Wednesday, 28 August 2013

Product Data is the New Logistics

Continuing my series briefly looking at organisational impacts of multichannel.

In my last post, I proposed a nice organisational direction leading through various stages until true multichannel is reached. Unfortunately this usually falls at the first hurdle: new organisational disciplines which didn’t exist prior to multichannel, and – here’s the rub – don’t obviously fit anywhere in an existing retail organisation and/or nobody “wants” them.

Many new disciplines – SEO for example, or email marketing – tend to drop nicely into place. In the early days of “Multiple Channel” retailing, with a Rebellion or Distributed organisational model (see my previous post) SEO activity will sit in an eCommerce team itself. Later on as the organisation matures, it will move naturally into Marketing.

Others, such as managing a Fulfilment Centre specialising in single-pick customer orders (as distinct from bulk retail replenishment) tend to land naturally in their primary discipline from day 1, in this case Logistics.

The “bastard discipline from hell”, as everybody who has ever been involved in a new eCommerce implementation knows all too well, is Product Data Management. It is always on the project critical path. And nobody ever wants to own it, either during implementation or afterwards in business-as-usual. It’s one of those tasks you can never do well, only do with varying degrees of less-badness, so there’s no reward. It’s horribly labour intensive, so there’s lots of cost. And it’s completely new, a discipline that simply wasn’t required before online channels came along.

Where should it sit in the organisation? It could sit in “eCommerce”. This, to me, is one of the tests I use early in an engagement to understand how multichannel a client is. If they still have Product Data Management in some sort of eCommerce leper’s camp, safely isolated from the rest of the organisation, then I can be pretty sure a client is organisationally pretty immature.

It’s often forced into Commercial or Buying teams. The argument is that these are the people with the relationship with suppliers, so these are the people that can source the data. While this is true in a way, I’m not sure I’ve ever worked with a Buying team whose primary competence is Business Process/Administration. On the other hand, at least these teams have a strong focus on sales (usually! – and yes I have worked with at least one retailer where Buying didn’t appear to have a sales target…). And lousy product data online usually equates to lousy sales.

My favourite example of lousy product data ensuring lousy sales, from some years ago now so I think I can use it without causing blushes, is this product sold by a major DIY retailer:

“What size are these doors?” is fairly fundamental. Worse still, the question had actually been answered on the forum, with a precise and accurate answer… by one of the retailer's buyers for the Doors category.

So, if Product Data Management doesn’t belong in eCommerce, or in Category Management, where else? Well, some sort of dedicated admin team is possible. But where should it report to? It’s unlikely to be big enough to merit a top-table seat in its own right, so it’s still left looking for a home.

Take a closer look at it. What does it involve? Well, it’s very business process driven, standards and compliance are essential, flow management is important, just-in-time-delivery is a core competence, it’s about getting something from suppliers, and you are always working to serve demanding sales channels… sounds very like logistics / supply chain doesn’t it? The difference is that instead of a physical supply chain via warehouses, there’s a virtual supply chain via data warehouses.


I do indeed know of organisations that do this (I say this hastily before I get hostile comments posted by irate Logistics Directors).

But it’s also perhaps the strongest illustration of another key consequence of become Multichannel: very new disciplines in traditional functions. Logistics is the New Marketing has been one of my themes in these posts. Here’s a related one: Product Data is the New Logistics.

Sunday, 18 August 2013

4 stages in the evolution of the multichannel organisation

As promised in my last post,  I’m going to take a look at a few of the many other impacts that going multichannel has on a retail organisation.

A high level overview seems like a good place to start. I typically see the following models, either in action, or – unfortunately – more often in aspiration, when I work with clients:

I’d like to say that the Rebellion model – where a small number of people, typically from I.T. and Marketing conspire together to drag a retailer online – is already dead. In actual practice, a version which I’ll call Sponsored Revolution seems to be alive and well. In its typical manifestation, there is indeed a general top-management mandate for adding new channels, but this does not translate into altering individual targets and KPIs, and so the implementation project team or eCommerce team has to spend a disproportionate percentage of its effort wheedling co-operation out of the rest of the organisation. To give a specific example, it is very difficult to persuade an individual buyer to devote 20% of his/her time to developing the range for online, or (worse) helping with product data management, when it is expected that only 3% of sales, and therefore 3% of his/her existing targets, will be met from online sales in the next 12 months.

The Distributed model is the one I encounter most often in actual practice (although this might be a biased reflection of the developmental stage of organisations that typically engage me). A small dedicated team looks after driving the new channel(s), but has a clearly defined mandate to use certain resources from existing business teams. To use the same example, the buyer would have a specific target for new channel sales, and a clearly stated guideline regarding the expected time commitment.

 In the Focussed model the eCommerce team is dispersed back out into its wider departments again, but the idea of managing specific (usually just new) channels persists, usually with a skeleton coordinating team. For example, the team responsible for online customer-service would now report into general customer-services, but would still retain a distinct identity and a strong affiliation with the online channels. I actually can’t think of a real-world example of the Focussed model implemented in toto, possibly because it is rare to encounter an organisation which is matrix-managed across the majority of its functions, but partial implementations are very common.

 Finally, we reach the point where the distinction between channels ceases, a true Multichannel organisation. For example there are not two groups of customers, there is one group of customers – “our customers” – and so the existence of a separate marketing team makes no sense. Yes there may be channel-centric technical specialists, for example experts in SEM or Affiliate Marketing, but every discipline has its technical specialists, and the task of management is to coordinate them towards achieving the same organisational goals. One day I will work with a retailer that is truly Multichannel in this way; I haven’t yet encountered one!

In practice, retailers make these transitions at different speeds in different areas of the business. It’s not uncommon to see something like Multichannel buying, Focussed marketing, and Distributed logistics. It’s important that this is a deliberate choice, not an organisational accident or worse still a kind of Darwinian struggle for channel supremacy.