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Omni-Channel Retail: A Term So Confusing, Even Those Doing it Best Don’t Know What it Means

Sally McKenzie — Thu, 31 May 2012 12:25:26 -0400

In the late 1990's, I remember attending an e-commerce trade show and laughing with a group of colleagues about rapid rise of the term "CRM". It was on the tip of everyone's tongue in the conference sessions, and the exhibit hall was full of solution providers, most of them new, claiming to have the perfect, easy to implement system to give us all instant access to customer intimacy.

A few years later, "Web 2.0" became what "CRM" had been; a nebulous term thrown about at trade shows and on blog posts that no one really understood. CEOs asked their e-commerce directors "are we doing Web 2.0?" as if it were something one could buy and install or a box that could be checked off of a to-do list. Fortunately, the term Web 2.0 went away and we never had to face the task of defining it clearly or, God forbid, dealing with a Web 3.0 or beyond.

Yet, here we are again. The term 'omni -channel retail' dominates the headlines of trade news stories and the business sections of high profile publications. When I ask my clients and my colleagues what that term means to them, we usually laugh and admit that we can't really describe it very well. Plus, I have yet to meet someone who likes the term or thinks it serves a valuable purpose.

An Internet Retailer article last week quoted Jamie Nordstrom as saying "I'm not sure what 'omni-channel' means". Nordstrom, arguably a leader in both investment and execution of integrated retail, lauded by some as a shining example of 'omni-channel' have themselves tossed the term aside. That ought to tell us something.

I first recall hearing the 'omni-channel' term about 3 years ago, when mobile shopping was just appearing on the horizon. The phenomenon of customers bringing the web into the physical store via their smartphones created a new customer behavior that many retailers weren't prepared for. This was more than a cross-channel shopper….so what should we call them? Since then, 'omni-channel' has been used with increasing frequency, though unfortunately without much further clarity.

Here's a quick summary of the conversations I've had over the last couple of weeks on the topic:

Retailers use the terms multi-channel, cross-channel and 'omni-channel' interchangeably, but probably mean different things when they say them. When you break it down, the most confusion comes between the terms 'cross channel' and (like it or not) 'omni-channel'. While I'm no fan of the 'omni-channel' label, at the heart it represents a very real phenomenon: cross-channel capabilities are rapidly advancing and retailers are more deeply integrating their channels to enable new levels of customer convenience and delight. We need to call it something, even If it's not 'omni-channel'. For now, I'm thinking about it this way:

Multi-channel: Generally speaking, most agree that any retailer that operates more than one channel (stores, e-commerce, catalog, mobile commerce, etc.) is by default multi-channel. But, being multi-channel doesn't mean that the experience of shopping across those channels is coordinated or cohesive to the customer. Companies in the early stages of coordinating the experience usually focus on the things close to the surface, such aligning customer facing promotional events, pricing and messaging for brand consistency. But, they may not embark on the heavy operational lifting or systems integration required to offer a seamless experience for those customers using more than one channel.

Cross-channel: Historically, this term has described the capabilities that allow customers to interact and transact with a brand across multiple channels, for example, researching an item online and buying in a store, buying an item on line and picking it up in a store or buying an item online and returning to a store. These cross-channel conveniences have become commonplace for many multi-channel retailers, but they don't necessarily require the level of operational and data integration that's starting to evolve. For example, all of the scenarios described here can be done without integrating customer data, inventory or product content. They take some process work and training, but they can be done without going too far under the hood. So, while they are great conveniences for the customer and may be executed well enough, there's a whole new level of integrated customer experience that isn't being realized. From an organizational perspective, the channels still exist as, well, channels, with mostly separated staffs, goals and strategies. This makes execution and measurement of cross channel programs difficult, and few companies do cross-channel well or without significant challenges.

Omni-channel: Most of the people using this term are using it reluctantly, either because they don't like the way it sounds or, more importantly, because the term doesn't adequately express the customer centricity of what they're trying to do. Suffice to say, for some, 'omni-channel' is considered a next generation or "advanced" version of cross-channel. Here, customer data, inventory, product data, content and operations are integrated to operate as "one", with the customer in the center. The customer is able to interact and transact across touch points (note the word touch points here, not channels) interchangeably and simultaneously. For most retailers, this is a highly aspirational state, but it's where the leaders are headed. Examples of 'omni-channel' in action might mean customers having access to inventory availability regardless of the store or warehouse where it resides, or an order being fulfilled from whichever location is the fastest, most economical or convenient to the customer. It might mean customers and sales associates having access to the same rich set of product information and content regardless of whether they are looking at a cell phone screen, a tablet , a computer, a cash register, an in store kiosk or a digital sign. It might mean that marketing messages are personalized, tailored and delivered to a customer based on location, purchase or browse history and device, with service at each touch point that takes this critical data into account. Culturally and organizationally, achieving success will take huge leaps not only in IT, but just as critically, in culture, organizational structure, planning and measurement. Channel barriers will need to be broken down with more cross-functional morphing across teams to deliver the desired customer experiences. Strategic plans, budgets and goals must be centralized, with focus on key financial and customer metrics company-wide. Easy to say. Very hard to do.

Clearly the aspirational state described as 'omni-channel' is a step up from how we've thought about cross-channel in the past. It's understandable that we're confused and frustrated by the term. E-commerce is still a young industry (and yes, I know that there are many of you out there who believe that 'e-commerce' is itself an outdated term). As we grow up, as customer expectations evolve, it's only natural to need a vocabulary to describe what we're doing and experiencing. If we ditch the term 'omni-channel' (and personally, I'd be all for it), hopefully we can all agree on what to call it before we move on to the next stage of our evolution (and the inevitable new and confusing buzz terms that that will bring).

Online Merchandising: What it Means, Why it Matters, Why it’s so Misunderstood

Sally McKenzie — Tue, 08 May 2012 16:28:38 -0400

Over 16 years ago, I took my first job in e-commerce. In today's terms, I was an Online Merchandiser, but back then, no one knew quite what to call it. My tool set was not sophisticated, nor were the metrics I used to do the job. I was relying on my "merchant intuition" and a lot of manual processes to make products in the online store discoverable and desirable to customers. I managed a calendar of promotions and placements for the main pages of the site, synching up with my retail and mail order counterparts on the photos and messaging, making adjustments to optimize for the online channel.

Since then, the job has evolved into one of the most critical and sought after positions on an e-commerce team. According to the 2011 Shop.org/Forrester State of Online Retailing report, e-commerce leaders planned to hire online merchants more than any other position last year.

Despite the rise of the role's importance, I am continually surprised by the number of companies who are either un-resourced or under-resourced in this critical area. In fact, I find online merchandising to be a largely misunderstood role in more cases than not.

So, what is online merchandising and why does it matter?

Merchandising, traditionally speaking, is largely about the product on the shelf; what's offered in the store. But, there's more to it. Take a look at this definition of merchandising:

"…merchandising refers to the variety of products available for sale and the display of those products in such a way that it stimulates interest and entices customers to make a purchase…" It's the second part of that definition: "display of products in such a way that stimulates interest and entices customers to make a purchase" that is at the heart of online merchandising. Online merchants typically don't select or manage the inventory, but they optimize the performance of the inventory in the online store environment based on customer behavior.

