Centralization and the Keys to Multichannel Success
Operating a successful eCommerce retail business is easier said than done, especially if it's a multichannel online business. From a product information management (PIM) perspective, there's much to be done, from managing orders to updating inventory to listing new SKUs across multiple channels. Handling all that using a decentralized manual system can significantly hurt your sales outcome and overall product visibility across these channels. Eventually, you reach a dead-end and sustaining the business becomes the primary focus at the expense of business growth.
A better approach is to centralize your product catalog to achieve the efficiency your online retail business needs to overcome bottlenecks and scale. When you have all your SKUs and product data (such as price, inventory levels, order tracking information, etc.), listing your products on eCommerce marketplaces like Amazon and Walmart becomes hassle-free and time-effective. Besides, centralization also automates various tasks, such as order management and shipping label creation. Your team will also see the value because it alleviates the need to work through numerous browser tabs and desktop applications.
This article will define what centralization means, its benefits to an eCommerce retail store, and the potential costs of operating with a decentralized system.
What is Centralization?
To better understand centralization and its importance, it's best to first know what product information is. Product content refers to all written and audiovisual material providing product information. That includes business documents, imagery, texts, technical sheets, and other tools that communicate a uniform message about your product SKUs across various channels. Product content is the first point of contact that your consumers have with your brand. Because they can't physically handle your product, they rely on product information, and if there are inconsistencies or discrepancies, there's a level of uncertainty that discourage them to make a purchase decision.
Centralization refers to a product information management (PIM) strategy that uses a centralized platform, where all product data, listings, inventory, orders, etc., is collected, stored, maintained, and distributed across various eCommerce marketplaces and retail and distribution channels. With a centralized PIM system, all your teams can access the data from numerous points, streamlining shared workflows and processes across multiple channels.
Features of a Centralized Product Information Management System
As an eCommerce manager, your responsibility is choosing the right PIM platform. Some software is well suited for large corporations with large teams that need access to the same data sets, while others are more suited to startups that require a handful of employees to work with the data. Still, there are some basic features that a centralized product information management platform must have:
- Product data – A PIM tool with product data management (PDM) functionality centralizes all product information, including technical manuals and SKUs, with automated data updates. It stores crucial data in a single platform, providing a holistic view of your entire product catalog.
- Product Inventory – A centralized PIM system must also enable you to gain more real-time visibility into your inventory. It must allow you to track your inventory, control stock levels, handle orders and shipping, sales, product returns, reports and more. It not only automates your inventory management process, but also improves accuracy, efficiency, and speed of operations.
- Orders – Centralized PIM software acts as an order management system, providing a single platform to view, receive, track, fulfill, and manage customer orders. The platform should provide a two-way sync between the order management feature and your eCommerce platform while providing real-time visibility to the entire process. In short, the system must enable you to track the entire journey of an order, from the time a customer hits the "Buy" button to delivery – and returns.
- Reporting – Timely data reporting and analytics are crucial when selling products online as they help you make quick, informed decisions. A quality PIM platform reports your product performance across various metrics with easy-to-read analytics, enabling you to view how specific products are represented and which ones need improvement now.
The Benefits of Using a Centralized PIM Platform
By storing all your updated and latest versions of your product data and resources in a single, centralized repository, you gain full control of your data. Every department (Design, Manufacturing, Marketing, and Sales) can access, edit, manage, and export product data with no duplication of files.
A centralized product management system has many benefits. They include:
Consistent Brand Voice
Maintaining a consistent brand voice is crucial as it helps build loyalty and trust with your customers. They should feel like they interact with the same brand throughout their journey. Therefore, when sharing your product information across multiple channels, ensure the messaging resonates with your brand identity. You can do that in several ways, including:
- Maintaining the same tone of voice
- Using the same brand colors
- Providing the same engaging experiences
- Using quality product images in the right file size
A PIM system also simplifies complex product information and standardizes it before it reaches the customer, helping you provide the right information at the right place on time. Accurate product information also offers positive customer experiences. For instance, product filters, clear product specs, and informative digital assets make the buying experience hassle-free and increase the chances of repeat business.
Remember, your target customers have options. They will quickly leave your brick-and-mortar store or online store if they don't get the information they need about a specific product. In fact, 56% of consumers say they abandon online purchases because of a lack of product information, service, or delivery. Hence, you risk losing business using a decentralized PIM system.
Automated Product Management Processes
Centralization of product information also automates processes that were previously handled manually. With a centralized platform, you need not manage product information in spreadsheets, ERP systems, or other databases. You'll have that information in a centralized location, ensuring all the data is up-to-date and accurate while eliminating errors and inconsistencies.
Additionally, product content management software enriches your product data by synchronizing it with other sources of product-related information. For instance, you can easily onboard product data from suppliers, who, in turn, use the templates to deliver the necessary data. This automated data enrichment process saves time, reduces management costs, and allows your team to shift their focus from managing product data to actually applying it.
Managing product information using a manual, decentralized system wastes a lot of time. Your team has to pull that information from various sources and distribute them across multiple channels. And they'll have to follow the same manual process whenever they need to edit, add, or remove any product data.
