The product content value chain

Our 2016 research on e-commerce for distributors finds a significant gap in online performance. For the past three years, 20 percent of distributors transact 80 percent of online sales. The performance gap is closing, slightly, as the technologically challenged verify sales loss. However, firms that lead in e-commerce spend more money on technology and have larger budgets for online needs, including the development of product content.

It is difficult to underestimate the customer’s need and want of up-to-date and accurate content. In our 2015 survey of 250 MRO customers, “current and reliable” product content ranked at the top of e-commerce attributes and above “fair and competitive pricing” and “inventory status and accurate delivery estimates.”

Numerous surveys have found product content to be a prerequisite for ongoing orders and a recent Forrester project found that quality content, among B2B buyers, was the deciding factor for 31 percent of all final purchases.

The movement of product content, across the value chain, from manufacturer to distributor and distributor customer is a gargantuan task. Most products have attributes that number between 45 to 55 and several of these are changed on a regular basis. In essence, for every 1000 SKUs, there are 45,000 to 55,000 attributes. If a wholesaler stocks 20,000 SKUs, the product content attributes can easily number more than 1 million.

The need for tools to manage content and populate the content management system is a challenge for most distributors and of real concern to manufacturers who rely on their distributors to grow sales. Hence, we believe that management of the product content value chain is necessary to maintaining channel relationships. 

Dynamic and static content efforts

There are two primary means of updating product content for the e-commerce effort:

  • Static updating.
  • Dynamic updating.

Static updating is using a variety of I/T and manual processes to update the content management system (CMS). Distributors are well aware of static processes as they have used them to update the ERP system and content attribute fields for each SKU. Much of the ERP system content, however, is not suitable for e-commerce including short descriptions for product and the ability to develop robust taxonomies. Static updating is often a function shared in the marketing and purchasing departments and revolves around the changes to price and product from major manufacturers. Much of the updates involve spreadsheet uploads to the ERP system.

Dynamic content management is done via PIM (Product Information Management) software and provides a gateway, on-boarding, content verification and ability to serve multiple platforms for SKU-based attributes. PIM software appeared in Europe during the earlier days of B2C e-commerce and has since migrated to North America with B2B specialized functionality.

Exhibit 1 displays some of the more telling differences in the content updating systems. For an initial low-cost, most distributors opt for a static system with the added benefit that it does not tax the IT capability, which is almost always under heavy demand as the industry digitalizes.

Dynamic updating, however, holds a clear lead in being more accurate and current while offering a lower long-term cost solution than static approaches.
As online commerce increases, the content will be used in multiple publication options from product catalogs, to vendor specific programs, video links, etc. PIM software offers these capabilities and they are often overlooked by distributors who believe that standard e-commerce is the singular channel for content usage.

Our experience and research gives a clear advantage to dynamic product content via PIM software and we believe that distributors who are serious about e-commerce will need to engage software to manage and update their content in the near future. 

Content Management for distributors

Considerable debate is underway regarding which function in the organization is responsible for online content. A growing majority of firms place the responsibility in the e-marketing part of the organization. Little attention, unfortunately, is given to the varying parts of the organization that use and update the content and distributors are encouraged to plan out the content management organization including the following:

  • Development, maintenance, and publishing of the product taxonomy.
  • Product managers and experts who have authority to manage and change specific areas of the product taxonomy.
  • Users of the content and their unique needs and schedules.
  • On-boarding of vendor content and working with discrete vendors on content issues including format, timeliness, accuracy, etc.

If the previous tasks seem foreign, they are for many distributors. However, our premise is that product content and its quality assurance and timeliness is absolutely essential for online sales success and perpetuating the manufacturer partnership. Hence we expect that distribution organizations will have or need to build the organization capabilities to manage content across the value chain. 

Selecting a qualified PIM

Our enthusiasm for PIM software is founded in the experience of billion-dollar distribution firms who are well-funded in e-commerce technology, have millions of SKUs online, and sell 25 percent or more or their volume online. Many of these firms purchased PIM technology and developed the content management function before investing in a new B2B e-commerce platform. In essence, product content came first and before the transaction platform upgrade.

A PIM should do several things including the following:

  • Be able to onboard a variety of file formats from vendors (JPG, PDF, XML, flat files, spreadsheets, etc.)
  • Be able to check incoming data quality for correct format and regular changes including product cost, list price, and other attributes. 
  • A content library or repository for user defined attributes and related variables.
  • Relationship management tools that assign products to the correct taxonomy or catalog structure.
  • Means to enrich and curate content including unstructured data (picture files, videos) and automate these needs wherever possible.
  • Workflow logic that directs content activities across the enterprise and outside to approved users.
  • Content publication tools that give users the chance to publish different media (print or online) for marketing purposes.

The cost of PIM software and integration varies significantly across various providers. A thorough vetting of the technology across potential suppliers is recommended. 

Other content sources

Several distributor marketing associations provide content generation for their members. These are often buying groups who aggregate vendors to drive volume and cost concessions. However, these efforts may not offer a software solution to manage content needs across the channel and they often do not cover all of the products a particular member sells. Hence, while we believe these efforts have a positive effect in that they ensure quality data and content updates, they can’t practically offer a full solution for their members.

Distributors are beginning to realize the need for quality content that is robust and current. Online buyers are, more often than not, unforgiving if errant content recommends the wrong product and especially if the product is installed and elicits downtime. Additionally, errors in pricing, functionality, configuration, etc. are reasons that users require the most accurate content available.

The cost of content management is significant and well into six or seven figures for the beginning years of content management software and integration. The function cannot be outsourced to firms that “strip” out data or marketing groups that generate content for members. Without quality content and as online purchases increase, the distribution firm will lose sales and customers and impair relationships with their vendors. Hence we place the discipline and funding of product content at the very top of the e-commerce effort.  

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