Case report – individual “Estore at Shell Canada Limited”

Executive Summary In 2002, Shell Canada launched its online store called eStore for its customers. The objective was to keep costs low by having a self-service technology so that agricultural customers can buy their products without the need for a sales-representative. The statistics from eStore showed even though the number of customers who signed up for eStore was close to the target, number of customers who actually used eStore remained low. The problem seemed to be mainly due to customers having difficulty with the service. According to customer’s feedbacks, many encountered various technical problems when they tried to place orders.

Others just preferred traditional methods of buying what they needed, while the remaining group were simply unaware of eStore. It is evident that the low number of purchases done through eStore is highly related to these issues particularly the technical issues in the website. If prompt actions are not taken to address these issues, Shell Canada would risk decreasing sales and even losing customers.

After analyzing the situation and the company, it is determined that assembling a small team of experts to fix the technical issues of eStore and improve its user interface based on customers’ feedbacks is the best alternative. The implementation will take two months and then there will be a month of close monitoring period after the improved version of eStore is launched.

Key Issues The main problem that Shell Canada needs to address here is low use of its online eStore. Finding the roots of this problem, three issues are identified: technical and user interface problems of the website, unawareness of Shell’s customers about the eStore, and customers’ preference to stick with traditional methods. As determined by the report from the consultant firm, RareMethod, technical issues and user interface problems are causing the low utilization of the eStore. They realized that customers who tried to sign up and potentially make purchases online encounter a few problems which made them reluctant to keep using the service.

Some customers did not remember the link or just mistyped it while some had difficulty remembering their automatically generated passwords. Some user interface issues of the website include confusing login page, multiple applications available in the menu, and long delays in the process of placing orders. In addition, there were some issues related to back-end eBusiness system which resulted in confusing and irrelevant notification messages sent to customers. All this issues fall into the technical category and are ranked as the most important and the most urgent to address.

The second issue is related to customer’s adaptability to this self-serve system. Although the number of people who have signed up for eStore is high, the proportion that actually uses it to make purchases has stayed low since eStore was launched. This shows that many customers are reluctant to use this new service. They either preferred to deal with their local sales representative with whom have developed personal relationships or they found the already available phone/fax service more convenient than online store. This issue is ranked as high importance but low urgency since it requires long term plans to make customers adapt to this change.

Lastly, based on the feedback that Wright received from the customers, many were simply unaware of the existence of eStore. This issue implies the need to market this new service to current and potential customers. While marketing the website will increase the number of people who sign up for eStore, it may not increase the amount of online sales. Therefore, this issue is ranked as low importance and high urgency.

ADDITIONAL PERFORMANCE INDICATORS

Earnings on a current cost of supplies basis attributable to Royal Dutch Shell plc shareholders ($ million)28,62518, 643 Earnings per share on a current cost of supplies basis ($)4.613.04 Net capital investment ($ million)23,50323,680 Return on average capital employed (%)15.911.5 Gearing at December 31 (%)13.117.1

Earnings (in billions)Revenues (in billions)Petroleum Products Earnings (in billions) Shell Canada$0.81$8.8$345 Suncor$1.1$6.3NA Husky Energy$1.3$7.7$28 Petro-Canada$1.4$12.2NA Imperial Oil$1.7NA$462 Table 5 – Shell Canada compared to competitors in 2003. (Shell Annual Report 2011, n.d.) Over 85% of all oil refining in Canada is owned by five major companies. Shell Canada Ltd, one of Canada’s most significant oil companies, reported annual revenues of CAD 8.8 billion in 2003. The net profit was CAD 810 million. (Saunders, 2006) “Shell has around 15% of the country’s refining capacity with three refineries: Scotford (62,000b/d refining capacity), Sarnia (72,000b/d) and Montreal East (121,000b/d).

All three are 100% owned by Shell.” (“Canada Oil & Gas Report”, 2011) Table 4 indicates the market share of Shell Canada in terms of earnings and revenues compared to its major competitors. As can be seen, it has the lowest amount of earnings compared to other four Canadian oil companies. Table 3 indicates fluctuating profits of the company which are the results of energy price fluctuations, political and economic changes and natural disasters which result in change in demand.

By 2002, there was a major shift taking place in the Canadian market for fuel and lubricant products. This market was simply segmenting to two separate groups. One group that consist 95% of customers were becoming highly price sensitive (i.e. transactors). The rest are not as price sensitive as the first group and are willing to pay prime price for high value of services (i.e. progressives). This market segmentation put a downward pressure on profit margins of Shell Canada and to best serve their downstream customers they needed to keep their prices low by implementing a self-serve sales service online. Alternatives and Recommendation

Alternative 1

In order to address technical issues of the online store, a skilled team of IT professionals must study the problems and come up with solutions and action plans to correct them. It must be noted that this time, the group should be relatively small and work in one location. The team involved in developing eStore consisted of a few groups in different regions and was simply too large for effective coordination and organization which could in fact be the cause of so many technical errors in the application. The goal is to eliminate all the technical errors, make eStore as user friendly as possible in short period of time, and reduce the number of sales representatives significantly.

