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Who is my eStore manager?

BY CSA STAFF

By Manish Lonial and Akhilesh Srivastava [email protected], [email protected]

Coming out of a Macy’s store a man introduced himself as the store manager and thanked us for shopping at Macy’s. Driving back home my 7 year old daughter asked me: “Dad who is the store manager when you buy at home on your laptop?” Hmmm…never thought about that before.

I looked back thinking about the e-retailers that I have worked with and started searching for the person in the ecommerce organization who has the bottom line responsibility of website operations, sales and profitability goals and customer satisfaction:

  • .com VP/president?
  • Customer service manager?
  • IT manager?
  • Content manager?
  • Marketing manager?

Everyone had a stake in the game but the question remained: Who is my eStore manager?

Store manager are measured based on the sales and profitability targets as well as customer satisfaction. To meet their objectives, store manager for brick-and-mortar store take responsibility for all store operations including customer satisfaction, sales and returns management, in-store marketing, inventory management, loss prevention and risk management.

Like brick-and-mortar stores; product, price and customer service still hold the paramount importance for the eStore. However, success of eStore is critically dependent upon few additional factors:

  • Website availability: Your eStore is always available for business.
  • Website performance: Response time which customers experience while on the eStore.
  • Ease of navigation and product availability: Your eStore can carry "unlimited" products.
  • Website scalability: Your eStore can accommodate huge number of customers while providing them with individual experience.

If you look carefully at what differentiates an eStore from a regular store you will notice a lot more IT system aspects that calls for a very diverse skill set in your eStore manager.

Majority of retailers continue to manage their e-commerce operations with separate business and IT teams similar to their bricks and mortar stores. This often results in a sub-optimal customer experience from retailers’ eStore, which is not consistent with the brick-and-mortar stores potentially hurting retailers brand image.

In our experience, setting up a dedicated eStore operations team can solve this problem.

The eStore manager — person leading the eStore operations team — should have the bottom line responsibility for successfully running the eStores and measured for the defined sales, profitability and customer experience and satisfaction metrics. The eStore manager should have the ability and organizational power to bring business and IT together to run the eStore.

Depending on organization’s maturity and culture one can chose to bring in a mix of Business and IT resources to the eStore operations team to provide an enriching experience to the customer.

The advantage of such an organization framework is:

  • eStore operations becomes a specialized function and the team provides a good balance of resources combining business and IT functions.
  • Running the eStore is a critical organization function. Your eStore is one of the largest stores in the organization with needs care 24×7 as your eStore is always open for business. Having dedicated focus allows quick turn around and better service to your customers.

Conclusion
Over last few years, online channel has grown in importance. There is a strong need and a business case to establish the dedicated eStore organization if online channel is part of long term strategy. Even the retailers who have identified the need are often struggling to setup the right organization structure.

Manish Lonial is a Principal in the Next Generation Commerce practice of Infosys Consulting. He can be reached at [email protected].

Akhilesh Srivastava is a senior principal in the retail, distribution and CPG practice of Infosys Consulting. He can be reached at [email protected].

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Rain and snow deal club channel blow

BY CSA STAFF

Costco said its worldwide sales increased 11% to $9.19 billion for the five-week period ended Jan. 2 and total company same-store sales increased 6%. Same-store sales at Costco’s U.S. clubs increased 4%, or 3% if the effect of higher year-over-year fuel prices is excluded. Internationally, same-store sales increased 12%, but that figure was aided by currency exchange rates. Excluding the impact of exchange rates, international same-store sales increased 8%.

The total company comp was essentially inline with analysts’ consensus estimate of 6.1%, however, the 3% U.S. gain was lighter than the 3.9% consensus figure. The company’s results were thought to be negatively affected by wetter than normal weather in Southern California where Costco has a large concentration of clubs.

Conversely, severe winter weather that hit the Northeast late in December negatively affected BJ’s sales as it has a high concentration of clubs along the Atlantic seaboard. Same-store sales in December increased 3.8%, or 1.4% excluding the impact of escalating gas prices. The company said sales during the five week period were strong during the early part of the month, but negatively affected by an unspecified amount late in the month when severe winter weather hit the Northeastern U.S. Aside from that impact, BJ’s said traffic at its clubs increased modestly and average transaction sizes were flat.

BJ’s sales performance was largely overshadowed by several other moves at the company. The closure of five underperforming clubs was announced (three in Atlanta, one in Charlotte, NC and one in Sunrise, Fla.) and there were a couple of senior level personnel moves. CFO Frank Forward, who has been with the company since it was founded in 1984, will retire as part of planned succession strategy involving the appointment of SVP and director of finance Robert Eddy being elevated to the role of CFO. In addition, SVP field operations Cornel Catuna was named EVP club operations to fill the void created by the retirement of Thomas Gallagher who the company said was leaving for health reasons. The changes come amid escalating speculation that BJ’s is a candidate for a private equity transaction.

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Target ekes out disappointing 0.9% comp in Dec.

BY CSA STAFF

MINNEAPOLIS – Despite an easy prior-year comparison, Target fell short of its December same-store sales guidance with a disappointing 0.9% gain. The company had forecast December comps in the low to mid single-digit range after it released November results, which saw comps advance 5.5%. Analysts were expecting the company to report a 4% December gain.

“December sales were below expectations, as strength in grocery and apparel was offset by softness in electronics, toys and some home categories. Sales in some key gift-giving categories moved earlier into the holiday season, and lower margin items drove a higher portion of sales than expected,” said Gregg Steinhafel, Target chairman, president and CEO. “Our 5% REDcard Rewards program is delivering the results we expected and we’re confident that we will continue to generate profitable growth, even while consumer buying patterns exhibit volatility across categories and over time.”

The rewards program was launched in October and offers those enrolled a 5% break on purchases. Also influencing the small gain was growth in average transaction size combined with a small increase in comparable-store transactions.

Despite the sales weakness, Steinhafel confirmed the company’s fourth quarter same-store sales forecast in the range of 2% to 4%, said January comps would be in the low to mid single digits and affirmed the fourth quarter profit forecast. In a statement, the company said the current median First Call estimate of $1.40 for Target’s fourth quarter earnings per share is a reasonable estimate within a range of possible outcomes, as favorability in the corporation’s credit card segment performance and income tax rate are expected to offset a slight decline in its retail segment EBITDA margin rate.

Trends in Target’s credit business continue to improve and delinquency rates in the portfolio are now at their lowest level in several years. Accounts 60 days past due in December represented 4.2% of the receivables portfolio compared to 4.6% in November and hit their lowest level since April 2008. The same was true of the 90 day delinquency rate where accounts 90 days past due in December accounted for 3.1% of the portfolio compared to 3.3% in November and hit their lowest level since July 2008.

As for merchandise sales, Target continues to report strong growth of its consumables business as it was busy throughout 2010 expanding those categories and adding fresh products as part of a massive remodeling program called PFresh. As a result, December same-store sales were strongest in grocery where a low double-digit increase was followed by a mid single-digit gain in health care and beauty. Comparable-store sales in apparel increased in the low to mid single-digit range, with the strongest performance in shoes and men’s apparel, and the softest performance in the newborn, infant and toddler areas. Despite a considerable promotional emphasis, comparable-store sales in hardlines decreased in the mid single-digit range in categories such as electronics, toys, sporting goods and entertainment. Comps also declined in the home business in the low single-digit range.

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