For a decade, Target outsourced its website operations to Amazon.com. The Minneapolis retail giant began preparing two years ago to take control of the site when the deal with Amazon expired this August. Three weeks after the switch, the site crashed. It went down again a month later—and then again, and again. In the three months since Target took control, the site has crashed six times, making it the glitchiest major U.S. e-commerce site, according to website monitor AlertBot. Even when the site is up and running, shoppers complain about failed checkouts and gift registries. Spokeswoman Morgan O’Murray says Target is “working diligently to ensure that the site is operating efficiently for the holiday season.”
Target’s Web woes are only the most obvious symptom of a big problem afflicting e-commerce: The dearth of talented engineers. Across all of tech, the job market is tight, with too many openings chasing too few people with technical skills. Retailers have an especially hard time finding qualified engineers because they lack the panache and pocketbooks of Silicon Valley companies. “There’s no question that things are a lot sexier going to Google or some startup,” says Greg Buzek, president of retail technology consultant IHL Group.
The crunch comes at a time when brick-and-mortar chains need technologists more than ever as they upgrade their Web operations to compete with Amazon and other online retailers. Online sales become more important to the bottom line every year, especially as many U.S. chains close stores. At troubled Gap, which has been shuttering locations, online sales rose 21 percent last quarter while total revenue fell.
Overall Web sales may grow 15 percent this holiday season, according to ComScore, while the National Retail Federation says revenue from physical stores will likely gain 2.8 percent. As their focus changes, retailers are in greater need of programmers and designers to improve websites, launch mobile apps, and integrate technology into physical stores. “Demand is off the charts, it’s been crazy,” says Harry Joiner, chief executive officer of ecommercerecruiter.com.
Chains have to compete for talent with the likes of Facebook and Zynga, which are heading toward initial public offerings that could turn young coders into millionaires. Established tech giants such as Google offer free meals, massages, and other perks that retailers with lower margins can’t match. And many technologists see retailers as stodgy bureaucracies, according to Joiner. “They want to go work for companies where they can contribute something lasting,” and see larger, older businesses as the “Death Star,” he says.
The chains end up fighting over the scraps, according to Sucharita Mulpuru, an e-commerce analyst for researcher Forrester. “Retailers aren’t getting the engineers from Facebook,” says Mulpuru. “This isn’t A-list development talent.”
Retailers have been coping with this by relying more on consultants and contractors. They’ve also been buying the talent they can’t recruit. This year, Wal-Mart Stores purchased search engine Kosmix for $300 million and Nordstrom bought HauteLook, a private-sale website, for $180 million. But acquisitions alone can’t solve the problem, according to Craig Rowley, a vice-president at Hay Group, a management consulting firm that has worked for Wal-Mart and Macy’s. “You are going to see more of that, but there aren’t that many companies to buy,” he says. “Even if there are companies to buy, how do you buy them and keep the talent in place?”