A PIM system frees up your team from manual work by automating data collection processes from different sources and storing it in a single location, providing a consolidated and holistic view of your product information. That said, your team's productivity increases because they can now focus on analyzing that data for actionable insights instead of engrossing themselves in manual work.
Better Understanding of the Business from Top-down
A centralized PIM platform also provides all the data you need to enrich your understanding of the various processes and activities at each level of your retail supply chain. For example, the platform can help you track and manage multiple projects within your business, providing a holistic view of your project portfolio.
Additionally, it allows you to see the performance of these projects across various performance metrics, such as cost, quality, sales margins, and schedule, helping eCommerce managers to identify areas of improvement. You can also identify potential risks and their impact on your overall strategy and make an informed decision on mitigating them.
In summary, a centralized product provides a single source of truth about how your eCommerce is performing on all fronts.
E-commerce leaders have to make many critical decisions affecting their products. A product data management tool gives you a centralized repository for all your product-related information, including analytics and reporting. It delivers accurate and up-to-date information that eCommerce managers need to make informed decisions on various processes, including product development, pricing, and marketing.
Intelligent Order Routing
It's crucial for eCommerce businesses to consistently comply with their sales level agreements (SLAs) by identifying the most effective means of fulfilling orders. A PMI system provides intelligent order routing that allows you to determine the best nodes to fulfill your orders from based on a range of factors, including:
- The location distance from the customer
- Stock levels
- Node ownership
- Node revenue share
The platform then automatically identifies where each order should go, utilizing the smart logic you set to select the closest fulfillment center or store to deliver the product on time. As a result, you save on shipping costs.
Faster Expansion to New Channels
While a product content management system helps you market and sell your products across multiple channels, it also enables you to expand into new channels faster. PIM software has automated features that enable eCommerce leaders to easily configure new marketplaces, as well as distribution and retail channels. Once you have a new channel linked to your PMI, the tool ensures that only the vital information goes to that channel.
For instance, if your database contains hundreds of attributes about a specific product because your eCommerce website needs it, and your new channel only requires thirty attributes, the platform's automated feature ensures only the thirty attributes are sent to that system.
The Costs and Risks of Decentralization
Using a decentralized product information management system means you don't have a single point of product information collection and storage. Instead, the data is distributed across various sources, significantly hurting workflow processes and information unification. Each team/department works independently, adding, editing, and removing data without synchronization to a central platform. Such a traditional PIM system can negatively impact customer experience and your business's bottom line.
Higher Order Defect Rate (ODR)
An order defect rate (ODR) refers to the number of customers purchasing defective products over a certain period. It's calculated by dividing the number of negative orders by the total number of orders in the same period.
It's a tool Amazon uses to gauge seller performance and ensure they provide quality and satisfactory customer experience. That said, you must create high-level customer satisfaction for customers to sell your products on Amazon.
Amazon uses your ODR to rate customer experience and satisfaction after placing an order. The eCommerce marketplace considers three aspects of the purchase experience to measure ODRs over 60 days. These three components include:
- A-to-z claims
- Negative feedback
- Credit card chargebacks
Amazon expects all its sellers to maintain an ODR of 1%. So any number higher than that is a higher ODR. Remember, Amazon offers its customers an A-to-z guarantee, which means sellers must offer a high-level experience from when the customers purchase to when they receive their package.
That should concern any eCommerce store still using a decentralized product management system. With such an obsolete product information management system, teams must manually retrieve data from various sources, files, and documents. It's a tedious process that takes time and adds to your employees' already busy work schedule. It also goes without saying that your team members will feel fatigued, increasing the chances of errors and inaccuracies in order management. As a result, your ODR can significantly spike, and it often comes with serious implications.
Amazon is very strict about ODR. If your ODR reaches 1%, the following measures could be taken against your retail business:
- You might lose the "Buy Box" automatically for any product associated with your online retail business
- Your Amazon seller account can be suspended or terminated. A Suspension applies to an account with ODR slightly higher than 1%. If your seller privileges are removed, you have 17 days to appeal the suspension and get reinstated.
- However, if your ODR is way higher than 1% due to numerous cancellations or late deliveries, customers will start viewing the marketplace as an unreliable online store. As a brand, Amazon's reputation will be on the line. Your account will be terminated immediately, with no chance of appealing.
A PIM system can keep your order defect rate low by ensuring a consistent brand voice and image. Its centralized database helps you deliver the relevant product information at the customers' speed, thereby providing higher customer satisfaction while lowering your ODR.
Other disadvantages of decentralization include the following:
- More errors and data loss
- Increased downtime
- Time-wasting on low-value, redundant tasks
- Lack of high-level understanding of business metrics
- Requires more people to handle the same amount of work
With a PIM system, you have all up-to-date product information to help you get your products from the shelves to the market faster. It provides huge time- and cost-saving opportunities while improving customer experience and teams' productivity. With a PIM tool, gaining brand visibility and consistency across multiple channels has never been so hassle-free and effective.
Experience seamless multichannel selling with Zentail – the award-winning PIM software designed by top sellers for multi-channel sellers. With Zentail, you get an elegant multi-channel platform that helps unleash your brand's full potential, multiplying your brand's sales three-fold. Streamline your operations, optimize listings, and grow your business. Visit us online to book a demo today!
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