Wrestling with product data has become a core concern of electrical distributors of every description, one of the hard, expensive problems that must be addressed daily. So much of each company’s fortunes — from operational efficiencies to market perceptions — are shaped by how smoothly the data flows that it’s hard to overstate its importance. This isn’t exactly news. For years people have said product data is the most valuable stuff a distributor handles. How can it still be such a pain? More importantly, what can you do about it?
Data’s challenges flow from its sheer scale and complexity and its constant state of flux. Most electrical distributors carry hundreds of manufacturers’ products, each offering hundreds or often thousands of discrete products. Every detail of their configuration can affect customer choices. Doing it right is an immense and unending challenge. Doing it wrong can be fatal for the company.
Electronic commerce has put the importance of good product data front and center. It has also increased the demand for more, and more varied, data on each product by orders of magnitude. Many organizations in the electrical industry have spent decades working on this problem.
One of the industry’s primary providers of electrical product data, IDEA, Arlington, VA, has 2.4 million SKUs in its Industry Data Connector master data management platform (formerly known as the IDW) and the amount of data associated with each of those items has exploded, according to Mike Wentz, executive vice president of the organization.
“Definitely, demand has been growing,” Wentz says. “We see more distributors trying to be competitive with Amazon and more of them have systems they can feel good about, and of course the key to that is content. That has been consistent for the past several years. I don’t think anybody will ever be satisfied with the content that’s available. The only thing they want is more. The manufacturers keep improving every single day from a quality standpoint. But in every situation, if we have three angles of a photo they want five or six. It’s challenging because nobody ever says, ‘You’ve got everything we need.’ The goalposts keep moving all the time.”
Determining the best way to obtain and use product data will depend on knowing what you want it to do for you. That means building a data strategy to support your company’s overall goals. On page 20 EW’s editors have collected some of the key questions you need to ask your team to get some focus on your data needs.
Most distributors aren’t trying to build an online e-commerce platform to compete head-to-head with Amazon or the other elite worldwide electronic commerce sites. They don’t want to sell everything they carry to customers all across the country or around the world. But when it comes to online commerce they still are compared with those sites every day because nearly everyone shops that way at least some of the time and that experience shapes their expectations.
Distributors are very aware of the threat posed by companies such as Amazon but most don’t see significant direct impact on their sales. But that view doesn’t capture the real risk they face online, says Dale Holt, a former distributor who sold his company, Codale Electric Supply in Salt Lake City, to Sonepar in 2012 and then started a company, Distributor Data Solutions (DDS), to tackle the problems he saw in handling product data.
“They look at it and they think, ‘I haven’t lost that much’ — everybody’s lost some degree of it — but the way I always looked at my business, you don’t have to lose all your business to go broke, just enough of your profitable business,” Holt says. “If all you’re left with is cutting wire for 3% and all the heavy lifting and you lose the higher margin business, you don’t have to lose a lot of that to get yourself in trouble financially.”
That comparison with Amazon is what’s driving distributors to demand an ever-increasing assortment of product data including not just images but multiple images from different angles showing different applications, 3D renderings, animations, videos and anything else that might help a visitor to the site make a decision about which product to buy.
Most distributors are more focused on creating a clean, rich and easy-to-use online presence for their existing customers. Some want to move smaller accounts online to free their salespeople to concentrate on the larger customers while others need to respond to demands from large customers who want to be able to buy everything electronically.
Even with limited objectives distributors face the challenge of obtaining and handling a huge amount of product data to support those goals. The very largest distributors have the scale to justify creating in-house organizations to aggregate and enhance product data they obtain from their manufacturers. Smaller distributors must be more careful to keep the costs in line with their budgets.
There is a variety of options for obtaining electrical product data and which one, or which combination of them, works best for your company will depend on several factors.
Distributors who want to “roll your own” product content by obtaining data direct from their manufacturers, aggregating it, enriching it and customizing it to reflect their unique identity in the market face a massive challenge.
Doing it yourself is unlikely to cost you less than paying a service to handle it, and it’s far more likely to lead to cold sweats, nightmares and bankruptcy proceedings. Unless you have either very limited needs or very deep pockets, you will want some help from those who specialize in the nuanced madness of formatting and updating product data.
