Having been in and around eCommerce and online marketing for the last 15+ years, it is safe to say that I have seen or experienced just about every kind of organizational structure and resource deployment possible. As such, I am often asked to comment/advise/consult on various ways to help companies optimize how to have eCommerce report within an organization.
Some companies are straight-forward and honest about needs and apply traditional thinking to justify and build eCommerce groups that will maximize the channel. Others think that this “new-fangled” channel needs to have some sort of unique application of resources and structure in order to drive different and better results. In the end, the companies that are successful are the ones that think strategically about the overall company, assess the business analytically, and maintain a focus on tactics that support a strong customer experience.
In taking a look at the Internet Retailer Top 500 and seeing where the head of eCommerce reports, the majority of these businesses (pure play eCommerce excluded) are aligned with the marketing area and usually report into the CMO or a Senior Vice President of Marketing. In talking with leaders in some of these organizations, the prevailing thinking is that as a “direct to consumer” channel, eCommerce is all about driving people to a website and a strong reliance on design and graphics to form and support a customer experience that leads to sales.
Other Alignments Encountered
While marketing may be the most encountered alignment for eCommerce, several other reporting structures can, and do, exist. The technology groups within some large companies often take ownership of eCommerce due to the reliance on software and hardware to serve up the electronic store. While the support of technology is great, the customer often is overlooked when bits and bytes trump actual customer behavior.
The merchandising area is another that will often drive the online shopping efforts within a company and take ownership of the eCommerce department. Chief merchants will note that “but for the products being sold and the efforts of the merchandising teams, there would be nothing to sell” (Quote by an anonymous chief merchant). While this may be true to some degree, the battle over the “what vs. how” can be unhealthy in a growing channel.
The last example to share is a multi-channel retailer with catalogs, a robust website and stores in most (if not all) states that had eCommerce report into finance. That is right. The numbers person was responsible for driving sales in the online channel. While certainly unique, there was merit in the underlying support for such a decision. Gone was the marketing vs. merchandising dynamic. In was the empirical decision making that would push ROI and increase shareholder value.
All in all, different approaches have worked (or not worked) for companies of all shapes and sizes. Much like raising a teenager (and eCommerce is is about at the top of that range), the trial and error in parenting the young, dynamic spirit that is eCommerce has produced all sorts of results.
The Maturing of eCommerce – Standing on Its Own
Today, eCommerce has established itself as a viable channel. In many companies, the eCommerce “store” is the largest in the company. It often produces the best net margins and value for the company. I am always happy to debate the differences in opinion about where eCommerce should report within an organization. There will be no one right answer as the channels continue to shift and evolve.
That said – As I get approached by recruiters for eCommerce positions, it never ceases to amaze me when the following scenario occurs. I will speak with the person inside the company responsible for assessing candidates. That person will provide all the position specs and then go over and above about how eCommerce is “the most important part of our business and gets the most focus of any of our strategic initiatives”. I then ask “To whom at the senior level of this company does eCommerce leadership position report?” Inevitably, 95% of the time, the answer will be one of the scenarios described. I then pause for a few seconds and follow with the statement “Since it is the most important part of your business, it should report to the CEO and have the autonomy to leverage all of the resources of the company”.
Looking Ahead on eCommerce Reporting Structures
This week I learned of a complete shift that a few large retailers are performing that is telling about the long-term value and reliance of eCommerce. In a forward-thinking way, these large brands are flipping over the reporting model and now having stores reporting into eCommerce. While the world is going more and more digital every day, it will not ever be “all digital”. However, the technology underpinnings and the focus on customer experience are establishing deep roots in the eCommerce area. Just let that sink in for a bit and then look at the eCommerce function in a new light and see where it will take a business.