Digitialization in Trade

The number of sales channels has skyrocketed in the last few years. Yet, marketing departments and companies such as Google only wanted one thing: the right content — fine-grained and ready for further processing. How is this aspect incorporated by the commerce industries? What are the conditions of possibility for providing customers with the right content at the desired time and place, from onboarding to e-commerce? Stefan Schulte of eggheads and Dennis Klüsekamp of alphabytes grant us insight into their field of expertise.

How has the process of digitalization affected the commerce industries within the last ten years?
STEFAN SCHULTE: In general, e-commerce has gained in significance. Simultaneously, more sales channels have been established, and companies now sell their products via their own online shops, while also serving markets such as Amazon. But offline sales channels, such as the company’s own branch stores, minor flagship stores, and catalogs etc. are also successful channels — spacious shopping malls decline more and more. On the one hand, a combination of online and offline channels together with new channels of distribution grant the chance to present one’s product range in a broader light and, consequently, to generate more revenue. On the other hand, competition grows with new — and international — business rivals. With digitalization comes along the automation of corporate processes. This way, personnel may be organized in a different manner: For example, the sales department or customer service may receive new support in virtue of which the revenue and customer satisfaction increases.

What are the special features of the digitalization of commerce in comparison to other industries?
DENNIS KLÜSEKAMP: The competitive pressure rises. Profit margins decrease — while the expenses increase at the same time. Consumers are more and more willing to prioritize lower final prices over loyalty towards brands and suppliers. Customer retention is a central topic. Commerce companies are to distribute their products to various sales channels under continuously decreasing lead times. With manual labor, this cannot be accomplished anymore — corresponding systems are required to take care of this. With advancing digitalization, the increasing degree of automation with regards to the management of product information becomes an essential factor.

What are the most pressing challenges that the commerce industries are to face here and now?
ST.S.: Positioning oneself and standing out in contrast to one’s competitors is a challenge. Other challenges include maintaining good customer evaluations and a professional customer service. Furthermore, data onboarding — i.e. the provision of qualitatively good product information by different suppliers — constitutes an essential factor. Without adequate product information, no interested parties will become aware of your company!

Given all available marketing channels, how can companies ensure that their content is presented to the customer at the desired time, place, and quality?
D.K.: The analysis of employed marketing measures and of their results is crucial. Marketing measures should only be implemented if it can be guaranteed that they can be analyzed inhouse.

ST.S.: This challenge cannot be tackled alone — which is why companies find a competent partner in us. The correct choice and professional training of personnel for e-commerce and online marketing are factors that are of equal importance. And not to forget: The right system! A Product Information Management system (PIM) guarantees that the product content is distributed to the appropriate sales channel in the desired form, the adequate quality, and correct language. In combination with a Customer Relationship Management system (CRM), an exciting component is added: The content is enriched with customer data to allow for targeted product marketing. With the help of personalization and segmentation together with the combination of PIM and CRM, the commerce company holds a powerful tool in its hands, with which it can increase its sales and capacities. Questions such as “Which interest groups and customers are most interested in which product?” or “What offers the highest and most promising sales opportunities?” can be answered on the basis of automated processes.

What can you provide in order to support companies in these processes?
ST.S.: We view all of our actual and potential clients as partners. Depending on the client’s leading questions and objectives, we counsel them on the correct business strategy, budget planning, as well as the realization of e-commerce and PIM projects — on the basis of our established expertise in commerce. Here, we take all relevant aspects into consideration, such as the selection of suitable online shops, the intersection points with data providers and Enterprise Resource Planning systems (ERP) etc. We know the markets and are partnered with the relevant system providers.

