Creating or adding to your commerce organizational structure
During my 30+ years as an ecommerce recruiter I’ve had the opportunity to work with countless hundreds of online businesses, both B2C as B2B. I’ve placed executive ecommerce leaders and helped businesses recruit and hire entire ecommerce teams with established Fortune 1000 companies down to early stagers and brand new 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. I’ve seen what org structures work and which ones don’t. I’ve seen owners scale up their ecommerce businesses to great success while others crash and burn. An outdated and less efficacious structure can result in unnecessary ambiguity, confusion, and lack of accountability. In-house ecommerce departments can be complex machines with many moving parts covering a wide range of responsibilities including product, brand and content, marketing, trading and conversion, operations and fulfillment. Many figure it out as they go, shooting from the hip as they switch focus from markets to products to competitors, rather than looking at the bigger picture. This often results in piecemeal changes where responsibilities can be overlooked, sometimes overlap, and where people and functions can actually work against each other. Worse, functions become totally misaligned with business objectives.
There is no one universal answer for how to organize around ecommerce, but 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 channel for your business? If you’re a pure play, the ecommerce team should ultimately 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 totally 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 mindset is definitely changing as digital commerce becomes more mainstream among old-line industries.
The decision to place ecommerce under marketing or operations in your ecommerce organizational structure 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 manufacture engineered products.
This whole question of marketing versus operations really comes down to the strengths of the owner/entrepreneur. 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 have been sucking 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.
While marketing is the most common functional bucket where you’ll find ecommerce, it is not universal. In larger corporations where there is a strong reliance on software and other computer technology to serve up the ecommerce store, IT groups will sometimes take ownership. Having all that technology is great, but with less marketing involvement there is usually a trade off in lack of understanding of customer behavior, which can be problematic in a world where the customer is in charge.
I’ve also had clients who run consumer goods ecommerce businesses ask me if merchandising should run the store. After all, they reason, without merchandise there IS no business, and of course in the brick and mortar retail world the head merchant sits at the same table with the President, CFO and other top executive leaders. I explain to them that while all of that may be true, my most successful ecommerce clients began by asking the key question, “HOW are we going to grow the business”, and structuring around that.
A Few Definitions
When I sit down and work with companies on ecommerce organizational design, I like to think in terms of the “front-end” of the ecommerce business (which is my focus). This helps me to compartmentalize the major key roles. Front-end functions would include the following:
Front End Development: Site architecture, site features and functions, frontend integrations, site testing, QA, UAT, asset upload, CMS
Merchandising: Manage and own the site calendar, planning and buying, pricing, site merchandising, manage online categories
Creative: Site creative guidelines, UX, UI (sometimes these functions report up to Development), features, editorial design, copywriting, design for marketing assets
Marketing: Site promotion strategy, SEO, SEM, display, affiliate, social, programmatic, email, vendor management
Back-end operations would include such areas as payment processing, fulfillment and returns, fraud and tax calculations and customer service, chat, and issue escalation.
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 commerce organizational structure. For many of my smaller clients (who I define as generating roughly $2-5M in revenue), it starts with an ecommerce specialist, a hands-on, roll-up your sleeves “doer” with both marketing and operational experience. At this level they may not have more than 7 or 8 years of experience, but that’s OK. 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 personal 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, someone who has a grasp of digital marketing, customer experience and perhaps even brand positioning. Every online business needs to attract visitors, convert them and retain them. This person should be a digital native with broad ecommerce experience, a creative mind, highly data-driven and analytical, and proven experience developing teams.
There are two ways to go here. Depending on the size of your business, you might need someone at the Manager level or you might need a Director. By “Manager,” I’m referring to someone with roughly 7-12 years of experience in the areas just mentioned. You might be able to get by with someone at the lower end of that experience scale (and at a lower price tag) IF they’re going to be reporting up to a President and/or owner who is a savvy and deeply engaged marketer. In that scenario, this role essentially would be a hands-on project manager. On the other hand, you might need someone who is both highly strategic as well as very hands-on, has a demonstrated track record of successfully growing an online business to at least the size you are now, knows more about the latest trends and best practices in digital commerce than you do, has management and leadership experience, and can identify and direct outside resources. Tickets to that dance would typically start at the Sr Manger or Director level. Most Directors have anywhere from 10 to 20 years of experience. In order to attract a candidate who currently has the title of Manager or Senior Manager, offering the title of Director can be a very strong inducement for someone who is ready to mov up in their career.
