Should Bloomingdale’s sales associates receive commissions for online sales?

Discussion
Photo: RetailWire
Apr 24, 2017
Tom Ryan

Bloomingdale’s workers last week held a rally outside the upscale chain’s 59th Street flagship in New York City and are threatening to go on strike in part because they feel they’re not getting fairly compensated for online sales.

The union claims the workers aren’t compensated at all for in-store customer service that leads to online sales. They also aren’t compensated for any BOPIS exchanges that take them away from a potential commission-driven sale on the selling floor.

A sales clerk at the flagship told CBS News she’s now earning 20 percent less annually versus five years ago due to increased online sales.

Retail, Wholesale and Department Store Union, representing about 2,000 workers at the store, suggests in-store associates could get a cut of sales sold online from their department. The union is also urging Bloomingdale’s, which is owned by Macy’s, to figure out some way to track and compensate offline’s impact on online revenue.

“I am sure the company can work on a tracking system,” Chelsea Connor, a spokesperson told CNN. “There’s technology for everything.”

“It’s more important than ever that Bloomingdale’s ensures a positive in-store experience that translates to online sales,” said union president Stuart Appelbaum, according to Racked.com. “The workers here create the mystique for the Bloomingdale’s brand that transcends the brick-and-mortar stores.”

The union claims Bloomingdale’s workers are paid almost entirely on commission, but management says the company has a variety of pay structures. According to the Daily News, Bloomingdale’s spokeswoman Anne Keating said commissions tied to online sales don’t appear to be “feasible” given the challenges tracking online sales.

The workers’ contract expires May 1. Also being negotiated are commissions for returned items, fair wages, scheduling protections and health care coverage.

Retailers are apparently still trying to tackle the challenge of awarding omnichannel attribution for associates. Some have suggested offering incentives to in-store staff for supporting shopper behaviors such as BOPIS and using the store for online fulfillment. Last year, some Canadian retailers explored allocating commissions from online sales to store personnel near the shopper’s residence.

DISCUSSION QUESTIONS: Should in-store staff be compensated for supporting online sales? Do the technologies exist to enable companies to track online sales stemming from an individual sale associate? If not, do you see them on the horizon?

Braintrust
"It is only fair to adequately compensate associates for the sales they facilitate. "
"...the general approach of spreading commissions from online sales to store staff based on shopper geography creates a free rider problem..."
"...the problem is very real when your whole compensation model needs committed, trained and experienced salesforces."

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22 Comments on "Should Bloomingdale’s sales associates receive commissions for online sales?"

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Jon Polin
BrainTrust

Retailers need to start thinking more like their consumers — a sale is a sale is a sale, regardless of the channel. Until stores cultivate a culture that rewards sales whenever and wherever they happen, internal cultures will detract from optimum customer service.

David Dorf
Guest
Store associates always need some amount of credit when they participate in the transaction, regardless of where the transaction starts or finishes. Otherwise, customer service tends to suffer. Buy online pickup in-store requires store associates to pick hold, and release the merchandise, which takes their time. Plus, they own the final interaction with the customer, so it’s important that they are happy and reinforcing the brand’s image. It’s too hard to associate pure online transactions to the store, so I’ll stop short of recommending credit be given there. But when the store is directly involved, like shipping from the store,… Read more »
Mark Ryski
BrainTrust
Yes, I believe that retailers need to find ways to compensate and incent store staff to serve customers that originated from online sales. The importance of the in-store experience regardless of where the purchase originated is well understood. While retailers have focused their attention on how to deliver a seamless omnichannel experience, they have given less consideration to the impact this will have on store staff. It’s unreasonable to expect store staff to gleefully serve online-originated customers when doing so negatively impacts their income. Retailers need to carefully consider how to fairly compensate staff for their work and to suggest… Read more »
Bob Amster
BrainTrust

The compensation paradigm is shifting and there is no perfect model in place. Retailers can test different approaches to see which appear to work best. But just as we have been suggesting that merchandising and marketing silos between channels need to be eliminated, so do compensation silos. The simplest model appears to be that some portion of all employees’ compensation should be based on overall company performance and another portion based on either individual or individual channel performance.

