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.


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