E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
Retailers whip supplier product data into shape so shoppers can find just what they're looking for.
Consumer electronics retailer Vann's Inc. confronted the same problem last fall that many retailers confronted during the recession: Its average ticket was down, a particular problem in a category in which profit margins are thin at the best of times. To maintain revenue growth, the multichannel retailer had to figure out how to boost traffic and sales.
Knowing electronics aficionados like to buy the next big thing, Vann's concluded that the easiest way to drive traffic would be by making products available on Vanns.com as quickly as possible, says Matt Ranta, the retailer's marketing manager. "The sooner we can get a product online, the more we benefit from organic search traffic," he says. "We generate sales from that traffic—especially if we can expose that inventory before others can."
But getting products onto its site quickly was not easy. The retailer has more than 120 suppliers. For each supplier the retailer's procedure had been to manually gather every detail about each individual product—including its dimensions, weight and images—then craft an original product description, and incorporate it into the Vann's content management system. The retailer then could display that content in the retailer's various online selling channels, including Vanns.com and its Facebook Shop tab.
The process was slow and disorganized, which cost Vann's employees' time and potential sales, says Ranta. "We're at a point where we have to try to wring more profitability out of everything we do," he says. "That inefficiency was not helping."
Enter Shotfarm, a vendor offering its Product Image Exchange, a centralized repository that retailers and manufacturers use to transfer data. The majority of Vann's suppliers now input product information directly into Shotfarm's product data management system rather than posting the data on a business-to-business web site or, in some cases, sending the information to Vann's on a CD or as e-mail attachments.
Vann's now downloads the data from the Shotfarm system into its content management system. By streamlining its data integration process, the retailer is getting products on its site faster, freeing up its employees to do other work, says Ranta. And the new process speedily gets hot products onto the site where electronics enthusiasts can find them.
A central hub
Vann's is one of a growing number of retailers using what are often called master data management or product information management systems to improve their collection and coordination of data, says Sanjeev Pal, research manager for consulting firm International Data Corp.'s product, project and portfolio management solutions service. "Across nearly every channel competition is increasing and manufacturers, vendors and retailers all have to be more efficient in how they communicate information," he says.
That demand is why the market for these systems is expected to grow to $5.9 billion by 2014 at a compound annual growth rate of 7.6%, according to a recent IDC report.
Retailers are realizing that they need to improve their product data organization as they integrate information from a variety of suppliers into their e-commerce sites, as well as into other sales channels, including mobile sites and apps, says Paula Rosenblum, Retail Systems Research LLC managing partner. Data synchronization is difficult, she says, but a necessary growing pain that many retailers are going through.
The numbers bear out the need for consistent data organization. 46% of retailers in a July RSR survey said that internal infrastructure challenges, such as production data coordination, prevent them from delivering optimal cross-channel capabilities.
"Retailers have to find ways to ensure that product information is synchronized across channels," says Rosenblum. "These systems can help them do that. That's important because in today's world consumers want to interact with retailers any way they can."
Find the right system
Master data management systems can help retailers overcome those issues and ensure that a retailer presents consistent data to consumers in all sales channels, says Rosenblum.
For instance, because Vann's has a central data entry point, it can leverage a single set of images and data to present a consumer looking at washing machines in Vann's Facebook Shop tab the same information as the consumer would find on the retailer's e-commerce site.
In addition to keeping Vann's data entry process organized, Shotfarm's Product Image Exchange also saves the retailer time and money. In the retailer's first four months of using the system, it has dramatically reduced the amount of time it spends finding, requesting, formatting, transferring and downloading files, says Ranta. While Ranta says he can't quantify the exact savings, Shotfarm says retailers have had savings as high as 80% in these areas.
Although its software manages product data, Shotfarm's technology isn't factored into IDC's market estimate because the system currently is free for both retailer and manufacturers. As such, it lacks a number of features that many retailers are looking for as part of their efforts to organize their data and that other master data management systems offer. These include tools that govern naming conventions, which can allow a retailer to group together like merchandise into a web site's filtered navigation. The vendor aims to add those types of paid features later this year.
While systems like Shotfarm can help some retailers improve the routing of data from their suppliers to their web sites, experts suggest that many larger retailers could benefit from more complex master data management systems that synchronize new data from suppliers to ensure that the new products are tagged with standard terms. "Retailers, particularly larger players, need to have one clean set of data that everyone can share," says IDC's Pal. "That allows one employee to know that what he's looking at is the same as what his colleagues are looking at. Having a standardized set of data can eliminate potential problems."
For instance, Midwestern retail chain Meijer Inc. works with software vendor DataFlux to integrate the retailer's master data management system with a data-cleansing tool to ensure that all of the site's data use the same organizational structure.