Jasmine Glasheen
Staff

In short: Absolutely. Brick-and-mortar stores are evolving into showrooms or testing centers where consumers try products they later buy online. Even customers who initially buy in-store will re-up online if they like the product. It is only fair to adequately compensate associates for the sales they facilitate.

Without adequate compensation great employees on the front lines will go into other fields, which leads to a compromised in-store experience, which leads to customers shopping online or with a competitor. Those who want employees and customers to stick around must adequately compensate their sales team.

Bob Phibbs
BrainTrust
I’m sure I’m in the minority here as I actually did work retail, actually did work on commission and actually purchased my first house by a career in retail. I don’t know the answer but the problem is very real when your whole compensation model needs committed, trained and experienced salesforces. To simply say, “oh, it’s a new model and a sale is a sale” is naive. The argument against the worker demand is simply how hard it would be to track and reward every contact made with the brand. A plan for them might be to average an employee’s… Read more »
Jasmine Glasheen
Staff
I agree completely, Bob. As someone that got themselves through school working retail cosmetics, I watched the market flag firsthand. My last job in retail cosmetics was two years ago, and I witnessed some of the biggest companies replace their best people with high school kids so they didn’t have to pay them a living wage. The kids love their jobs because they get nine bucks an hour to clock in and go get coffee and text their friends from the in-house Starbucks. I experienced the loss of commission due to completely dead stores. My sales numbers were compared to… Read more »
Charles Dimov
BrainTrust

Retailers that don’t provide in-store associates with credit for BOPIS sales are going to fail. Running this model means the chain is stuck in multi-channel mode. The last thing an omnichannel retailer wants is for the associate to be resentful about click-and-collect pickups and placing an online order to help a shopper in-store. It has to be seamless. It has to be a great brand experience. Associates need to get credit for omnichannel sales, so their hearts are in it, to help both the shopper and the retailer.

Sterling Hawkins
BrainTrust

Store associates need to be rewarded for all the customers they’re supporting, regardless of channel. Their participation helping customers online, via BOPIS or shopping in-store can be invaluable, especially if they are empowered to make the customer experience what it should be. Technology simply extends the store associates’ reach to have a broader and potentially more meaningful impact.

Dan Frechtling
BrainTrust
Some method of giving associates credit for online sales is in order. But the general approach of spreading commissions from online sales to store staff based on shopper geography creates a free rider problem that doesn’t compensate individual effort. A more personal model of attribution is needed. For online orders shipped home, attribution is technically simple but financially knotty. Here are three ways, by degree of difficulty: Associates facilitate orders of out-of-stock or non-inventoried items with tablets before the shopper leaves the store; Associates get credit for home orders via a code or a unique landing page for their clients… Read more »
Ken Morris
BrainTrust
Sales attribution is becoming a complex issue with the advent of cross-channel shopping. Omnichannel retailing is, or should be, changing the way retailers evaluate their business performance and sales compensation. Since the shopping journey is often cross-channel, it is short-sighted not to consider the indirect influence and impact each channel has on the other channel’s sales. The consumer purchase decision rarely is isolated to one touch point. Maybe we shouldn’t be even trying to attribute sales to a specific touch point like the “last-touch” model, as the consumer’s decision process is often impacted by many brand interactions — not just… Read more »
Martin Mehalchin
BrainTrust

As retailers look to respond to these challenges, they should use it as an occasion to make things simpler rather than more complex. That’s why I like Ken’s suggestion of rewarding based on the success of a market. Pay a competitive or better base wage to in-store associates with a correspondingly high expectation around service levels (many branded retailers already do so to a greater or lesser extent) and then reward the team with bonuses based on the overall performance across channels of the store’s trade area.

