SOLVED! PRODUCT DATA CHALLENGES WITH APPAREL

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2 CONTENT The Complexity of Apparel Product Assortments... 2 Lookbooks for Ecommerce... 2 Problems during Data Aggregation... 4 Supplier Data Adoption and Data Quality... 5 Time-to-Market is Everything... 6 Integrate Customer Feedback... 6 The Role of the PIM System in Apparel Retailing... 7 Ecommerce Solutions for Apparel Industry... 8 Conclusion... 9 Heiler Software Authors: Sylvia Dömer, International Retailoring / Christian Farra & Christian Hütel, Heiler Software AG Enterprise Product Information Management White Paper Chapter 13 1

3 Today s world of apparel is fast-paced, colorful, complex, extravagant, and above all, elaborate in its upkeep. Internationally successful apparel labels, retailers, and manufacturers such as Puma, Saks Fifth Avenue, and Tommy Hilfiger must face the challenges of a constantly growing and changing market. Fortunately modern IT systems can provide much needed help. This white paper addresses the tasks and challenges companies from the apparel industry must overcome while also showing how these companies can attain sustainable business success through the integration of product information management software solutions. It is based on the opinions of specialists and the expertise of ecommerce managers from the apparel industry, both retailers and manufacturers. The Complexity of Apparel Product Assortments When asked about the size of their product range, manufacturers and retailers often answer with common yet industry-specific numbers. 2,000 items seems like an average and reasonable response. At first this doesn t seem too complex, yet until recently apparel retailers did not fully realize that attributes such as size, color, and seasonality make managing the product range much more complicated and demanding. The number of actual available products increases exponentially when these variables are taken into consideration. Every item comes in various sizes, ranging from Small to XXXLarge. Some items like shoes require even more information, such as country-specific labels. Another crucial factor is color, which plays an extremely important role in the apparel world. Last but not least, apparel is constantly changing from season to season. Not many items are offered throughout the entire year. Seasonal apparel trends, to which the apparel industry is eager to defer, quickly establish themselves based on geographic location and climatic actualities. If one considers all factors and multiplies these with the originally presumed product range, the following calculation applies: Figure 1 Example of a product range calculation The list of factors can be extended as required. Companies in the apparel business must keep up with this enormous amount of datasets. For multi-brand companies such as Bestseller or Otto who manage nine brands in-house, the product range increases exponentially. Lookbooks for Ecommerce Today, various measures are implemented to increase sales specifically for online selling. Predictions of what a new customer will like are made based on the purchasing statistics of previous visitors to the online store. Customers can find these suggestions under a "Customers Also Bought section. Expanding to other product areas with sometimes lower margins may result in profits for retailers, but in turn can also lead to questionable relations. Cross-Selling, or recommendations made to customers, is another method used to increase sales. Additional items are suggested to complete outfits for individual products, such as jeans. However, this strategy also has a decisive disadvantage: It demands a large measure of imagination from the customer. Their tastes are just too varied. How does a customer know whether a green cardigan will match grey shoes or whether a simple scarf will complete an Enterprise Product Information Management White Paper Chapter 13 2

4 outfit? Studies show that customers often do not even know what they want to buy when they enter a store or visit an online shop. Customers can often be persuaded by spontaneous incentives. Indeed, proven and future-oriented concepts have asserted themselves to turn an indecisive web browser into a purchasing customer. Industry insiders know that today's apparel is presented and sold with styles or look books. This means that coordinated and seasonal outfits are displayed instead of only individual items. Quite frequently these outfits set the trend for a particular season. Complete styles also give the customer the feeling that her purchased items are trendy. For the retailer this is a total success because profit margins increase and complete looks can be sold more readily. Figure 2 Example of a look The advantage to visiting a store in person is that one has the opportunity to feel, touch, and try on merchandise. Mannequins fulfill the visual role at the point of sale in the store s display window, yet online shops also show great potential. As shown in many studies, a product sells particularly well over the internet if it is well illustrated - and even better if short videos are included. The clever usage of product videos with live models gives a customer an even better impression of the product. Although the customer cannot touch the product, common apparel characteristics like the look, folding, and the fit of the items are conveyed. Also, clothing that is showcased by live models on a catwalk rather than by mannequins has a greater appeal to customers. The time-consuming and frustrating process of trying on clothes can be avoided. The customer primarily buys when visually stimulated by media. Today, various online apparel retailers offer the possibility to try on different clothes. Clever algorithms are used to detect the shape of the body or the human face. Ideally, the customer just clicks her outfit in order to try it on. Enterprise Product Information Management White Paper Chapter 13 3

