Walmart.com Reorg A Potentially Great Advance For Merged Channel
Written by Evan SchumanWhen Wal-Mart confirmed a major E-Commerce reorganization on August 12—including the loss of Walmart.com chief Steve Nave and global E-Commerce exec Raul Vazquez—it was said that E-Commerce management in developed countries will now report to the senior in-store executive for each country. That’s a change from those positions reporting into Global E-Commerce boss Eduardo Castro-Wright. If we set aside the personnel issues—the loss of execs such as Nave will likely hit hard—the strategy involved here is both compelling and actually the right approach.
One of the most vexing merged-channel issues today is how to compensate online and in-store execs so they don’t solely push their primary channel. By having the chief of Wal-Mart’s U.S. stores, for example, also responsible for Walmart.com sales in the U.S., that compensation/conflict-of-interest issue goes away. Well, it theoretically could go away, assuming the U.S. president makes sure the compensation of various direct reports is similarly merged. The ideal here is for everyone to be focused on selling Wal-Mart products however they can, with no financial incentive to push mobile, online, in-store, call center or any other specific channel. To the extent that this reorg helps bring the chain closer to that goal, it’s a good thing.
-Marc
August 18th, 2011 at 6:53 am
Theoretically, what you stated makes sense. In practical applications, it stifles innovation. The biggest driver of sales for Walmart is brick n mortar, which is still true for most retailers who got their start in brick n mortar. No incentive plan will change that fact. And so, Walmart’s focus will be in protecting the brick n mortar business no matter what, while other pure play etailers will focus on eating Walmart’s lunch. One will be focused on protecting existing, while the other will be focused on creating the future. And the future always comes.
Competition (fair) is at the heart of what motivates. Like it or not. It’s the heart of capitalism. Healthy interoffice competition is not necessarily a negative thing, as long as the executives are big enough to understand that you don’t always win by making someone else lose.
And lastly, without experience in driving ecom business, it will be next to impossible for the right direction to be set. No matter how great a leader you are. The ecom business is a complex combination of tech, merch, mktg that are more tightly integrated than any other business. You have to have lived it, and it has to be in your blood to know where it’s headed to be able to give the right direction.