television in the Glasgow area is interactive, and could therefore support a 'home shopping' service. Clyde Cablevision have not yet committed themselves to offering such a service, but an established provider of a 'home shopping' service would clearly stand a chance of getting the franchise if and when it is put out to tender.

It might be possible to offer a local news or advertising service possibly in conjunction with a newspaper or perhaps with local radio.

 

9. Potential Cashflow.

An initial attempt at an estimate of the Cashflow of a service as outlined above is attached as fig. 3. There are many variables, probably more than show., and choosing a value for them at this preliminary stage is a cross between guessing and estimation. However the attached figure shows that there is a possibility that the service might be able to repay the initial costs in a reasonable time.

 

Prepared by George S Herrick - 2^nd June 1987