Today, the online merchandiser's tool set is rich and robust: sophisticated on site search tools, product recommendation software, product videos, side by side product comparisons, enhanced visualization tools, reviews and ratings, the list goes on. Site analytics help merchants identify how placement and presentation decisions are impacting conversion, basket size and sales. Site administration tools have advanced to help "non-technical' online merchants make presentation changes easily. A/B testing tools allow for ongoing testing, learning and optimizing based on what works. More than ever, online merchants are focused on site productivity; getting maximum product engagement, conversion and sales per order.

If you operate an online store and you don't have at least one really strong person in the online merchandising role, chances are good that you're missing opportunity to present products in a more compelling way, improve your conversion rate and increase your average order size. If your assortment is large, you need a team of these people responsible for each of your major categories. If you've purchased product recommendation tools or other point solutions to optimize your site, you might not be getting your maximum value without good site merchants mining the data, fine tuning the business rules and driving better results. All that marketing money you're spending? Not as productive as it might be if he site you're driving traffic to a site that isn't merchandised well.

What makes a great online merchant? Successful online merchants often have a "traditional" merchandising or buying background. They are data superheroes that aren't afraid to throw in some intuition when it comes to romancing and selling a product. They don't have to be tech heads but they have to be comfortable doing things in a technology based environment and driving improvements with technical tools. Bonus points if they have actually worked in a physical store and worked with real, live human customers. (I can't tell you how much of a difference that can make). They're collaborative, driving (or participating in) decisions about site design, new features & tools, marketing offers and product mix.

So, if the role is so important, why is it often so misunderstood?

I've been thinking about this a lot in the last few months. I've had numerous assignments in the last year that have been focused on helping clients understand and operationalize the online merchandising role. Here are some observations that might explain the confusion:

Product focused or "merchant driven" organizations tend to think that merchandising is all about buying. The online merchant role is confusing because it usually does not include the buying function. Truthfully, store operations people and visual merchandisers would probably understand the online merchandising function more than buyers, as the roles are much more similar.
Marketing focused organizations tend to center their e-commerce efforts on digital branding first, commerce second, with site ownership falling under marketing. Pieces and parts of the online merchant's job may wind up in various marketers' or agencies' hands vs. consolidated into a dedicated function.
Technology focused companies may confuse online merchandising with UX design and/or marketing, lumping part of it in with "the front end" functions that usually fall under marketing. They may also assume that online merchandising tasks should be automated via algorithms alone.
Companies new to e-commerce are often surprised by the heavy amount of site administration and merchandising skill required to have a successful online business. They worry about the platform, they worry about SEO and SEM, but they tend to overlook the importance of minding the store, or they think that those tasks "just happen" automatically. After all, this is the web, right?

Not to be overlooked, the scarcity factor for skilled online merchants only adds to confusion…with the position coming into demand more and more, some companies may choose to "do without" or morph the role to meet the skills of the people they have or are able to find.

If you're hiring for your online merchant team or re-positioning/re-defining the role, here are a few tips to help you avoid common mistakes:

Hire as senior/experienced a person as you can find or afford: the skill is specialized, the tool set is sophisticated. You'll get more for your money if you hire someone who'd done this before, especially if you don't currently have this skill set in house.
Online merchants should report to the leader of e-commerce. Don't make the mistake of having them report to buyers; you want your online merchants to make site placement decisions based on customer insights and data, not based on what slow moving product needs to be promoted.
Be sure that the online merchant isn't a fancy title for product data administrator. Product data is of course critically important and the product data administrator is equally important. But, it's a different role than the online merchant. If you have heavy site data admin needs, hire people to do that so that your merchants can be merchants.

And, don't forget. Your online merchant is no longer just about merchandising the web site; they've also got the mobile site, the tablet app and a host of other placements and surfaces to look after. Chances are you need more than one.

Getting Organized: 4 Fundamentals for Online Org Chart Success

Sally McKenzie — Sat, 14 Jan 2012 02:06:39 -0500

Next week is NRF's Big Show in New York and I'll be participating in a Shop.org First Look panel - The Organization of the Future.

Many of my engagements recently have been focused on e-commerce organizational structure, and frequently it seems that even when organization design is not the star of the assignment, it winds up with a strong supporting role in the work.

In some ways, this is nothing new. Retailers have been wrestling with how to best organize for online and multi-channel success ever since e-commerce has existed, well over 15 years now. What's changed, though, is that online and digital initiatives are now front and center in most retail strategies. E-commerce sales are a significant portion of a retailer's business. The website and new mobile touch points function as critical access tools for customers who research before and during their trips into the brick and mortar world.

While many companies have invested heavily in the technologies and capabilities needed for smooth shopping and buying across channels, all too often the actual experience of using these capabilities falls short. The rise of mobile devices and the continuing growth and dominance of Amazon are overdue wake up calls to retailers, many of whom recognize the need to re-examine their value propositions and improve their abilities to execute well in the digitally integrated world. Inevitably, the people that these retailers hire and how they position those people in the organization will make the difference in success or failure.

So, where should the online team report? How should you organize your team? Who should you hire?

The answers to those questions are different for every retailer, of course, but there are a few strong guiding principles that I have found to apply in just about every company:

Get the reporting structure right: Your online/digital team should have a direct line of communication to the executive in the organization that has broad reaching vision, influence and authority to drive change across the organization. Very often, that means the CEO. It can also mean a strong COO or leader of Direct. If you instead choose to make the online team an offshoot of merchandising, marketing or (even worse) IT, it's unlikely that you'll realize the broader opportunities of the online channel.
Understand the specialized functions critical to running an online business: While you may think that e-commerce and digital marketing are "new" functions in your company (and, relatively speaking, they may be), most solid online teams are increasingly comprised of specialists that are skilled in critical disciplines. Think about marketing channel specialists (email, SEO, SEM, Affiliates, CSEs), think about online merchants, who have a growing set of sophisticated search, recommendation and product presentation tools to master. Think about data analytics and A/B testing (in my view, one of the most consistently under-resourced functions on e-commerce teams), and think about the information architecture, interaction design, visual design and user experience disciplines needed to have a first rate site. I am frequently surprised at how few executives are familiar with these important roles. Understand them, and be prepared to invest in the specializations that are the most important for your online business.
Think process integration vs. organizational integration: For most retailers, the e-commerce team started out as an independent unit that didn't have much to do with the rest of the organization. That was a good thing, since the online world was new and e-commerce teams needed time and space to figure things out. No more. With digital initiatives at the top of every retailer's priority list, there's nowhere for the online team to hide. That's good, but it's causing many organizations a great deal of stress as they struggle to integrate the online team with the company as a whole. From my experience, it's usually not integrating the organizational design that solves this challenge. Instead, it's integrating the strategy, planning and business processes to include online. Brace yourself. It takes a lot of time and roll-up-your-sleeves working sessions to figure out how to make things work across channels and functional groups, what meetings need to take place, where the teams need to intersect and hand off. It's a lot harder than shuffling boxes on an org chart, but it works better.
Rise to the recruiting & retention challenge: If you read the industry news or if you currently have open seats on your e-commerce team, you are probably already aware of the heavy demand for digital retail talent. Chances are it will be like this for some time to come. With the continued rapid consumer adoption of all things digital, there will be no letup in demand for e-commerce and multi-channel innovation. According to a recent Fast Company article, most workers now change jobs about every 4 years. That means that even if you have great e-commerce talent today, you might find yourself filling those positions in the near future. I'm not a recruiter, but I often interview e-commerce leadership candidates on behalf of clients, and here's what they care about. They want to be in a company that has a strong vision for the role of e-commerce. They want a direct line of communication to the person who can help them be successful (in other words, they want to report to the CEO or a senior influential leader). They want to know that the company has solved, or is willing to solve some of the issues that have made e-commerce and multi-channel initiatives flop in other places, namely, internal "channel conflict", long IT queues to get basic customer facing needs addressed, underinvestment in critical functions needed to run a digital business well (see #2 above). In other words, they want to work for someone who "gets it" and will help them clear the runway.