5 Figure 3 Example of a product video on Saks Fifth Avenue s ecommerce site. Problems during Data Aggregation What makes the topic of master data management (MDM) or product information management (PIM) for apparel labels so unique? As already mentioned, a large product range presents a challenge to apparel retailers as it requires the efficient management of data. The clearance and processing steps are quite varied. External agencies, photo studios, the legal department, and marketing - all participating groups, even some external groups, participate in the process. Many apparel retailers online are not aware of the significance of perfect product data and its management. They form marketing strategies and invest in various directions, often without well-thought-out ROI strategies. Social commerce then ends in appearances on Facebook, as companies hope to sell something there. A well-formed, multichannel strategy with associated measurement data, analysis tools, and success measurement remains a rudimentary, manually pieced-together work of information. Meanwhile marketing is becoming more and more complex. Just when you think you ve mastered social commerce, a customization for mobile commerce is required - and so on and so forth. As already mentioned, data volumes created in the apparel industry are completely undervalued. In apparel seasonality is also an important factor. For accurate evaluations, different seasons collections must be distinguishable from each other. Adjustments in price also play a role for seasonal sales. Sale analyses must be differentiated by price and the sale price, otherwise wrong conclusions can be reached. If manually executed, the complex process of data storage and evaluation leads to time delays and aging of data. The learning effect disappears - or the final evaluations are not even read because they are already outdated upon completion. This is especially disastrous in the apparel world as this industry thrives from fads and rapidly changing Enterprise Product Information Management White Paper Chapter 13 4

6 trends. The problem begins with item filing and master data entry. If the foundation is a homespun Excel file, then measuring success and product range control cannot be executed accurately and efficiently. Often manual changes and updates to these Excel tapestries lead to errors that can immobilize a company for days until the error is found and resolved. It can also lead to delays in product launches, which in turn has a negative effect on sales. Order forms and/or order sheets, which are used as the foundation for manually filing items, are often incomplete. Important missing information can be a reason for this, i.e. missing seasonal label numbers, product indications, marketing target planning, and inconsistent color specifications. This lack of data lays the cornerstone for elaborate subsequent editing when the product process switches over to the marketing planning phase or later to the sales analysis phase - and all of this occurs in the broad variety of the various sales channels. It is a vicious cycle as sales evaluations again lay the foundation for the orders of the following season. The resulting disadvantages of manual data management with table calculation programs are as follows:» Manual duplicate data entries» Missing referral to media assets in data entry» Elaborate accumulation of information» Missing consistency examinations» Classification of styles without reference to hierarchy» Manual conversion of data» Manual control of data quality» Process lasting several weeks» Premature process planning becomes a necessity Supplier Data Adoption and Data Quality Data arrives from a supplier with a fixed nomenclature. These are usually color specifications, washing instructions, sizes, etc. The data is harmonized within PIM and enhanced with other information. For example, some retailers prefer a fixed code for specific colors such as polar white. Another example is the synchronization of various size specifications or washing instructions. Images are another crucial aspect in apparel - they are unarguably the most important selling feature when selling over the internet. These media assets are most often provided by external agencies. The simplified onboarding of media, also through external access, greatly simplifies and accelerates this process. It is especially valuable for ecommerce managers since an independent agency s delivery of media assets can be ensured. Having everything in one system means access to the product information management system from anywhere. The Heiler Media Portal supports this collaborative approach to provide and process media objects. These are directly uploaded from the media provider via the web frontend. An automatic allocation of name conventions of provided documents with PIM objects additionally reduces the workload. The automatic allocation of a digital asset to a PIM object simultaneously prompts the automatic creation of associated derivatives (other sizes, qualities and/or formats). The simplified cooperation with external service providers and determinable workflows saves apparel companies valuable time and also increases the online store s conversion rate. Enterprise Product Information Management White Paper Chapter 13 5

