Good Product Data: The Oxygen for Catalogs and E-Commerce
Good product data is crucial for any successful distributor catalog or e-commerce website. This includes accurate and complete specifications of products as well as clean photos, related items, and substitute products.
Consider this: Distributors who say they have an effective catalog are nearly twice as likely to have complete data and more than four times as likely to have accurate data than companies with ineffective catalogs, according to a recent survey by MDM and Real Results Marketing. (See Figures 1 and 2.)
What’s more, distributors who generate more than 10 percent of their total revenue from e-commerce are twice as likely to have highly complete data and 60 percent more likely to have accurate data than distributors with smaller e-commerce channels.
Figure 1: Product Data Completeness
Figure 2: Product Data Accuracy
The high correlation between good data and successful catalog or e-commerce operations is easy to understand. Once a customer is at a website or browsing in a catalog, good data makes it easier to find and evaluate products to purchase, increasing conversion rate.
Going a step further and including enhanced data such as substitutes and product accessories increases cross-selling which improves average order value. For e-commerce there is an additional benefit of good data: Searchability is improved which, in turn, drives more traffic to the site.
Greg Palmer, director of marketing at industrial distributor Reid Supply Co., said the company has seen benefits from cleaning up its data. “Our website was substandard. Customers couldn’t find what they were looking for due to weak product categorization, corrupt product data, weak product search capabilities and lack of adequate images to represent our product offering accurately,” he said.
The distributor enlisted data services company ByteManagers to clean up the data, adding 40,000 CAD images and improving overall website usability. The result: a 17 percent increase in e-commerce revenue.
Here are some approaches to improving your product data.
The largest function in many data management projects is acquiring data from the supplier and scrubbing it for use in a catalog or website. The objective is accurate product information including product name, product attributes, manufacturer and the location. Among other things, this involves syntax corrections, expanding abbreviations and acronyms, and de-duplication.
Many distributors choose to outsource data scrubbing to a company such as ByteManagers, Enterworks, Sam’s Custom Catalogs or Unilog Content Solutions. The process starts with a test period, where the vendor verifies and validates that the data conversion process has worked with a small set of SKUs. Once that has been demonstrated, larger scale scrubbing and cleansing can commence. After the initial delivery of the entire set of SKUs, the outsource data vendor will often play an ongoing maintenance role to ensure content is accurate and up-to-date.
Typical costs per cleansed SKU range from $1.00 to $2.50 depending on SKU volume and data complexity.
An alternative is to work with a third-party data aggregator. The aggregator gathers data from many suppliers and makes it available to many distributors. Although some of the third-party data aggregators such as ThomasNet and Global Spec operate as an online mall for many distributors, other aggregators such as IDEA’s Industry Data Warehouse and IHS provide data that can be used in the distributor’s own catalog or website.
Each of these aggregators provides a single source of information that can be consumed in a variety of formats including XML, flat file, EDI, and so on. IHS boasts detailed information on more than 65 million manufacturer products used directly by engineers and indirectly in distributor catalogs and websites. Unless there are heavy data customization requirements, the advantage to working with aggregators is that data quality is high because it receives scrutiny from more users. The cost is also typically lower.
Thanx Media in Chicago has developed a product called Blosm, which is a novel approach for gathering product data that is far less labor-intensive than the traditional data-cleansing approach. As a result, the price per SKU is well below $1. Blosm finds product data on the Web, often from multiple sources including manufacturer data feeds and websites, e-tailers such as Amazon, shopping sites such as Nextag, and from social media sites that include blogs and reviews.
After data has been aggregated and extracted from the different sources, the information is mapped and transformed into a master product database. The mapping and transformation process is automated to suture information together from multiple sources and to arbitrate in the case of conflicts.
This approach provides a very efficient means for creating the initial database and simplifying the maintenance with periodic updates. A data management executive shared the following about Blosm: “It excels at collecting large amounts of data very quickly and in an organized way that was able to be put to use immediately. By using the enriched data that Blosm supplied we lowered expense while increasing efficiency of our employees.”