According to the Shop.org State of Online Retail Report, 2011, over 80% of the retailers surveyed will be adding staff to their online teams in the coming year. That means there will be plenty of companies vying for e-commerce talent. Are you organized to win and keep the best team?

Yes, Virginia, There is a Nordstrom. My Holiday Story of Retail Fate and Therapy.

Sally McKenzie — Thu, 22 Dec 2011 14:31:42 -0500

A few months ago at the Shop.org Annual Summit, I attended a session where e-commerce executives discussed the future of digital retailing. The conversation rode the waves of many intriguing topics, but for me, the most compelling moment of the session went something like this:

The moderator asked how big digital giants like Amazon are thought about in more traditional retail organizations; what strategies are retailers deploying to prevent losing market share to pure play leaders that offer price, speed and convenience? There was an awkward silence in the room. The silence itself said as much as the few participants in the room who spoke up to answer the question.

As this year's holiday season has unfolded, the importance of this topic has only intensified in the minds of retailers, as they watch customers scanning bar codes in their stores being rewarded to buy on Amazon instead, and as the Kindle Fire (design flaws and all) offers consumers an affordable device that integrates content and commerce.

I rely on Amazon for cat food, Kindle books, and a wide variety of "long tail" items that are too hard to find in the "real" world. But, there are things that Amazon can't do for me, despite the recommendation algorithms, the endless selection and the ease of buying with one click.

Last week, I was reminded of what makes great retailers truly great. My experience didn't take place online on my usual e-commerce shopping haunts, but in the brick and mortar world of a digitally savvy, customer focused multi-channel retailer. Here's the story:

It was Wednesday morning and I was in a rush. I was leaving on a 2pm flight for Europe to complete a client assignment. I've been a business traveler nearly all of my working life, but I have yet to master the art of truly being prepared for a trip. Always the last minute thing to buy or pack, the long mental list of things I need to remember (passport, converter, adapter, power cords, eyeglasses, International data plan, instructions for pet sitter and on and on and on). So, as usual, I was in my stressed frenzy, running out to take care of my last minute errands before leaving for the airport.

As I hurried to cross the street, I felt a snap. It was sound no woman ever wants to hear: the death of my black tote bag. The handle had popped off of the bag, leaving me with a useless sack of leather. Any female business traveler out there knows the critical importance of the black tote bag. It serves as both your briefcase AND your purse on business trips so that you can still carry on your suitcase. It holds your laptop and work in addition to the usual wallet, cosmetics, phone, power bar and keys. There's no point in even discussing the possibility of making a trip without it.

With less than an hour before needing to leave for the airport, I cast all decorum aside and simply went into a panic. Luckily, I was a block away from Nordstrom, one of the better places to have a meltdown. I rushed into the store and walked a blue streak to the handbag department on the first floor.

Hyperventilating, I went to a fixture and opened the first tote bag I saw. Too small. Ugly too, but I can't be picky. I went to the next fixture and reached for another bag. Then I heard a voice. A woman pulling a cart full of handbags called to me and said "You need a new tote bag and you're in a panic!"

I looked up. I showed her the amputated handle of my tote bag, and in between frantic breaths I blurted out something about the bag falling apart and needing to leave for the airport. She smiled confidently. "Ok, no problem. Let me put this cart away and we'll get you a new bag. I'm going to credit you for the one that broke and we'll get you into something that will work. Just breathe. Be glad that this happened now instead of while you were on your trip. You might want to look at these two bags to start, but I'll be back in just a minute to help."

She was good on her word. We looked at every tote bag on the floor. She was able to quickly point out every feature of each bag (inside pocket here, secure zip closure there). While I looked at one bag, she brought me another. I was like a choreographed dance. We settled on the best solution and she whisked me to the register. She looked at my broken bag. "You bought that here maybe 3 or 4 months ago, right?" I said I couldn't remember, but that was probably about right. She looked up my account at the register and immediately located the purchase of the old bag, giving me full credit. I moved my belongings into the new bag right there at the wrap desk, scraps of paper, half eaten power bar and all. As we were finishing the purchase she said. "I could just tell by the look on your face that you were in trouble. Hopefully now you'll be able to have a great trip." I thanked her (I really wanted to hug her but held back) and walked out of the store, honestly a bit wobbly from the experience. I thought, "What just happened here…?"

Well, now that I've had a week to reflect on it, I'll tell you what happened.

I had the good fortune of having a merchandise crisis a block away from one of the best, if not the best service retailers around
Within seconds of my arrival in the store, an amazing sales associate tuned in to my needs and without even asking, knew intuitively exactly how to solve my problem. She stepped in to help without waiting for me to find her.
She knew her product. She could tell me the price and features of every bag without missing a beat. She asked me questions about features and styling and immediately helped me zero in on the right options.
She had the technology at her fingertips to look up my old purchase and credit me on the spot, and she had the benefit of a service policy that allowed her to process the return, no questions asked, no manager sign off. Note that I never asked for or expected a refund. It just happened.
Not only was I sold a great bag, I felt genuinely and personally cared for during the experience. This was truly retail therapy.
I walked out of the store in about 15 minutes with a beautiful bag, a normal breathing pattern and a smile on my face.

Keep in mind that all of this happened during the holiday season, when the store was busy and both customers and sales associates are taxed.

For those of you multi-channel retailers out there, ask yourselves: can your organization do that? If you're worried about the battle for shoppers' attention and the aggressive actions of Amazon, think about this:

While I will likely always be an Amazon shopper for some things, Amazon can't do for me what Nordstrom did for me that day. They may personalize the site, but they can't know what I need by looking at my face or reading my emotions. Despite Amazon's stellar self service, in this case it's no substitute for the real deal; of a person who really listens and knows their stuff. Technology, while not at the center of the experience, beautifully enabled the person helping me to do her job efficiently and process my return seamlessly. Amazon delivers fast and is getting faster all the time, but 15 minute delivery with the kind of experience I had isn't in their reach.

The holiday shopping season is almost over. For most e-commerce sites, the final hours of shipping deadlines are on rapid approach. For those of you in brick and mortar, your stockrooms are emptying and likely so are your personal energy reserves. It's time to refuel and gear up for 2012. Based on my experience last week, my holiday wish this year for all retailers, large and small, online and multi-channel is that you will each find your own ways to bring unique magic and joy into the shopping experience of your customers. Yes, Virginia, there is a Nordstrom. May their magic inspire retail greatness everywhere.

10 Online Retail Lessons Learned at Least 10 Times, and Still Loving It.

Sally McKenzie — Wed, 19 Oct 2011 23:44:26 -0400

I love my job. It's been a frenzied year so far and with many e-commerce teams about to hunker down for the holiday crunch, I'm at last taking a two week break to read, (hopefully) write and recharge.

