Many of my engagements recently have been focused on e-commerce organizational structure, and frequently it seems that even when organization design is not the star of the assignment, it winds up with a strong supporting role in the work.
In some ways, this is nothing new. Retailers have been wrestling with how to best organize for online and multi-channel success ever since e-commerce has existed, well over 15 years now. What's changed, though, is that online and digital initiatives are now front and center in most retail strategies. E-commerce sales are a significant portion of a retailer's business. The website and new mobile touch points function as critical access tools for customers who research before and during their trips into the brick and mortar world.
While many companies have invested heavily in the technologies and capabilities needed for smooth shopping and buying across channels, all too often the actual experience of using these capabilities falls short. The rise of mobile devices and the continuing growth and dominance of Amazon are overdue wake up calls to retailers, many of whom recognize the need to re-examine their value propositions and improve their abilities to execute well in the digitally integrated world. Inevitably, the people that these retailers hire and how they position those people in the organization will make the difference in success or failure.
So, where should the online team report? How should you organize your team? Who should you hire?
The answers to those questions are different for every retailer, of course, but there are a few strong guiding principles that I have found to apply in just about every company:
Get the reporting structure right: Your online/digital team should have a direct line of communication to the executive in the organization that has broad reaching vision, influence and authority to drive change across the organization. Very often, that means the CEO. It can also mean a strong COO or leader of Direct. If you instead choose to make the online team an offshoot of merchandising, marketing or (even worse) IT, it's unlikely that you'll realize the broader opportunities of the online channel.
Understand the specialized functions critical to running an online business: While you may think that e-commerce and digital marketing are "new" functions in your company (and, relatively speaking, they may be), most solid online teams are increasingly comprised of specialists that are skilled in critical disciplines. Think about marketing channel specialists (email, SEO, SEM, Affiliates, CSEs), think about online merchants, who have a growing set of sophisticated search, recommendation and product presentation tools to master. Think about data analytics and A/B testing (in my view, one of the most consistently under-resourced functions on e-commerce teams), and think about the information architecture, interaction design, visual design and user experience disciplines needed to have a first rate site. I am frequently surprised at how few executives are familiar with these important roles. Understand them, and be prepared to invest in the specializations that are the most important for your online business.
Think process integration vs. organizational integration: For most retailers, the e-commerce team started out as an independent unit that didn't have much to do with the rest of the organization. That was a good thing, since the online world was new and e-commerce teams needed time and space to figure things out. No more. With digital initiatives at the top of every retailer's priority list, there's nowhere for the online team to hide. That's good, but it's causing many organizations a great deal of stress as they struggle to integrate the online team with the company as a whole. From my experience, it's usually not integrating the organizational design that solves this challenge. Instead, it's integrating the strategy, planning and business processes to include online. Brace yourself. It takes a lot of time and roll-up-your-sleeves working sessions to figure out how to make things work across channels and functional groups, what meetings need to take place, where the teams need to intersect and hand off. It's a lot harder than shuffling boxes on an org chart, but it works better.
- Rise to the recruiting & retention challenge: If you read the industry news or if you currently have open seats on your e-commerce team, you are probably already aware of the heavy demand for digital retail talent. Chances are it will be like this for some time to come. With the continued rapid consumer adoption of all things digital, there will be no letup in demand for e-commerce and multi-channel innovation. According to a recent Fast Company article, most workers now change jobs about every 4 years. That means that even if you have great e-commerce talent today, you might find yourself filling those positions in the near future. I'm not a recruiter, but I often interview e-commerce leadership candidates on behalf of clients, and here's what they care about. They want to be in a company that has a strong vision for the role of e-commerce. They want a direct line of communication to the person who can help them be successful (in other words, they want to report to the CEO or a senior influential leader). They want to know that the company has solved, or is willing to solve some of the issues that have made e-commerce and multi-channel initiatives flop in other places, namely, internal "channel conflict", long IT queues to get basic customer facing needs addressed, underinvestment in critical functions needed to run a digital business well (see #2 above). In other words, they want to work for someone who "gets it" and will help them clear the runway.
According to the Shop.org State of Online Retail Report, 2011, over 80% of the retailers surveyed will be adding staff to their online teams in the coming year. That means there will be plenty of companies vying for e-commerce talent. Are you organized to win and keep the best team?