Online store manager compensation

January 12, 2010 3:54 PM

I've been offered a position managing the online store component of a small business manufacturer in the recreation space. I am unsure about the value of the incentive compensation and could use some insights into this.

I've been offered a position with a family-run manufacturing business. My position is titled internet marketing manager. My primary responsibility would be running and upgrading their online store, which sells parts they build for their main product as well as related items from other companies.
A person I had counted on to assist me with evaluating the offer is not available so I'm turning to the hivemind for some help.
The salary is middle-range, nothing to sneeze at or get overly excited about either. The company would be excellent to work for, a great opportunity to work in some prime areas of my interests.
The offer says there is an expectation I will increase the store's gross to cover my salary within 2 to three months.The store's gross is around 250k yearly.
Also, I am incentivized with 10% of the increase of the gross margin (after cost of goods sold and my compensation) of direct part sales if the gross margin is greater than the same month period of the preceeding year.
In other words, I am expected to increase gross sales by at least the amount of my salary each month compared against the same month of the previous year, and, I receive 10% after costs of the increase in sales (not the total) compared against the same month from the preceeding year.
This seems to me like an equitable compensation to me. I'm switching careers so I have trepidations about managing an online store, but c'est la vie.
Any relevant information about this offer would be useful, or URL's I could check out and/or people I could contact who could give me more information or possibly mentoring around running an online store.

posted by diode to work & money (4 answers total)

What percentage growth would this be for the website? Is the core brick and mortar business growing? Can you sustain this growth for a full year?
posted by 26.2 at 5:33 PM on January 12, 2010

And do you have 100% cart blanche to do anything you think needs to be done to the site?? Marketing budget or are you expected to make that all happen for free with just your work effort??
posted by SteveG at 9:51 PM on January 12, 2010

Do you have any control over what is considered cost of goods sold? Can you affect those costs either positive or negative? What happens if you don't meet the goal? How much time do you have? What if you have shown significant progress? What if you do it 2 months out of three? Is it an average or recalced monthly? Certainly what percentage gross is tres important. IF your slary is 100k/year and they grossed 250k last year is much different than going from 250k to 300k if your salary is 50k. Are you passively managing the store or proactively?

I would tell them how excited you are and ask if they would give you a sample calculation for what they would expect the bonus to llok like 6 months from now. Is your salary deducted from the increase and you get 10% of what is over your salary? If your salary is 5k per month and you increase sales by 8k, do you get an $800 bonus or a $300 bonus? IS there any upper limit to the bonus or did they just offer you 10% of the increased business regardless?

Is the calculation cummulative? IF you miss the first month, does the difference carry forward and is it added to the next month? IF you salary is 5k a month and you increase sales by 4k, do you have to increase sales next month by 6k before you get paid or will you get 10% of the 1,000 over your 5k salary for that month and the previous loss is wiped clean?

Are these parts so specific to their product that you essentially need their products to have problems so you can sell them more parts? If their sales are down, is it going to affect the parts store? It could go the other way in that more people will choose to repair and fix rather than buy new just like with a car in this economy.

You need to evaluate the market for these parts to know if you even have a chance. My opinion is that if the product is a godd one, this is a great offer. They are giving you 10% of the company's net over 250k/year in sales. It is like having equity without the downside.
posted by JohnnyGunn at 10:08 PM on January 12, 2010 [1 favorite]

I would be completely honest with myself and try to get a gauge of the websites potential. Is there some strategy that could be put into place that could realistically improve profits dramatically? Also, ask about the resources you'll be provided to complete your job. You can have the best plan in the world, but if the company you work for can't afford the copywriters, designers, and IT staff needed to execute the plan it's worthless.

Those are the questions I'd be asking.
posted by mcbrett at 7:29 AM on January 25, 2010