Ecommerce Confidence Report 2009

Introduction

As the wider world economy tackles recession, many Ecommerce businesses continue to
experience an increase in demand and this is positively impacting on the confidence of the
market’s professionals, according to research. Aryn Hurst-Clark, co-founder of Bearing
Partnership, the specialist Digital recruitment consultants behind the survey, unveils its
findings and its implications for the industry.

The Bearing Partnership Ecommerce Industry Confidence Report 2009 highlights the issues
that are of importance to Ecommerce professionals, how they believe they individually – and
their departments – are faring in today’s economic climate, and the outlook for this year. The
report also looks at how Digital professionals perceive their own career choices as well as
their length of tenure within their current positions and averages across the industry.

The Ecommerce industry remains confident at this moment, despite the wider economic
downturn. Organisations are recognising that Digital media provides multiple platforms on
which consumers want to interact with brands.

From a marketing standpoint, Digital platforms provide measurability and accountability and
as consumers become more comfortable with making online and mobile purchases,
Ecommerce is witnessing positive growth.

This growth can be attributed to a number of factors, but one that has a big impact on the
success of an Ecommerce channel is the talented professionals who manage it. Bearing
Partnership has contacted more than 100 Ecommerce Directors of leading UK brands who
between them manage around 10% of the UK’s total Ecommerce revenue to gauge their
views on the industry at this critical time in its development.

Bearing Partnership is registered in England No: 04969452. Bank Chambers, 10 Borough High Street, London, SE1 9QQ.
Tel: 0207 397 7190 Fax: 0207 397 7191 w:www.bearingpartnership.com e:info@bearingpartnership.com

Index

1 Respondents
How much revenue is under management by our respondents?
Ecommerce in a historical context
Did they hit their targets in 2008?
Headcount
Salary Expectations for 2009
Confidence of Ecommerce Directors to move companies in 2009

2 Salary & Benefits
Head of Ecommerce Pay
Has the market matured enough to provide extensive benefits?

3 Tenure Trends
Steep learning curve
Averages

4 Summary

5 About Bearing Partnership


THE RESPONDENTS

How much revenue is under management by our respondents?

A Reuters report this year based on data from Nielsen, Comscore, Hitwise, et al – put UK
business-to-consumer (B2C) Ecommerce sales (including Digital downloads and tickets for
travel and events) at a total of £59.8 billion, up more than 28% over 2007.

The survey respondents to the Bearing Partnership Ecommerce Confidence Report manage
over 10% of that total revenue figure between them. Over £7.3 billion of Ecommerce revenue
was brought in by the Ecommerce Directors in the report.

Whilst several Ecommerce Directors were responsible for more than £1 billion, the
respondents questioned managed a range of company size, from small, recently launched
Ecommerce sites, to large powerhouse Online brands. Nearly a quarter of the respondents
managed between £1-£5 million revenue, whilst 65% delivered between £5-£100 million.

Ecommerce revenue managed by the sample respondents

upto £1m
£1m ‐ £5m
£6m ‐ £10m
£11m ‐ 20m
£21m ‐ £50m
£51m ‐ £100m
£101m ‐ £500m
£501 ‐ £999m
£1bn +

0 5 10 15 20 25

% of sampled respondents

Ecommerce in a historical context

The time it has taken to build this revenue stream is also a factor in how Ecommerce
Directors are judged and remunerated. These three time periods in Figure A account for
nearly 70% of website launches for the respondent companies. Whilst the period that
commonly became known as the Dot Com boom lasted for several years, interestingly only
20% of the companies we questioned actually launched their Ecommerce site during that
period.

Figure A

2007- 2008 15%
2004 – 2005 27%
1998/1999/2000 20%

2004 to 2005 was by far the most popular time to launch an Ecommerce site. This could be
attributed to a number of factors – one could argue ’04-05 was really the coming of age for
Ecommerce with the combination of security, broadband penetration and consumer’s
adoption of the channel encouraging more companies to provide retails services online.

Did they hit their targets in 2008?

During 2008 more than three-quarters (77%) of Ecommerce Directors hit or exceeded their
own sales targets, according to the research. Moreover this is set to continue with analyst
group Forrester predicting annual growth of 6% for Ecommerce over the next five years, with
UK retailers at the forefront.


Currently 28 million Britons shop online, according to Forrester, rising to 37 million by 2014,
further underlining the importance of the Ecommerce team to the overall business both now
and in the future.

This growth will need to be staffed and managed. Firms need to ensure they have the right
people in place to understand the opportunities posed by Ecommerce and how to best
capitalise on them as consumers increasingly turn to the Web for fulfilment.

