Less than a month into the New Year and the e-retailer and marketplace announces plans for three additional U.S. fulfillment centers.
Health care reform is a hot topic, and retailers are as divided as the nation. Salaries, experts say, are not as high as expected.
Health care reform is among the top political issues of the day. In many of the health plans circulating through the halls of Congress, there is a mandate that all employers provide employees with health care insurance. Such a mandate can have a powerful impact on retailers, and their bottom lines.
33.8% of retailers and consumer brand manufacturers strongly oppose employer mandates, 12% somewhat oppose them, 17.6% are not sure, 19% somewhat favor them and 17.6% strongly favor mandates.
These are the findings of Internet Retailer’s new health care benefits and executive salaries survey of 143 web-only retailers, chain retailers, catalogers and consumer brand manufacturers.
Cost and age
“Many are opposed because it’s expensive and they’re trying to manage their bottom line. So, many of them are opposed to paying employee benefits if they don’t have to,” says Jill Krumholz, human resources practice leader at executive recruitment firm Stephen-Bradford Search.
But, she adds, there’s another factor at play: age.
“E-commerce, generationally speaking, is a younger industry. You have many Generation X and Generation Y employees, and executives,” Krumholz says. “If you look at their priorities, even in the C-suite level, they are more concerned with work/life balance than they are with health care. Benefits are not driving these people-it’s about how they live their lives.”
As it stands, 71.8% offer health care insurance to employees, according to the Internet Retailer survey of IRNewsLink e-newsletter readers conducted last month with e-mail marketing and survey firm Vovici Corp. Two-thirds of the companies responding to the survey have fewer than 50 employees. Krumholz and other experts say this skews health care coverage in the survey lower than what they see as industry medians.
At 4.8% of retail employers that offer health care insurance, less than 30% of employees opt in, the survey finds. At 16.5%, the opt-in figure is 31-50%; at 24.3%, 51-75%; and at 54.4%, 76-100%.
At 52.4% of retail employers that offer health care insurance, employees pay less than 30% of the premium, the survey says. At 29.1%, they pay 31-50% of the premium; at 11.7%, 51-75%; at 2.9%, 76-99%; and at 3.9%, 100%.
An overwhelming majority of retailers and consumer brand manufacturers, 92.1%, were hit with increases in their health care insurance premiums this year. However, most were generous to their employees: 67.7% did not force employees to pay more.
But employees cannot count on premiums staying the same.
“The clear trend, without a doubt, is companies are paying less of the premium. The cost of health care is so expensive,” Krumholz says. “So they’re going with less expensive plans, less coverage, and higher deductibles, and employees are paying a greater percent of the premium. This is not just indicative of the e-commerce industry but of all industries. There are very few companies I’ve seen today that pay full health care benefits.”
While they are passing on more of the costs of health care to employees, retailers in the Internet Retailer survey are not offering salaries in line with what e-commerce executive recruitment experts view as industry medians. Two-thirds of the companies responding to the survey have fewer than 50 employees, though, and that skews salary figures lower, the experts note.
According to the survey, 41% of retailers and consumer brand manufacturers are paying their top e-commerce executive $75,000 or less in salary and performance bonuses. 16.4% are paying $75,001 to $100,000; 9.7% are paying $100,001 to $125,000; 7.5%, $125,001 to $150,000; 13.4%, $150,001 to $200,000; 3.7%, $201,001 to $300,000; 5.2%, $300,001 to $500,000; and 3% more than $500,000.
$110K to $200K
“Generally, a vice president of e-commerce’s low-end base salary begins at $110,000 and the high end tops out at about $200,000; that’s the range we’ve seen,” says Wendy Weber, president of executive search firm Crandall Associates.
And an e-retailer of any size should consider performance bonuses for top executives, she adds.
“E-commerce, as opposed to other channels, has the ability to make a substantial immediate difference to the bottom line,” Weber says. “So performance bonuses should definitely be tied to any top e-commerce position because if a large performance bonus is being paid out it’s only because substantial amounts of incremental revenue have been generated as a result of that professional’s efforts.”
Online marketers, like e-commerce executives, are crucial to virtually any Internet retailer. The survey, though, found what experts say are low salaries-though they may be in line with the pay at smaller retailers, who represent the greatest percentage of survey respondents.
46.5% of retailers and consumer brand manufacturers pay their top online marketing executive $75,000 or less in salary and performance bonuses, the survey finds. 15.5% pay $75,001 to $100,000; 13.2% pay $100,001 to $125,000; 6.2%, $125,001 to $150,000; 8.5%, $150,001 to $200,000; 4.7%, $200,001 to $250,000; 3.9%, $250,001 to $300,000; and 1.6%, more than $300,000.
Merchants paying online marketers in the lower salary ranges will have trouble competing for top candidates, Krumholz says.
“They are going to have a hard time attracting and retaining talent. They are going to have younger employees. They’re going to have less seasoned employees,” she says. “E-commerce is a very young industry, so there’s not a level of sophistication around what compensation looks like; it’s very discretionary. Plus you have the economy. Retailers may be being very cautious about what salaries are. And performance bonuses may be at least temporarily halted because of caution in this economy.”
The survey makes clear the economy is having an effect in the area of hiring. 57% of respondents have delayed at least some e-commerce hiring because of economic uncertainty.
Looking for help
The kinds of employees retailers that are hiring are looking for run the gamut.
In the next 12 months, 19.6% of retailers in the market for new talent are seeking e-mail, affiliate or other marketing specialists, the survey finds. 19.6% are looking for customer service managers or reps; 18.2% are seeking search engine marketing specialists (paid and natural); and 17.5%, web developers.
While the survey indicates many retailers are not able to offer top pay or benefits, these companies can make themselves enticing to talented professionals in other ways.