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Brands invest significant amounts of money, time, and human resources into product information management, including technology solutions built to tame the chaos of product information internally, but these address only part of the problem. Suppliers and retailers both struggle with the last mile (i.e., the stage of getting enriched, complete, accurate product information to retailers and in front of customers). If organizations don’t solve the innate friction of linear digital supply chains, content management and content distribution solutions will continue to fall short. (Read our post on how connectivity reduces this friction here.) Linear supply chains aren’t and will never be fast enough for the speed of retail, and in a time when speed matters more than ever, being faster to market will be a key differentiator for space leaders.
Here are three reasons a faster last mile matters more than ever in online retail.
1. Consumer demand is increasing.
Online purchasing is increasing across the globe, and retailers continue to pursue a moving target to meet consumer demand.
High-level expectations include the following:
- Online shopping experiences should be reliable and convenient.
- Orders should be shipped quickly.
- Product catalogs should have a large variety of products with accurate, well-documented listings and better prices.
39 percent of online shoppers say speed is the largest factor when choosing to purchase online over brick-and-mortar. (NPR/Marist, 2018)
Omnichannel commerce continues to be a concern for retailers that have both physical and digital storefronts. These retailers struggle with delivering real-time data to customers, unifying in-store and online shopping experiences, and leveraging online product listings and the physical store experience to be more attractive to customers (e.g., online ordering with in-store pickup, in-store shopping with online ordering, or searchable product listings that guide customers to particular products and precisely where to find them in-store).
2. Competition is getting stiffer.
In retail, the concept survival of the fittest rings truer by the day. If your organization is like countless others facing the same issues in responding to how online retail is changing the landscape of retail as a whole, it is likely solving challenges with intermediate technology that’s meant to be transitional (Read: Stopgap), which also typically means that it’s cumbersome, expensive, difficult to implement, disjointed, and not future-proof. The challenge of modernizing and streamlining processes and tech stacks for organizations is similar for both brands competing with other brands and retailers competing with other retailers.
Consumer expectations for shopping experiences are largely being driven by retail behemoths like Amazon and Walmart, and these big retailers continue to grow. Retailers, like Amazon, which are predominantly, if not exclusively, online are digital at their core and therefore positioned to be more responsive to improving digital experiences for customers. Such businesses are able to do more with less when compared to those that are brick-and-mortar first, and, as margins continue to shrink across the board, proactively addressing inefficiencies, cutting costs, and maximizing revenue opportunities are absolute necessities for all retailers. For retailers with both physical and digital storefronts, aligning the physical and digital experiences for customers while also getting faster and more efficient at all other operations is a challenge online-only retailers don’t need to worry as much about.
For online stores, improving speed to market is key to maximizing uptime for products and keeping product information up-to-date and accurate. This gives customers what they are looking for and, in turn, positively affects customer retention. Overall, the retailers and brands that are faster to market with products will have a competitive advantage over those that aren’t.
3. Slow speeds are costing you money.
Arguably more crucial to success for retailers and brands than the aspects of competitive advantage and agility is how speed to market directly impacts revenue. Simply put, slow speed to market delays revenue. The slowdown here is typically caused by inefficient content handling processes on the side of the retailer or the brand (or even a content service provider that sits between the two). Products don’t go live until product content is ready to be seen by consumers, and every minute product information isn’t in front of customers is a minute the product isn’t being purchased. With current processes, a bottleneck occurs when product information is passed between organizations. Before products can be pushed live to site, the product data must be prepared or adapted to suit the end platform. Regardless of who is bearing the burden of adapting product content, manual processes and disjointed systems on the brand or the retailer side mean that it takes more time to get products live than it would if the process of product transformation and distribution was automated–preventing faster speeds to market for brands and retailers alike.
Nike example case with Zappos
Let’s take Nike as an example. If you’re a big brand like Nike, the bulk of your sales likely don’t come from selling directly to customers through your own branded brick-and-mortar stores or your online store. In Nike’s case, the bulk of its revenue comes from wholesale by a large amount. In fact, according to Statista, Nike’s worldwide revenue in 2018 was approximately $35B USD, of that 70% ($23.97B USD) was from sales to wholesale customers.
In 2017, Nike reported that it would be altering its strategy to focus on 40 of its 30,000 retail partners. The company followed this announcement by closing out relationships with many of its low performing independent retailers to favor high volume retailer brands like Nordstrom and Amazon; however, Nike’s digital supply chain undoubtedly still suffers from friction due to the limitations on how brands can deliver product information to retailers.
For illustrative purposes, we’ve focused on one retailer, Zappos.com.
Running a search for the parent brand Nike on Zappos.com results in 5008 products in six categories (e.g., clothing, shoes, accessories, bags, sporting goods, and home) under five brands (Retrieved July 19, 2019). These values correlate to a minimum of six product category schemas (or product category templates) for Zappos alone. We’ve disregarded subbrands for simplicity. With products in six categories, source product information must be adapted to six different product category schemas.
Now, imagine this scenario multiplied across 40 retailers. If we assume similar product category associations for all 40 retailers, we can multiply 6 product categories by 40 retailers, which yields a value of 240 product category schemas. As brands sell to more retailer categories and subcategories, the submission process becomes even more complex, as requirements are different from category to category or subcategory, and every retailer manages these differently.
Keep in mind that this scenario doesn’t consider country-specific sites and other languages.
Whenever Nike updates product information or adds new products (which we can assume is a minimum of twice a year and anticipate that the frequency of product information updates made by brands will increase as online retail grows), it must adapt information according to current retailer formats and product data requirements. Understandably, this process takes a long time, especially when you consider the approvals and other manual steps that happen on the retailer’s side once product information is received by their system and content team.
How to get products to market faster
Being able to get products to market faster is important for growing revenue and being more competitive in the retail space, but the inefficient processes prevent organizations from getting product information prepared, distributed to retailers, and in front of customers faster. To those who are familiar with the process of getting product information from brands to retailers, it will be obvious that a technology capable of automating much of this process will save organizations significant time and effort. Fortunately, technology exists today to replace the inefficient, repetitive processes used to manage, adapt, and distribute product content with solutions that are intelligent and automated, making speed to market is a value that organizations can improve.
Venzee solves the product content bottleneck with one-to-many distribution that’s automated and API-connected. Venzee specializes in automating the transformation, validation, and delivery of product content for new products and product updates faster and more reliably than the manual, standard methods of emails, spreadsheets and retailer portals. Venzee technology sits between brands and all of their retailer channels. Regardless of where your organization sits on the digital supply chain, Venzee can guide you to content efficiency. Speak to us about how you can exchange product data faster and more efficiently using Venzee technology.