Easier and Faster
Without good product data, both e-commerce and catalog marketing efforts will suffer. So why haven’t more distributors taken the plunge? Time and cost are most frequently cited as barriers to better data management.
Fortunately, today there are a variety of approaches for getting and maintaining good product data. For those that can afford a custom solution, traditional methods of data scrubbing may be the way to go. But some of these options make clean data attainable even for smaller companies. Improved technology and third-party services make it easier, faster and more affordable.In other words, there’s no excuse not to pursue better product data.
Web and Catalog: Fast Friends
Catalogs and e-commerce are critical individual components in distributors’ marketing arsenals. Distributors that have taken advantage of clear synergies between the two are reaping huge benefits, including cost savings in product information management and marketing. What’s more and, perhaps most important, they are making buying easier for their customers by allowing them to purchase when and how they want.
Results from a recent MDM-Real Results Marketing survey highlight the potential benefits of taking an integrated approach:
- 85 percent of companies (see Figure 1) who have a successful catalog believe that Web and catalog are synergistic or that their catalog helps drive Web sales. These companies consider their catalog effective or highly effective.
- 73 percent of companies (see Figure 2) who have a successful e-commerce channel believe that Web and catalog are synergistic or that their catalog helps drive Web sales. For these companies, e-commerce is at least 10 percent of total revenue.
- The three distributors (Grainger, MSC Industrial Supply and McMaster-Carr) who were considered by their peers in this survey to have the best websites were also considered by their peers to have the best catalogs. All three of these companies have had long-standing catalog sales before incorporating e-commerce, yet they excel at both.
Figure 1: Beliefs of distributors with successful catalogs
Figure 2: Beliefs of distributors with successful e-commerce solutions
Here is a look at how synergies between the two marketing platforms can work.
Product Information Management Synergy
Most distributors get product data directly from manufacturers. The data is typically scrubbed, classified, and then placed into a product information (PIM) or content manager. The information required on each product is similar whether it goes into a print catalog or onto the Web. Clearly, this provides enormous efficiency for distributors that use both Web and catalog channels.
Completeness and accuracy of product data are essential for many aspects of marketing. It turns out that distributors with successful Web channels and catalogs are much more proficient at getting complete and accurate information. According to the survey, nearly 75 percent of distributors with successful Web channels consider their product data to be highly complete versus only 39 percent of other distributors. Over 60 percent of distributors with successful catalog operations consider their data to be highly complete versus 36 percent of other distributors. When it comes to product data accuracy, the difference is even more pronounced between successful catalog distributors with 82 percent reporting high product data accuracy versus 18 percent for other distributors.
Kele Inc. in Memphis, TN, is a distributor of building automation products with catalog and e-commerce channels. Dean Mueller, vice president of marketing at Kele, has instituted a technical evaluation process in which some products are evaluated to verify specifications before product information goes into their PIM. MSC has an internal PIM system that supports both the print merchandising team and its e-commerce marketers. This ensures they have consistent and accurate product specifications regardless of the channel customers choose to use for their purchase decisions. The cost for Kele’s and MSC’s commitment to accurate information is spread across their catalog and Web platforms.
While it is difficult to argue causality between successful Web/catalog operations and good product data, the correlation between the two is still strong. It is likely that using data in more than one context improves the overall quality of the data because the data receives more internal and external scrutiny. Better product data makes it easier for customer to find and purchase what they need.
An additional benefit lies in the supplier relationship; more co-op funding can often be secured for Web and catalog rather than either one alone. Many suppliers recognize the increased exposure their products gain when featured in both channels and are willing to contribute with both financial and technical support.
Integrating the look, feel and messaging of a distributor’s catalog and website helps build brand equity. Customers tend to have a greater level of trust when purchasing from suppliers who demonstrate consistency. As noted by Peter Bingaman, chief marketing officer at MSC: “Both online and print media work hand-in-hand to provide a consistent view of MSC.” Brand equity is further enhanced when the customer’s experience is consistent across channels, assuming that experience is a good one.