7 Time-to-Market is Everything Since images are very important for apparel retailers, companies should establish strict data quality levels for this field. The product characterization must include at least one image, a short description, color specifications, and available sizes. Over time the data enhancement process can add to that, providing further descriptions, additional images, videos, and cross-references. The process can be continuously improved. One of the most important things for apparel retailers is to get the product online and ready for sale as quickly as possible. 5 tips for apparel retailers:» Product data quality is one of the most important factor for online businesses» Images are the most important, emotional selling features» Initially one image with a rough description is sufficient to put a product online for sale (add more over time)» Continuously improve data quality over time» Use all language versions from the start After a short period of time, the item should be available online with respective labels and in various languages. The process describing the time period from importing the item to integrating it into the online store is called time-tomarket. During this time the product only incurs costs and does not generate any profit. It s important for the retailers to shorten this time to reduce costs. Being the first to put a product on the market gives the retailer a distinct competition advantage. Let s imagine that Justin Timberlake just made a music video and MTV is showing it. In the video he is wearing a new shirt by Jack&Jones. Fans will use Google to search for the same shirt using search terms like shirt justin timberlake. According to a study conducted by Heiler, the processing and configuration time for a new item can be reduced from 12.5 minutes to only 8 minutes by utilizing a PIM system. This is possible due to the quick integration of product information and high flexibility of the online store. Overall, this can save you of 30% more time per product. After a short period of time the item would be available online with respective labels and in various languages. Shortening the time-to-market is achieved due to the improved internal and external processes; it is not only a measure of reducing costs but also a factor for increasing profits. Integrate Customer Feedback Companies in the apparel industry should take advantage of direct customer contact in the form of evaluations and feedback. Today customer feedback is one of the most important pieces of information used for product planning because it makes it possible to identify trends earlier than in the past. Most of the time reviews are illustrated by a 5 star scale. The option to leave a comment should also be included in the review system. The possibility of receiving negative feedback shouldn t be viewed as a risk factor. Responding to a negative comment can also create a sense of trust in a community. Negative feedback can point out mistakes in the store or in media assets that the retailer is unaware of. Reacting quickly is essential in this case. According to the Heiler study, correcting faulty data across all channels is significantly faster when using a PIM system. Time spent detecting and resolving errors can be reduced from 4 hours to only 1 hour (75%) when using a PIM. Time needed to configure an item for search engine optimization is also decreased. All of this information can be integrated in today s PIM systems and contributes to establishing a product range. As you can see, information has a strategic value for companies. Data quality as well is significantly influenced by a PIM system. Companies are already utilizing direct customer integration in their online communities. On some platforms buyers can create their own videos showcasing a certain outfit or product. This not only creates content to illustrate products but it also supplies the retailer with authentic customer videos. Not only does the retailer gain a reputation for being customer-friendly and innovative, but their customer loyalty is increased, too. Over time a community of customers Enterprise Product Information Management White Paper Chapter 13 6

8 forms around a company. The PIM system makes participation and integration of customer feedback possible for the apparel retailer. The advantages of integrating customer reviews include:» Optimized product range and prices» Improved data quality» Increased customer trust» Increased customer loyalty» Reduced return rate» Early detection of trends The Role of the PIM System in Apparel Retailing In order to be able to answer all evaluation questions with the push of a button, the product information management system (PIM) + enterprise resource planning + shop system must be linked and homogenously coordinated. This seems to go without saying, yet the sale of apparel is complex, erratic, and fast-paced, making the controllability of data an indispensable existential factor. It is quite astonishing that companies will rely on these handmade databases for marketing, along with sales software programs, which are most often not integrated with each other nor controlled by any criteria. This mix of manual work and different software programs makes the control of an apparel company in all its complexity impossible. If the data control is not well constructed, the occurrence of a data crash and/or faulty evaluations is inevitable, and these problems can present a tough challenge to any company. The sooner the possibilities for a new solution are explored, the quicker company growth can be secured, allowing departments to focus on their core tasks again. Managing all production data in a central data source has the following advantages: Data entry process in a central system» Establishment of a central data management team» Gets the best out of the data silos by creating a single point of truth for product information» Mass data processing» Image preview directly in the PIM system Improved data quality» Completeness of data» Exactness of data» Validation of data» Automatic consistency examinations» Software workflow and notifications Future-oriented investment» Increased independence, interface takes care of synchronization» Improved time-to-market» Platform-oriented toward the future, scalable and grows with business requirements Enterprise Product Information Management White Paper Chapter 13 7

