Background
Traditionally retail businesses had classic organisational structures which were functionally based and looked something like this:
The structures were organised to support brick-and-mortar stores with almost all customer interaction occurring in the physical store.
Enter the age of e-commerce
When retailers added the online channel to their offering, becoming multichannel retailers, they generally tried to fit e-commerce into these traditional structures. E-commerce starts out being a very small proportion of revenue which does not justify a position at the executive management level alongside finance, IT etc. E-commerce becomes the responsibility of one of these executives and often falls under marketing. This is due to the belief that e-commerce is an extension of the marketing aims and objectives of a business. It could also have been due to the fact that marketing generally “owns” customer experience. The digital nature of e-commerce requires the customer journey to be robust.
A survey done by the Association of National Advertisers (ANA) in the USA, asked how e-commerce aligns with company structure with the following results:
The survey supported the general trend of Marketing owning e-commerce, with a variety of other ways of structuring it, presumably based on skills, capability and ability to take on this complex area.
Before the placement of e-commerce management is debated, the activities that deliver a good e-commerce experience for customers should be listed. This should provide valuable insight into the challenges that e-commerce ownership face.
E-commerce operations include:
a) Website development and SEO (Search Engine Optimisation)
b) Photography and graphic design
c) Customer acquisition and relationship management
d) Marketing & campaign management
e) Personalisation
f) IT infrastructure to support online shopping
g) Connection to banks for online payment options
h) Refunds
i) Inventory management and availability
j) Fulfilment of online orders through logistics and delivery
k) Returns logistics
l) Store fulfilment
m) Call Centre
The above list could be categorised into Marketing, IT, Finance, Logistics and Stores, although there may be a variety of reasons that certain operations are placed elsewhere.
Thoughts and considerations
The issue that companies often face when marketing drives e-commerce is that fulfilment operations do not receive the support and voice that is required, leading to a poor experience. Logistics, IT and finance have to be carefully integrated to ensure that customers’ expectations are met. Trust is a huge element of online shopping. Poor online experience and order delivery will reduce customers’ trust in your brand and company.
A well-integrated “backbone” will allow companies to drive online sales without being concerned with their ability to deliver on promises made to customers, even in peak times like Black Friday.
It can easily be seen in Figure 4, that e-commerce is a truly cross-company operation. It relies on high levels of collaboration across all relevant departments. It is for this reason that companies find it difficult to assign an e-commerce owner who can cover all aspects without adding another executive.
Suggestions and recommendations
Based on the above information the following is recommended:
1) The person who is given responsibility for e-commerce needs to be interested in all the operational elements equally
2) The responsible person needs to have influence across all departments involved in e-commerce
3) The person should be at the same decision-making level as the executives of the organisation
4) If no dedicated e-commerce executive is placed, the Supply Chain or Marketing Executive would be the most appropriate owners
5) As e-commerce grows as a proportion of total revenue, structures should be re-visited
Ongoing e-commerce management and coordination
Considering the collaborative requirements of e-commerce, regular cross-department meetings should be held and chaired by the responsible executive. Meetings should have agenda items for Finance, Supply Chain, IT, Marketing and Stores. Specific focus should be placed on customer communication during all stages of engagement with digital customers.
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