Distributors who successfully integrate print catalog and e-commerce channel marketing also create a greater level of legitimacy. Nearly all industrial distributors who were in business in the 1990s created catalogs as their primary marketing vehicles and have since added an online presence. Those who have maintained both channels have reinforced their brand equity through the confidence they have built as long-standing suppliers. This is in contrast to the way customers may view some online-only businesses that are merely storefronts, or agents who simply process and drop-ship orders from other organizations.
In most industrial businesses, when a computer is not available, catalogs are, and customers needing a product solution reach for the company’s with which they feel most confident. Again, the multi-channel marketing distributor has the edge in getting that business.
MSC’s Bingaman agreed with the importance of multi-channel capabilities, saying: “At the end of the day, we are enabling our customers to access the information they need in a way that works best for them. But whether our customers choose to utilize online or print media, we continuously work to make sure our data is concise, consistent and relevant in helping them make the best purchase decisions.”
For many customers, when comparing distributors, it is much easier to flip back and forth between pages among different catalogs than it is to bounce between multiple sites, multiple products within sites and the wide variety of available brands.
The customer call that begins with “Hi, I am looking at your website and I have your catalog opened to page …” is becoming more common. This may happen even more with customers who are not quite sure of the right solution.
Kele’s Mueller says that “the single most important thing is the printed catalog. Web is important as a sales vehicle but also as a broader information source.” Indeed, many companies use the Web to reach prospects and then use their catalogs to ramp up new buyers or to deepen wallet share with established customers.
Given the profound synergy between Web and catalog, it is important for distributors who have just one to strongly consider adding the other. This consideration should be guided by two key questions.
First, given that you have already aggregated the product data for Web or catalog, what will be the incremental cost of adding the other? The incremental cost may be surprisingly low. For many distributors, the cost will be less than $500,000 if co-op funds are applied. If a full-line catalog is too expensive, instead evaluate publishing mini-catalogs.
Second, what is the revenue benefit of having both web and catalog?
Benefits will be realized when customers purchase more because they can purchase when and how they want.
Print Catalogs: Why They Are Alive and Well
Distributor measurements of effectiveness primarily include return on marketing investment, customer retention and lifetime value, and secondarily include share of wallet and internal rate of return. Furthermore, nearly 80 percent of distributors have gather customer feedback on catalog effectiveness.
While e-commerce is rapidly expanding reach and gaining widespread usage among industrial buyers, it is not completely replacing print catalogs. As noted by one mid-market distributor: “Print will be dead when people stop reading. Not everything works well on a desktop, laptop, tablet or phone!” There appears to be a need for both channels and the challenge for distributors is to ensure that there is a synergistic effect generated with these marketing vehicles.
Figure 1: Catalog Effectiveness
This research was conducted by Real Results Marketing in conjunction with Modern Distribution Management. The research performed included an online survey taken by 170 participants across a variety of distribution sectors. There was heavier participation from industrial, electrical/electronics, building, safety, hardware, and HVACR. Over half are small distributors with less than $50M revenue, over 30 percent are mid-market with $50 million to $500 million revenue, and 15 percent large with more than $500 million revenue.
Catalog Use and Purpose
Catalogs provide a different value for customers than e-commerce and although there is overlap with e-commerce websites, there remains enough differentiation between these two channels that one cannot replace the other. Buyers use catalogs in a number of situations:
- When no computer is available: Product specifiers or users are not always in a position to jump on a computer to research potential suppliers.
- When comparing multiple distributors: It is easier to flip through relevant pages of two or more catalogs to make quick product comparisons.
- In conjunction with the Web: Users when on a supplier website often like to page thru a supplier catalog to help them better navigate and research alternatives.
Catalogs are a branding tool, serving as a constant reminder of where buyers can source products. Catalogs sit on the shelf in a customer’s office or on a desk somewhere in the facility and when a product need arises, that supplier’s name is top of mind. This is especially true for low usage products.