This person can’t be, and won’t be, an expert in everything. They will be what is often referred to as a “T” marketer, someone who has some depth in a few areas of digital marketing and exposure to others. Ideally, they can wear multiple hats, sort of a “Swiss Army Knife,” as I like to call them, who is an inch deep and a yard wide but deeper in some of the areas where you need strong expertise to drive the business. Those “areas” should be defined by how you expect the business to scale. Where do you want the business to be in 12 months, 24 months, 36 months? Exactly what will you need to focus on in order to reach those goals? What will my cash flow allow me to hire right now? These questions, and others, should be part of the roadmap that spells out your vision for the business and how you’re going to get there. If your business is going to be driven largely by paid media, for example, then you’ll start with someone who has solid paid media background and exposure to other growth drivers such as email or social media. I had one client recently who told me that 90% of their business was generated through email. Sounds like a scenario for an Email Marketing Manager to be hire #1!
For owners who already have strong marketing and sales expertise as well as product domain knowledge, on-boarding an operator is the perfect complement. A good operational hire will help create leverage and free up the owner to apply their expertise to the business side of the house.
Then there are those owners who are more of a generalist- good at many things but not expert at any one thing. If this is you, you will likely need to hire, or outsource, specialists who know a lot more about digital marketing and ecommerce than you do. They need to truly “own” their roles. As owner of the business, you would serve in a sort of GM providing strategic direction so that everyone keeps their eye on the prize.
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.” Sometimes looking at the weakest links in the chain will help inform their 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, allowing the owner to continue to focus on the Amazon channel (which in this case he enjoys doing the most). 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.
Usually the next priority, after marketing, is for someone to update the website with the latest products and content and optimize images to attract customers visually. A typical title for this person is Website Manager.
If your business has a large number of SKU’s an online merchandiser might be next in line, although in many smaller ecommerce businesses merchandising is often handled by the owner (or one of the owners if co-owned). Many of the owners I have worked with over the years started their businesses based on product knowledge, so merchandisers don’t often enter the equation until SKU counts get to the point where the amount of work requires a stand alone role.
In the world of ecommerce, it’s all about testing and learning. You test different campaigns, see what works. At the end of the day, growing your ecommerce team is really no different. Start with 5 or 10 different campaigns to build your business case for scaling the team. See which campaigns scale better than others. Segment your customer file and swipe it in 30 different directions. Let’s say you discover that retention is a major growth driver. How would you go after that- email, customer service, paid media ? What percentage of revenue is coming in through which channel? A recent call from a new client was a perfect example of doing it backwards. His roadmap was channel based and he discovered he had specialists overseeing channels that simply were not drivers for the business. The important thing is to start at the customer level and then determine which channels should get the resources.
Rounding Out the Ecommerce Organizational Structure
When a pure play ecommerce business reaches roughly the $10-20M range, it’s not unusual to have as many as 15 or 20 employees/contractors covering additional key functions, including many of the following key categories:
- 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 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. Sometimes the need to go outside is driven by the realities of the labor pool. Some positions, most notably paid media and Amazon specialists, are especially difficult to fill. And even if you’re lucky enough to hire a good one, it’s hard to keep them because of the sheer abundance of opportunities that are out there. Plus, many of these individuals have shifted from full-time positions to contract. As freelancers, they not only can make more money but they can work pretty much anywhere they wish.
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 other staff as responsible for ecommerce in addition to their 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 need to 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, instead, make supporting five retailers 100% of one person’s job. Most consumer marketing clients I have worked with who 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 go with 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 their centralized marketing technology departments, and instead have distributed these 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, and I’ve observed that incentives that reinforce this kind of more collaborative culture have led to a surge in new ideas by newly empowered employees.
Here is an ecommerce organizational structure for one of my clients with a well-developed ecommerce business generating $50-100M in annual sales:
A few important observations 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 later brought in house. Also, note that this particular organization incudes a Director of Retention. 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 when hiring candidates for the most common digital commerce roles, along with sample job descriptions.
