Posts tagged: budgeting

You ARE a technology company

In this day and age, pretty much every company is heavily dependent on technology to operate. But if you have an e-commerce operation (or really any sort of transaction website), you are a consumer technology company. The sooner we recognize and accept this fact, the sooner we can get on with leveraging it to our competitive advantage.

We often talk about focusing on our “core businesses” at the expense of everything else. At a conference I attended last week, I heard a number of speakers and attendees reference Amazon as a “technology company” as sort of a dismissal. They were basically saying, “Yes, Amazon has lots of great features and functionality and people rate their experience highly, but they’re a technology company. We’re retailers. We can’t compete on that level with them.” This type of statement draws the obvious retort: “So, then, on what level do you plan to compete?”

While Amazon does generate some revenue from selling technology services, the vast majority of their revenue comes from retailing products. Their financial statements look pretty much the same as most retailers (except they have much bigger numbers and growth rates). But Amazon and other pure play online retailers are not burdened with the type of legacy thinking that exists in a lot of multichannel retailers. They understand full well the value of creating a quality online experience, and they understand that technology is part of their core business.

Competing with Amazon is clearly very difficult for a variety of reasons (price being high on the list), but how many business elements can we abdicate to them before our very survival is at stake? Shifting our mindsets regarding our sites is one key way to claw back into the game.

Our websites are consumer software applications, in many ways like Microsoft Word or Quicken. And this means that online our business is technology.

People use our website applications to accomplish tasks like buying our products, learning more about our products or getting inspiration. Their perceptions about the quality of our applications can absolutely make the difference in whether or not they complete their tasks and whether or not they return to use our applications again.

And their perceptions of our brand can also be influenced by the quality of our site experiences. A study by ForeSee Results on the Internet Retailer Top 100 sites found that people who were satisfied with the online experience of a retailer were 44% more likely to purchase offline. That indicates significant value in making sure the website is a quality software experience.

Our websites are also an opportunity to differentiate from our competitors, particularly if we’re not selling proprietary products. If consumers can buy the same North Face jacket or Nikon camera from a variety of different retailers online, the quality of the online experience will be a contributing factor in the decision.

Let’s do what it takes to include the quality of our site experience in our value proposition.

Here are 3 ways to get started towards becoming a consumer technology company:

  1. Organization
    We will likely need to make organizational structure changes to support a consumer technology focus. I previously made a case for changes in E-commerce IT organization that goes into more detail, but suffice to say the technology strategy and the business strategy need to be not only aligned, but integrated.

    Furthermore, we need think about different types of roles. Software companies have product — not project — managers and product teams who are dedicated to building customer focused product strategies and life cycles. A quick check on the Amazon careers page reveals many product management positions. Do you have product management positions in your organization?

    Check out a typical set of responsibilities from Amazon’s Baby Registry product management gig and note the mix of business and technology functions and responsibilities:

    • Research and identify opportunities for Amazon to further distinguish our Baby Registry offering.
    • Define a long-term product roadmap, including technical, business development and marketing initiatives.
    • Develop new strategic partnerships ad drive day-to-day partner relationships.
    • Conduct business and financial analysis, including forecasting, monitoring, and reporting.
    • Define requirements, and drive customer experience projects and work with all relevant cross-functional areas and our technology teams to guarantee smooth, efficient implementation.
    • Manage bottlenecks, provide escalation management, anticipate and make trade-offs, balance the business needs versus technical constraints, and maximize business benefit while building great customer experiences
    • Work cross-functionally with designers, software development engineers, salespeople, product managers, and other internal partners.
  2. Budget/Investment
    How might our current budgets change if we considered ourselvesĀ  technology companies? Maybe not at all, but we should nonetheless re-examine our customer investment strategy in such a light. At the very least, we might consider revamping our budget processes to accommodate a fast moving, highly innovative competitive marketplace where the features and functionality of our website “product” are key parts of our business strategy and our ability to differentiate from our competitors.
  3. In house or outsource?
    Often we decide to outsource technology (and other elements of our businesses) because they are not “core” to our business and other people can do a better and more cost effective job. How does our thinking on outsourcing change if we consider ourselves technology companies? We might still legitimately consider outsourcing or licensing third party software, as many software companies do. However, we might also consider building up true competencies in at least some areas of software design and development because of the need to differentiate and deliver quality branded experiences for our customers.

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Recognizing and accepting the fact that developing an e-commerce operation puts us in the consumer technology business is an important first step to successfully competing in the online marketplace. Once we’ve achieved the consumer technology mindset, we’ve got to take steps to create an organizational structure that executes like a consumer technology company. Without such steps, we will fall further and further behind the companies who are leveraging their technology focus to create the positive customer engagement cycles I discussed in my previous post.

What do you think? Do you think being in e-commerce means you’re in the in consumer technology business? How is your company organized?

Photo credit: Sebastian Bergmann


Retail: Shaken Not Stirred by Kevin Ertell


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