Product data exchanges between suppliers and distributors
Introduction & methods used
Product data exchanges between suppliers and distributors are at the heart of the retail industry. For each online or offline product, there is a data sheet drawn from information shared between two partners. Although this process is often unknown to the final consumer, this collaboration can reveal to be a real headache. Scalia decided to carry out an unprecedented study by speaking with suppliers and distributors to better understand their respective expectations and challenges met on a daily basis
The study builds on a total of 74 surveys and 17 interviews completed with actors in the retail world from all sectors (FMCG, electronics, home appliances, lifestyle, etc.) and of all sizes.
First finding: a generalised frustration
From both sides of the spectrum frustration is what stands out the most. On the one hand, suppliers complain from being exploited by distributors (79%) which impose numerous tasks on them. On the other hand, distributors complain from transmission delays (84%) and a disregard of the instructions transmitted (57%). In short, these product catalogue transmission steps harm the supplier/distributor relationship.
A considerable amount of this frustration can be understood by analysing the discrepancies which exist between the distributors’ expectations and the understanding of these tasks by the supplier. Suppliers consistently state that the 5 key criterions of product data collection (EAN, images, compulsory fields, list of values, editorial constraints) had not been explicitly formulated to them.
Between bad communication and bad faith it is hard to know who should be blamed first. Nonetheless, we observe the results of these divergences: on average 5.1 round trips and a 42-day waiting period are needed from the commercial agreement to a product listing going live.
Same old process, growing needs
The frustration we uncovered is intensified by the explosion of the volume of exchanges these past years. Since 2010, the size of assortments handled has increased by 44%, the number of partners has grown by 79% and more importantly the renewal rate of product catalogues has increased by 12 percentage points. These effects combine themselves and participate in the continual worsening of the situation.
On top of the increasing size and renewal rate of assortments, customers are also becoming more demanding! Product data sheets contain almost twice as much information than in 2013. Beware of the distributor who doesn’t comply with clients’ expectations: close to 30% of abandoned carts and 18% of returns (25% in the retail world!) are caused by incomplete or incorrect data.
Astonishingly and in spite of these growing demands processes have not evolved or not in the right way. The number of columns per file exchanged has increased proportionally. The different actors regret the absence of new work methods.
A frustrating status quo but some improvement perspectives
Nonetheless, each side agrees on improvements to consider to ease the product data handling process. Namely it is the case with import templates (also called grids or matrices). Although distributors and suppliers don’t have the same perception of the length of templates: they believe that these have 35 and 59 columns on average respectively, all agree that templates are too long and that they should be simplified and set out clear instructions.
A first area of improvement would be to automate certain low added value tasks (data check-ups for example), but distributors highlight the absence of tools, or the lack of flexibility of existing tools in dealing with the multitude of formats sent by suppliers. In our survey, 84% of respondents stated that they carried out their data check-ups manually; only 10% of the respondents had automated check-ups, often using an Excel Macro.
Increasing costs
The last part of our study focuses on the production costs of product data. Yet again, there is an important gap between the perceptions of both suppliers and distributors and the economic reality. On average a product data sheet costs 15€ to make but actors in the retail ecosystem think this costs is inferior by 32%. This underestimation can be explained by two factors: the ignorance of the amount of work done by partners and the lack of appreciation of the total time spent to consolidate product data sheets. It is also interesting to outline the wide spread between the study’s different respondents. For suppliers product data sheets costs range from €4.2 to €21.5 and from €5.1 to €30.7 for distributors.
Also, the study found that the typical product sheet creation expenses were divided into the 5 following tasks (average cost in brackets):
- Collection (1,6 €)
- Standardization (3,2 €)
- Visual content management (5,2 €)
- Check-ups (1,1 €)
- Compliance (4,1 €)
Good practices are helping to improve the process
Thankfully, there is optimism in the way the retail ecosystem manages its data. While carrying out its study Scalia took note of good practices that are worth sharing:
- Content requests should be realistic
- Set clear rules (and respect them!)
- Give clear, concise and automated feedback to pinpoint errors
- Work asynchronously with bigger partners to anticipate and smooth production peaks
Concluding remarks
To conclude, this study shows just how frustrating product data exchange is for all actors of the retail industry. This continued to be true even with the growing importance of product data in the multi channel retail world of today and tomorrow. The fact that the current process and its cost to the industry are often ignored and underestimated show the ignorance of retailers when handling product data. The advent of new solutions which enable economies of scale and flexibility is welcomed by all the actors who have understood that product data is the long-term solution for flawless exchanges and to open new business opportunities.
