What does it take for an offline company to successfully launch an e-commerce site?
A new report from Forrester Research, “Organizing for eCommerce,” reinforces the emerging belief that brick-and-mortar corporations stand a better chance for success if the e-commerce initiative is organized as a dot-corp or dot-com. These independently managed business models are believed to flourish because they are able to develop an e-commerce culture that is separate from the corporate structure at large.
What’s a Dot-Corp?
In a dot-corp, the Internet group reports directly to the CEO, division president or corporation, with the mission being to extend the existing business online. The Internet group is governed by an existing executive or committee and is managed as a strategic part of the corporation.
The dot-corp is staffed by a combination of internal and external personnel. It seems to work best if the corporation wantse-commerce to be a heavily controlled extension of the existing corporation and its product or service mix.
Many of the large retailers originally jumped online as dot-corps, extending an existing product line to the Net for the convenience of existing customers. This group includes Office Depot, K-Mart and Wal-Mart.
However, now many of these same companies are considering a move to a dot-com model to get more aggressive and entrepreneurial in their Web efforts.
What’s a Dot-Com?
The dot-com is much more entrepreneurial and is often launched as a subsidiary rather than a department. The mission of a dot-com is to experiment with new business models and develop its own mix of products or services. Often times, the dot-com has entrepreneurial governance and reports directly to the corporate board of directors.
Additionally, a dot-com is usually funded by venture capital and its staff is predominately external. The model works best if the company wants to leap onto the Net quickly or if management wants to experiment with new products, services and business models.
Toys “R” Us is using the dot-com model in its attempt to catch up with online toy retailers, and Conde Nast created CondeNet in order to create an e-commerce business culture that is independent from its traditional magazine culture.
The Danger of Mixing Online and Offline Cultures
Online efforts run into trouble if they become a side division within a department. In this setting, the Internet group often becomes a stepchild that is resented by the offline professionals. This dynamic sets up a power struggle in the organization that weakens the focus and thrust of the Web initiative.
This potential problem may seem self-evident and easily correctable, but was surprisingly widespread throughout the early to mid-1990s, even in the most sophisticated corporations.
Wall Street Loves Well-Organized Companies
One of the side benefits of creating a dot-corp or dot-com is that Wall Street understands the special governing needsof e-commerce efforts. A strong and appropriate e-commerce organization will make the Internet initiative much more attractive for investment.