One of the reasons I love my job so much is that the learning environment in digital retail is endless. The pace of change in e-commerce is at an all-time high, and every client brings a new set of circumstances, opportunities and unique challenges into the mix. But sometimes, there are common threads that run across even the most diverse of engagements and sometimes, the learning is a re-run. In a good way.

This year I have had the opportunity to work with e-commerce executives at 'household name' brands, regional retailers and fledgling startups. Most are in the U.S., some International. Most B2C, some B2B. Many are well established in selling online, others just getting started (I continue to be surprised at how many sizeable retailers are still in the early stages of e-commerce). Some are highly successful in digital retail, others, admittedly, are falling short and need serious help.

Despite the obvious diversity of these clients, they are kindred spirits in the lessons they have learned by striving for excellence in online and multi-channel retail. I am often asked "what are the most common mistakes you see retailers make online?" or, "what are the biggest challenges that you see clients face in the online space? ". I'll take a slight detour and answer that question based not on the "mistakes" and "challenges" but instead on the 10 lessons I see CEOs and executives (and myself) learn over and over again in the world of online retail.

Lesson #1: This will be harder and more expensive than you think.

This lesson is particularly important for executives new to the online channel, many of whom have little perspective on the level of effort and investment required to build and sustain an online or multi-channel endeavor. It's not just the technology. It's the people, the design, the marketing, the analysis and the ongoing improvements. Many of the "rescue 911" engagements I see are the result of underinvestment in critical areas of e-commerce.

Lesson #2: This will take longer than you think.

Online commerce moves at warp speed, but that does not mean that your return on investment or sales increases will be instantaneous. If you have a short time horizon in terms of expected success – ask yourself: "Why do I think that ROI will come quickly?" Do you have data and perspective to validate that expectation? Wishing won't make it so. Its ok (and right) to aim aggressively - but have a plan (not just a hope) to get there.

Lesson #3: You will need to get educated about how to run a digital business.

The good news here is that the e-commerce industry is full of great conferences, communities and sources of information, much of it free or low cost. The perplexing thing is that too many executives don't take advantage of them. Subscribe to newsletters, follow industry experts on Twitter, listen in on webinars, read industry research and white papers. Just when think you've read a ton, read some more. Spend a lot of time (no, just cruising the home page doesn't count) on the sites you admire. You'll be surprised how quickly things change and how quickly new technologies and tools take hold (think mobile, tablet, social, etc.) and how different this channel is from the others that you may operate. Understand the metrics that are important to the business and how they work. Make your web analyst your best friend. He/she has lots to teach you.

Lesson #4: This will impact every area and every channel of your organization.

If you ask any seasoned, successful retail executive how online commerce has changed their organization, they will tell you that the changes have been substantial and that the changes have spanned every operational and customer facing aspect of the business. Be prepared for conflict; be prepared to make hard decisions. You will need to develop a vision for integrating digital into your organization, become a digital cheerleader and bring the rest of your organization along for an exciting and at times bumpy ride.

Lesson #5: Who you hire and where you place them in the organization is critical.

Hire people who "get it" and have done this before. They are hard to find, but they are out there. Mix them with your best and brightest internal minds. Stir. Have them report either to the CEO or to an executive that not only understands but actively communicates the importance of digital endeavors in your company's future. The rest of the organization will need to understand and buy in to the online vision and be appropriately incented to align the customer experience across touch points and channels. (Go back to Lesson #1 if you think this will be easy) Send the message that this matters.

Lesson #6: The guiding principles of great retail still apply.

Shiny website, great. Even more great? Awesome product, great merchandising, effective marketing, attentive service, fast, accurate fulfillment. Don't ever think you can forget those things.

Lesson #7: There will be distractions. Have a strategy, stay focused.

Having a solid vision and strategy for e-commerce is just about the only thing that will help you determine which of the many new ideas you'll see and hear about are worthwhile and which are simply shiny objects floating by. Be open to the ideas and the possibilities; but have the discipline to prioritize and say "no" when necessary. (Note, see Lesson #1 again – this is probably the main thing I see even the most successful online retailers struggle with)

Lesson #8: Your customer is already way ahead of you, and so (likely) are your competitors.

I still have the occasional client that will tell me "our customer is not that internet savvy…" to which I say, don't kid yourself. This is no longer a choice. It's an imperative. Your customers (young old, rich and not so rich) are already shopping online on their computers, on their phones and on tablets. They may not be shopping online with you yet, but their expectations are being raised every day by the early adopters who have gotten it right. Yes, you will have to run to play catch up, but that will be less difficult than not entering the race.

Lesson #9: The longer you wait the harder and more expensive it will be.

Yes, in some ways the barriers to online entry continue to be lowered due to advancements in technology. But, at the same time, the complexity and sophistication of the online world continues to evolve and (see the point above) customer expectations continue to climb. Jump in and kick like hell. There isn't going to be a better or easier time.

Lesson #10: This will be more fun than anything you've ever done.

Despite the hard lessons above and many others, I don't know a single e-commerce executive who hasn't become completely addicted to the pace and excitement of running their online business. It's the shot of adrenaline that every retailer needs.

So, to that last point above, I admit it, I'm an addict too. Yes, I'm about to take a two week vacation, but as crazy as it sounds, I can't wait to come back to work.

The Spring of my E-commerce Discontent: Aren’t we Better than This?

Sally McKenzie — Fri, 03 Jun 2011 11:41:27 -0400

I've needed to write this post for a couple of months, but I've held off. Despite my frequent use of sarcasm, I'm generally an optimist, and I generally give people and companies the benefit of the doubt. Especially companies selling online; I know how hard it is, I know that they're trying. But enough already. I have spent more time on the phone with the customer service departments of online retailers this spring than any other time in my online ordering life. I've been buying online enthusiastically for as long as I've been able; probably around 15 years. Usually, things go well. So well, in fact that my expectations (and probably those of all consumers) have been raised to a level where nothing but fast, accurate and friendly execution just won't do. And rightly so. But maybe online retailers have (dare I say) slipped and let a few of the important fundamentals slide through the cracks?

Here's a quick litany of this spring's e-commerce experiences.

