In my introductory article, I alluded to my passion for entrepreneurial business and operational optimisation. So what has this all to do with eCommerce. Let me bring this all together in a story.
In the movie City Slickers, Curly, played by Jack Palance, holds his finger up to Billy Crystal’s character and says to him: “Do you know what the secret of life is? Just one thing… You stick to that and everything else means s…” Billy Crystal replies, “What’s the one thing?” Palance replies: “That’s what you have to figure out”.
I wasn’t quite sure what I wanted to do in life. I loved electronics, working with my hands and I was passionate about business. I had read Peter Drucker’s book Innovation and Entrepreneurship and I was sold. So I pursued training in all these areas.
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Vocational salvation in the form of the web
However, I still wasn’t sure what I really wanted to do as a career. It was in the late 1990s when access to the internet began to gain momentum and usage of the World Wide Web started to take off. I found my one thing that Curly was talking about. What we know today as online shopping was as crystal clear to me in 1997, as it is to the rest of the population that have only really started to embrace online shopping over the past two years. Being able to transact online to me was an epiphany of the career path I wanted to follow and where the future of business lay.
Passion or no passion, I had to earn a living. So I joined a national retailer in 2002 and cut my teeth on the ins and outs of bricks-and-mortar retail. Being a systems and processes kind of guy, I immediately went about setting these up for the business, taking it through a complete turnaround from a largely manually run business to an integrated and scalable business with systems and processes that were documented.
I also went about creating its digital strategy and was given the green light to go ahead and develop integrated websites for the business, and integrate I did!
In 2007, the business had live inventory online. This meant that a customer browsing or ordering online was guaranteed that their order would be dispatched on the same day, something we expect from online retailers today, but this feature is still sorely missing in most multi-channel businesses.
The site also had the technology to do a live product check at each store across the country. To explain by example, this meant that if a customer in Perth saw a product they liked, they could either order the item online or check if the stores in Perth had that item in stock. They could then simply ring the store, ask the store to hold the item and then collect it.
My next plan was to optimise click and collect but this was not to materialise. My employer was caught in the traditional retailer’s trap of growth by capital intensive national store expansion and was not yet in the mindset of the importance of eCommerce over bricks-and-mortar retail. Instead of viewing the website as the capstone of the business, they saw it as a little clip-on store horizontally integrated into the business.
At the same time they started to show uneasiness about writing emotive descriptions for each product and having features and benefits photos taken. This to them was a waste of time and resource. The concept of now having to sell a product in a virtual environment, using emotive language and well-crafted images was alien to them. Their model was derived from the original village market mentality, which was to place your product at a stall in a market and the statistical flow of passers-by will ensure that some of your product will sell.
The magic of the web was lost on their shallow insightfulness, backed by rhetoric of other corporate Jurassic retailers – you know who I am talking about!
Bringing order to chaos
In 2009 I was first approached by one of Australia’s leading online retailers. They were aware that I had a track record in strategic planning, financial management, and had senior management experience in national retail. More importantly, I knew how to create integrated scalable systems that produced economies of scale and manage the changes an organisation has to go through, and the disruption and concern it causes for staff. An important requirement for this job was knowledge of and passion for eCommerce.
Besides geometric growth and phenomenal sales, the business was a mess. It had no managerial direction or structure, and there was an innocent ignorance to regulation and compliance and disrespect for the status quo. The IT team was immature without any enterprise experience, and the buyers were effectively university drop-outs and market traders and hagglers.
And so the journey began. I hired a warehouse manager to clean up the warehouse and improve productivity and bring leadership; switched payroll processing from weekly to fortnightly; and designated team leaders in areas of customer service, and design and production. I even prohibited paper coffee cups as they were frequently left on desks or thrown into bins half full, and attempted to bring about mindfulness about waste and sustainability. I created a discount structure for staff.
Other challenges were to create benchmarks for the management of image sizes loaded on the server. At times the home page would load with three megabytes plus of image data; not a good thing when tens of thousands of visitors are bombarding the site simultaneously, not to mention the increase in hosting fees. Mistakes such as incorrect product description, or misleading features and benefits or even the wrong photo were common, so someone was designated as a proof reader to ensure that accuracy was improved.
One of the biggest challenges was introducing an experienced data entry operator skilled at creating stock keeping units – SKUs – the global acronym for a number or code unique to each product or item sold. More about this later! A myriad of other issues, too numerous to mention, were addressed and could easily make up the content of an interesting book.
Resistance may be futile, but it’s also real
The common theme amongst all these changes was resistance. The owners were entrepreneurs, and all the staff were sub-30-year-old geeks except for the company accountant. In relation to this there is a lovely saying, “you don’t know what you don’t know”, and the knowledge I brought to the business was consistently frowned upon, and that of my newly acquired warehouse manager.
The one director once naively told me, “This business doesn’t run operationally like the other businesses you have worked in”. I found this to be a very shallow comment as logistics of an online business is no different to that of a mail order house, and as I said, you don’t know what you don’t know. The most frequently chanted rhetoric was, “You’re putting walls around us”, in reference to my efforts to have my team barcode, categorize and create SKUs for each item, so we could manage inventory quantity, location and reorder capabilities.
This was ironic as the current system was to send a team of casual warehouse employees to count leftovers of products each time they were to be relisted on the website. This would happen every time the products were to be relisted on the site. Surely to know what’s in stock via an electronic warehousing and inventory system is breaking down walls, not putting them up? As the business grew to even more unmanageable proportions, it became more obvious to some of the naysayers that the inventory control was the key to the survivability of the business.
The message here is that with the best intentions, business owners bring in experts when there is acknowledgement to improve efficiencies in a business. The hardest thing to change is not so much the technologies and systems, but the people in the organisation, including the decision-makers who bring you in.
Resistance to change must never be underestimated. People inherently do not embrace change well; it threatens job security for many, as systems and automation often replace labour intensive manual processes, and some of the concepts just plain scare the decision-makers as these changes often represent a loss of direct control.
For most entrepreneurial businesses though, there is always a lack of resources and automated systems. Processes allow everyone to actually focus on adding value instead of performing rote tasks and working ridiculous hours. Simply put, organisational change is a short-term pain that brings about long-term gain if done effectively and with empathy.
Mark Freidin is an experienced chief operating officer, eCommerce pioneer and consultant to fast-growing companies in Australia. Find him on Twitter: @internetretail; LinkedIn: au.linkedin.com/in/internetretailing; or on email: [email protected]