Stefan Weitz
BrainTrust
Any time BOPIS happens, the associate should get some sort of commission (maybe it’s reduced from full commission, but there needs to be recognition of the work required to manage the increasing burden). But it also really highlights the value of tools to allow associates to drive a better customer in-store experience that can lead both to loyalty and increased sales through better upsell, cross-sell and clienteling experiences. Being able to turn a BOPIS or return into a new sale for which an associate can get full commission is really the play here — and to do that, they will… Read more »
Brandon Rael
BrainTrust
Absolutely they should be compensated for online sales! The in-store workforce technologies to track online sales originating from the sales associate most certainly exist and should be adopted ASAP by retailers seeking to remain profitable, relevant and viable in a digital-first, experience-first universe. If retailers are preaching that they are offering an omnichannel, mobile-enabled and superior customer experience in their stores for their customers, they most certainly must provide financial incentives for the in-store associates to receive compensatory credit for all their hard work, investigations and doing whatever it takes to please the customer. A converted sale is a sale,… Read more »
Tom Erskine
BrainTrust
7 months 14 days ago

Absolutely! As the number of channels expands, the role of the store in the customer journey changes but remains a critical, immersive sales and service touchpoint. As long as stores are meeting agreed upon goals for visits and customer satisfaction (NPS), they should participate in the upside of online sales in their region/area.

Sean Wargo
Guest
Absolutely! In the current landscape of fluid online and in-store purchase paths, consumers are bouncing back and forth between associates and digital sources. Within this context it is only fair that an associate who has helped qualify a customer and lead them towards a purchase should get compensated for that action, even if the purchase ends up being made online. This is a common activity in consumer electronics as well, where product demos and comparison shopping is done in-store, but then the consumer opts for an online purchase due to an inventory issue. One possible way to handle this is… Read more »
Ken Cassar
BrainTrust
I am entirely sympathetic with Bloomingdale’s sales associates. They are right that they are undoubtedly having an impact on online sales. Tracking multi-channel attribution though, down to the transaction level, would put an undue burden on the consumer and would be far too imprecise for a compensation system. Better to develop a system of attributing offline influenced online sales at the store or market level than at the employee level. Employees ought to be careful, though, to not overplay their hand — odds are that they gain many store trips from well-informed customers that visited the website and then the… Read more »
Tom Redd
Guest

Yes. I bought a new truck over the weekend. The deal started online and shifted to the store (dealership showroom). Amanda — my online truck seller — stuck with me through the dealership dealings and a fast, done deal. She will receive partial commission. Stores should do the same. Share a bit, eh?

W. Frank Dell II
BrainTrust
Retailers need to stop thinking there are two paths to the consumer. The consumer today does not shop either store or online, they shop both. When the store is out-of-stock, consumers go online to buy the item. When a consumer sees an item in the store they may research it at home and buy online. Repeat purchase of a consumable item is easy to procure online. The store associates are the only human interfacing with your customer and they should receive some compensation no matter how the consumer buys. Understanding that online orders can be less profitable than store purchase… Read more »
Kenneth Leung
BrainTrust
There is no perfect solution here. The ability to map the online sales journey to individual sales reps isn’t there (I haven’t seen anything that can do it). The technology that can track a shopper’s journey to the store is primarily through mobile and Wi-Fi, which is imprecise. One has to break things down into components: BOPIS transactions should be compensated because you can tie that to a sales associate who is supporting the customer. Another part would be some sort of pool compensation for online sales within the geographical coverage area of the store. Another part would be restructuring… Read more »
Roger Saunders
BrainTrust
Thoughts to management and the union workers … be careful what you ask for. Compensation systems should follow several well-established guidelines: 1) They should be consistent with company and associates need to earn what they need; 2) Point all associates in the direction in which the company must go to meet marketplace needs: 3) Keep the “blood in the mouth” of commissioned sales associates — unionized or non-union; 4) Be easy to administer; 5) Be timely. If both management and the union cannot address each of these topics, neither are positioned to alter matters. Sounds childish for an associate to… Read more »
Christopher P. Ramey
BrainTrust

No. A salesperson is paid to represent the brand properly and sell product. They should not be compensated for sales they failed to make. A store is a sellroom — not a showroom.

wpDiscuz
Braintrust
"It is only fair to adequately compensate associates for the sales they facilitate. "
"...the general approach of spreading commissions from online sales to store staff based on shopper geography creates a free rider problem..."
"...the problem is very real when your whole compensation model needs committed, trained and experienced salesforces."

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