John Lewis Reaps a High Return on Investment in E-commerce

There was much for A Level Business students to glean from the Christmas 2015 trading update by John Lewis Partnership - particularly the continued and rapid growth in its e-commerce sales.

The Guardian reported that online sales at John Lewis grew by 21% over the crucial Christmas trading period.

The full trading statement can be viewed here on the JLP website.

Some key points for students to pick up are:

• UK customers continue to migrate their spending towards e-commerce. Online sales at John Lewis were up 21.4%, representing 40% of total sales in the six week Christmas trading period
• The importance of being able to offer a "click and collect" option in e-commerce. 35% of John Lewis online orders were collected from Waitrose branches.
• E-commerce trading was more concentrated into three crucial phases; Black Friday, the immediate run-up to Christmas and the launch of online sales immediately after Christmas
• The importance of effective, reliable IT operations & logistics. The Chairman of John Lewis comments:

"Our performance reflects to a large extent the significant investment we have made in our distribution and IT capability. Despite the fact trade was even more concentrated across a number of very busy shopping days, our operations performed especially well."

The continued strong growth in online sales will provide some validation for the investment appraisal that John Lewis will have carried out as part of its planned £500m investment in e-commerce.

As the article above describes, John Lewis expects that online sales will overtake shop-based sales within 3-4 years.

To support that change requires substantial and long-term investment.

"The investment plan, the bulk of which will be executed in the next three years, will include the completion of state-of-the-art warehousing and investment into information technology that will improve systems, forward planning, analysis of shoppers and their buying habits and provide what Street called a ‘seamless journey’ for customers."