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 even 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 supporting 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 an ecommerce organizational structure with a client 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:
Often I’m asked by business operators or owners how they should structure their ecommerce department around multiple brands. Whether those brands currently exist or they’re on the product drawing board, they want to know: At what point does it makes sense to stand up separate digital commerce teams to support the individual brands? There is no “one size fits all” answer to this question because like so many other things in ecommerce there can be many variables, and those variables can become… well, even more variable over time.
In large multinationals (think P&G, Unilever and Coca-Cola) the digital commerce teams have a wide variety of functions and granular specialties. In those environments, Email Marketing, SEO/SEM, Social Media Marketing, Creative and Design and other digital marketing functions have separate teams responsible for each of the different brands or business units. Some of these companies literally have dozens of internal ecommerce groups overseeing the online businesses of their major brands or product categories.
But what about smaller organizations?
When a business is marketing distinctly branded products (often with their own branded websites), it’s inevitable that some of the brands are going to sell better than others, so they will demand more immediate resources. But before your expand the org chart to accommodate brand or product-specific ecommerce teams, the P and L for each category needs to justify it. And that usually doesn’t happen until revenues being generated by each of the brand or product categories reach a substantial size. At that point, many businesses will name Brand or Category Managers to run P and L over each of the brands, sort of a mini-GM. They, in turn, typically report up to a head of marketing. These brand/category managers may or may not have strong digital commerce backgrounds. If they don’t, then the existing ecommerce department becomes a sort of “Center of Excellence” supporting each of the brands and will expand its capabilities as the brands grow and demand more resources. If a Brand or Category Manager does come to the business with a background in ecommerce, then they can wear that hat along with brand marketing (and also perhaps merchandising) and oversee the duties that require more concentrated ecommerce expertise. For example, I recently worked with a client that had three brands under their corporate umbrella, but one of the brands accounted for nearly 80% of the business, and email was a huge driver for brand retention. In that particular case, because of the size of the business (more than $50M), it made sense to hire an emailer dedicated to that particular brand. For the other brands, email fell under an ecommerce manager who supported both of the brands, along with social media and paid search (which was outsourced).
The best advice I can give any owner or operator is to not get too far ahead of yourself when it comes to organizational planning. Before different brands or categories are even ready for market leaders are thinking about organizational structures one year, two years and even five years down the road. I can guarantee you that whatever plans most ecommerce businesses had in early 2020 have hit the shredder because of the unexpected impact of the pandemic.
-Start with strategy, then determine the ecommerce organizational 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 generally 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. Ask youself: In terms of skills and competencies of the current ecommerce team, where are we really strong where are we weak? Where are we focusing right now to grow the business? What’s working and what isn’t? Are there big, clear areas that need attention? Your ecommerce structure should start at the CUSTOMER level, not channels.
-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.
-If it’s outside ecommerce, keep it outside the ecommerce department. Ecommerce should be treated as a highly specialized stand-alone function, so keep things like finance, IT (or at least anything you can automate), HR, and strategically selected out-sourcing in their own silos. But DO tap other internal teams for things where it might make sense, eg, pulling in someone from Finance who’s anxious to take on added responsibilities to do some data entry.
-Don’t be afraid to make big changes to stay on track with your roadmap. I recently had a discussion with the owner of a $20M DTC ecommerce business that has been doubling every year, and he is concerned that his current Ecommerce Director will not be up to the task of scaling the business from here. Making it even harder, this Director has been with the owner since almost day one and they’ve become closely tied to the hip. But sometimes it takes an outsider such as myself to remind owners that having the wrong person in charge of a growing ecommerce business is a losing strategy.
-There is no one size fits all when it comes to ecommerce organizational structure. Don’t we wish it was that simple! No two ecommerce businesses are alike. They all have their own unique needs. All the more reason why it is essential to review your roadmap quarterly, and make course corrections where needed.
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!
There are literally a hundred job functions under the category of digital commerce. If you’re looking to fill one of these specialized roles and would like a sample job description, I have plenty of them- many of them I wrote, others supplied by clients. Just drop me an email and I’ll be happy to send one to you. My direct email address is email@example.com