Why and How Retail Automation Is Disrupting The E-Commerce Industry

April 25, 2017

E-commerce is growing. A recent study by the ARC Advisory Group suggests that e-commerce revenues have increased 51% over the last five years, with 42% growth expected in the next five years.

This huge growth represents great news for busy online retailers, although it also means efficient fulfillment is now more important than ever before. Which is why retail automation is starting to have such a big impact on the industry.

The Importance of Integrations

“Integration” is a nonspecific term, but it’s a term that sells. Look at the websites of most e-commerce software companies. Front and center is a list of integrations. Why? Because integrations ultimately lead to automation, and that’s an important part of growing and scaling your business.

Without integrations, businesses end up with slow, home-grown, error-prone processes that often revolve around spreadsheets, lists and a lot of manual entry. Integrations hold the promise of a simplified and streamlined future by automating what would otherwise be a repetitive process of passing data back and forth between two systems.

Problem of the Day: Marketplace Management

When e-commerce was born back in the 90’s, things were completely different. Today’s giants, including Amazon and eBay, were just starting out and were incredibly lenient when it came to design and demands.

These days, marketplaces are far more controlled with rules and penalties aplenty — Amazon enforcing brand permission from retailers and cracking down on incentivized reviews is but one small example.

To thrive in today’s market, retailers must adapt to the constantly changing data demands of the various platforms on which they do business.

To illustrate this problem, let’s take an example (one we look at in depth in our recently published integrations-focused eBook, The Software Solution). In this scenario, you’re a popular international golf retailer based in San Diego.

You began the business six years ago, and have grown to a rate of fulfilling more than 500 items a day, selling on a range of channels utilizing ChannelAdvisor. The bulk of your sales come through your website, Amazon and eBay.

Starting out, your product catalogs were simple spreadsheets — easy, cheap and functional. Then the business grew. As new SKUs and sales channels were added, it quickly became apparent that spreadsheets were not intended to facilitate good processes.

As you expanded, demands on your team also grew. For example, the buying team had to keep hot products available, stay on top of fulfillment in a timely manner, and manage products across a multitude of sales channels. Growth added complexities to the business that weren’t there before.

ChannelAdvisor proved to be a huge asset in disseminating product data across marketplaces, automating much of the listing and inventory management constraints that come with multi-channel retail. As a result, your catalog grew from 2,000 SKUs to 12,000 SKUs during the last two years — both a blessing and a curse when it comes to catalog management!

The curse becomes apparent when you realize product data is getting mixed up. One morning, when one of your key employees has called in sick and you’ve received one of your highest volume of orders in months, you discover that you’re dealing with a mess. Feeling the pressure to fill all the orders accurately and quickly, you identify the following issues:

  • Multiple sets of product data  — such as location of inventory in the warehouse, inventory levels, and so on — on more than one spreadsheet. Confusion arises when you’re unsure of which one to use or which one is more recent.
  • Marketplaces and sales channels that don’t get updated with new inventory levels or new product offerings in a timely manner — or at all.
  • A spreadsheet that is too large, messy and clunky for anyone to open and edit.
  • A product catalog that isn’t always readily available for those who need it, or isn’t presented in a format that can be effectively used.

All of the above lead to lost sales and cumbersome, error-prone workflows that make daily operations more expensive, impede growth and impact morale.

This is where a Product Information Management (PIM) solution can help.

Solution of the Day: Catalog Push

The core tenet of product data management is data consistency — which is easier said than done.

Product data exists in the following systems and each system must agree on what a specific item is:

  • Any number of marketplaces: Amazon, eBay, Walmart, etc.
  • Your website: Shopify, BigCommerce, Magento
  • Multi-channel listing software: ChannelAdvisor
  • Your PIM, spreadsheets or other back-office data solutions

In a perfect world, modifying one set of product data — your PIM — will trigger a chain reaction across all channels, updating existing listings and building new ones when necessary. Fortunately, that’s the world we live in and the solution you’re looking for is an integration to push catalog data to various sales channels.

Whether it’s creating new products or making updates to existing ones, it’s all about consistency.

When it comes to product data management, accomplishing this consistently requires a single, authoritative source of product data and automation, preferably in the form of an API integration to push that data to the specified channel.

Importance of Product Data in the Warehouse

Looking at the software mix of our golf company, a reasonable question to ask is why not use a solution like ChannelAdvisor as your authoritative data source?

So why utilize both a PIM and a software solution as a growing multi-channel retailer? Because you have more than just sales to complete — you need accurate product data in day-to-day business operations including buying, warehousing and fulfilling to run a scalable, efficient business. I go into more detail on these three key areas in our eBook.

It ultimately boils down to the fact that leveraging a single set of product data in your PIM allows for consistency and flexibility in your business to scale across marketplaces and sales channels. As a result, your life is made easier, your workforce is less stressed and your operations are more streamlined.

Most importantly, this allows you to continue growing sales.

Product Data and Flexibility Across Channels

Another big advantage in having a centralized PIM that houses your product data is that it gives you an opportunity to leverage a smaller data set across more sales channels.

For example, a popular item that tends to sell daily on our theoretical golf retailer’s website is a waterproof golf shoe.

But just as there is no one-size-fits-all golf shoe, for different sales channels there is no one-size-fits-all product title, description, style, language or price. Different channels attract different customers who find different information more relevant to a purchasing decision. Some data can — and should — be identical, whereas it’s essential to change other data for a variety of reasons.

Here are just a few examples of varying data requirements across channels:

Product Titles — On our example website, the shoe is titled “FootJoy D.N.A. Golf Shoe.” Simple. However, on Amazon and eBay, it’s titled “FootJoy D.N.A. Men’s Waterproof Breathable Golf Shoe.” On your website, the name can be short, clean and organized, but on other marketplaces, the title needs to be more focused on acquiring people through search terms.

Product Prices — In this example, all three listings have varying sale prices, to account for different fees levied by each individual platform. Using the automated process known as Catalog Push, you are able to independently push different retail prices to different marketplace listings from your main hub — an automatic process that may take into account your margin among other pricing factors.

Product Pictures — In comparison to the different title requirements, all three listings can use the same product pictures for clarity and continuity. In addition to creating uniformity across different platforms, it allows you to take one set of product photos and distribute them to all marketplaces automatically, making your life easier.

There are also some variables that influence the importance of a Catalog Push integration with your sales channels. These include:

Catalog growth — the more often you add new products to your catalog, the more often data will need to be updated to your sales channels to maintain data consistency.

Catalog size — marketplace demands aren’t static, meaning your data needs to keep up with the times. Larger catalogs leave more room for error with manual workflows, adding more value to a strong Catalog Push integration.

Number of channel integrations — the more channels you need to update your product data to, the more likely a mistake will be made or a channel will be forgotten if it’s done by hand.

In short, the larger and more volatile your catalog is, the more important it is to automate product data conveyance to channels to keep them all consistent.

The number of channel integrations compounds this issue, which is why so many businesses find that having a strategic software partner helps reduce the number of marketplaces they have to manually touch.

There are many other considerations to take into account in product catalog management and fulfillment, but you now have an idea of how a good integration can solve marketplace management problems. The key to data consistency is automation.

Blog post by Sam Moses, CEO, RetailOps