US brick-and-mortar retailers Wal-Mart Stores Inc. and Kmart Corp. last year made plans to reintegrate their spun-off Web businesses, deciding it doesn't pay to completely separate e-commerce operations from the rest of the business. Now automaker Ford has come to the same conclusion.
Ford Motor Co. in the US is disbanding its ConsumerConnect e-business unit and saying goodbye to Karen Francis, CEO at the division. Considered a rising star when she was hired last year, Francis is leaving Ford effective Aug. 1 after 15 months with the automaker. Other Ford departments will absorb her duties and the group's 350 employees, the company says.
Industry watchers have expected Ford to make this move for months, says Kevin Prouty, research director for automotive strategies at AMR Research. "Ford has a very big back-to-basics strategy right now," Prouty says. "ConsumerConnect by itself didn't really fit into that."
ConsumerConnect initially was developed as a stand-alone division to develop e-commerce ideas, much like General Motor's e-GM division. In the past, Ford and GM formed incubation areas "that allowed people to go out and think differently, and try doing things differently, and spend money in a different way," Prouty says.
There were definite successes and definite failures with this approach, Prouty says. "The biggest failure wasn't any one investment, it was more that some of these companies weren't really ready to change as fast as these incubation areas thought they should," he says.
Ford's decision to redistribute its e-commerce initiatives internally echoes similar juggling during the last few months at GM, Prouty says. It's not necessarily a sign that the automakers are cutting back on e-commerce, but a realization that e-commerce shouldn't be separated from the rest of the business, he says. "What Ford and GM both realized is that it really does need to be run from inside the traditional business segments," Prouty says.
Ford spokesman Paul Wood says the ConsumerConnect restructuring is not a money-"saving move but a natural evolution.
"The e-commerce strategy has evolved to a point where a lot of the ideas have grown and now we're putting them into day-to-day use," Wood says. "As we are able to develop new ideas we will. But having a dedicated organization just to do that no longer makes sense."
Wood says the e-business activities that the ConsumerConnect group developed are not going away but are being integrated into Ford's global marketing efforts.
FordDirect.com - through which Ford doles out sales leads to its dealers - is still going to exist as a stand-alone entity, reporting to Ford's global marketing division, Wood says. The same goes for MyFord.com, Ford's consumer site for post-purchase services.
Ford will continue to fund Covisint, the auto marketplace in which it has about a 30 percent stake; along with ConsumerConnect offspring Percepta, Ford's CRM venture with TeleTech.
Folding e-commerce projects into traditional departments has good and bad implications, Prouty says. Putting e-commerce responsibilities in the hands of business managers is a good thing if a company has forward-thinking managers, he says. "The downside is you may end up with a business or brand manager who doesn't really understand what the technology can do."
Ford's decision to restructure its e-commerce efforts comes after a high-profile telematics retreat by the automaker. In June Ford pulled the plug on its 18-month-old Wingcast LLC joint venture with Qualcomm Inc. A telematics initiative out of the ConsumerConnect division, Wingcast was launched to provide Ford vehicles with onboard Internet and wireless technology.
"[Wingcast] spent a lot of money without really delivering anything," Prouty says. Unconfirmed reports say Ford pumped more than US$140 million into Wingcast.
Ford also has retreated from its plans to provide all employees with computers and Internet access. And last fall, Ford took a $199 million charge to write-down "certain investments in e-commerce and automotive-related ventures," the company said in an October filing with the Securities and Exchange Commission.