LCBO’s e-commerce success

On July 26, 2016, the LCBO (Liquor Control Board of Ontario) launched a brand new online retail channel. The new venture enabled consumers across the province to buy its almost 5,000 products online for the first time, with the option to have them delivered either to home or to one of its locations for free in-store pickup.

 
Canada Post worked closely with the company, which included ensuring that its longstanding commitment to the responsible sale of its beverages was firmly woven into the home delivery process.

 
In the new issue of Delivering the Online World magazine, we tell the story behind the launch – from how the LCBO pulled it off in half the original time planned, to the exciting new online venture it’s planning for 2017.

 
You can read the story as it appears in the magazine below.

 

How the LCBO launched its new online retail store

 

On July 26, the LCBO (Liquor Control Board of Ontario) made headlines when it launched an e-commerce channel for people across the province to buy its products online for the first time. The new site meant customers could access about 5,000 LCBO products, no matter where they lived in Ontario.

 

But what the news didn’t convey is the story behind the headlines – which explains how this large organization was able to execute the e-commerce launch in half the time it had planned originally. How did they do it? Kerri Dawson, the company’s Vice-President of Marketing, sums it up matter-of-factly: “Team work.”

Photo of Kerri Dawson, Vice-President, Marketing, courtesy of Pinpoint Photography

 
The beginning
Three years ago, the LCBO operated a basic non-transactional website, a place where shoppers could go to find information, such as locations, store hours and background on available products. But with Canadian consumers increasingly embracing online shopping, the company recognized it would need to evolve the website to serve an increasingly digital-savvy customer base. So it embarked on what Dawson calls a “digital reinvention.”
 
In 2014, it re-launched a more robust, though still non-transactional, site. A year later in spring 2015, the company received support from the Ontario government to sell online, and then Board approval shortly after. The e-commerce team got to work, devising a 24-month plan to launch an end-to-end online channel for lcbo.com. But digital retail thrives in a fast world, and then-CEO Bob Peter had a different timeline in mind. He issued what Dawson refers to as a CEO challenge. He wanted the site ready in half that time.
 
Culture change
For nimble start-ups, launching an e-commerce venture in 12 months might not seem like a big deal. But for a government agency, with more than 655 retail stores, about 9,000 employees and a product that requires proof of age, it’s a massive challenge that, Dawson says, turned into a key factor for success.
 
“What was good about that challenge was the team became incredibly focused and the project was scoped out with laser-like precision. It also meant that internally the organization rallied around the delivery of e-commerce.”
 
That internal rallying translated into noticeable changes in how the e-commerce team worked.
 
For instance, it affected meeting attendance. When a meeting was about e-commerce, Dawson says, people showed up, making time in their schedule. It focused decision making – no longer could people take a week to make a decision, they had to work faster. The project manager became crucial, not only for keeping everyone on track, but also holding them accountable for their part. And the glue that kept it all together? Buy-in at all levels of the organization, including the very top.
 
These kinds of culture-driven factors made the e-commerce project team of roughly 150 from several LCBO departments more effective, efficient – and invested. “When we launched, you could tell there was a sense of pride with the accomplishment.”

 
Good timing
Like most large traditional organizations, the LCBO is not an early adopter. It also had successfully invested in upgrading and expanding an extensive store network in some 300 communities across the province. Ironically, Dawson says, not being “bleeding edge” turned out to be a positive.
 
Many Canadian retailers had been in the e-commerce market for a decade. However, it was just over the past three to five years that Canadian shoppers have embraced online shopping, enabling retailers to finally start seeing significant returns.
 
This meant the LCBO could look at the industry, at other retailers and at its own customers for what successful e-commerce looked like. There was little guesswork or risk when it came to building an engaging website with a compelling customer experience.
 
Yet there was one area the company would have to execute flawlessly that most other retailers didn’t even have to think about.
 
Social responsibility
“The number one question I would get when talking about e-commerce was ‘How are you going to make sure kids aren’t ordering this online?’” says Dawson. “I actually found that quite encouraging, that people were thinking about that.”
 
Social responsibility is something the LCBO takes very seriously, so it is a major component of its e-commerce strategy. The online path to purchase includes prompts reminding customers that they must be at least 19 years of age to receive or pick up orders.
 
When customers buy products online and pick them up in-store, they must produce proper ID if they appear to be under 25 – the same rule that applies for in-store shoppers.
 
For home delivery or pickup at a post office, the person receiving the shipment must also prove age of majority if he or she looks under 25. As well, e-commerce parcels have stickers that clearly state a person’s required age in order to receive LCBO items.
 
Dawson notes that delivering in a socially responsible manner was an integral component of the RFP shipping contract. “We expected the same diligence in terms of social responsibility from our partner that we chose for home delivery, and Canada Post was a good choice.”

Photo courtesy of LCBO

 
Soft launch
To ensure that all components of a smooth online shopping experience were in place, the LCBO tested the channel internally in April 2016. The soft launch gave the company an opportunity to test the systems and business processes, and allow staff at retail locations to practice.
 
“The team really stressed the system to figure out where any breaking points would be,” says Dawson. “We had a good sense of the critical mass – and it was much higher than we anticipated.”
 
When it came time to launch publicly three months later, the team was ready – even for its first surprise.
 
On day one, immediate changes were already required: order volumes were well above expected levels. The team responded seamlessly, adding more pick-and-pack stations and tripling the number of staff who worked them.
 
Also unexpected was the ratio between in-store pickups and home deliveries – they had projected 80/20 based on the experience of other liquor retailers, but real numbers showed a 60/40 split. The difference suggested that shoppers were interested in the convenience and willing to pay $12 for shipping.
 
The origin of online orders has confirmed that shoppers from large and small cities use the new delivery services. As of September, only 28 of 655 LCBO stores had not received a pickup order in-store.

Photo courtesy of LCBO

 
Up next
The LCBO is already working on the next phase of its e-commerce strategy. The company will launch a new global online marketplace, where suppliers from around the world can sell their products on the site. It will also continue to promote domestic suppliers, including a large number of Ontario-based wineries, brewers and distillers.
 
Having proven their ability to succeed in the digital world, the LCBO’s employees are primed to keep going. “They are really buoyed by the successful launch,” Dawson says, “and they are ready and excited to continue building. It’s been a great example of cross- divisional collaboration and proven our ability to be agile in bringing new customer services to market, while staying within budget.”

 

Written by Cynthia Reynolds
 

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