A Profitero study showed Target’s online prices were 25% more expensive than Wal-Mart’s, which were just slightly more expensive than prices on Amazon.
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“What’s so interesting about this space is that jobs don’t stay static,” says Bacon. “Anything that touches technology changes constantly. So what someone knew six months ago, they don’t know any more because the technology has changed, so they have to keep up on that technology. A lot of companies will separate out the pay systems between those who keep up and those who stay behind.” But staying on top of technology changes requires frequent training updates, and a company’s willingness to provide such training can be a deal clincher when it comes to recruitment and retention of IT staff.
E-retail job functions less directly IT-focused represent another situation. Though a retailer’s top e-commerce marketing director commands top dollar, he or she needs the support of a whole raft of other job functions to make the site successful - everything from e-commerce strategy director to marketing analysts to customer support mangers. Expertise in these positions is less easily transferable from e-retail to other industries, and professionals with the expertise have seen the e-retail job market contract. For many in this group, security and stability of employment become increasingly important. Employers who can rebalance more of the compensation package toward base compensation and predictable bonuses, and less toward riskier incentives will most likely have an edge.
At least, they will for now. As compensation experts like Bacon look into the future, they see other influences on the horizon that could change today’s employment dynamic. For instance, there’s the aging of the current workforce to consider. As the workforce matures, it needs cash today to fund today’s purchases, not just promises of potential IPO wealth in the future. “There will always be 23-year-olds around to staff start ups, but as the current crop of workers matures, I’d suspect they’ll want more traditional compensation packages,” he says. Which could mean that compensation in e-retail (and other industries) swings even further toward traditionally structured pay and incentives.
Or not. For as Bacon points out, the definition of winning recruitment, retention and compensation strategies changes with the state of the economy. “With the decline of market values, there has been a shift back toward more traditional base pay and incentive compensation,” he says. “If the market goes back up again, I would guess there might be a shift back toward things like options. They’re still a driver, but not as much lately. The market performance is a key factor. And no one knows what’s going to happen there.”
It was the best of times for Best Buy’s hiring needs
The timing of consumer electronics retailer Best Buy Co. Inc.’s efforts to build its first transactional web site aligns almost perfectly with the timing of recent trends affecting employment in e-commerce. And Best Buy’s experience provides a snapshot of the e-retail employment marketplace over the past 18 months.
It was slightly more than a year and a half ago that Best Buy went into high gear to prepare for the new web site it would launch a few months later in June 2000. As an e-retailer staffing up just as unsuccessful dot-coms were staffing down, BestBuy’s online subsidiary, Bestbuy.com, had no trouble attracting employees. In fact, director of resource management Curt Gray was surprised at how easy it was.
“Early on, we thought hiring would be more demanding than it was, so in the infancy of our organization, we just made sure we had a very competitive compensation package,” Gray says. In retrospect, additional factors beyond compensation helped Bestbuy.com to find the talent it needed quickly, factors that also have worked to the recent advantage of other e-retailers with jobs to fill.
For one thing, the pool of talent was simply larger than at the height of the dot-com frenzy, due to layoffs and downsizing at other companies. An attractive job location is another key factor: the company is headquartered in Eden Prairie, MN, a close-in suburb of the Twin Cities. Finally, Gray, believes, Best Buy’s established brand and presence as a clicks-and-mortar retailer rather than a pure-play gave it a hiring edge. “People looked at us and saw that there was a very stable mother ship behind the dot-com operation,” he says.
That’s not to say that staffing Bestbuy.com was all gravy. Like other e-commerce operations across industry sectors, Bestbuy.com had to compete to fill positions requiring specific IT expertise: in its particular case, those with the Java, Pearl, and XML language skills critical to its AGT platform.
Gray says Bestbuy.com handles the competition for hot-skilled workers in part by using contract information technology workers for up to 25% of staff needs. He concedes the use of higher-priced IT contractors does drive up overall labor costs, but only temporarily, and only because Bestbuy.com has been in its initial building phase. “We don’t need to build in these resources over time at a fixed cost, we just need them for short-term development,” he says.
And in the short-term at least, higher compensation for hot skills is an expense Bestbuy.com and other web operators expect to bear. “The market hasn’t had time yet to develop a sufficient quantity of people with expertise to meet the demand as the new tools come out,” says Gray. “All of us in the e-commerce business jump on the same new technology, and we’re all fighting for those same resources.”