Pros of Alternative

  • Online user satisfaction
  • Well-functioning online store results in cost savings due to less number of sales reps needed
  • Allows Shell Canada to offer lower prices to transactors
  • A comprehensive technical troubleshooting and improving user interface requires large investment in time and money
  • Many customers will still be unaware of the eStor

Alternative 2

Another alternative is to offer a fully functional online service to transactors who have already signed up for eStore so they can make their purchases from Shell online at their desired prices. The main difference with alternative 1 is that in this case, the eStore is only targeted for transactors who are aware of the service and will be willing to use it if it is free of technical errors and is user friendly. The rest of the downstream market, who are progressives and transactors who are either unaware of the eStore or are reluctant to use it, will continue getting services from their sales representative.

Pros of Alternative

  • Better targeted online store
  • Higher utilization of the website (those who sign up are more likely to use it as well)
  • Customers are not forced to change their preferred method of purchase
  • Losing customers is very unlikely
  • High cost to keep the sales reps
  • Potential difficulty in offering eStore to the right portion of customers

Alternative 3

This alternative focuses on the customers that have not heard about eStore. The idea is to market eStore and promote it so eventually every customer of Shell Canada would be aware of the service and how it works. This option might require marketing campaigns, seminars about the eBusiness, instructional brochures, eStore advertisements in newspapers and flyers, and promoting the store through Shell Canada’s website and sales representatives. The result would be increased number of people who open account on eStore; however, the proportion that actually uses it to make purchases will not necessarily increase significantly.

Pros of Alternative 

  • Increase in awareness about eStore and its functionalities
  • Increase in number of customers who sign up
  • High cost for promoting and marketing the website
  • Resistance to change purchasing method will still exist

Alternative 4 Since eStore has been inefficient as a self-serve system and majority of customers still choose to use phone or their sales reps to make their purchases, Shell Canada has the option to take down eStore and focus on sales done through sales reps or phone service.

Pros of Alternative

  • High level of customer satisfaction with sales reps or phone service
  • No further cost to operate the website•High cost of sales through sales reps
  • Very low profit margins or low number of sales from transactors due to high prices
  • Fall behind competitors in eCommerce

Based on the decision criteria, the best alternative that addresses urgency of correcting technical difficulties of eStore is alternative 1. Even though, there will be customers still unaware of this available service, the large number of customers who have already signed up will start utilizing the website once they find out the new eStore is more user friendly and does not have previous technical issues. Implementation and Action Plan

It is now determined that to increase utilization of eStore, detecting and correcting the technical issues and improving the user interface are the priority. Once the issues with user interface are identified based on customer’s feedback, a team of internal IT experts in Shell Canada must be assigned to work on improvement and troubleshooting of the service. Since for the eCATS project, large number of people from multiple departments were involved, there was a problem in effective communication and coordination of the project.

This time, the team must have a small manageable size (4-6 members) that closely work together while constantly communicate with other departments. Another advantage of a small team is its lower cost of operation. As an IT eBusiness leader, Milley should take charge in leading this technical team. Also it is important that the members should be chosen internally from those who were involved in developing eCATS to make sure they are already familiar with the project and have previous experience with it.

After assembling a competent team, a time-frame of four weeks is given to solve the technical issues that are fundamentally inherent in the web application or those from the back-end eBusiness system. After that, another four weeks will be dedicated to solve all the user face issues and come up with a new design for the website. In more details, the team must address the following:

  • First of all the URL for eStore should be simplified so it will be easier to remember.
  • Besides, if customers use in typing the address, the system must automatically redirect them to the secured connection.
  • When customers register in eStore, they should be able to choose a more convenient customized password and have the option of saving the password in their system for future use.
  • The log-in screen should only indicate customer’s login and the employees should either have a separate page or have a small link at the bottom of the page.
  • Increase the speed of processing orders and minimize delays
  • Set-up a platform for regular updates on the website including information such as number of available items in the stock

One week before launching the fully functional and error free version of eStore, Shell Canada should send emails to its customers promoting the improved eStore. The email should refer to the improvements in detail so the customers would know about the changes. Also, when launched, new features and improvements must be promoted on home page of the eStore. After the new eStore is launched, there is a monitoring period of four weeks required to make sure it is running properly and the previous problems do not rise again. If any issues are observed, they have to be addressed immediately.

When number of eStore customers start to grow, an online survey should be taken from them to see if they are satisfied with the new version of the website and if they have encountered any issues in their online purchase experience. The survey should also ask about their preferred method of purchasing from Shell Canada.

Based on the feedback from this survey, the success of this plan can be evaluated. If after six months, there is no significant rise in the number of people who use the service to buy products, even though there are no technical issues on the website, then the main concern becomes promoting eStore to those who are still reluctant to use this service. However, in order to effectively market eStore, the main reason behind persistent low number of website utilization must be found out. Conclusion

In conclusion, Shell Canada must take immediate action to resolve technical and user interface issues in its online store. The implementation will take about two months and a new version of their eStore will be available to customers. It is expected that the large number of customers who have signed up for the eStore will start using the service once they notice the previous issues do not exist anymore. Having an efficient and user friendly online store will give Shell Canada a competitive advantage against other oil companies and will provide the possibility of offering lower price products to its highly price sensitive customers.