Virgin: swapping clicks for bricks

Virgin.com is one of the three most trusted brands on the internet, according to the Henley Management Centre. So having established such a successful range of online businesses, what does Sir Richard Branson do next? Bring them all back to the high street, of course, in a project called V.Shops.

The first five V.Shops opened in London last week and are set to replace 200 Our Price record stores nationwide. The idea is to enable those who like the physical act of shopping to access services previously only available online from Virgin.com.

This means that customers will be able to look at mobile phones and CDs that are on display and buy flights or train tickets on the net using in-store terminals. They can then pay directly to a real, human store assistant and choose between having goods delivered to their home or collecting them from the store. Virgin believes this mix of online, phone, and high street shopping is the future of ecommerce.

The man in charge of V.Shops is Will Whitehorn, who also has the additional responsibility of being brand strategy and corporate affairs director at Virgin. Whitehorn not only keeps Virgin ticking over while Branson is off ballooning or whatever, but was also the driving force behind moving Virgin's established businesses online. He oversaw the launch of Virgin Cars, Virgin.net and rail ticketing service trainline.com.

But despite such a heavy workload, Whitehorn still manages to appear relaxed.

While a game of table football clatters away in the background and a colleague kicks a football aimlessly round the office, Whitehorn sips from a can of Coke - sorry, Virgin Cola - and spells out his views on the future of Virgin and the internet.

The first advice he gives to any company looking to prosper on the web is that if the organisation has a good, traditional brand, it shouldn't throw it away for what he calls a 'jungle-up-my-bottom' dotcom.

Just as everyone else is rushing to move online, you're going back to the high street. What's going on?
People feel much better about paying considerable amounts of money via ecommerce when they know there's something physical behind it. That's where the V.Shop comes in. It's the world of Virgin.com, accessed through a shop. If I don't have a credit card, I can pay cash over the counter and have the goods delivered to my house.

A number of times [when] I've bought things on the web, the delivery has been an absolute nightmare, so here you can have them delivered to the shop and pick them up when you're free. I think this is a very exciting concept.

Where did the idea come from?
In the late 1990s, we realised Virgin.com could become a key internet brand. We also believe that a long-term ecommerce strategy has to have a high street presence. We had to buy Our Price back from WH Smith first, and we've taken 18 months to form this new V.Shops strategy.

Why did you decide to aggregate all your online brands into one shop?
Trains, planes and automobiles don't obviously fit with banking, mobile phones and CDs. If you look at the Virgin businesses in isolation, there isn't really a logic trail to them until you come to where we are now, which is Virgin.com.

We've always been firm believers that, with one or two exceptions, the way forward on the net was not going to be with new brands, it was going to be with traditional brands. We believe that 90 per cent of the pure internet brands at the moment will not be here in three to four years' time.

You've taken your existing businesses online and you've set up new dotcoms. What are the major lessons you've learned?
Ecommerce is considerably more complex than people initially think. There are plenty of ecommerce sites available in the UK where you have no recourse to any communication with a real person. Those sites will die. You have to have telesales operations.

One of the best examples is Virgin Cars, which has been running for three months. We've sold 1400 vehicles so far, which is incredibly good. We've had several million hits on the website, but I think they've only sold one without someone phoning the call centre.

So what's the secret of your success?
We decided to get some businesses going first and learn about dealing with the customers in those business areas. What you should be thinking about is building a profitable business and not being hung up about the web. By 2005, it may be that the .com vanishes because most people will be doing these transactions on an advanced third-generation mobile phone.

When did Virgin first realise the potential of the internet?
In the mid-1990s, we realised that although the internet was fairly well established, the number of consumers was very small. It was clear to us that there wouldn't be any real consumers for at least another five to eight years, and I think we've been proved right.

At the same time, we looked at where we'd take the Virgin brands and decided to launch a range of businesses that were easily adaptable to the future. Eventually, the convergence of technologies will mean that a lot of current practice is preparation for the future, which will be more mobile-oriented.

Next week we talk to Whitehorn about the importance of Virgin Mobile to the company's long-term ecommerce ambitions and ask what advice he would give to IT directors looking to tread the same path as Virgin.com.