One of the most fundamental, foundational issues for companies who want to grow their online business is: “How do we build an effective ecommerce team?”. This article is for startups to mid-sized businesses, say under $500MM in annual revenue. It is not aimed at Fortune 500 companies, but some of the ideas herein might be useful to them.
Compared to just about any other business-related discipline (such as Accounting, Operations, HR, or IT), Ecommerce is still relatively young, and there is no standard structure for an ecommerce team. This article aims to change that.
First, we need to start with a definition. What is Ecommerce? “Commerce” is a synonym for “business”, so ecommerce and ebusiness are the same thing. It is NOT just an IT function. Put simply, ecommerce is doing business electronically over the web. That definition is expanding though; it can include any electronic media or medium, including the mobile web, OTA/OTT set top boxes like ROKU or Apple TV, and so on. If you can buy or sell electronically, it can be defined as ecommerce. Ecommerce is not just digital marketing, not just digital product management and IT, and not just online merchandising. Ecommerce is the confluence of all of these functions, along with digital strategy.
Now that you know what ecommerce is, what do you need to operate an ecommerce business? If you’re a retailer, a wholesaler, or a brand manufacturer (a “brand”), you need a bunch of things. Besides products or services to sell, you need people to make and sell them, typically via a website with related supporting technologies and processes. This is why I like to think of ecommerce in terms of a three-legged stool: “People, Processes, and Technology” (PP&T), because everything is related and required, or the stool will not stand.
Although the various functions needed to build an effective ecommerce operation are defined in terms of PP&T, my focus in this article is on the people. By the time we’re done, we’ll see a prototype ecommerce & marketing team organizational structure with all the necessary functions included. Building a high-performing ecommerce team is not easy, cheap, or fast. It is not easy for several reasons:
1. First, because job definitions are not standardized. For example, “Accounts Payables Manager” is fairly standard everywhere, but “Email Marketing Manager” is definitely not! It’s also not easy because while there are common college degrees for accountants or IT professionals, there are no common college degrees for “Email Marketing Manager” or “Online Merchant” or “Social Media Community Manager”, and so on.
2. Second, it’s not easy because there are simply not enough experienced people in any of these functional areas, especially considering the double-digit compound annual growth rates (CAGR) of ecommerce, and no matter where your business is located, there are probably not enough of each discipline in most cities to make recruiting for them easy. Offering remote work has become necessary for most ecommerce teams.
3. Third, it can be expensive. Most of these personnel are professionals who are in demand; there is competition for their services. Unless you’re a very special organization (highly focused on people development), it’s unlikely you’ll have someone in the organization who can be trained into these roles and equally unlikely that you’ll have someone who has the skills, time, and ability to be that trainer. You don’t have to hire everyone at once, but as you grow you need to understand that some people will be a jack-of-all trades (out of necessity), and that means they will not be able to focus on any given area, nor will be they be as effective as they could be if (or until) they were allowed to specialize. I’ll talk about planning and growing in a later section.
4. Lastly, it won’t be easy for some companies because there is often overlap in functionality or responsibilities, and that will cause some internal politics issues. For example, if you want a merchandise buyer dedicated to web-only extended product assortments, do they work in the existing merchandising organization, or do they join the ecommerce team? Who do they report to? I will address that issue in this article.
I wrote above that ecommerce job descriptions are not standardized. Email Marketing Managers are one example, and it will surprise you just how different this role can be from company to company, unless you’ve managed this role at multiple companies. An Email Marketing Manager in one company may simply be responsible for project-managing the production of email marketing campaigns and do a little reporting. In other companies, this role may be much deeper: He or she may manage a digital marketing agency, may manage the subscriber list hygiene, create list or campaign segments, analyze and take steps to improve deliverability, open rates, click rates, etc, lead or participate in the creation of promotional content, select and/or implement new ESPs (Email Service Providers like MailChimp), and manage a team that may include graphic designers. That’s just one example. Every company and every job description may vary, depending on the company’s needs and the capabilities of the people you hire. Another example might be online merchandisers – in some companies, these folks may only manage the presentation and selling of merchandise online that’s been procured by buyers or merchandise product managers. In others, they may also be merchants in their own right, who manage vendor relationships and buy or develop unique products for sale on your website. In future posts, I plan to write standardized job descriptions, but you should understand that there is no such thing (check the Bureau of Labor Statistics), and that you should customize them to meet the needs of your business so that these folks have well-defined areas of responsibility and can work well together.
