Product Management in ECommerce
What do PMs do in the e-commerce industry?
Before I joined Frank & Oak to help run their mobile initiatives, I honestly didn’t know how a Product Manager would spend most of their time at an e-commerce company. I’ve learned a few things so far.
Before you read, here’s a quick back story about F&O for some added context:
- Online menswear lifestyle brand, targeting stylish young men.
- Pretty explosive growth in the past few months — around 400% since 2012.
- Vertically integrated — we design, manufacture and ship our own products.
PRODUCT MANAGEMENT IN E-COMMERCE
Product Management (PM) in general seems to have a different job description depending on the company. Some focus more on project management skills, some focus on UX skills — but the core of the position seems to be the same: the glue between business development, product development, and the users.
However, every industry has its own twists on what the role really entails, and where you make your impact as a PM.
In an e-commerce company, the “product” — the primary reason for consumers engaging with your brand and giving you money for interacting with it isn’t just a web app or a mobile app — it’s the overall experience from browsing, to ordering, to receiving a package at your doorstep — and in some e-commerce companies cases (such as Frank & Oak) — it’s the physical products as well. The digital aspect of the customer experience is only one of many different touch points your brand has with its customers.
With that said, it makes sense for the company to be structured in a way where you have PMs — these mini-CEOs — supporting all these different touch points with the brand.
In e-commerce, you typically would have three general areas of the company that are run by PMs (or PM-like positions or people)
- Product and Merchandise: This is every sellable product designed and manufactured by the company. For us it’s our clothes, the design behind them and the overall strategy of where the line is going. This is the end-product that consumers purchase and enjoy.
- Consumer Tech: Every consumer facing digital product such as your website, the mobile apps and any other channel that has an interface with your customers or potential customers such as emails or ads. This is the machine that brings in customers, orders and generates revenue.
- Non-Consumer Tech: Every non-consumer facing aspect of the business such as infrastructure, operations, API, B.I., payments and logistics. This is the part of the business that supports the machine, without it you’ll fail as a business.
These teams are reliant on one another: one brings in the sellable products (merchandising), one brings in the orders (consumer-tech), the other executes and delivers on those orders (non-consumer-tech).
So what do PMs actually do?
It turns out, just like other companies — Product Managers do more of the same in an e-commerce company. Depending on which aspect of the company you’re working on, your day to day might be different but there’s a few core behaviours that are uniform across. However, before I go deeper I think it’s worth mentioning what the motivation behind Product Management should really be: Customers. As companies and brands, we are there to serve customers and provide a great service and experience to them. Everything we do should be geared toward fulfilling that goal.
Anyway, here are some of the aspects of Product Management that are incredibly core to the role. None are exclusively e-commerce, but there might be more emphasis on one more than the other in other industries:
Metrics & Analysis
This shouldn’t be a surprise — a big part of your job as a PM is to define various KPIs, regularly track them and analyze them over time in order to have a better view of where the business is going and what you can do to make it better. Some of this might mean getting dirty with Excel for a few hours a week or just looking at already existing dashboards you’ve setup (or your lovely B.I. team has setup for you) and becoming a part-time analyst by looking at your metrics. The best metrics are the ones that are indicators for how well you’re doing today v.s. yesterday and how well you will be doing tomorrow.* You’ll use these KPIs to understand how well the business is doing and attempt to move the needle incrementally over time.
Testing
This might be dependant on the culture of the company, but you usually make sure that you don’t push any changes out unless they’ve been fully tested against their respective metrics and are either marginally or significantly better than their predecessors or at least are meeting the same level of performance as before. Generally speaking, you can run tests for different reasons:
Testing for User Experience
Running tests for better user experience is always a great idea. Especially when better user experience also yields higher performance. However, these tests should come in well thought-out and ideally tested with a small group of people first. You only get to run a few of these before you start annoying your customers.
Testing for Performance
This is a no-brainer. Running tests to increase your conversion rates (CRO), or the average order size and metrics alike are performance tests that should be carefully run in the areas of the business that you’re attempting to improve upon. It’s very important to make sure you run tests in areas that you can have the biggest impact first. Example: if your checkout completion rate is at 20% — there’s a lot of room for improvement here that you can tackle. It’s also important to never deviate too much from your brand promise and guidelines when running these tests.
‘Smoke Tests’
These are tests that you run when you want to introduce a new feature that’s part the long-term strategy of the business. The goal here is to match the performance that you had before, without decreasing engagement and conversion rates. These tests usually consist of a few smaller tests around the feature in order to optimize the experience. Your goal is to introduce features without confusing your customers about what you stand for and where your product is going. If there’s a big backlash from your customer base, the feature might even be the wrong direction for the product. These tests will also help you have visibility into how less or more engaged customers become after the introduction of the feature.
Customer and Market Research
This should come without saying. Customer development and market research are great ways to get to the core of the problem, come up with solutions or creative ideas for tests you’d like to run, products you might want to introduce or just a good indicator of how well you’re doing. It’s also a good idea to do some Customer Service every week to be never forget who you’re serving and what it’s all about.
Prioritization & Return on Investment
ROI may sound like a fairly corporate acronym that’s definitely overused, but it is a key metric to think about when it comes to putting resources into building something new, fixing something that’s broken or even spending the time to explore an idea. PMs should always be asking questions like: How will this push us towards our long-term strategy? What’s the smallest version of this idea that can give us the biggest return? What’s the impact of this project?
The good news is, if you’ve setup your metrics properly then this becomes fairly intuitive and ad-hoc as you go along.
In fact, prioritization is by far the most important part of a PM’s job. Using the KPIs that are set for the business, you have to make intelligent decisions around the priority in which projects are going to get built and launched.
You have to test your assumptions as you go and incrementally improve upon different parts of the business over time by choosing the right projects at the right times. Methodologies such as Lean and Agile are some good starting points to systematically approach this problem.
These decisions should be made in a calculated and proficient manner.
Communication
When attempting to prioritize or understand the impact of the tests you’re running and the direction the product will be going, you’ll have to understand many different aspects of the business. Using your knowledge, you’ll make decisions and would have to communicate your reasoning behind that decision to all the stakeholders in a precise, efficient and respectful manner. The stakeholders may be founders, C-levels, VPs, engineers, designers, customer service heros, or anyone else who will either want to understand or might disagree with your decision. Communicating information between teams not only ensures that everyone is on the same page, but also motivates everyone to work together as a team to move the product forward.
If you can’t articulate why a test should be run or why a feature should be implemented, then you’re likely either making the wrong decision altogether or haven’t thought it all through well enough. This comes back to making decisions backed with proper knowledge and understanding of the market, your customer base and a little bit of gut feeling.
P.S. In my experience so far, you end up running quite a few tests every month and focus a lot on prioritization both short-term and long-term which is incredibly exciting as well as challenging if you’re doing the analysis over and over again in order to understand customers’ behaviour better and attempt to optimize their experience.
If you’d like to read more about product management, optimization, mobile or the e-commerce industry follow me on twitter or subscribe to my newsletter here.
* If you’re interested in Metrics and KPIs, read Lean Analytics for how to choose good ones.
Thanks to Isaac Souweine, Karim El Rabiey, Alexandra Meyer and Will Lam for reading this before hand and helping me structure my thoughts.