Those companies who did not hit their targets maybe missed their markers due to general
economic conditions, but the overall picture is a positive one for Ecommerce.

Ecommerce sales success 2008
Don't Know
Below Target
On Target

Above Target

Headcount

The average team size for companies generating up to £100 million revenue is 10.5 people;
phenomenally successful when looking at the average contribution per employee.

One indicator of this is that ‘pure play Ecommerce’ companies are some of the most profitable
companies to run – underlining why Ecommerce sites can undercut high street retailers on
margin. But this doesn’t take into account that many Ecommerce channels are not entirely run
as their own Profit and Loss centre, and therefore have shared services with their parent
company such as IT, Finance, HR and Logistics, thus increasing average contribution per
employee.

Much like some of the world’s largest Web properties such as Facebook, which only has 900
staff worldwide, Ecommerce companies are hugely scalable. Ecommerce companies are less
reliant on the number of staff as their bricks and mortar retail counterparts, but they are reliant
on the quality of their staff. Brands need to be able to service the rapid growth in demand for
Ecommerce by having an effective team of Ecommerce professionals. Our survey found that
the vast majority (85%) of Heads of Ecommerce expect to either expand or maintain staffing
levels during 2009. Encouragingly, the number which plan to expand (36%) is more than
twice the number who expect to cut Digital staff (14%) during 2009.

Most respondents expect to maintain staffing levels, which would imply that Ecommerce
managers see 2009 very much as a year of consolidation and perhaps expect to see
business pick up next year.

This suggests a high level of confidence throughout the industry and a belief that current
headcount strategies are, on the whole, the right ones for this climate.

Those that expect to reduce headcount are very much in the minority, which is good news for
the health of the industry. Luckily, the professionals who are in shrinking teams should be


able to transfer their skills to other Ecommerce businesses fairly easily, if the findings of our
survey prove to be accurate.

Remuneration is always a key concern for senior Digital and Ecommerce professionals. Most
Ecommerce teams at the leading brands are small (up to five people), our research found.
Half (50%) of the leading brands approached had an Ecommerce team salary overheads of
under £250,000 per annum, and only 8% had an Ecommerce team costing more than £1
million a year. At this higher level the team would consist of approximately 20 people and
therefore would only feature in the larger retailers or pure play Ecommerce brands.

What is important is that in the current climate Heads of Ecommerce will be looking to get the
maximum value from their staff. Where wider company headcount freezes are prevalent,
more pressure will be placed on value for money from the Ecommerce team. Also, roles will
be merged to get the most from each individual. Pay-per-click (PPC) and Affiliates
programmes can be combined, Information Architecture (IA) and design assimilated into one
and merchandising and content roles merged.

This desire for staff value will mean getting more for the salary paid. Through effective
recruitment of multi-skilled candidates, businesses can ensure headcount budgets are
maintained without compromising on the Ecommerce growth targets.

In the earlier section on ‘Company Targets’, we saw that 23% didn’t hit their sales target - yet
only 13% are looking to reduce headcount. Whilst companies may be looking to make
redundancies to assist lowering their cost base, there are more companies looking to expand
their team to deliver on continued growth of their business. The industry as a whole is still
expanding – contributing to skill shortages.

Another area not mentioned here but talked about by several Directors of Ecommerce is that
they were looking to make zero cost, or cost saving hires, by in-housing some of the
operations that they had perhaps relied on agencies to provide. In these cases, whilst it may
appear that the industry as a whole may be expanding, there are some areas where the
balance of where these skilled Ecommerce professionals work is simply transferring from one
place (agencies) to another (client side).

The fact that 50% of these companies are looking to maintain their team size is also a positive
step, as aspirational hires will be made to replace those that move onto other opportunities.

Overall, there is a very healthy view of the team headcount strategy and this appears to be
shared across the Ecommerce Industry.

What headcount changes are
expected in 2009?
Reduce Expand
Don't Know

Maintain


Salary Expectations for 2009

Nearly half (46%) of Ecommerce Directors expect to receive a salary increase in 2009. Some
might think this is audacious in a recession, but this attitude is clearly based on how their
channel is performing. Whilst many of the Directors of Ecommerce we spoke to talked of their
company’s need to consolidate costs, there was still an overwhelming feeling that if their
performance is on or above target then they should be remunerated for this achievement,
especially if it is bucking the overall economic trends.

