Web-only retailers, including Amazon, accounted for 42% of sales of all retailers ranked in the Read Now
By doing a better job of aligning upcoming Internet development initiatives with business objectives, web retailers can avoid projects that waste both time and money, a panel of web retailing managers said Tuesday at the Shop.org 2005 Annual Summit.
As a start-up operation or as a skunk works, planning and prioritizing e-commerce initiatives can often be done on the fly, constantly changed and confined to the web retailing portion of the organization.
But as web retailing grows and e-commerce managers compete with their counterparts in stores and catalog operations for more funding and information technology resources, they must become much more specialized and organized in prioritizing projects, a panel of web merchants told attendees Tuesday at the Shop.org 2005 Annual Summit in Las Vegas.
For instance at HSN.com, the e-commerce arm of The Home Shopping Network, all e-commerce initiatives are implemented and prioritized using a criteria based on each specific project’s potential return on investment and business requirements. Even before a project is approved, HSN.com puts together a team assigned to a project manager to detail all potential costs and the projected ROI. More importantly, HSN.com requires managers to write a detailed business requirements report that looks at specific project priorities and implementation details both in the short run and longer term. “We are approaching $380 million in sales in 2005,” Frank Han, executive vice president and general manager of HSN.com, told attendees during his session, Project Prioritization: How to Distinguish Mission Critical from Mission Impossible. “When we prioritize and launch a project we have written functional specifications that will tell us what this initiative is going to look like six or eight months from now.”
At a certain size, Han says, web retailing organizations often prioritize their e-commerce initiatives and implement changes over a longer period of time. For example, HSN.com, which is the Home Shopping Network’s fastest growing channel, now plans and implements most major site work on a monthly schedule rather than a daily basis. Often the work to be performed, including the expected outcomes and performance results, are outlined in each project’s functional specifications document. “With a project initiation document we can plan and see more clearly what we are getting into,” Han says.
Despite the fact that web retailing may be the fastest-growing part of a chain retailer’s or catalog company’s operations, e-commerce managers still must be very clear when they discuss ranking and prioritizing projects with senior management. “We are in the business of software so what’s happening with site search may be important to us, but maybe not the CEO,” Han says.
To help prioritize e-commerce initiatives, web retailing projects should be in sync with the company’s overall business objectives, says Mariam Naficy, vice president of e-commerce at The Body Shop. For instance, The Body Shop is just beginning its second full year of e-commerce operations and how future web retailing initiatives are planned, prioritized and ultimately funded depend primarily on profitability, she says.
“I’ve worked in companies where priorities were tied to growing top line sales and in others where the focus is on being profitable from the first day of operations,” Naficy says. “Project planning and prioritization starts with the right set of financial criteria.”
Even in smaller organizations where e-commerce managers and employees perform many roles, ranking and prioritizing projects is often done more effectively with even a simple cost benefit analysis. “Start with a strategy that is tied your organization’s defined business objectives,” Naficy says.