eCategory Management: Growing and Protecting Your Brand Online
Protecting the brand. Controlling pricing. Dealing with rogue, unauthorized sellers. All are almost daily challenges for brands and manufacturers into today’s turbocharged ecommerce channels.
eCategory management can help.
Etail Solutions recently released a new special report: eCategory Management: Reclaiming and Protecting Your Brand in the Ecommerce Age. The new report takes an in-depth look at the strategies and tools brand marketers need to get their ecommerce channels back under control.
Building Brand Online
There has never been a better time – or a more challenging time – to build a brand.
Gone are the days where it took millions of dollars and dozens of years to create brand awareness and brand equity. Today, thanks to the Internet and rise of ecommerce, new brands, digitally native brands, direct to consumer brands and micro brands are building consumer awareness and loyal fans in months rather than years. That’s the good news.
The bad news is that it has never been tougher to manage and protect a brand. Unauthorized sellers list branded product on major marketplaces – with the marketplaces’ full support and cooperation. Rogue players break MAP, creating channel conflict and race-to-the-bottom pricing. Control of brand content slips away – eroding brand equity at best; creating inaccurate, maybe even illegal, content at worst.
Brand owners need to take back control of their brands.
This is more than a marketing issue, more than a sales management challenge. It requires a different way of thinking about brands and a new toolset for managing them.
That toolset is called eCategory Management.
The term eCategory management is used to describe all the efforts of consumer goods companies to manage the online channel.
In the past decade, online sales have grown ten times faster than in-store retail. Today, two thirds of all shopping trips begin online, regardless of where the final purchase takes place. By 2020, 20% of all retail sales will be made online.
After years of ignoring – or at least under managing – the online channel, brand marketers and manufacturers now are viewing digital commerce as a growth engine.
According to a study by McKinsey and Company of senior sales, marketing and IT leaders from consumer goods companies, 91% say building eCommerce capabilities is a strategic priority. Some 78% say building eCategory management capabilities are within the top five priorities for management or the sales organization. Yet only 22% of respondents said they actually had implemented eCategory management.
Most brand marketers couldn’t imagine working in a company without a dedicated team and resources to manage operating in the mass merchandiser, grocery or club channels. Yet that’s exactly what they are facing in ecommerce – the fastest growing and dominant channel in retail.
The Road to eCategory Management
Category management is not a new concept in retail marketing. For years, category managers have worked in brick-and-mortar stores, managing product placement and merchandising both on-shelf and for promotions, enforcing pricing policies and setting competitive pricing strategies, and ensuring adequate inventory is available to meet seasonal and promotional demands.
In many ways, the tools of eCategory management are the same as those used for traditional category management in physical stores – just updated and enhanced with technology.
|Brick & Mortar
|Inventory availability||Distribution and shelf placement||Static with occasional promotional pricing||Deals and displays|
|Fulfillment management||Product information management
Listing creation and publishing
|Dynamic, market and competitive price
|Listing content optimization
Channel advertising and promotional programs
eCategory Management Tools
eCategory management is a powerful concept for maintaining control of your brand and economic future in the ecommerce channel. Successful eCategory management requires four types of tools:
- Fulfillment Management Tools
- Pricing Management Tools
- Product Information Management Tools
- Marketing Management Tools
It’s important to note that three of these tools – Fulfillment Management, Product Information Management and Pricing Management – can be implemented either as standalone point solutions or as a single integrated system.
The integrated system approach offers several advantages in eCategory management:
- Absolute data integrity – data enters the system once and doesn’t need to be reentered into disparate systems.
- Automation – routine tasks can be automated to eliminate human error and reduce overhead costs.
- Cross data sharing – data generated by one part of the system can be utilized by another part of the system. For example, inventory data might affect how and where a listing for the inventory is published. Cost of fulfillment data might change the way the pricing is set to win the Buy Box.
- Business analytics – a system that integrates fulfillment, pricing and product information management can also integrate business intelligence and reporting across all these functions – providing a 360-degree view of your eCategory operations.
Let’s take a closer look at these four tools.
Fulfillment Management Tools
Fulfillment management includes as:
- Order Management System (OMS)
- Inventory Management System (IMS)
- Warehouse Management System (WMS)
Many companies offer ecommerce management systems that bundle an OMS and IMS. Warehouse management tools are usually limited and include the tools needed to adapt a more traditional warehouse operation to the demands of single package, direct to consumer ecommerce. They also often include a shipping solution – either created as part of the platform or, more commonly, offered as in integration into one of the large, shipping software solutions such as DeskTopShipper or ShipStation. These integrated solutions are usually preferred because they offer “best-in-class performance” including rate shopping and negotiated shipping rates that the built-in solutions can’t match.
Best-in-class eCategory fulfillment platforms differ from ecommerce order and inventory management systems in a couple of ways.
- End-to-End Integration of Suppliers and Sales Channels
Many ecommerce order and inventory management systems offer some visibility to inventory at suppliers – including in your own warehouses. World-class eCategory management systems also provide visibility into inventory in the sales channel and in transit and are able to reconcile inventory across the entire sales and supply chain. For example, when a unit is sold, inventory in stock is decreased by one unit and designated to fill the order, inventory available published to the channel is decreased by one, and a replacement unit is added to an order to the supplier. All automatically.
- Ability to Execute Multiple Fulfillment Methods
Most ecommerce order and inventory management systems are designed to support pick-and-pack operations with limited support for drop shipping or FBA. Best-in-class systems support multiple fulfillment methods – including often offering tools or wizards to optimize the method.
