The e-retailer reports a $126 million net loss, stemming from a $640 million year-over-year increase in spending in the quarter on technology and content ...
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Friedman joined the company full-time as database programmer in 1997, recently garnering the title of executive vice president. Though his responsibilities now encompass more than the online channel, Internet retailing is viewed as the future of the company and remains his primary role. Compared with how the job might have evolved in a non-family business, Friedman had more ability to call his own shots and define his role as the company’s web business gained on its catalog business.
When the web business was starting to take off, he tapped into the deep institutional knowledge surrounding him. Relative to the rest of retail, J&R; doesn’t have a lot of turnover: 20% of its staff, for example, has been with the company for 15 years or more. To populate the fledgling e-commerce department as it separated from the catalog department, Friedman searched out top prospects already employed at the company in other departments, approaching those with skills he saw as a fit for the new channel and pitching them on the opportunity.
Hitting up established departments for top employees could rock the boat in other organizations, especially when a new department head is-as Friedman was-a 25-year-old, and Freidman acknowledges that when establishing his new role and the new e-commerce department, it didn’t hurt to be the bosses’ son, with his own long-term experience in the business. Otherwise, he says, “In the beginning, I probably would have had to do a lot more convincing and I would have had a harder time taking buyer, catalog and warehouse resources,” he said.
Today e-commerce operates as a standalone department in J&R; and Friedman heads a dedicated team of 50. And he doesn’t need to convince anyone anymore that the web is a key channel. With online sales estimated by Internet Retailer at $43 million, it has become one of the biggest parts of J&R;’s business.
Not just liquidation
When a retailer offers an average 700 new SKUs per day, there will be a lot that sells and some that doesn’t. Such is the case at retailer Jewelry TV, which thought it figured out an answer to that problem a few years back: the Internet.
“It was the place we were going to put everything that didn’t sell on TV,” says James Thome, vice president of e-commerce at Jewelry Television. “It didn’t have its own P&L;, didn’t have its own budget or revenue goals. It was more of an afterthought.”
But that was then. “Management realized the web could be a huge growth driver going forward,” Thome says. As a result, during the last two years it has invested in technology and people. Thome was brought in as the company’s first e-commerce vice president a year ago and told by top management it was looking to double the Internet business, about 10% of revenue in 2005, within a year. So the first thing Thome did was to restructure his entire department.
The e-commerce function had been supervised by a director of e-commerce who had oversight for a merchandising group and a design group. Thome determined that structure couldn’t support the accelerated channel growth the company was seeking. “There was diffused accountability and responsibility. We needed to have very clear lines of accountability so we could be very efficient, because frankly, we’re doing three times more now than we were last year,” he says.
Thome is responsible for day-to-day operations as well as future strategy of the company’s online business, which includes both Jewelry Television and the recently acquired Shop At Home. He grew the online team of 20 to about 30. He divided it into six functional areas: e-marketing, e-merchandising, web and design services, project management, product management, and business intelligence (a combination of web and database analytics). The director of e-commerce now has responsibility in the first three areas; a second director reports to Thome with responsibility for the rest.
The web site’s first priority is to supplement Jewelry Television’s TV broadcast, which runs 24/7 and is streamed on jtv.com. But beyond that, the web site affords the opportunity to appeal to different shoppers in different ways than the broadcast does. That utility and the channel’s sales growth have gained the attention of senior management. Thome says the team is recognized as instrumental in the growth of the company and included in high-level decisions.
“When we talk about business expansion, acquisitions that would complement the online channel, and using the Internet to enter markets we’re not in,” he says, “we are defining and driving that strategy and getting the funding to move forward.”