Professional Documents
Culture Documents
MAY 2014
By Monica Gout
eBay Enterprise Strategy and Consulting Services
OMNI-PROOFING YOUR ORGANIZATION
Contents
The real question we should be asking is: how do we continue to win customers in an increasingly
digital world?..................................................................................................................................................................3
The Phases: Business functions move through various phases, often at different times........................................5
I. Incubate: ...........................................................................................................................................................7
References ....................................................................................................................................................................17
eBay Enterprise 1
Omnichannel Benchmark Study
The move toward omnichannel operations is influencing a major wave of change in the organization, and
there are a wide variety of structures in place as companies struggle to meet the challenge. In January 2014
eBay Enterprise commissioned a survey of 168 brands and retailers of all sizes, to determine their readiness
and attitudes towards omnichannel initiatives. The Omnichannel Benchmark Study included organization
structure as one of its research pillars. Below are some of the study’s key findings around organizational
structure, and how it can affect a company’s ability to drive omnichannel consumer experiences. Read on to
learn more around how your business can prepare for this inevitable shift.
50%
>$1B
45%
40% $500M-$1B
35% $200M-$500M
30%
$150M-$200M
25%
$100M-$150M
20%
15% $50M-$100M
10% $20M-$50M
5%
$5M-$20M
0%
0% 20% 40% 60% 80% 100%
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ogy
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Stra
Pro
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Centralized
Customer Experience Maturity
Collaboration
Ad Hoc
3
2014 eBay Enterprise Omnichannel Benchmark Survey
eBay Enterprise 2
OMNI-PROOFING YOUR ORGANIZATION
Organization structure is often used as the ‘quick fix’ If you want to win customers in the digital world,
for solving various business issues. Unfortunately, structure should be your last question. Start with
a quick change on the chart often may not solve these first, and answer them honestly:
anything due to deeper issues that need to be • How well does your team support the
addressed. These problems are only magnified as omnichannel consumer today?
brands and retailers move into the world of
‘omnichannel’ and digital integration. By looking • How smoothly does the business operate
beyond, or perhaps beneath, the org chart and ‘on the inside’?
taking some different steps, we discuss how retailers • What options do you have to improve the way
can optimize their structure and make organization you execute and focus on the customer?
their omnichannel silver bullet.
Organizations evolve as business needs change.
Omnichannel is influencing a major wave of change
We’ve been asking the wrong question and there are a wide variety of structures in place as
organizations struggle to meet the challenge. After
For years retailers and brands have debated the years of working with and for dozens of retailers and
organizational structure of the ecommerce brands, we’ve isolated the most important levers to
department. Where does ecommerce belong in the improve performance and optimize structure.
organization? Should it report to Marketing? Or IT?
Should it stand as a separate organization? What
groups should be part of Ecommerce--Creative?
Web Development? Marketing?
eBay Enterprise 3
OMNI-PROOFING YOUR ORGANIZATION
Think outside the box We’ve observed how organizations evolve over time
and defined three phases--Incubate, Expand and
Most companies today think they are much more Integrate, along with five key markers--to help them
aligned than they really are. In 2013, Forrester understand where they are in this journey, and how
surveyed 208 businesses and asked them to assess to improve performance.
their effectiveness at implementing a multichannel
strategy. Fifty-eight percent of the respondents
indicated they were “effective” in providing a FIFTY-EIGHT PERCENT OF THE
consistent cross-channel experience.1 We often hear
things like, “Of course we’re aligned--we all share one
RESPONDENTS INDICATED THEY WERE
sales number.” Yet when executives look a bit deeper “EFFECTIVE” IN PROVIDING A
into their own day-to-day operations, they often find
CONSISTENT CROSS-CHANNEL
disparate goals and shifting priorities, which are only
made worse by limited resources and political EXPERIENCE.1
agendas. No wonder it can be hard to get things done.
LEADERSHIP LINKAGE
RESOURCES
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OMNI-PROOFING YOUR ORGANIZATION
The Phases: Business functions move through various phases, often at different times.