What functions does the ecommerce team need to perform?
Leadership & strategy, team administration, legal & compliance (GDPR, et al).
Digital marketing and customer acquisition (while collaborating and adhering to the organization’s marketing philosophies). This includes:
Social media community management (some customer service too)
Social media marketing (PPC & influencer marketing)
Email marketing
PPC (pay-per-click marketing) and possibly programmatic advertising
Content marketing (creation, curation, organization, distribution, copywriting, brand management)
Search engine optimization (SEO)
Loyalty, retention, and referral marketing
Online merchandising. This includes:
Creation of product pages, product titles, descriptions / copywriting, and images
Searchandising (internal site search manipulation), visual display, & taxonomy structure
Product recommendations management
Pricing & promotions (competitiveness, profitability, accuracy, functionality)
SEO & keyword optimization
CRO (Conversion Rate Optimization)
Inventory management, forecasting, product launch support, and clearance management
Buying / product procurement & merchandise vendor relationship management
Web design, UX/UI (user experience and user interface), & CRO (conversion rate optimization)
Web development & digital product management (technology project planning & management, such as site search, taxonomy, payment methods, cybersecurity, more. The product we’re talking about here is not sellable product – this product is the shopping cart, or a payment method, or a loyalty program, for example)
Reporting, analysis, & recommendations – for the team, and for executive information
Marketplaces management (Amazon, eBay, Walmart, and supporting services)
Marketing research (especially pricing, promotions, and competitive capabilities or practices)
Who should the ecommerce team report to? Where should it be located within the organization?
Over the years, this is one of the most common questions I’ve heard. It has not been a simple question to answer, because there are various considerations. My experiences and observations have clarified this question for me however: It should be a separate, self-contained department that reports to the company leader (CEO, President, Founder, GM, etc.). It should not be a part of Marketing, nor Merchandising, and certainly not a part of IT (Information Technology).
This is because ecommerce is multi-disciplinary, and it’s also because ecommerce requires its own particular focus and resources. If ecommerce is a significant part of your business, then you need to have an ecommerce leader, someone who is focused on ecommerce 100% of the time. An effective ecommerce team is a combination of digital marketers, online merchandisers, web designers, web developers, web data analysts, digital product and project managers, and so on. Could the digital marketers be part of the marketing team, and the online merchandisers be part of the merchandising/buying team, and the web developers be part of IT? Some organizations do exactly that, but it’s a mistake.
It’s a mistake for two reasons.
First, these people need to interact with each other on a daily basis, often frequently throughout the day. For example, the digital marketers work with the online merchandisers and the web designers very frequently, and the web designers may work very frequently with the web developers. A web data analyst will work all day long with online merchants, digital product owners, and digital marketers. So, they’re more effective if they’re all co-located. Splitting them up would be like splitting a buyer from his or her assistant buyer.
Second, focus can be a significant issue, especially for leadership. If, for example, a digital merchandiser reports up to the VP of Merchandising, there will be a loss of focus on online merchandising. The online merchants will become “red-headed stepchildren”. I have seen it happen many times, because the VP’s focus is on product acquisition, vendor relationships, store, catalog, or TV performance, and other more traditional merchandising topics, as opposed to how product is presented online, “searchandising”, and other concepts with which he or she is likely inexperienced. A similar problem exists with digital marketers and web developers. Digital marketers have a very different skillset than traditional marketers, and their tools, processes, and timelines are vastly different. If the CMO (or equivalent) lacks digital marketing experience, he or she will be unable to provide effective guidance or even understand what they’re doing.