The cat food that turned into dog food. My cats have discriminating taste and managed to fall in love with a hard to find food. I found it online at one of the major online pet supply stores. Ordered 5 cases. Got all 5 cases of cat food PLUS a pallet sized shipment of multiple cases of dog food. How's that for a gift with purchase? It weighed a ton. Instead of shipping it back to the company, I donated it to a local animal shelter. Some good should come of this.
The cat beds that made me lose sleep. The cats outgrew their cat beds. I searched online at several sites for the right color/size replacement beds. I finally found them at pet site I had never heard of, but the site seemed reputable enough, had a prominent 800# all over the site, plenty of promises about their great customer service. Ok, I ordered. I got an initial email confirming my order. A week goes by. Another week goes by. And another. I check my "order status" on the website. No information. No indication that the beds are on backorder or that they've shipped. Radio silence. In the 3^rd week, I call customer service. I am on hold for over 15 minutes. The line is scratchy and playing a radio station so full of static I can't tell if it's music or talk. I give up and call back a couple of hours later. Same thing. I give up and call back the next day. At last, a voice. A nice guy informs me that the beds are to be dropped shipped from their supplier and that he "thinks" they will be going out this week. But, he says that should call back if I don't see them by next week. Ok, so now it's MY job to track this order and be sure it arrives? The following week, no beds. I call. Same static ridden phone line. I hold, and hold and hold. I give up. I call back a couple of hours later. I hold. I hold. I hold. At last, a voice. He "thinks" they will ship next week. I explain that I was told the same thing last week. He suggests I call back by the end of the week if I have not seen the beds. I explain that every time I call I am on hold for an eternity listening to static. He advises that I call during the hours of 10am and Noon Pacific time when they are "not so busy". Delightful. Now I'm fitting into their schedule. "Will there be a tracking number sent to me when the beds ship?" I ask. "Probably not", he answers, "since it's a drop ship order". I go to their website again. That cheery 800# is still placed all over the site encouraging me to call anytime. Right. Another 2 weeks later, the beds arrive. My cats are happy. I am so exhausted, I could curl up in one of them myself.
The (human) bedding that got tossed and turned around. It was time to order new sheets, a bed skirt and comforter cover (this time for me, not the cats). I ordered from a well-known and reputable home furnishings company. About 2 weeks go by, no sign of my order. I go to the website to check my order status. It reads "order not found". I call the customer service number. At least this time someone answers. Fortunately, I have my confirmation email and can provide an order number. I explain that the website says the order does not exist. "Oh" say the voice on the phone, "we switched systems so the website is not accurate". Nice. How about an email to let me know? "Well", she says, "I show that there was an attempted delivery for your order last Saturday, but no one was there to receive it." Well, of course not. I had it delivered to my husband's office, and there's no one there on Saturday. I check with him and he says there was no attempted delivery notice. What now? It's now the following Thursday and no sign of this order. "Well," she says, "you need to contact your local post office to schedule another delivery". I swear I am not making this up. "Can you give me some sort of tracking number or shipment number or something?" I ask. "No" she says. Miraculously, the next day the package arrives at my husband's office. But, the bed skirt ($30) is missing from the package, even though the packing list says it is in the box. I decide to donate $30 to this company and avoid yet another lengthy and painful series of phone calls.
The patio furniture that went on a cruise. The deck furniture that I bought over 10 years ago is in need of replacement. It's showing its age and starting to rust in the Seattle rain belt. I receive an amazing, gorgeous catalog from a company I've always admired on heavy, luxurious paper showing me some of the most beautiful outdoor furniture sets imaginable. My husband and I are enchanted. We go online, select a table, chairs, chaise, side table, bar table and stools and a set of cushions for all. It's a major purchase (I'm talking thousands here), hit the "submit order" button and anxiously await our new "major purchase". I receive an email telling me that I will "soon" be getting an email confirming the delivery details. The email even tells me to be on the watch for further information regarding my order. There's a link to where I can track my order online. I am encouraged. I get busy, my husband gets busy. We realize that 3 weeks have gone by. No follow up email from the company with the gorgeous catalog. No furniture. Both the email and the website show a prominent 800# to call. I call. The call instantly goes to a recording that says "Thanks for calling" (no mention of the NAME of the company)," to place an order, press 1, to inquire about an existing order, press 2". I press 2. The phone rings, and rings, and rings, and rings. Dead silence for about 45 seconds. Then a dial tone. Odd. I call back. I press 2 again. Rinse and repeat, same story. I double check and triple check the number. I am actually worried. I give up for the day. I call back the next day. I get a nice guy who says "hi, thanks for calling" but again, no NAME of the company I ordered from. I ask about the status of my order. I tell him that that the web site says "pending fulfillment", which it has said for weeks and I've gotten no email, no indication of where my order might be. He tells me to hold. I hear the thwack of the keyboard in the background. "Ok", he finally says, "it looks like the cushions for this furniture had to be made custom, but you should be seeing it arrive towards the end of the week". I ask for a tracking number. No dice. "If you don't see things start to come through in a week or so, give us a call back." I am sure you can guess what happens next. Ten days go buy. No merchandise. The credit card bill arrives. I call again. This time, I do get a person to answer the phone on the first try. She seems genuinely concerned. I explain that I have a bill for thousands of dollars but no merchandise and no communication about the whereabouts of this order. She thwacks at the keyboard. "I'm going to need to call the warehouse about this" she says. Can I call you back?" Of course. About an hour later, she calls to let me know (and I am not making this up) that she "tried to call both the warehouse and the order processing department and everyone's so busy that they won't pick up the phone. I've left email and voicemail and no one has gotten back to me. I'll call you when I know something." I look around for the candid camera signs. About 3 hours later, I get a voicemail that the "container was late, the goods are in customs, should clear by the end of next week", which means the possibility of seeing them the week after. No tracking number, no reassurance. As I write this, I am still uncertain.
The doormat that took over the earth. I needed a new doormat to go in front of my French doors. Easy enough. I found a terrific website (a division of a much larger terrific website) that offered hundreds of choices in size and pattern. I found the perfect one and ordered it. Simple, $50 transaction. Good follow up emails, letting me know my order was received and confirming shipment. At this point I'm thinking that maybe this time things will go flawlessly. Wrong. My husband calls. "What the hell did you order?" he says. "There's a giant rug here that hardly fits in my office." My "doormat" arrived in the disguise of a full blown rug, 6 feet X 9 feet. I checked my order confirmation. I ordered a 2X3 mat. I called the customer service number. Fortunately the woman who answered was helpful and apologetic. We had a good laugh about the giant rug. The correct rug is on the way (or so I have been told). As for the giant rug, it's still waiting disposition. Apparently "someone will call to arrange to have it picked up". Rug company, I'll give you a week, and if no one calls, it's going on EBay.

So perhaps I'm just having a bad streak with online retailers. Or maybe we need to take a step back here. From my perspective, this spring was not our finest hour. For all of the press about the success of e-commerce, the exciting developments in mobile and multi-channel wizardry, there are obviously still opportunities to buckle down and get the fundamentals right. All of the above online retailers had good, functional websites. All of them touted reliability and service on their sites. All of them had prominent 800#s on every page. A couple of them even sent me very nice catalogs encouraging me to visit their website and buy online. But, as my experiences above illustrate, the lack of actual accurate timely delivery of the product, proactive communication on the status of an order and available, knowledgeable customer service representatives can cause the experience to crumble in the dust. I remain a passionate enthusiast of buying online….but what about the average customer who doesn't make her living from e-commerce? Would she tolerate the experiences above?

E-commerce executives: do yourselves a favor and buy something off of your own websites. Document your experience start to finish. Are you getting the fundamentals right, start to finish? You might be surprised. I certainly was.

E-commerce: You’re Not Selling Online until the Fat Lady Sweats

Sally McKenzie — Tue, 08 Mar 2011 19:35:37 -0500

Is there an e-commerce initiative on your priority list for 2011? Don't be the fat lady at the gym.

Just about every day that I'm not traveling on business, I take a break from my e-commerce work and go to the gym down the street from my office. I've been in this routine for nearly 5 years and I find that it makes a profound difference in my productivity, stress management and ability to focus. I can't count the number of hairy online retail problems I've solved on the Cybex machine with sweat dripping down my shirt.

Lately, two women have been showing up at the gym at about the same time I do each morning. I'm not one to judge, but let me just say that these women are very heavy. When I first saw them I thought it was great that they were taking the plunge and starting to exercise. Now, I feel a bit differently.