I. Incubate – ‘New’ functions often start as a separate team to provide dedicated focus (and air cover). Many
ecommerce groups started this way, and for many companies this remains the correct structure. These
organizations need to educate and evangelize to help the enterprise realize the benefit, and ultimate
necessity, of supporting omnichannel growth.
II. Expand – as synergy builds between ecommerce and other teams, different functions learn how to
embrace the role of digital in their existing processes and decision-making. Combined results (online/
offline revenue, traffic, etc.) start to increase, and the teams work more smoothly side-by-side. There may
not be any structural changes, but results are much improved.
III. Integrate – as collaboration increases, the function/organization reaches a tipping point. They’ve adopted a
different way of thinking, and applied an omnichannel lens to goals, plans and decisions. Teams
understand how to focus on the customer first, and how to optimize their part of the business across
channels and touchpoints. Online/offline teams are often integrated within a function.
THE MARKERS: These indicators are signs of maturity in the organization and are
important to any healthy business. They take on extra meaning in building a successful
omnichannel organization.
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OMNI-PROOFING YOUR ORGANIZATION
To guide your own self-assessment, we’ve created a profile of each phase, including recommendations on
‘how to win’. And while there are successful organizations in every phase, one way or another, real
omnichannel success requires integration across business teams.
INTEGRATE
PHASE III
OMNICHANNEL
AWAKING TO BASICS STRONG IN
IMPROVING MEASURES
OMNICHANNEL COVERED SOME AREAS
EMERGING
INCUBATE
PHASE I
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OMNI-PROOFING YOUR ORGANIZATION
I. Incubate:
Most organizations decide early on to keep ecommerce as a standalone department (Gap, Gateway, Best Buy
and Sony, to name a few), and for good reason. It can be the only way to get the proper level of focus in a
company traditionally oriented towards brick and mortar or wholesale. According to a 2013 Forrester study,
49% of the businesses they surveyed still operate with a separate ecommerce group model. This approach can
help consolidate scarce digital skill sets for maximum leverage.
In the Incubate phase, sponsorship is critical to success. With that in place, we’ve seen ecommerce teams
successfully report into Marketing, Finance, IT, as well as the CEO.
Teams in this phase are focused on their own silos. The ecommerce team is focused on growing ecommerce
store sales. Other areas focus on the larger primary business and have mixed views on the priority, impact
and benefit of ecommerce relative to their own area.
eBay Enterprise 7
PHASE I PHASE II PHASE III
INCUBATE EXPAND INTEGRATE
I. INCUBATE
Strong retail or brand leaders that are product, brand or stores focused, but may
personally have limited experience with digital or ecommerce
Ecommerce leader may or may not have prior ecommerce experience, but
LEADERSHIP understands how to get things done across the organization
Mostly home grown teams. Varying levels of expertise. May not have enough depth
in key specialty areas such as Web Analytics, User Experience Design and Mobile
RESOURCES
Works well in some areas--usually where there is digital expertise embedded in the
brand or retail team--and not at all in other areas
Unclear processes to link online and offline activities (marketing, creative, etc.)
LINKAGE
Merchandising, marketing, stores teams incented on their own channel only, limiting
the amount of focus and collaboration with the ecommerce team.
Separate ecommerce P&L which can create conflict of priorities with Stores, Call
GOALS & Centers or Wholesale Partners
COMMUNICATION
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OMNI-PROOFING YOUR ORGANIZATION
• Invest in strong second lieutenants that integrate tightly with other key areas of the
business, such as Merchandising, Marketing and Stores.
• Ecommerce talent is hard to find, but it’s important to create a team that mixes
company knowledge with outside expertise and prior digital experience
• Leverage partners where it makes sense--either for fast-changing areas like social or
mobile, or to assist with specialty areas like testing and analytics.
2. Strengthen Collaboration
• Seed the ecommerce team with A players from Merchandising or Marketing to build
better credibility and understanding between teams.
