With signs of a softening economy and reports of lackluster retail sales, it appears that many leading retailers are belt tightening. Just this week, a number of organizational restructurings were announced at Sears, JCPenney, Eddie Bauer and others. And there are likely more to come.
A recent study presented at the NRF convention by the J.C. Williams Group focused on the organizational structures of e-commerce teams. Among the big findings, as many of us know first hand, were that a) e-commerce has taken a larger and more prominent "seat at the table" in recent years, as online sales volumes, profitability and customer engagement have grown in importance to the total company results, and b) that online teams, while more integrated into the "mother ship" of the organization than in the past, still very much need focused leadership and resources to thrive. The result for many companies is a "semi-integrated" organizational model, which allows web teams to execute and make day to day decisions somewhat independently, but yet ultimately report to and share information with a larger entity, such as total direct sales or global marketing.
As I read about the belt tightening and re-organizations focused on cutting cost and "streamlining efficiency", I worry about where the e-commerce teams will land in the shuffle. While senior management in most organizations clearly recognizes the importance of online selling, experience tells me that many of them are woefully void in really understanding what it takes to manage an online business day in day out. We've done an amazing job of making online shopping easy for the customer....trouble is, that makes many people who are unfamiliar with the channel think that is is just as easy behind the scenes. I, and my seasoned colleagues will tell you, it is anything but easy.
Temptation will likely be to break online teams apart; have online merchants report to catalog merchants, have designers report into the creative team...after all, the web is pretty automated, right?!?
There could be long term advantages here. Certainly, tighter channel integration, if executed well, yields a better customer experience and better knowledge transfer across the organization. Combining teams in a well thought through way with that as the primary objective can work, I've seen it work. However, combining teams with the sole purpose of cost savings may yield a loss of focus and attention to a channel that has been the bright spot of innovation and profitability over the last decade. If you're an executive considering such a move:
- Talk to the people who are the smartest about e-commerce in your organization. Ask them to help you understand how it works operationally, the challenges and resource needs. Don't be afraid to admit that you don't know much about what it takes to run the website. They'll be glad you asked. And you'll be surprised at how hard it is.
- If you must eliminate jobs, be sure you have a clear understanding of what things you'll be giving up - both short term and long term. Don't assume that it will all still get done. It probably won't.
- Determine how will you maintain critically needed focus on the channel: what's happening in the industry, with your competitors, with technology needs? Most importantly, who's the person who will be ultimately responsible for the customer's experience on your website?
The good news here, of course, is that e-commerce has proven itself to be a survivor in many troubled organizations and through troubled times, and it will continue to survive. But e-commerce growth rates are slowing. Thriving (not just surviving) will take more focus and muscle than ever. Have you positioned your e-commerce team to do the great work they need to do?
Even the most progressive business owners are not very knowledgeable about the actual mechanics.
Posted by: Ecommerce Junkie | February 01, 2008 at 10:05 AM