I've noticed that every time they come into the gym, the routine goes like this: one of them grabs the remote control and turns on not one but two TVs to the same show. They get on cardio machines side by side and start to talk (very loudly I might add, so loudly that I can hear the chatter above my iPod). Their conversations get intense. Often, one of them is leaning over across her machine to speak to the other, looking her friend in the eye. Their feet and arms are hardly moving. This goes on for about 30 minutes. These women aren't working out. Neither of them ever breaks a sweat. While they may think that they are doing something good for their bodies and can officially claim "I went to the gym today", all they are really doing is socializing while standing up, with a TV in the background. Now, I suppose this is better than the two of them socializing while eating at a fast food restaurant, but you get the point. They aren't focused on the task at hand. It's easier to go through the motions of multi-tasking than it is to block out the distractions and push your body through a challenging workout.

A recent study by Booz & Company cites that executives at companies with few (1-3) strategic priorities were the most likely to say that their companies have above average profitability and revenue growth. Take on more than that and the company loses focus; people run in place, sort of like my new fellow gym members. The same survey goes on to report that 64% of executives say that their biggest frustration is "having too many conflicting priorities", and 56% report that "allocating resources to support their strategy" is their biggest challenge.

Case in point: I am currently in the process of helping two clients get their e-commerce efforts off the ground. One of them in particular is moving very slowly, despite their consistent rallying cries that we need to move faster faster faster(see my previous post about slowing down to speed up). The problem? Corporate metabolic disorder. The team I am working with has more than 10 initiatives on their plate, of which launching e-commerce is just one. They have day jobs too, important ones.

Every time I speak to my client, he breathlessly tells he's moving a thousand miles an hour, in meetings from 7am til after 6 every day, moving so fast he can't believe it.

Hmm. Is all of that moving so fast really moving any initiatives forward? From my vantage point, things are moving quite slowly. I produce a document or plan for us to review. Two weeks go by while a conference call to make decisions on the material is scheduled and rescheduled again two times. Finally, the call occurs but half of the critical team members don't show up, and two arrive so late that they can't participate effectively. Still others "just didn't have time" to read the material ahead of time, even though they've had it for over 2 weeks. Decisions get made, but the quality of those decisions is questionable under the circumstances.

When we begin interviewing e-commerce platform solution providers, the key questions the team has are about (you guessed it) delivery dates. Can you get our online store up and running by our target date? Can you meet our aggressive timeline?

Here's the deal. I've been involved in e-commerce launches and redesigns for the last 15 years. I've seen the reasons why projects don't get completed on time. There are many, but the most common I've seen are a) unrealistic dates thrown out up front without the necessary planning and due diligence to be sure the timing is realistic and b) client side delays in foundational e-commerce elements like product data assets, content production and integration. The reason for the client side delays is typically lack of focused resource on critical tasks. Too many large initiatives going on simultaneously with no dedicated resources. Too many TV shows and conversations without emphasis on the real task at hand: working out.

Yes, an e-commerce consultant can be a huge help, but there's no getting around that there is a lot of work that will need to be done by you and your team to prepare for selling online.

If you've decided that e-commerce is a critical initiative, then treat it like a critical initiative. Dedicate resources, clear the less important things off of the plate, strap in and work up a sweat. Don't be the fat lady at the gym.

New Year’s Lesson: 3 Big Things That Clients and Cats Taught Me about E-commerce Success (and cat training)

Sally McKenzie — Mon, 10 Jan 2011 21:12:10 -0500

It's a new year, and that means that in our work and personal lives, we are reflecting and looking ahead.

Sometimes, my personal and professional lives parallel one another and enlighten me in surprising ways. Such was the case in December.

Professionally, I started working with a new e-commerce client. They have a terrific product that's very desirable and priced fairly. They have a great cause tied to their company that is impressive and admirable. The founders are passionate and smart.

What's wrong with this picture? For one, they're not doing a lot of business, nowhere near as much as they should be. They're frustrated. The riches of e-commerce seem to be passing them by.

Personally, my husband, dog and I adopted two young kittens, Vincent and Theo. They are adorable, as most young kittens are. They are delightful to be around. They are thrilled to be in a home instead of a shelter, surrounded by food, toys and comforts.

What's wrong with this picture? We have a very steep, open spiral staircase in our house. The cats would hang out in the upstairs bedroom, but were too scared to come down and spend time with us, so we either had to make special trips upstairs to visit them, or only see them at night when we went to bed. All of us were frustrated. The riches of being a family were eluding us because we couldn't get the cats over their fear of the stairs.

At the start of December, little did I know that I'd be solving both of these problems concurrently, nor did I realize how related the two problems really were. Call me the crazy cat lady, but in the end, the 4 month old kittens provided a lot of insight into how we make buying decisions and why we engage with and commit to brands.

First, a bit more about my client. After doing a full audit of their e-commerce website, their competitors' sites, their business and their customers, it really boiled down to 3 big things.

Big thing #1: They weren't acting like merchants. Everyone who sells online is, by definition I suppose, a retailer of sorts. But many, especially in e-commerce, don't take that role to heart or understand the obligation that comes with it. It's so much more than simply putting your product online and providing a shopping cart. It's so much more than showing up in search results. It's about powerfully and consistently persuading your customers that what you have is something that they want. Persuasion can take on many forms: a)compelling, rich product imagery, b)informative and engaging copy full of features and benefits, c)suggestive selling and product recommendations, d)removing barriers via things like free shipping, alternative payments, and a clear, liberal return policy, or e)helpful tools that allow for easy comparison, sorting, filtering and sharing of products.

Interestingly, in person, my client is a vibrant and skilled sales person. Yet, her site is lifeless and impersonal. The product, as wonderful as it is, can't be seen as special or desirable without a merchant doing their job. Remember the phrase "may I help you"? You can't exactly ask that of an online shopper (well, you can if you offer live chat; in this case, they don't), but your site should reflect that you've thought through the answers to that all important question. If you don't have the experience/instinct for retail, get educated or hire someone (a merchant!) who "gets" the nuances of persuasive selling in an online environment. If you are thinking about becoming an online retailer, do yourself a huge favor and work in a brick and mortar store for 6 months waiting on customers. You might not like it, but you will learn lessons that will help you enormously in the e-commerce world.

Big thing #2: They weren't being story tellers. As I mentioned, this company has a compelling cause, and buying their product truly does make a difference in the world. When I asked my client how she expected customers to find her site on the web, she replied: "Word of mouth. We thought that with our great product and great cause that word would get out there." So, here's the thing about word of mouth: First, you have to have customers (see #1 above). You have to tell the story yourself really well at least a few times before your customers will tell other people. Then, you have to invite customers in, give encourage them to engage, and give them a megaphone. Customers need to a) understand the story b) be compelled to tell it c) be invited to be a part of it and d) given the tools to tell it easily. No matter how passionate they are about you and what you sell, you're going to need to give them a little help. One of my favorite sites that does this well is TOMS Shoes. Take a look at the home page and you see a page bursting with how to do it right.

This leads me to Big Thing #3.

Big thing #3: They weren't making conversation. My client, despite the struggles with their e-commerce store, had set up a Facebook page and Twitter account. Good things. However, both were being used like billboards vs. conversations. Every post and tweet was about themselves; what they were doing, what sale they were having. The few followers they had weren't participating. Some self promotion is ok, but the power of these tools is in the dialogue, the listening, encouraging conversation and engagement. Without that, it's hard, if not impossible to stimulate and foster the word of mouth and storytelling that is so critical to my client's business.