Most distributors benefit from sourcing their product data from one of the handful of primary data sources in the industry.
The Industry Data Exchange Association (IDEA), Arlington, VA, has become the standard for product data in the industry after almost two decades of work. The organization, a joint effort by the National Association of Electrical Distributors (NAED) and the National Electrical Manufacturers Association (NEMA), was built to support and streamline the exchange of product data between manufacturers and distributors with an emphasis on keeping the data unaltered and entirely in the control of the manufacturers and their authorized distributors.
Trade Service Corp., San Diego, has played a role in electrical industry product data for many generations, originally providing the industry’s go-to pricing tables and product descriptions, then evolving into distributor product catalogs and now to providing comprehensive and enriched product data and an expanded array of data services.
Unilog, Wayne, PA, began as a data services provider distributors hire to format, normalize and customize product content and has expanded into hosting and supplying full product data, most recently under an agreement with the buying/marketing group Affiliated Distributors to supply its member distributors across its seven vertical industries with a subscription-based source of enriched product data.
Distributor Data Solutions (DDS), Salt Lake City, is the newcomer of the bunch, an effort launched by electrical distribution veteran Dale Holt after selling his Codale Electric Supply to Sonepar in 2012. DDS has invested heavily in software development and data architecture expertise to fit a vision of a thoroughly modern and comprehensive, cloud-based, machine-learning-driven source for enriched product content.
Most of the product sourcing services offered by these organizations are billed on a per-SKU basis so there’s an opportunity for distributors to control their costs by selecting a limited range of products to feature on their e-commerce platforms. Many distributors take this approach, says Joe Bennett, Senior VP-North America, for Unilog.
“You may be talking just 15,000 items to start. You walk on the journey,” Bennett says. “You don’t have to get all 850,000 products you carry normalized, enriched and ready to go. You’re going to get a big chunk of your business flowing through your website with 15,000 SKUs that make up easily 85-90% of your sales. I would work on getting that data enriched and right for me.”
Seeing the difficulty distributors face in obtaining product content, the industry’s distributor buying/marketing groups have stepped up with investments in technology and service agreements that have quickly changed the game for many of their member distributors.
AD, in partnership with Unilog, and IMARK Group, in partnership with Trade Service, now offer subscription-based access to data feeds from their supporting manufacturers. In its agreement with AD, Unilog receives a data feed from IDEA and normalizes and enhances the data for AD members. Trade Service provides its own data feed from the manufacturers. Members in both cases can also contract with the data providers to add manufacturers that aren’t in the groups to the data platforms and download all their data from that one source.
Distributors who aren’t buying group members or who choose not to subscribe to those services still have other options for mitigating the cost of data by forming their own ad hoc syndicates of distributors who contract with a data provider to share the cost of product content.
Distributors who use subscription services must decide for themselves to what extent they’re content to use the identical product descriptions, images and other data that their peers use, or whether it’s worth the extra cost to invest in unique content that will set their sites apart. Customizing at least part of the content can be not just an advantage in terms of marketing differentiation but will also help the site score higher on Google searches as Google gives preference to unique content.
“We have a handful of customers who leverage our writing teams, so they take what the manufacturer has and write something unique, something similar to that but it’s unique,” says Brian McCarthy, vice president of sales for Unilog Content Services. “When you’re starting to look at unique content, that means SEO is a big thing for you and you’re starting to look outside your distributor walls. You want to collect unique eyeballs from the web.”
Whichever service or combination of services you choose to draw your data from, don’t expect it to be flawless. In the case of IDEA, despite intensive work to get manufacturers to comply with very precise data content and formatting standards, it still is at the mercy of the manufacturers’ ability and willingness to collect, compile and provide the data. Trade Service and Unilog, despite their hands-on involvement in cleaning up and categorizing the data they receive, are dealing with a constant tsunami of content and the challenge of spotting exceptions and fixing problems in mid-flow. DDS, having put together a team of technology specialists with data and software experience at firms such as Apple, IBM and Goldman Sachs, is taking an approach unique in this market, of building software tools to handle the entire load. If the system continues to develop as the firm intends, this approach may prove to be the new solution to a very old problem.