• Dedicate time and resources to define roles and responsibilities across teams, clarifying
accountability and streamlining how work gets done.
• Integrate key web metrics into your overall business reporting. Create joint dashboards
to compare key web metrics to those of your other stores and business lines.
• Educate the senior team about the direct and indirect impact that online has across
the business. How do web sales, conversion, and traffic compare to your other stores?
How much of your main business is influenced by the web? How much of your traffic
is mobile?
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OMNI-PROOFING YOUR ORGANIZATION
II. Expand:
Organizations that implement the suggestions above move toward a more steady state operation of the
ecommerce site. Teams start expanding their thinking to also focus on web-influenced sales, which can
have a far greater impact on the overall business. This becomes the lever to drive stronger collaboration
across areas. Organizations in the Expand phase are learning how to plan across channels to drive better
results in all areas.
This expanded view of leveraging digital often starts in merchandising or marketing, and seems to take
longest between stores and online.
In this phase, the ecommerce organization has built credibility. Digital interactions are having an impact on
traditional operations. The online store may be the largest ‘flagship’ in the company.
eBay Enterprise 10
PHASE I PHASE II PHASE III
INCUBATE EXPAND INTEGRATE
II. EXPAND
Retail and brand leaders recognize their consumers are increasingly digital and are
more open to testing new ideas and approaches.
The ecommerce leader is the advocate for omnichannel thinking – across platforms
(mobile, web) and across functions (merchandising, marketing, etc.)
LEADERSHIP
Strong second lieutenants maintain online sales growth, but have clear
understanding of broader benefits of omnichannel and act accordingly.
Teams are building up their level of digital know how, and start working closely with
their ecommerce counterparts.
Programs are evaluated for ability to optimize the total business - driving traffic to
stores, increasing overall repeat rate and total spend by customer, across channels.
EXPERTISE Measurement and attribution become important tools for making investments.
RESOURCES
Merchandising learns what sells well online vs. in store and understands how to
maximize online results
Stores collect email in store. Store Management recognizes the value of saving a
sale, and begins to consider associate ordering or ship-from-store programs.
LINKAGE
Customer Service supports email, chat and phone orders, but is also realizing the
impact of emerging channels such as social and mobile.
Although the ‘collective mindset’ evolves quite a bit in this phase, often the metrics
and incentives lag behind, slowing things down.
Communication may be high level and vague, as retailers and brands try to explain
‘omnichannel’ and its importance to their employees.
GOALS & Executives are ‘talking’ about omnichannel, but progress and real results can be slow.
COMMUNICATION Some companies can get ‘stuck’ in this phase, saying the right things, but struggling
to see results.
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OMNI-PROOFING YOUR ORGANIZATION
• The ecommerce team needs to educate and evangelize to help others see that
omnichannel is a new way of doing business.
• Add some other metrics. Comp sales will always be important in retail. But if you are
trying to serve customers anytime/anywhere you need additional measures:
–– How much do omnichannel customers buy from you, vs. single channel customers?
–– What is your overall customer repeat rate? What’s your NPS rating?
–– What percent of store/brand sales are influenced by online?
• Find the pockets of your organization that have a natural affinity for understanding the
power of omnichannel. Communicate wins to build momentum and support.
–– Test certain items or categories of product online only.
–– Dedicate merchandisers to drive better results online.
–– Build a marketing campaign that starts with mobile first.
–– Pilot ship-from-store programs, or associate ordering, with a few districts and compare
the results.
–– Implement a social monitoring program in Customer Service and find out what
customers are really saying about your brand.
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OMNI-PROOFING YOUR ORGANIZATION
III. Integrate:
There is a point where an organization’s functions and structure reach a tipping point of sorts. Teams work
so closely together it almost doesn’t matter if they are part of ecommerce or some other organization.
Some roles even start to seem redundant. There are still unique tasks that are required to support digital
operations, but in this last phase of organization evolution, it becomes even more effective to integrate
some teams, and truly focus on the customer, however they want to shop.