Distributors who produce catalogs on a regular basis mostly target current customers rather than utilizing them as prospecting tools. A greater percentage of small distributors use catalogs for prospecting than do larger distributors. Smaller distributors are also likely to be more of a product specialist and thus have fewer offerings and smaller catalogs which provide better prospecting opportunities. Building materials and construction, hardware, pulp and paper, industrial, and safety are the most focused on current customers, not prospects.
Catalog Circulation and Publishing Frequency
Surprisingly, our research also reveals that nearly 30 percent of distributors are not using catalogs as a revenue generator leaving room for competitors to win away their customers. As shown in Figure 2, only 60 percent of distributors publish a catalog at least once per year with a minimum circulation of 25,000. Among large distributors with $500 million or more in revenue, 20 percent do not publish any catalog. Fifty percent of mid-market and just over 30 percent of small distributors publish at least once per year. Naturally, catalog circulation is correlated with the size of the distributor. Small distributor catalog circulation is usually less than 25,000 except for companies that are focused exclusively on catalog marketing.
Figure 2: Catalog Circulation and Publishing Frequency by Revenue Band
Within distribution sectors, electronics and janitorial were least likely to publish a print catalog, focusing instead on in-store and e-commerce, according to Figure 3. Distributors who compete in sectors where overall demand has been waning have the highest rates of catalog production frequency. These markets have been depressed, and distributors want to do all they can to gain market share. Additionally there is a correlation with the degree of competitor fragmentation and the frequency of catalog publication.
Figure 3: Catalog Circulation and Publishing Frequency by Sector
Those who abandoned catalog efforts said they did so for two primary reasons:
- Belief that e-commerce would make catalogs entirely obsolete. The “print-is-dead” mantra began with the advent of e-commerce in the late 1990s. A number of companies who abandoned catalog marketing did so in the early part of the new millennium.
- Inability to measure catalog ROI to justify continued efforts internally and to suppliers. Companies who use imprecise metrics for marketing effectiveness are often hard-pressed to make a compelling case to suppliers for marketing development funds. Such companies view the catalog as a cost, not a profit center. When budgets get tight, they discontinue publication.
Attitudes about Print Marketing Vehicles
The survey showed that overall (see Figure 4) there is still confidence in print as a marketing vehicle with nearly half saying that it is still alive, and more than quarter saying print is in transition in a significant way.
Figure 4: Attitudes about Print
There are several segments of those who believe that print is alive and well. Some believe it is a channel best-suited for MRO segments as an effective and useful purchasing tool. Others note the importance of print in a relationship-oriented sale where people use the catalog as a talking point or leave-behind collateral. Several of the large distributors commented on the synergy between print and digital. An executive from a large electrical distributor, wrote: “Print is NOT dead for our customer base. Demographics of our customers will keep print catalogs relevant for years to come. We need both print and online catalogs.”
The respondents who felt that print is in transition recognize it is declining overall due to e-commerce, but it is nevertheless here to stay. The transition may be as short as five years and as long as 20 years. For some, the transition is from full-line catalogs to mini-catalogs and specialty publications. One respondent wrote: “It is still necessary. However we are trying to train our customers to access online PDF versions of our catalog for more current information. This training will be ongoing until our customer base catches up with technology.”
Sentiments about the death of print as a marketing vehicle are typified in this comment from a very large distributor who said: “Print is dying, pieces are outdated as soon as printed, whereas anything and everything on the Web can be updated immediately.” Interestingly, the belief that print is dying or dead was correlated with neither the company size nor the sector.
While the frequency of and size of catalog publications is evolving, research for this article and our current experiences in distributor marketing make it clear to us that print catalogs for many parts of distribution are here to stay. We believe that for many companies, print catalogs are in fact underutilized. They can provide competitive advantage in many sectors if properly utilized. Coordination with e-commerce programs can provide even greater return on catalog efforts.