“We take sets of products that have already been categorized with a high level of confidence, and, using that as a training set, we have the software and learning algorithms predict which categories they belong to,” says Matt Christensen, vice president for DDS. Subject matter experts from customer companies help verify the results. “It can categorize hundreds of thousands of products in a matter of hours using machine learning and clustering,” he says.
Getting the data you need is one thing; using it is another thing. Distributors have to be sure they have the full technology stack to handle the data and to support their efforts to make use of it. For instance, although your enterprise system most likely has a data repository built into it, trying to load enriched e-commerce data into it will be nearly useless, says Bennett of Unilog.
The PIM system provides the functionality to properly categorize the data so that it can be displayed on web pages, mobile apps or exported for use in print catalog layout. A PIM is also critical to render results from customer (or inside sales) searches on the data and support the intensive cross-referencing, recommendations and product relationships necessary for a rich e-commerce experience.
Obtaining the product data content, getting it properly loaded in the various systems that depend on it and setting up processes for keeping it updated and catching errors is a huge undertaking. But in the eyes of the industry’s data heads, that’s just the table stakes.
To gain full advantage from the data investment, says Denise Keating, CEO of data services specialty firm Datagility, distributors must put the data in motion.
“When you’re looking at digital strategy there are strengths that the distribution channel has, that they can play to, that a purely online retailer like Amazon cannot touch right now,” says Keating. “Distributors need to have an omnichannel strategy, which is the integration of the physical world with the digital world. There’s so much focus on what they have to do digitally that they neglect leveraging the strengths of their brick and mortar stores and really combining that in a way that delivers a more compelling value to their customer.”
Keating says the omnichannel approach involves a lot of nuances that may seem simple but are often overlooked. “A customer may be able to buy products online and they might even be able to see the orders that they placed online, but what the customer really wants is, regardless of how they placed that order, is total visibility of all of the orders that they’ve placed. Distributors will need to integrate the e-commerce system with the back-end ERP system. So now if a customer places an order by phone, in store, or online, you’re making all of that information available to them in your online environment for post-sale order management.
“It’s also about giving customers cross-channel inventory visibility, taking in account inventory for all branch locations and, when that customer signs in, being able to present, ‘This is your preferred store location and we’re going to show you the inventory that we have available where you typically get your products.’ However, distributors can take one step further when the product isn’t available at the preferred location and offer inventory availability from other locations as well as order fulfillment.”
As the industry advances on its e-commerce journey it’s important to keep in mind that doing business using electronic tools isn’t only about website shopping carts. Linkages with estimating packages hold a lot of promise. “The thing about online is it actually represents a very small percentage of the commerce that’s being done within the electrical industry,” says Bob Stone, vice president of business development for Trade Service. “A big amount of commerce that’s being done is over on the project side, with new building. People don’t go out and buy all the gear and lighting and wire and cable for a new building off a shopping cart.”
One of the major efforts among software and data providers in the industry now is the development of linkages from distributor data systems into contractor estimating software and the whole suite of data that flows among architects, engineers, general contractors and subs in the process of getting new construction built.
Some forward-thinking distributors are even beginning to look at website e-commerce as a secondary concern and instead prioritizing data for mobile apps, says Susan Streich, director of strategic accounts for IDEA. “Some have gone straight to a mobile app,” she says. “This makes sense because contractors are mobile workers, they’re not sitting in front of a laptop. Some distributors find apps more effective than having a big online presence.”
As the electrical industry’s technological sophistication keeps advancing, along with the needs and expectations of customers, it will be up to each individual distributor to work with the organizations devoted to providing product data content to stay in that sweet spot where they can deepen customer relationships and grow their businesses profitably.
Sidebar: Questions to Ask
To get a bead on your data needs and start building an overall data strategy to support your company’s goals, gather your team and work your way through these questions.
- What do our customers want?
- How do we want customers to use our site?
- Who are the competitors we’re targeting, and what are their capabilities?
- What’s our resource budget in terms of money, time and human effort?
- Can our existing systems handle what we want to do?
- What are our ROI expectations?
- Who can help us?