Ok, so what about the kittens? Surprisingly, when I dissected the problem, I found that I was making the same errors in cat training that my client was making in operating her e-commerce store.

Once Vincent and Theo were big enough, I removed the barricade that we had put up at the top of the stairs. I expected that they would eagerly come down the stairs to explore the rest of their home. Wrong. Days and weeks went by, and they showed no desire to leave the bedroom. They occasionally ventured to the top landing, only to run away in fear. At one point in my frustration, I picked them both up and carried them downstairs, forcing the issue. They freaked out, and quickly went back up stairs, showing no intent to return.

Then, I decided I needed to act like a merchant. It wasn't enough to simply open the store (in this case, the barricade) and expect results. I needed to point out the benefits of being downstairs. Delicious food. Special toys. Lots of affection and laps to sit on. For several days, I tempted them with how wonderful life could be beyond the bedroom. I was persuasively selling the concept of coming downstairs. Within a week, it was clear that they finally wanted to come downstairs. They just needed continued encouragement and persuasion to get over their fear.

So, I also had to be a storyteller. I had to tempt them numerous times, in different ways for the message to sink in. One time it might be luring them with a feather toy. The next time a dish of favorite food. The next time praise and affection. Every time, the ending of the story was the same: see guys, downstairs is fun, and it's fun every time. Word of mouth, if there is such a thing in the cat world, did eventually do the trick. Vincent, the braver of the two kittens, eventually took a deep breath and made it, slowly down the stairs on his own. Theo protested and wouldn't join his brother. But, later that day, Vincent made it up and down the stairs 2 or 3 times, each time seeing the benefits of good food, fun toys and lots of affection. The next time Vincent descended the steps, Theo was right behind him, eager to experience what his brother had no doubt bragged about. Word of mouth in action.

Wallowing in my success, I nearly made a critical error. After a couple of days of the kittens coming downstairs, I noticed that they had reverted back to their usual habit of hanging out upstairs for most of the day. Why weren't they coming downstairs with the enthusiasm they'd had before? Maybe because I hadn't worked to keep the conversation going. I acknowledged them when they came downstairs, but had done little to keep them interested. I was tending to my own work while they wandered about aimlessly, sometimes getting bored. I quickly learned that I didn't need to be involved with them every second, but that I needed to create an environment where they could entertain themselves and stay engaged in being downstairs, with occasional guidance and participation from me. Sound a bit like your social media/engagement efforts?

Conclusions?

My client is a bit like my kittens. She's at the top of the stairs, taking it all in. She's starting to see the benefits of acting like a merchant, being a story teller and encouraging conversation online. I must continue to help her, show her that it's ok to take that deep breath, that first step and come down the stairs to a better place. Be the same vibrant person on line that she is face-to-face.

My client's customers are like kittens too. They are at that scary top step when they come to her site every day. My client needs to persuade them to join her, to experience her product and to engage with her brand.

As for Vincent and Theo, they have become vocal advocates of exploring their new downstairs home, and have earned their spot as "junior partners" in my consulting practice, reminding me often that I need to take my own advice.

Happy New Year.

What I (and probably your customers) Really Want For the Holidays

Sally McKenzie — Mon, 29 Nov 2010 18:30:51 -0500

It's Cyber Monday. Actually, if you've looked at the results for most online retailers lately, 2010 could be called CyberYear. More than ever, shoppers armed with their digital device of choice are turning online to research, compare and buy. Smarter shoppers mean that working in retail (never an easy job to begin with) has gotten harder. Unfortunately, I think that being a shopper has gotten harder as well. As someone who has spent plenty of time on both sides of the cash register, I understand the need to get customers to buy. I understand competitive forces and the impact of economic downturns. Here's how it's playing out for me as a shopper this holiday season.

In seemingly desperate acts to get my attention, retailers are bombarding me with catalogs, email, text alerts and yes, discount after discount. I have discount overload. I am numb to free shipping, 30% off of everything in the store, group coupons that give me some crazy amount of product for a fraction of the price, sales that only last one day, one hour. And please, don't make me get up at 3 am to get the discount. Sure, I like to save money as much as the next person, but personally, I think that retailers using all of the amazing new technologies and tools that we have to keep discounting products is a waste of the technology (not to mention margin). How about using the technology to be personal, relevant, magic and meaningful? I'd gladly pay full price for that. Here's a quick trip back in time to illustrate the point.

When I was about 25 years old, I was an assistant buyer at a department store. There was no internet (at least not one that the average human could use) and PCs had not made it into the mainstream workforce. If you were a shopper, stores and catalogs were it.

It was the holiday season, and I was exhausted. For three out of the four weekends between Thanksgiving and Christmas, I, like everyone else in the buying office, was assigned "store duty". After putting in a long week at the office, I pulled myself out of bed early on Saturday morning, put on my dress and heels (this was, believe it or not back in the day when women were not allowed to wear pants on the selling floor!) and headed to the store to wait on the onslaught of customers doing their holiday shopping. Needless to say, such a schedule kind of put a cramp on my own holiday shopping. So, there I was, the weekend before Xmas, getting off of my selling floor shift at 5:30 and heading out to try to do some shopping of my own.

I walked into Nordstrom, figuring I might be able to find a scarf, earrings or something (anything!) for my mother. I was in my dress and heels. I was carrying my purse, briefcase, coat (it was brutally hot in the store) and 2 or 3 small bags from other stores that I had gathered in my desperate attempt to get my shopping done. The store was packed. I tried to wriggle my way up to the jewelry counter amid the sea of heads and elbows. I don't think I used the term "this sucks" back then, but I am sure I uttered something of equal sentiment.

Then, I felt a tap on my shoulder. I turned around, and a handsome young man in a tuxedo smiled at me. "Would you like a shopping bag for some of your things?" he asked. He was carrying a dozen big, strong Nordstrom shopping bags on his arm. He held one open for me while I filled it with my coat, small bags and purse. He smiled again and wished me luck with my shopping. I stayed in the store for a couple of hours, and wound up doing much more shopping at Nordstrom than I had planned to, most of it at full price. Yes, of course, I am still a customer and probably always will be.

What I think is remarkable about this story is that I have remembered it for years. In a low cost, low tech way, I had a magical, personal moment. Someone in the store was watching me, seeing me struggle and reaching out to help me. When I shop in stores and online today, I keep looking for that kind of a moment again. Personal. Helpful. Relevant. Magical. I am impressed when store associates are aware of online offers, when I can scan a barcode in a store and do price comparisons, when e-commerce sites send me an email highlighting the item I just looked at, which is miraculously now on sale. I have no doubt that these tactics drive business and I know that they require some technical heavy lifting. But they don't excite me or make me loyal. I'll take the guy in the tux over a 20% discount any day.

What's your magic, your "guy in the tux" this year? Chances are, he's hiding under a pile of discounts, but he's what your customers really want.

E-Commerce Leaders: Is Your Decision Making in A Swarm? Take 5 Lessons from the Honeybees

Sally McKenzie — Wed, 10 Nov 2010 12:46:15 -0500

Photo courtesy of bees-on-the-net.com

When I'm as busy as I've been this year, there are two things that I miss the most: 1) reading and 2) writing. There just doesn't seem to be time enough to do either one, at least not particularly well. Fortunately, there are vacations, and my longstanding rule for vacations is that I get to read (and eat) whatever I want. Fortunately that rule usually means that I wind up with some great stuff to write about, fueled by my long overdue reading.