Fulfillment methods include:
- Amazon: Including 1P, 3P, FBA, FBM, Multi-Channel Fulfilment (MCF) and Seller Fulfilled Prime (SFP)
- Drop shipping
- Just-in-time cross-docking
- Pick, pack ship
Ecommerce and your e-channel strategy is constantly evolving. You need the flexibility to adapt and experiment. One hint: Avoid products offering a “free trial” period. The reason the can offer a free trial is that they are often only optimized for a few channels and fulfilment methods and are only lightly integrated with suppliers. They won’t offer the long-term flexibility and growth you need.
- Intelligent Fulfillment Routing
Many order and inventory management systems claim the ability to route and order to the best warehouse based on inventory availability, location and shipping time. More advanced systems can route based on fulfillment costs by location for each line item on the sales order – ensuring the lowest cost of fulfillment along with any other criteria you set.
- Ability to Scale
Many ecommerce order and inventory management systems are not designed to scale to support enterprise ecommerce. Many were founded by ecommerce entrepreneurs who built the tools for their own business. While these businesses may be successful by the standards of small-and-medium business entrepreneurship, their support systems were never designed to process at massive scale.
Replatforming for eCategory management can be time consuming and painful – even when things go well. You don’t want to outgrow your eCategory management platform.
Pricing Management Tools
The ability to offer the lowest, or a least highly competitive, price is the basis of many marketplace’s value propositions.
How you make money at that price is your problem.
Your pricing tools and strategy should be the cornerstone of your eCategory management program.
- Rules-Based Repricing: These price management tools allow the user to define a set of rules to tell the repricer what to do for a specific product or groups of products. They offer a huge amount of control and flexibility. But they also take a lot of time and effort to decide what the rules should be and then configuring the system.
- Algorithmic Repricing: With algorithmic repricing, you only need to supply the repricer with the minimum price you are willing to accept for the product. The repricer will then use its own predefined algorithms, competitive data and price experiments to find the optimal price that maximizes revenue while keeping the price as high as possible. The problem with this approach is that the repricer is only as good as its algorithms. Different algorithmic repricers will deliver very different results.
Some systems combine both rules-based and algorithmic repricing.
The problem with rules-based and algorithmic repricing is that they do not consider the total cost of selling the product. For example, your product cost or fulfillment cost may have changed since you set up the repricer. So while they may help you win the Buy Box, you could still lose money on the sale.
A third type of price management tool is an Integrated Dynamic Repricer. These tools are integrated into your Inventory and Fulfilment Management Systems and automatically capture vendor price changes and cost changes — including the use of different fulfillment methods — in a calculating a price. Pricing is based on maximizing margin – not just winning the sale at any cost.
Dynamic repricers also allow you to set up pricing strategies, not just blindly react to competitive actions. For example, if you have authorized resellers you may set up your repricing strategy to never compete with them.
Product Information Management Tools
Product Information Management Systems handle the logistical complexities of publishing and maintaining your product listings and catalog.
- Managing product information from a single source of truth and publishing out to multiple marketplaces while meeting the unique requirements and taxonomies of each marketplace
- Managing static product attributes such as product dimensions, item weight, shipping weight, UPC and category
- Managing marketplace-assigned attributes such as ASINs
- Managing the publishing of marketing assets such as headlines, product descriptions and photography.
- Managing dynamic product attributes such as price and inventory availability. As we’ve seen, advanced eCategory management platforms integrate listing management into their price and inventory management systems to adjust listings in real-time
- Managing item variations such as color and size
- Managing product alternatives such as kits and bundles
Best-in-class eCategory management tools include several advanced capabilities for product information management. These may include:
- Automatching: The ability to identify and list all listings for your products – not just the listings you or your authorized sellers create – by UPC, ASIN or other information. This is useful for spotting unauthorized sellers, ensuring adherence to brand guidelines, and identifying violations of MAP.
- Restriction Management: Automatically remove listings for products restricted by the marketplace or containing ingredients that are banned. Prevent the creation of new listings for the banned items.
- Dynamic Inventory Publishing: Control inventory availability on each channel. Automatically delist when inventory is unavailable and relist when inventory is restocked. Prevent overselling, the need to cancel orders or back orders and potential marketplace penalties.
Marketing Management Tools
When most brand owners think about category management, they are thinking about tools for advertising, promotion and marketing optimization – in other words, marketing management tools.
Experienced eCategory managers realize that successful ecommerce strategies are based on establishing and stabilizing a system for listing products, pricing aggressively and fulfilling efficiently. That creates satisfied customers, four-star reviews and – most importantly – the margin needed to grow and compete more aggressively. Only then are they ready for promotion and optimization.
There are many marketing tools available to manage content, optimize listings and SEO, manage reviews, test alternatives and provide analytics. Unlike integrated fulfillment, pricing and product information management tools – where data integrity and passing and leveraging data across the toolset can create new capabilities and competitive advantage, best-in-class point solutions are often the best route for marketing management. The choice of these tools depends on your category, your marketing objectives, and the channels you compete on.
It’s An Evolution, Not a Revolution
Ecommerce and eCategory Management are just the next steps in the long evolution of retail:
- 1900-40s: Department Stores
- 1940-70s: Grocery Chains, Shopping Centers
- 1970-90s: Mass Retailers, Category Killers, Club Stores
- 1990s- Ecommerce, Omnichannel Retailing
In each case technology – often creating improved logistics, lower costs and more efficient operations – created a new opportunity and challenged existing formats.
And in each case, new brands arose that capitalized on the advantages of the new format while existing brands struggled to adapt.
Those existing brands that were successful; survived and even thrived in the new opportunity. Those that weren’t…didn’t survive
eCategory management can be your tool to ensure your brand survives — and even better – thrives in the new world of ecommerce branding.
Learn more about eCategory Management in our new special report: eCategory Management: Reclaiming and Protecting Your Brand in the Ecommerce Age.