Creating or adding to your commerce organizational structure
During my 30 years as an ecommerce recruiter I’ve had the opportunity to work with many hundreds of online businesses, both B2C as B2B. I’ve placed executive ecommerce leaders and entire ecommerce teams with established Fortune 1000 companies all the way down to early stagers and start-ups. During my client kick-off calls, I am often asked to share my insights on ecommerce organizational structure, a topic I write about frequently about. I’ve seen what org structures work and which ones don’t. I’ve seen owners scale up their ecommerce busineses to great success, and others crash and burn. Many figure it out as they go, shooting from the hip as new urgencies arise. In-house ecommerce departments can cover a wide range of responsibilities including these major categoreis: Product, brand and content, marketing, trading and conversion operations and fulfillment.
While there is no one universal answer for how to organize around ecommerce, there is one irrefutable fact: It’s all about the people you hire. They will make your business, or break it. The structure is no better than the people who work it. The trick is putting the right people into the right places at the right time.
This article will help you do that.
Marketing Versus Operations
First question you need to ask when considering the best ecommerce organizational structure for your business is this: Do you sell entirely online, or is ecommerce just one of other distribution channels for your business? If you’re a pure play, the ecommerce team should ultmately report up to the owner or chief operator of the business. For those businesses that market through multiple channels, ecommerce typically falls under marketing or operations. Only rarely, and I mean VERY rarely, should it ever report up to IT, Finance or any other function unless the business lacks a marketing or operational leader. Many companies in manufacturing and construction are still holding onto the idea that ecommerce is an IT function, but that’s definitely changing as digital commerce becomes more mainstream among old-line industries.
The decision to place ecommerce under marketing or operations often comes down to the nature of the business. If you have an especially large number of SKU’s with more varied and complex supply chain, fulfillment and customer service requirements, then you’re probably a good candidate for having ecommerce roll up to operations. These functions can require more complex systems and processes which don’t often fit within a marketer’s skill set. There are lots of moving parts and too many opportunities for the “wheels to come off.” I see this often on the B2B side among companies that manfacture engineered products.
This whole question of marketing versus operations really comes down to the strengths of the owner/entreprenuer. If you have a strong marketing or sales background and that’s really what you want to focus on, then it only makes sense to hire someone with a strong operational skill set. At a certain point- I would say roughly in the $3-5 million dollar revenue range- it’s time to consider bringing on a strong operator to take care of the systems and processes that suck up your time.
So when does it make sense to have marketing run the ecommerce show? I usually suggest it for any business other than the kind I’ve just described, ie, ecommerce businesses that are pure plays, and those that need to put at least as much focus on customer acquisition, conversion and retention as they do on product management, fulfillment and customer service. This category would include B2C resellers in highly competitive consumer product categories that rely on search, email, social, affiliate, UX, conversion, retention and other marketing channels and strategies to drive traffic and retain customers.
Hiring Your First Ecommerce Manager
Once you’ve determined which direction you’re going- operational versus marketing- the needs of your business will dictate who you should hire first as you develop your ecommerce organizational structure. For many of my smaller clients (who I define as generating at least $3-5M in revenue), it starts with an ecommerce specialist, a hands-on, roll-up sleeves “doer” with both marketing and operational exposure. At this level they may not have more than 7 or 8 years of experience, but that’s OK. At this point, it’s always better to hire slightly “up” than to hire “down,” as you want to allow this person some room to grow into the role over time.
For businesses owners whose passion is building the best operating machine, this first ecommerce hire should be someone who can run with the marketing and sales side of the business. For owners who already have strong marketing and sales expertise and product domain knowledge, onboarding an operator is the perfect complement. A good operational hire will help create leverage and free up the owner to apply their expertise on the business side of the house.
Sometimes it’s more difficult to know which way to go. I’ve worked with lots of founders and business owners with both marketing and operational backgrounds who struggle “letting go.” But they don’t know everything, so looking at the weakest links in the chain will help inform that decision. As an example, I worked with a client recently that had built a very strong Amazon business and now wanted to launch and grow their own branded ecommerce site. I suggested he look for an ecommerce manager with particular strength in customer acquisition including exposure to email, search and social media. Typically, candidates at this level will be stronger in some platforms than others, but outsourcing always remains an option to cover areas where internal expertise may be lighter.
Rounding Out the Ecommerce Organizational Structure
When a pure play ecommerce business reaches the $10-20M range, it’s not unusual to have as many as 15 or 20 employees/contractors covering additional key functions, including the following:
- Customer Service
- Paid Acquisition
- Organic Search
- Management & Leadership
- Technology / Product Management
- User Experience
- Fulfillment (Shipping, Returns)
As-needed specialized expertise is often outsourced, and it has been my experience that many of these functions can usually be covered by outside contractors, with the notable exceptions of Management & Leadership, Product Management, Merchandising, Purchasing and Fulfillment. These areas often require a higher degree of cross functional internal interaction, and most of my clients who reach this size will hire these roles on a full-time permanent basis. I encourage clients to in-source whatever they view as strategic, that is, when a compelling rationale can be drawn for hiring proven talent in-house for work that could yield a competitive advantage. After all, “renting” the same team as your industry peers yields little competitive advantage. That being said, hiring a consultant or agency that has unique and specialized knowledge or capabilities can create significant value by compressing the learning curve or producing exceptional work that couldn’t be done in- house.