9 With four or more seasonal sales phases, time-to-market has become extremely important in the apparel industry. When time is of the essence, planning new product collections and data entries cannot take several weeks. As already mentioned, processes are often run parallel due to external agencies and distribution to other national subsidiaries. Manual data entry is therefore inadequate for successful ecommerce retailers, and this does not only apply to the apparel industry, but to all businesses alike. Ecommerce Solutions for Apparel Industry In ecommerce, product information is the deciding factor that influences customers to buy or not buy. The interface integrated in Heiler Enterprise PIM simplifies the entry of product attributes so that the customer is able to search for products, make comparisons, and ultimately buy a product. For retailers and manufacturers in the apparel industry, a product information management system does not merely mean simplification and harmonization of data entries and operational processes. Heiler Enterprise PIM supports individual ecommerce strategies - whether these are online shops, market leading systems, or sales channels on Amazon, ebay, or Facebook. Special ecommerce channels (adapter) ensure an individually customized export of all product data to the respective sales channel. This makes it possible for the PIM system and ecommerce solution to communicate seamlessly about items, products, merchandise groups, digital assets, and much more. Protocol of data changes makes it possible to incrementally update online data. Figure 4 Standard ecommerce integrations in Enterprise PIM Enterprise Product Information Management White Paper Chapter 13 8

10 The functional areas of ecommerce standard templates at a glance:» Support the retrieval of data for items, products, catalogs, structure systems, structure groups, digital assets, and data (e.g. prices, logistical data, references, etc.)» Option of mapping product and item relationships for variant mapping in the same way as in the user s ecommerce solution» Create export format templates to supply ecommerce solutions with all relevant product information» Integrated channel quality assurance, including all validations relevant for the reference implementation to ensure QA approval of the data in the ecommerce system How retailers can benefit from it?» Huge flexibility in terms of international ecommerce strategy» Higher conversion and lower rate of returns due to flawless communication of information via the internet» Pre-built templates reduce implementation and operating costs In addition to ecommerce templates, additional channels can also be supplied with product information within the capacity of a multichannel strategy. Heiler Enterprise PIM, for example, supports the search and targeting solution by Fredhopper. Also, digital signage at the point of sale, apps, and mobile applications can also be serviced if desired. Conclusion Many companies invest large sums of money in optimizing their stores. The increase in global business models demands, especially for multichannel distribution, is growing. It definitely pays off to take a look behind the scenes. Entrepreneurs in the apparel industry should respond to these increasing demands and invest in IT systems. When considering the vast data range in this industry, a complete view of all product data and its management in a system is indispensable. A configuration of all processes is required in order to attain a sustainable ecommerce strategy. In particular, the efficient provision and aggregation of product data is essential. This begins when filing master data for all products. The apparel business is too fast-moving and trends are too erratic not to have perfectly-managed product data. The well-informed salesperson makes the sale and this is not only true for online shops. Faster time-tomarket is not only essential but it s also the key factor for long-term business success. Today successful apparel retailers use every possible sales channel because it s the only way to generate customer loyalty in the form of emotional shopping experiences. A central product information management (PIM) makes this approach possible because of the direct integration of customer feedback. Enterprise Product Information Management White Paper Chapter 13 9

11 Heiler Software Visit our social media channels and receive first-hand information about products, companies, and events. You will also find a large number of videos to view. Become a fan and follow us. We look forward to meeting you! Enterprise Product Information Management White Paper Chapter 13 10