In its second-largest acquisition, Amazon buys the company for $970 million.
There are plenty of numbers to back up observations on a shrinking dot-com job market, including well-publicized layoffs not just at e-retailers, but at major network providers and software companies that service them.
Last year, it took William Mercer & Co. compensation consultant Reese Bacon an hour and a half to drive from his San Francisco office to San Jose to meet with his Silicon Valley technology company clients. Now, traffic has lightened up so the trip takes only an hour. “A year ago, you couldn’t get an apartment in this town. If you found one, you were bidding up another $500 a month for it,” he recalls. “Now, there are For Rent signs all over the place.” The morning rush hour that used to cut off at 10:30 is now over by 9:45. And perhaps most telling, “I don’t see as many start ups,” Bacon says from his office in the former epicenter of Internet start-ups. “These are some of the things that tell me employment demand is down. “
Beyond the anecdotal, there are plenty of numbers to back up Bacon’s observations on a shrinking dot-com job market, including well-publicized layoffs not just at e-retailers, but at major network providers and software companies that service them. New York-based outplacement firm Challenger, Gray & Christmas reports that dot-com companies cut nearly 83,000 jobs from January through June of this year. Of that number, the retail sector and two others vital to its support - Internet technology and portals-accounted for more than 44,000. Many of the layoffs were at dot-com companies that went out of business.
While grim news for investors, there’s good news in the failures for still thriving e-commerce operations with jobs to fill: staffing up and staying staffed isn’t nearly as difficult now as it was last year. They can be choosier about the experience and credentials of new hires, and generally speaking, they no longer have to go to extreme measures to get them to come on board. At the same time, existing employees are less likely to jump ship.
Pay holds up
Compensation levels have not dropped as the market has flooded with qualified job seekers ranging from top e-commerce executives to web site content analysts. In fact, they’ve risen year to year in line with inflation, even rising above that in some categories and for certain technically focused “hot” skills, typically, expertise in newer or more popular programming languages. But the rate of increase has slowed down, and while employers aren’t cutting the pay scale, they’re keeping expenses down by hiring fewer people and spreading more tasks among existing employees. “Last year we were seeing leaps of $10,000 to $20,000 in what was being offered the first of the year to later in the year,” says Karen Eagan, a partner with MRI Retail Search, Grass Valley, Calif., which specializes in retail placements including, over the past few years, e-retail jobs such as executive and web developer. “It’s not so crazy now.”
While e-commerce operations and the vendor companies that support them keep an eye on their own bottom line, they’ve been able to cut back on the number and size of hiring bonuses, reduce soft perks like free lunch, ask existing employees to do more, and still get and keep staff. But that’s not to say that the dot-com falloff has made staffing and recruitment into a total buyer’s market for e-retailer employers. Even in these tougher times, employees have demands of their own. Many want compensation packages that are heavier on the certainty of base pay than on risky incentives like stock options. There’s more interest in working for established companies, the lure of start-ups having been tarnished by the failures of the past year.
The more technically focused jobholders and job-seekers flock to opportunities to work with the latest technology-in whatever industry sector. Some workers and job seekers are packing up their skills and leaving e-retail for other fields that can use their talents. That means that for certain tech-heavy functions needed to support retail web operations, employers may find themselves competing increasingly not with other retail operations, but with other industry sectors where the scale is higher across the board.
“In terms of IT job functions, there’s not a whole lot of distinction among the industries. You can take your development skills, your e-businesses skills, and walk across the street,” says Diane Berry, vice president of research at people3, a Gartner Inc. company that specializes in human resources for IT companies.
In fact, with the exception of a few job functions tracked in a Mercer 2001 e-commerce compensation survey, the retail and wholesale sector on average compensates e-commerce professionals at a lower rate across the board for the same job skills than do the industries that make up the aggregate average. And it’s considerably lower than the financial services industry, a top-paying industry sector tracked in the Mercer survey.
Only the top e-commerce executive average salary of $254,100 ranked higher in retail than the all-industry average, which was $236,400. But this was considerably lower than the average salary of the top e-commerce executive in the financial services industry, $277,000. Only in one job function did average salary in the retail sector top both the all-industry average and the financial services industry: at $136,100, e-commerce marketing directors make more in retail than their counterparts in all industries ($120,900) and in financial services ($134,500.) In all other job functions tracked year to year, with the exception of web content analysts, e-commerce professionals working in the retail sector made less on average in 2001 than both the all-industry average and the financial services sector. Mercer notes that as this is only the third year of the annual survey, which polled 135 e-commerce organizations across the country including 25 retailer/wholesalers, the sample population has yet to stabilize and the data have yet to prove trends.