The Ecommerce Directors’ attitudes to their remuneration are congruent with the ‘judge me
on my performance’ mindset that became evident in the late ‘90s. Those early adopters
engendered a performance-based culture and work ethic that has been widely replicated
throughout the Ecommerce and Digital industry. The fact that both Digital marketing and
Ecommerce retailing is accurately measureable also contributes to this performance-based
attitude that is widely evident amongst all the respondents of the survey.

How confident are you of a salary rise in 2009?

Not At All Confident Don't Know Very Confident

Not Very Confident Quite Confident

Ecommerce Directors meeting their targets and being able to present their achievements
through accurate measurements and key performance indicators (KPIs) goes a long way to
explaining why nearly half of the industry will be looking to be rewarded financially for their
endeavours.

Equally, the bonus potential for the Heads of Ecommerce is also a key part of their package
when it comes to remuneration, and is in line with their performance culture. The survey found
that less than 15% of the Ecommerce Directors questioned didn’t receive a bonus of any kind.
The other 85% all had some form of performance-based bonus in place, with varying terms of
payment. The largest grouping (more than a third of respondents) received 25% or more of
their base salary in bonus payments in 2008.

Bonus Levels

25% +
% Of Base Salary

10‐24%
0‐9%

0 5 10 15 20 25 30 35



Confidence of Ecommerce Directors to move companies in 2009

More than four out of five (81%) Ecommerce Directors are confident or very confident of being
able to secure a new role in 2009. This exemplifies how Heads of Ecommerce feel that they
can add value to any organisation, regardless of the economic downturn.

Where does this confidence come from? One reason is that many Ecommerce Directors are
still approached by headhunting companies. Another explanation, which was cited by many of
the respondents, was the activity that could be seen in the employment market, in addition to
the direct approaches they were receiving.

At a time when, according to the British Chamber of Commerce, the wider UK economy is
expected to shrink by more than 3% this year, it’s a reflection of the relative health of the
Digital industry that four in five senior Ecommerce professionals are either “very confident” or
“quite confident” that they could move companies in 2009 if they wanted to.

That so many Ecommerce professionals believe they could move jobs (if desired) underlines
both the recognition that Digital and Ecommerce is still growing fast and that their skills are in
huge demand. A great deal of this confidence is due to the wide acceptance of a general
skills shortage in the industry, and the demonstrable evidence of the success Ecommerce
Directors point to when moving companies. This factor is replicated throughout the
Ecommerce skill set and experience levels and illustrates that working with a specialist
recruiter in Ecommerce will not only enhance personal career prospects, but can also aid
hiring into a current Ecommerce team.

How confident are you that, if desired, you would be able to move
companies in 2009?
Not Very Confident Not At All Confident
Very Confident
Neutral

Quite Confident


SALARY & BENEFITS

Head of Ecommerce Pay

We found that the base pay levels are extremely diverse for professionals all carrying a
similar job title; ranging from £40,000 per annum to over £150,000. The salary levels are
indicative of a market that is still maturing, but the biggest factor that would reasonably
explain the differences is the levels of revenue that the Ecommerce Director is responsible
for. An exception to this is where the revenue has been low and the base salaries high. This
is often the case in new Ecommerce ventures where higher salaries are offered to
Ecommerce professionals who will launch and establish the site in the market.

The biggest range of respondent Heads of Ecommerce (64%) earn between £50,000 and
£100,000 a year, and one in ten enjoys annual salaries exceeding £100,000. Nearly one
quarter (24%) earns less than £50,000 pa, but these individuals are generally managing a
small team or are reporting into a Director that has responsibilities other than purely
Ecommerce (e.g. a Finance or Marketing Director who takes ultimate responsibility for the
Ecommerce channel).

Combined with the bonus structures in place for most Ecommerce Directors, the salaries are
now reaching comparable levels with the other C-Level or Director level positions within
traditional companies. However, the major difference is that the length of time it has taken to
reach that level of authority – as the report shows in the Tenure Trends section, the average
time a Head of Ecommerce has spent working in Digital is only 7.9 years – if compared with
the heads of department within IT, Finance or even Marketing, this would see Ecommerce
Directors punching above their weight for the years of experience they bring to the board
table.

Base Salary

£100,000 +
£95,000 ‐ £99,999
£90,000 ‐ £94,999
£85,000 ‐ £89,999
£80,000 ‐ £84,000
£75,000 ‐ £79,999
£70,000 ‐ £74,999
£65,000 ‐ £69,999
£60,000 ‐ £64,999
£55,000 ‐ £59,999
£50,000 ‐ £54,999
£45,000 ‐ £49,999
Upto ‐ £44,000
Didn't Say

0 2 4 6 8 10 12 14 16


Has the market matured enough to provide extensive benefits?