This year's unexpected source of inspiration is Honeybee Democracy by Thomas D. Seeley, a book which took my appreciation for honeybees and their approach to both marketing and corporate decision making to an unprecedented level. I've written previously about honeybee behavior and the parallel to social networking in the ways that honeybees find and communicate their favorite food sources (see previous post). The Honeybee Democracy focuses on a much more complex and interesting aspect of honeybee survival; how honeybees make decisions on where to live, and how they execute on those decisions once a suitable hive site has been agreed to.

I found this topic particularly fascinating, as in the last year I have heard and witnessed from my e-commerce clients that internal decision making is harder than ever and getting harder still. Even though there's no lack of enthusiasm for the online channel, budgets are being scrutinized like never before. The consumer's migration to the web and all things digital has put e-commerce leaders in the hot seat, with more stakeholders in the company wanting a say in the strategy. New channels and access points (like mobile) are disruptive, creating new work streams and considerations in online marketing and site development. Thus, decisions involve more people, take longer, and carry more weight.

We've all seen the common pitfalls of corporate decisions making:

Ambiguity about who makes the decision; over-emphasis on building consensus & unanimity
Heavy handed influence by the leader or person in the highest level position
Dominance of one overly-vocal team member (sometimes inexperienced) who wants it "their way"
Inadequate time to explore viable options; pressure to decide without the confidence of due diligence
Poor communication & execution once a decision is made; getting everyone moving in the same direction

Fortunately, we need to look no further than our closest honeybee hive to find intelligent, practical approaches to all of the above.

To understand how the bees tackle these tough issues, you need know a little bit about bee behavior when it comes to propagating and house hunting (the author does a much more thorough job that I'll do here).

To keep the honeybee population alive and growing, new hives need to be formed. So, as an existing honeybee hive becomes crowded, about half of the bees in the hive, along with their precious queen bulk up on honey and leave the hive in search of a new one. The homeless bees find a place to 'hang' (literally) for a few days while they search for a new hive site. The picture of the swarm above shows what this hanging out looks like. 15,000 or so bees all huddled together, protecting their queen, badly in need of shelter. So, how to find a new hive site, how to decide which hive site is best, and equally critical, how to get 15,000 bees, plus the queen to a new site efficiently is the order of the day.

A relatively small number of the older and more experienced worker bees in the hive "volunteer" to become scouts. As a scout, a bee must fly (sometimes great distances) to evaluate a potential hive site and fly back to the hanging swarm to report on her findings. She tells the group about her find by "waggle dancing" on the backs of her fellow bees. The duration and strength of the dance indicates her enthusiasm for the hive site she has found. The movements in her dance indicate the distance and direction of the potential site. Her fellow scout bees do the same, each returning back to the hive with a potential new home site, varying in their dance steps based on the quality of the find. (In case you were wondering, bees look for a lot of the same things we do in a new house: secure entrance, warmth, spaciousness).

So, how do the bees ultimately "decide" the best hive site? When a scout bee dances for the site she has found, depending on the strength of her dance, other scout bees will go check it out for themselves. They come back to the swarm and either dance (to confirm the original scout's judgment) or refrain. The more scouts that ultimately visit and validate the suggested site, the more likely the site will "win" and become the hive site of choice for the swarm. As enthusiasm for one site builds, enthusiasm for other suggested sites dies out, and ultimately, the bees make their choice, buzzing in unison that it's time to take flight. Since a majority of the 15,000 plus bees, including the queen have never been to the winning site, leader scouts fly above the swarm, guiding the way, assuring everyone arrives quickly and safely to begin 'moving in' to the new place. In this process, the bees become, in a sense, a collective decision making body with the interest of survival as their sole focus.

How does all of this apply to corporate culture and decision making? There are many things that we can learn from the honeybees, and Seeley dedicates a late chapter in his book to how he has applied many of the bees' techniques in running the academic department at his university. Here are the 5 big insights that got me buzzing:

Bees don't need a leader to make a critical decision. It's a common misconception that the queen bee is the leader of the hive. She's not. In fact, she doesn't rule or make any decisions at all. She's just there to fill her essential role in reproduction, and thus, she is pampered and watched over by the other bees. But don't look to her for strategic guidance or vision. The bees don't have a leader. What they do have is a unifying goal: to stay alive. If you're leading an e-commerce team, remember this. It may not always be your job to make the decision or even heavily influence the decision. It may instead be more important and helpful if you clarify the goal and unite the team around it, and then let them reach the right decision.
Bees rely on their most experienced team members to surface options and perform due diligence. Hive site selection can be a life or death decision. This isn't the place to let your newborns test their wings. Send your strongest, smartest and most seasoned to do the information gathering. They know what to look for and what questions to ask.
When a scout bee finds a good hive site, she dances about it to tell the others, then promptly shuts up and lets the other scouts make up their minds. I love this, because I (probably like you) have sat through way too many decision making meetings where one influential and vocal person runs at the mouth, making it hard or impossible for alternative options to be discussed. It's great to be passionate about your idea, but it's even better to make your pitch and let a trusted group of colleagues do the necessary research to get on board or raise concerns. This approach can prevent costly mistakes and assure that those that are on board are there because they have validated the quality of the decision.
Bees balance speed with discipline. Time is critical. Bees can only hang there for so long without a home. Then again, making the right choice for a hive site is critical too. The house hunting process is a remarkable balance of speed and discipline. By deploying their most experienced workers to scout out sites, and by validating each others' work, the scouts can effectively make a decision for colony without all 15,000 bees having to weigh in. In test after test, this method allowed the bees to choose the highest quality home in a short period of time.
Once a decision is made, the bee colony acts as one. Nothing is more frustrating than going through a painstaking decision making process only to find the execution poor, the team members scattering off in multiple directions. If this poor execution were to happen to the bees (and it has happened), the bees would lose their queen, and thus their lives. Seeley cites examples in the book where two strong hive sites are found and the bees are competing and/or confused about deciding which is best. The swarm, in rare cases, divides in two, flying in two separate directions, usually causing the queen to become lost and fall out of the swarm. There are also remarkable examples of the bees successfully locating the queen, gathering around her, and "getting their act together" in terms of unifying their flight plan.

Some things you should know about Honeybee Democracy: a) if you have an interest in nature, insect science, social networks, or corporate cultures you will get value out of this book. b) If you are more interested in social networks and corporate cultures than the insect and natural sciences (as I am) you may find parts of this book a bit tedious, especially when the author describes how certain experiment were conducted or how data was gathered. That said, I'm no scientist, but I still found the info intriguing and the methodology remarkably similar to the techniques used in A/B testing on e-commerce sites. Keep in mind; I was sitting in the heavenly sun in a beach chair with a drink in my hand. Even the most banal reading can be easy to take under those circumstances. c) If you read this book on a Kindle (which I did) you will likely be annoyed by the number of typos; something clearly went afoul in the translation, but you'll be able to figure out the correct words ("of" and "off" get transposed constantly, as do "few" and "flew") easily enough.

If you're too busy to read (like I typically am) you might just look up the next time you're in your back yard. It's amazing what kind of business advice you might find.