Ominchannel retailers and other businesses marketing through multiple channels that want to devote some focus to ecommerce but can’t yet justify the funds to dedicate the desired level of support, often designate staff as responsible for ecommerce in addition to other primary responsibilities. This approach is most common at the account level, particularly for omnichannel retailers that already have a dedicated account team in place.
If you’re going to commit to supporting retailers other than Amazon, you have to make sure you have the right staffing model to do it. You should assign one person to each account or dedicate somebody to support “all other” brick- and-mortar dotcoms. That simply means rather than making digital 20% of one person’s job at each of five customer accounts, make supporting five retailers 100% of one person’s job. Most consumer marketing clients I have worked with that market through Amazon have a dedicated in-house Amazon account specialist. The bigger corporations often co-locate these positions in Seattle where Amazon’s account managers are based.
As the channel matures and volume grows, hiring priorities will develop as operational weaknesses become more evident and the channels, platforms and strategies that are most effective at driving that growth emerge. Perhaps your weakest link is in sourcing products, or maybe it’s in customer acquisition or on-site conversion. The amount of work and time required to fill that gap will determine whether you need to make an internal full-time hire or an outside vendor.
In midsize and large scale ecommerce businesses, each of these areas can become stand alone departments of their own with a Manager or Director of Ecommerce, Digital Marketing or similar function as department head, reporting up to a Director, VP or even a SVP. Some companies I’ve worked with have dissolved centralized marketing technology departments, and instead distributed those specialists among individual teams. The resulting structure has served to reinforce the cultural shift from reporting to respective departments to sharing responsibility for a team and leveraging expertise where it is needed. These teams are measured by the success of the product or service—incentives that reinforce the collaborative culture and have led to a surge in new ideas by newly empowered employees.
Here is a typical ecommerce organizational structure for one of my clients with a well-developed ecommerce business generating $50-100M in annual sales:
A few important footnotes as you review this chart. This is more representative of a B2C marketing organization versus B2B (this structure does not include sales enablement, as an example). Some of these roles are specialty positions that were initially outsourced and were later brought in house. A CRM team is more typical in businesses that have a heavy focus on retention, loyalty, membership and the like, and have systems and processes in place for collecting and segmenting customer data.
Writing job descriptions for these roles is a whole other discussion, but I have that covered for you. For starters, check out my article on job description tips from the trenches. Also, my ecommerce career guide goes into much more detail on exactly what to look for in these candidates, along with sample job descriptions to help fill out your ecommerce organizational structure for commonly filled positions.
Aligning Ecommerce With Overall Company Structure
As the org chart example above shows, ecommerce rolls up under marketing, and as you’d expect that is typical for organizations that have a marketing head. Sometimes I am asked if ecommerce should be a stand-alone unit, separate from marketing, sales or operations. That structure seems to work best with smaller and mid-sized ecommerce “pure plays” where the entire function reports up to a President, CEO or an owner (s). However, in larger media and consumer product companies, it is not uncommon to find ecommerce within brand management, integrated marketing or media. A classic example of this would be a large consumer package goods company such as a Procter & Gamble. Some of these bigger CPG’ers can have dozens of ecommerce teams support a large number of brands and brand categories. Then there are businesses like Sephora, who have combined the retail and online teams to create a sort of “Digital Center of Excellence,” a centralized swat team, as it were, which has transformed the way they look at customers across channels.
Here’s another example of an ecommerce organizational structure with an ecommerce team led by merchandising, marketing and operations:
Finally, here is an example of a recent client of mine which is a branded manufacturer specializing in women’s apparel. They launched their web business about two years ago and with my help have built a very capable merchandising and marketing team, while going outside for their development work. They have one website that grosses approximately $10M per year:
-Start with strategy, then determine the structure. It’s important that everyone in the company is on the same page regarding the firm’s commitment to ecommerce and its definition of success. So, first things first: Define the strategy up front and communicate it internally. Only then will budgeting and resourcing around ecommerce fall into place with everyone in the organization understanding it, and feeling some level of ownership and involvement.
-Dedicated resources are better than designated resources. Many companies new to ecommerce assign responsibility for ecommerce to individuals or teams that carry other core responsibilities. But when work becomes crucial to driving performance, it deserves someone who is a dedicated specialist. Then, as the business scales and volume grows, more dedicated resources can be added.
-As comittment increases, positions become more specialized. Performing at world-class levels of excellence requires expertise and specialized tools. Consequently, industry leaders increasingly are dedicating people in specialist roles to ensure that important work gets done and done right, at the right level. It’s important to identify gaps in your ecommerce teams and where specialists may be needed to round out your ecommere organizational structure.
-Culture is key. Whether it’s done by experimenting or simply instilling a sense of ownership and involvement in every part of the business as you go through a digital transformation, company culture is key. Firms must help every team and individual understand what digital means for them, have the right incentive structures in place, and know what they can do to impact success. Otherwise it doesn’t matter what your ecommerce budget is or how big your team is.
-In-source and develop expertise internally where it matters most. Outsourcing critical activities can help accelerate results, but I recommend developing expertise in-house in the areas that you view as strategic to the business, ie, anywhere work can generate a true competitive advantage.
-There is no one size fits all when it comes to ecommerce organizational structure. Don’t we wish it was that simple! The scope of responsibilities under each of the Directors can vary greatly.
For business owners who haven’t hired large staffs before, I have one golden rule: Hire specialists who are smarter than you in their particular field. You’re running the overall business. You’re providing the vision and top level leadership. Look for people who challenge the status quo, who challenge deep rooted assumptions. THAT’s how you build a high performance ecommerce business!