The best structure is to have the digital marketers report to a DMM (Digital Marketing Manager) who reports to the VP or Director of Ecommerce. The DMM can still report (in a dotted-line relationship) to the CMO, for brand and promotional consistency. Similarly, the web developers will quickly find that they have little in common with rest of the IT staff; and that the majority of their interactions will be with ecommerce web designers, merchandisers, and digital product managers / owners.
That said, every company is different, and nowhere are the differences more pronounced than in the backgrounds and abilities of its department leaders. It’s very possible that your marketing team is led by a leader with a very strong ecommerce background; if so, then your company may be an exception to the rule (and that might be a case for a combined marketing and ecommerce team, which will be discussed later). But it’s more likely that your marketing leader does not have this experience. Similarly, your IT leader, maybe a CIO or CTO, or a Director of IT, probably lacks the marketing, merchandising, sales, or consumerism skills required to be an effective ecommerce leader. In fact, ecommerce technology itself is quite a bit different than organizational, internal information technology, so his or her knowledge of networks, databases, systems, and such probably has limited applicability to ecommerce.
Planning and Growing the Ecommerce Team
It’s not likely that you will have an unlimited budget to hire everyone you need right off the bat. I have been in that situation once, and it was amazingly cool, but even that situation had some downsides. So you should plan ahead – what do you want the ecommerce team to look like in three, four, or five years? What does your org chart look like, from one year to the next? Get out your PowerPoint, and draw year-by-year org charts – this makes you think through how you want to grow. Be prepared for the fact that your plan will change over time, and depend on business success (or lack thereof), the people you already have, economic and competitive conditions, and probably other factors. Your staffing model should be part org chart, part hiring roadmap. You should review the staffing model every three months, or at least every six. Your four-year plan will never be accurate, but this thinking exercise will help you make better plans.
Your first hire will set the tone for your ecommerce growth. Who you can hire, in terms of title, experience, and salary, will of course depend on your resources and your ambitions. But remember that ecommerce is a highly complex endeavor, so set your expectations appropriately. No one has unlimited bandwidth, and no one is an expert in all the functional areas listed earlier. Most likely, this person will need to learn your business and your industry, and that process will take a year, all the while architecting your future ecommerce capabilities. And no, this is not a job that should be outsourced!
To help you set your expectations appropriately, keep this analogy in mind: If you’re building a new hospital, you have to hire many different types of doctors. You cannot hire a general practitioner and think you’re ready to open. You need cardiologists, pediatricians, surgeons, and so on. You need various digital marketers, merchandisers, web designers, and so on. No one can do all of these things, and even if that kind of unicorn existed, they still would suffer from bandwidth limitations.
As Steve Jobs once famously said, 'It doesn't make sense to hire smart people and then tell them what to do , we hire smart people so they can tell us what to do.' That first hire needs to be a manager or director-level person who is business-savvy, and possesses multiple years of general ecommerce experience. The broader that experience is, the better. You should avoid someone who only specializes in a narrow topic, like social media management, for example. If they also have a specialty or two, that’s great and helps in determining your next hire (someone who has different strengths). This should be a person who is both strategic and tactical – someone who can roll up their sleeves and do something. This person should also be someone who can manage ecommerce vendors or digital agencies, and learn from them. You will want to hire consultants and/or agencies because they have specialized knowledge or capabilities, and they can contribute substantial value by shortening your learning curves, producing exceptional work, and providing bandwidth that simply isn’t available internally. Always keep in mind, you’re not only building an ecommerce operation – you’re building institutional knowledge and professionalism.
As your ecommerce business grows, operational deficiencies (skills, bandwidth, and processes) will emerge and will guide or change your hiring priorities. When you discover that one person’s workload has shifted to 50% of activity XYZ, it’s time to hire a dedicated person for XYZ. Or, when you discover that an important activity is simply not getting done, it is time to hire for that activity. Conversely, you may also find it useful to have someone manage that work in conjunction with an outside vendor. But keep the economic law of Comparative Advantage in mind – You should not do work that someone else could be doing at less expense or more efficiently.