Gone are the days when a company offering great benefits within the Digital and Ecommerce
sector equated to a foosball table and share options. In a multi-billion pound industry, senior
Ecommerce professionals expect to receive a menu of benefits, but the results vary quite
considerably.


What benefits do Heads of Ecommerce receive?

Health Insurance

Pension

Life Assurance

Car Allowance

Share Scheme

Child Care Assistance

0 10 20 30 40 50 60 70 80 90

Does not have this benefit Has this benefit

Level of company pension contribuGon

11% +
10%
9%
8%
7%
6%
5%
4%
3%
2%

0 2 4 6 8 10 12 14 16 18 20


The benefits packages that most senior professionals in blue chip companies are likely to
receive are health insurance, life assurance, a company pension and car allowance.

Against these markers, Ecommerce Directors’ health insurance is the core benefit offered,
with 73% receiving cover. The other benefits are less common - less than 50% receive life
assurance, only 56% are entitled to car allowance and just over half of the respondents
receive a company contributed pension.

Levels of contribuGon for car allowance

£10,000 +
£9000 ‐ 9,999
£8000 ‐ 8,999
£7000 ‐ 7,999
£6000 ‐ 6,999
£5000 ‐ 5,999
£4999 ‐ 5,000
£0 ‐ 3999

0 2 4 6 8 10 12

% of sampled respondents who receive a car allowance


Non-essential benefits that are often used to entice and retain staff are in even shorter supply.
Three quarters do not receive subsidised gym membership, and the same level do not
receive child care assistance (77%).

An argument that is used consistently against the introduction of wider employee benefits is
that the companies pay a higher salary and bonus to their employees. It would seem to fit the
profile of professionals that are more interested in performance-based remuneration to take a
higher base salary and bonus and manage their own finances, instead of having company
benefits organised for them. It may also be the case that the larger, longer established
businesses have a more established compensation and benefits arrangement in place.

Every company is different, but in a competitive market where skills are in short supply,
organisations that are serious about Ecommerce need to be creative and flexible in the
packages they offer staff, with benefits being moulded around the needs and wants of the
individuals within the Ecommerce team .


TENURE TRENDS

Digital is often referred to as one of the fastest paced industries for people changing jobs.
This is often cited as a reason a hiring manager, unaware of the rate at which people move,
may use to reject an individual who they feel are ‘too flighty’. The statistics in this report would
validate that view if looked at in isolation, but there are several other factors that contribute to
Ecommerce Directors moving company on average every three years, with a large
percentage moving every 18 months to two years, taking their valuable industry knowledge
with them.

Average Gme in a company

6 to 12 Months
12 to 18 Months
18 months to 2 years
2 years to 2.5 years
2.5 years to 3 years
3years to 3.5 years
4.5 years ‐ 5 years
5 years +

0 5 10 15 20 25 30 35


Steep learning curve

The average time the Ecommerce Directors in the survey spent in one position (or in one job
title) is 3.2 years. When looking at the average of time spent in the Digital industry as a whole,
the Ecommerce Directors have spent just under eight years. This suggests that an
Ecommerce Director would have only moved 2-3 times before becoming the head of the
department. This low number of promotions to reach the Head or Director of Ecommerce
position indicates that companies are still operating a very flat structure within their hierarchy.
This also goes some way to explain why moving companies is the best way to attain an
increase in salary and/or responsibility. Moving to a larger company, a more prestigious brand
or into a different vertical, allows Ecommerce Directors to expand their knowledge and
experience whilst still effectively doing the same role.

Length of tenure in Digital

3 years
4 years
5 years
6 years
7 years
8 years
9 years
10 years +

0 5 10 15 20 25 30



Length of tenure in current role

Up to 6 Months
6 to 12 Months
12 to 18 Months
18 months to 2 years
3years to 3.5 years
4.5 years ‐ 5 years
5 years +

0 5 10 15 20 25 30


The same can be said for individuals that prefer to work in a company that is in a high growth
or transitional stage – whereby the Ecommerce Director may be able to help a company
establish itself in the market. Many of the Ecommerce Directors surveyed suggested that they
were interested in going to either a larger company or a newer company as a way of
developing their career. What is a clear message from the respondents is that most
Ecommerce Directors are still fully prepared to take a risk on a company that is not
necessarily established. This reinforces the reputation that Digital professionals have
acquired for wanting to work in challenging environments and not just taking a comfortable
role in a larger corporate environment.