What systems are required for these aspects, and for what reasons?
D.K.: A combination of different systems that communicate with one another is a reasonable solution. What systems and system combinations are appropriate does, of course, depend on the individual processes and objectives of the respective client. In the optimal case, the commerce company has an ERP system with warehouse management, focusing on e-commerce for the controlling and planning of supplies, materials, financial means, and bill of materials etc. On top of this, the commerce company ideally owns a PIM system for the coordination of product information and distribution to the desired sales channels. In the case of an online retailer, an appropriate shop software for operating an online shop is also required. This combination provides the client with sufficient equipment for the marketing of products via both online and offline channels.
The PIM system provides all product and media information, while its import and export functionalities constitute a bidirectional compatibility with all other systems — from online shops, market places, as well as CRM and/or ERP systems etc. The shop system can then function as the tool for managing the points of sale. Suppliers, too, are connected to the PIM via the onboarding process, thereby facilitating the management of supplier data for both the commerce company and the supplier. The same goes for the quality of the data. Together with the aforementioned connection to an intelligent CRM system, the commerce company can continuously control its sales potentials.

How can the sales be improved after implementing the right systems?
ST.S.: The right strategy paves the way to increasing revenues. For the correct business strategy, as we always emphasize, multiple systems are required that are to be coordinated with one another. Through a preceding analysis of the processes and the modelling of objectives, we — the software developer eggheads, together with the e-commerce specialist alphabytes — conceptualize the adequate strategy hand in hand with the client. Besides the current business situation, we also factor in the long-term strategies: What does the commerce company want to achieve and what is on its agenda for the next five, ten, and twenty years? How can the objectives be accomplished with the help of the respective systems?

What significance does the interplay of PIM and e-commerce have?
D.K.: The highest good for a commerce company is — depending on the respective industry — the right product information. Only if the customer is provided with additional value, the decision to purchase can be positively affected. In particular, B2B commerce companies that sell unconventional products are presented with a huge opportunity to position and represent themselves in a manner that is also optimized for search engines. With the right customer retention strategy, customers remain loyal to their retailers. A PIM system can help structuring the information and the distribution to various channels in various languages.

Would you please demonstrate these benefits by using your client DELO Computer as an example?
D.K.: DELO Computer has one of the most complex data structures. As a B2B hardware distributor, DELO collaborates with the most competitive companies in the field, such as Philips, NEC, BENQ, as well as Samsung. However, not even the biggest providers can always deliver extensive article information that can be directly forwarded to the online channels without any further processing and modifications. With the implementation of eggheads Suite for PIM and its connection to one of the biggest data providers, the expenditure of labor has been reduced by 80 percent. Now, the article information is so extensive that they stand out in contrast to the competitors’ article information — a change which has also quickly made its impact on search engines. In the case of the old shop, DELO Computer was barely represented in the relevant search engine results. Only four weeks after they went live with the PIM system, the top products offered by DELO Computer are now in part listed even before the original manufacturers. 4.000 pages were already indexed. Articles have up to 200 attributes — which Google evaluates as a higher quality factor.

ST.S.: Additionally, the PIM system can individualize and organize the article information. For example, the product groups of the subsidiary company are managed independently from the data providers. A comprehensive workflow with connection to the ERP system, the PIM system, and the shops guarantees low error rates.

From your point of view, what chances can the digitalization of commerce provide companies with? What are future business possibilities?
D.K.: Here, I take two sides into consideration. First, the customers. For them, digitalization enables a faster and simpler way of purchasing products, while also benefiting from easier online and direct payment methods. Second, the retailers. Digitalization increases their sales through individualization and service, they can occupy niche markets, and they can present themselves in a broader light. Accordingly, classic retailers sell their products via online shops, while — on the opposite site — many online retailers invest into stationary points of sale. Online and offline sales channels complement each other very well, commerce companies can now tap into new markets, while Europe-wide and global business is facilitated thanks to the process of globalization.

ST.S.: I wholeheartedly agree. The dangers for commerce simultaneously grant new chances. Retailers that have the knowhow and the necessary equipment will open up new markets and gain new customers through digitalization.

This article was published 13.06.2018 on thegroupofanalysts.com
Original German article by Nadine Pelzer
Picture credits: Nora Carol Photography / Getty Images

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