Also as your ecommerce business grows, keep in mind that roles will become more specialized. You may hire a Digital Marketing Manager early on to manage email marketing, social media marketing, PPC marketing, affiliate marketing, and more, including agencies. As you grow, you’ll hire an email marketing manager, a PPC marketing manager, and so on. These people are managing a vital business process, probably managing an outside resource, and may eventually manage people. These functional managers may take the place of agencies, or they may lead the agencies in their efforts. Also remember that high levels of expertise requires specialized tools (software applications).
Don’t wait to hire people until your business can support their salary. This might sound counter-intuitive, or against typical CFO cashflow advice, but if you wait, your growth will be slow. You hire people to help you grow, right? You wouldn’t wait to hire a warehouse manager until after you’ve started shipping product; nor should you wait to hire an email marketing manager until you reached some arbitrary email metric.
Should I use external digital agencies? For what? How should I divide up the work?
There are really three models for determining who does ecommerce work:
All work is done by internal resources (employees), and there are no agencies.
All work is done by external resources (agencies & vendors), and there are no internal employees, except the people who manage the agencies.
A hybrid model, where internal resources manage and work with the agencies.
When all work is done by internal resources, you are totally dependent on that person or team. If they go on vacation or leave the company, you suddenly have a problem without an effective solution. If they fail to keep up on best practices or industry developments in terms of tools or processes, you have another problem, one which may go some time before being detected. This is not a smart way to run an ecommerce business. Most self-taught ecommerce staff are severely lacking in some ways – you never know what you don’t know.
On the other hand, when all work is done by external resources and is only managed by an internal resource, you’ll likely have a communications gap caused by lack of focus and time on the manager’s part, and also a knowledge gap because the agency has all the knowledge and the vendor manager is probably not up to speed on the vendor’s specialties, and thus can’t really gauge how well the vendor is performing. I saw a terrific example of this recently while consulting for a client. The VP of Marketing (whose background was catalog marketing) managed a PPC vendor who held weekly calls which I attended. The PPC vendor gave very superficial reports, and the VP of Marketing didn’t know enough about PPC to ask any intelligent questions or to guide or challenge the vendor. This vendor and this relationship were not effective, because neither drilled down to identify specific problems or solutions, and they never left their weekly meetings with better understandings or specific action plans. Their activities also did not support the overall brand strategies nor specific campaigns.
The hybrid model is the most effective. You should use external agencies for some of your ecommerce work, including digital marketing and large web development projects. External resources should be used for two main reasons: First, they can provide extra bandwidth when needed. For example, if an employee leaves the company or goes on vacation, you may have a big gap to fill. Or, you may have a large project going on, and your internal staff may be spread too thin. Another example – you may have 30,000 SKUs across 100 different product categories; in that case, a single person trying to manage a PPC program of that size will be difficult.
Second, the external agency should help educate and train your internal staff on best practices. They’re likely working with various other clients, so they see what works or doesn’t, and they may gain ideas from other clients that can work for you too. They often have access to tools and information that you probably do not. Picking up on the earlier PPC example, I once worked for a small startup and managed our PPC marketing. I was certified in Google AdWords, but also selected and managed an external agency, with whom I held weekly account review phone calls. I knew enough where I could manage our PPC business, but I was much more effective because we had the agency as a partner. They had deeper knowledge than I did, access to tools that I did not, and more bandwidth, which enabled them to do more testing and drill down to more granular levels than I could have. They saw what worked for other accounts, something they mentioned frequently. My own experience and certification enabled me to understand everything and provide guidance to them.