Averages

• 1.7 years (20 months) – Average time an Ecommerce Director has spent at their
current company

• 2.9 years – Average length of time an Ecommerce Director spends at any one
company

• 7.9 years – Average length of experience an Ecommerce Director has spent in the
Digital industry


SUMMARY

The overall message from the respondent Ecommerce Directors was very positive, not just
because they largely hit or exceeded their targets in 2008, but because they also feel that
they will be able to buck the economic trend with their channel’s performance in 2009. This of
course will have an impact on hiring, also positive, with over 85% looking to expand or at least
maintain the size of their team. With the average team size amongst the companies spoken to
only being 10.5 heads, it will also mean that much will be expected of a relatively small team
in order to deliver on the company’s objectives.

If an Ecommerce Director feels their performance is deserved of a pay increase in 2009, they
will not be alone. Despite the slowdown in growth and many sectors making cutbacks –
almost half the respondents are looking to achieve a pay increase this year. And if they don’t
get the salary increase they are after? More than 85% are confident of being able to secure a
new post if so desired in 2009, based on the activity they see in the employment market.
Ecommerce Directors will not be sitting tight if they think they are not being remunerated for
their performance. Companies looking to retain their quality management within the
Ecommerce channel will need to offer flexibility through their benefits and pay structures.

We also see a great deal of diversity within the pay scales of Ecommerce Directors. The title
of Head of Ecommerce or Ecommerce Director means many things depending on the size
and complexity of the company and team. There is plenty of scope for progression for those
on the lower salaries to move up, with the majority earning between £50,000 and £100,000.

With the average length of time an Ecommerce Director has spent in Digital being just under
eight years – the industry has yet to reach maturity so we are still likely to see these salary
and benefit averages level out in the years to come. Currently we see the length of time it
takes to reach the ‘Head of’ being quite short; only three promotions or company moves is the
average for making it to the top. Combined with their total level of experience in Digital as a
whole – Ecommerce Directors have progressed extremely quickly to their current positions
and hold a very high level of responsibility – our respondents alone managing over £7 billion
in Ecommerce revenue.

Ecommerce is fast becoming the new de facto way to do business, especially in retail. This
recession could spell the end of the high street for some kinds of retailers. One just has to
look at entertainment specialist Zavvi, whose bricks and mortar stores were forced to close
yet its online arm, Zavvi.co.uk, was attractive enough to receive a buyer in The Hut Group.
Woolworths, as well as a handful of magazine and paper publications, have also been in the
news this year for becoming Digital only businesses, outliving the original core business.

While Digital professionals have every right to feel confident at this time, there are many
reasons why the future will see Ecommerce professionals as even more important to retail
companies. The introduction of location-based services technology and the integration of bar
code reading applications for phones, means it will not be long before the high street will be
intrinsically linked to the Web by consumers' desire to compare prices and seek out value.
The effective integration and management of this change will be the key to determining a
business’s long term success in Ecommerce.

In the immediate future, Ecommerce professionals are in the privileged position of having
choice and confidence in their ability to move companies during 2009. As this view is shared
amongst virtually the entire community, it will ensure that their value, in both monetary and
leadership terms, will remain high.

With such a high level of expectation on Ecommerce as a revenue source, combined with the
immaturity of the market and disparity amongst salary levels and benefits, Bearing
Partnership is positioned to help avoiding costly mistakes that can occur through the hiring
process of either the Senior Management of an Ecommerce function or the specialist skills
required within the team.


To discuss hiring in your company, your own career development or to offer comment and
feedback on this survey, please contact Aryn Hurst-Clark on 0207 397 7190 or email
ahc@bearingpartnership.com

About Bearing Partnership

Bearing Partnership is a London-based specialist recruiter with reach across the UK providing
executive search and contingency recruitment services to the Digital industry. Bearing
Partnership work with both media content providers and Ecommerce companies to deliver
resource within the key Digital functions of their business, at all levels.

Companies such as ITV, Random House, The Economist, Hachette Filipacchi, Virgin Media
and Panasonic, as well as Molton Brown and French Connection in the retail sector have all
benefited from Bearing Partnership’s knowledge and ability to recruit within a fiercely
competitive and challenging market place.

The founders of Bearing Partnership have worked within the Digital market place since 1998
and have helped many well-known brands to build their Digital teams over times of
phenomenal growth as well as periods of rationalisation, providing unrivaled knowledge and
experience in this complex and niche sector.

Contact Details
Aryn Hurst-Clark
Director of Search & Selection
Email: ahc@bearingpartnership.com
Direct Dial: +44 (0)20 7397 7190
www.bearingpartnership.com


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