Collective attention has shifted beyond just web sales, and the impact on overall business is significant. For
some, this leads to a complete realignment of what was the separate ecommerce division (as Gap Inc.
recently did). For others, the integration is focused on recombining certain functions (like Saks did earlier
last year with omnichannel merchandising). The extent of integration may vary by business, but the goal is
the same – focus on the customer.
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PHASE I PHASE II PHASE III
INCUBATE EXPAND INTEGRATE
III. INTEGRATE
Retail/brand leaders understand the power of digital to drive their business and
the necessity of thinking that way.
Digital expertise becomes a required skill set for advancement in the organization.
LEADERSHIP The ecommerce leader may move into an omnichannel advisor role, or
cross-functional innovation role, driving adoption of omnichannel operations and
looking out for the next technology disruption and how it will impact the business.
Teams are ‘multi-lingual’ and work to leverage each channel as best they can to meet
customer needs.
Teams are increasingly focused on the customer experience, but the skills required
to execute can be difficult to find. A 2013 Forrester study found that 62 percent of the
ecommerce businesses they surveyed ranked “hiring for customer experience” as
EXPERTISE
“Challenging” or “Very Challenging”. 2
Re-combined teams are more efficient and can raise the quality of execution.
Staffing levels are appropriate to support the combined business, including those
activities unique to digital operations.
RESOURCES
A smaller core ecommerce team may still exist to run testing, analysis, etc. but now
with an omnichannel focus. Mobile may also be part of this team, as a way of
incubating it within the broader integrated organization.
LINKAGE
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OMNI-PROOFING YOUR ORGANIZATION
• Continue to measure key omnichannel metrics across functional areas--it’s the only
way to keep the proper focus and balance of resources.
• Audit your ‘ways of working’ periodically to make sure you are still executing as well
as you need to.
• The pace of digital change is not going to slow down anytime soon. Take the time to
document, and update, your omnichannel strategy to understand how change will
continue to impact your organization.
• Thoughtful review of ‘what’s next’ and ‘what’s important’ with a small set of dedicated
resources will help you anticipate how to make the necessary adjustments to
the organization.
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OMNI-PROOFING YOUR ORGANIZATION
Not all organizations will naturally evolve to this more integrated way of working. Many times, top-down
directives will be required to be successful in today’s digital world. After all, we’ve all spent a long time in our
silos. This means senior level engagement is critical to long-term success. More than just sponsorship of a
steering committee, but authentic, active involvement across areas.
Some companies will spend years in one phase or another and be reasonably successful. However, winners
will be more integrated than not. Organization structures will vary, but they will all have strong linkages
across functions in serving the omnichannel consumer. Most importantly, their leaders will understand not
only how to paint the vision, but also how to drive accountability and execution. It’s the only way to survive
and thrive long term in our connected world.
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OMNI-PROOFING YOUR ORGANIZATION
References
1
“Five Pitfalls to Avoid When Executing a Retail eCommerce Strategy – Forrester Research, August 2013
2
“Trends 2013: Staffing and Hiring for eBusiness” – Forrester Research, May 2013
3
2014 eBay Enteprise Omnichannel Benchmark Study
eBay Enterprise 17
+610.491.7000 | www.ebayenterprise.com | insights@ebayenterprise.com
eBay Enterprise is a leading global provider of omnichannel solutions, including commerce technologies, order management, retail
operations and marketing services. Our comprehensive and modular solutions enable brands and retailers of all sizes to deliver consistent
consumer experiences across digital and physical retail touch points throughout the entire purchase lifecycle by engaging potential
customers, converting browsers into buyers and delivering products with speed and quality. Our expertise in commerce and omnichannel
solutions provide our clients with the flexibility and control they need to accelerate sales growth and win with today’s digitally connected
consumer. eBay Enterprise is headquartered in King of Prussia, Pa. and has major service offices in Austin, Barcelona, London, Los Angeles
and New York. eBay Enterprise is an eBay Inc. (Nasdaq: EBAY) company.