Another example of a hybrid model being more effective: you should have web developers on your internal ecommerce team. These technical people enable you to respond to urgent issues, like your site being down. They enable you to add new site functionality, by creating or installing plug-ins made for your ecommerce platform, such as new payment types, chat apps, or installing security patches. There is plenty to do for an internal web development team, and it is highly recommended that you have at least one developer who is certified on your ecom platform. If you’re using Magento, for example, you should have a Magento-certified developer. Another advantage of having internal developers is speed, or response time to needs and requests. Response times from internal developers can be measured in hours or days for many requests, while response times from external vendors are usually measured in days, weeks, or months. But there are great advantages to having those external vendors too. They will usually know your platform better than your internal team, even if you have a certified developer, because they see many different clients trying to add or upgrade various capabilities that your team maybe has not done before, and because they usually attend invite-only training events with the platform developer (Magento, Shopify, Hybris, et al), and will have personal, technical contacts there. If you want to engage in a large project (like a replatforming project), your internal team will still need to handle the day-to-day needs of the existing site, and their time to work on the project will be limited. This is where bringing in an external web development agency can be helpful. Their expertise in large projects, additional bandwidth, and specialties like database optimization, API or feed development, or integration with a CRM or ERP can be very useful, and help you complete projects much sooner. They can brainstorm with your internal developer(s) and other stakeholders to arrive at optimal solutions. Then, in the future, when your developer(s) goes on vacation or leaves the company, your external resources can backstop the work until your internal situation is resolved. This helps guard against the loss of institutional knowledge.
Can I have an integrated Marketing & Ecommerce team?
Yes. You don’t have to, but you should. This is not the same as having ecommerce report to marketing; this is having the two of them integrate into a single team. Marketing has changed drastically in the past twenty years. It’s much more data-driven, much more technology-driven, has more specialties, and has a lot of overlap with ecommerce. Ecommerce and marketing are inextricably intertwined, and it’s the synergies that generate the value in this structure. A combined structure enables you to look at customers across channels consistently and holistically, and lets your customers do the same. Combining these teams into one is what turns a siloed “multichannel” company into a synergistic “omnichannel” company, one where branding and messaging always looks like it came from “the same mother and father”, and one where an effective customer journey can start with offline touchpoints and end with online conversions – or vice-versa.
That said, it’s extremely important to understand that non-ecommerce marketing is far from dead. A combined, integrated Marketing/Ecommerce team will still need to support traditional marketing needs, such as pricing & promotions management, non-digital marketing channels & advertising, brand management, collateral creation, photography, marketing research & consumer behavior, tradeshows, and so on. With all of that, the organization needs a strategic marketing & ecommerce leader with many years of broad and deep experiences across various marketing disciplines; of course these unicorns are extremely hard to find. So hard, that you may need to maintain separate marketing and ecommerce teams.
So what does an effective marketing and ecommerce team look like?
The image below shows a prototypical, modern marketing & ecommerce team. This could work for your company, but it may require some customization. A few key ideas:
The most important key idea is to ensure that the key marketing and ecommerce functions are performed by someone, or by an agency.
This structure doesn’t need to be built all at once – Rome was not built in a day, nor was Amazon.
Your plans will constantly change for various reasons and need to be reviewed regularly.
A three-year plan is shown below, but your timeline will vary. You should use a series of PowerPoint slides to develop annual org charts that illustrate how your team will grow.
A few other notes:
For a recent client, I used orange triangles to denote and prioritize key hiring needs.
Other roles for future consideration but not included in this near-term plan model include:
Cybersecurity specialist.
Digital Product Owner / Manager (preferably trained in Agile/Scrum).
Inventory Planner.
Videographer.
Site Search & Taxonomy Mgr.
Project Manager.
Agencies, vendors, and freelancers can supplement some functions, providing expertise, bandwidth, and financial flexibility.
Interns are added if available in order to add bandwidth, but more importantly to identify possible future employees.
This chart does not show “multiples”. For example, there could be a need for multiple photographers or web merchandisers.
This chart does not include a Customer Care organization. I don’t normally recommend that Customer Service be a part of this organization, although I have seen it a few times. That said, there should be a close relationship between the customer service team and the marketing team, especially with the leadership, social media, promotions, and marketing research functions.
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