Ecommerce Confidence Report 2009


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Ecommerce Confidence Report 2009

  1. 1. 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
  2. 2. 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 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
  3. 3. 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. 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
  4. 4. 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 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
  5. 5. 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  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
  6. 6. 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  % of sampled respondents  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
  7. 7. 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  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
  8. 8. 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  % of sampled respondents  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. 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
  9. 9. 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  % of sampled respondents  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  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
  10. 10. 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 . 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
  11. 11. 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  3.5 years to 4 years  4 years to 4.5 years  4.5 years ‐ 5 years  5 years +  0  5  10  15  20  25  30  35  % of sampled respondents  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  % of sampled respondents  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
  12. 12. Length of tenure in current role  Up to 6 Months  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  3.5 years to 4 years  4 years to 4.5 years  4.5 years ‐ 5 years  5 years +  0  5  10  15  20  25  30  % of sampled respondents  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 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
  13. 13. 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,, 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. 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
  14. 14. 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 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: Direct Dial: +44 (0)20 7397 7190 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