Tag Archives: Heiler

The Long Tail strategy and PIM

As promised at the end of one of my recent posts, let’s have a closer look at the long tail approach and how PIM supports it. The driver for the long-tail model is customers expectations. In fact, they demand an increasingly larger and broader assortment of products through various online channels given that the shelf space is no longer a concern. The key insight here for independent retailers is that expanded offerings and selection can reveal demand that was otherwise not known to exist. 

The benefit of a long-tail strategy is that products in the long tail can be sold against a higher margin. Aberdeen reports up to 29 % higher profits due to higher product margins in the long-tail assortment.

Longtail_PIM

The challenges for many companies, however, is the actual management of large assortments. The graph below shows the relationship with the size of a company’s assortments and having a PIM system. 

Assortment Size - Heiler

Retailers with and without PIM in relation to their assortment size (Source: Heiler)

It is remarkable to see that when the assortment increases to over one million SKUs there are no companies that do not have a PIM system.

How PIM supports the long tail has been clearly highlighted by Rolph Heiler, founder of Heiler Software (which has recently been acquired by Informatica):

Assortments are often restricted by the fact the product data cannot be efficiently maintained. A Product Information Management (PIM) systems enables dealers to setup and manage extremely large assortments, without rising costs for expanding their assortments. 

End quote. The point is that for the first time ‘dealers’ are given a process and a tool to onboard data from suppliers and store it centrally before it is prepared and enriched for presentation purposes. However, as aptly pointed out by J. Abraham in his upcoming book (see references below), implementing a long-tail strategy entails much more than just onboarding data from suppliers to your PIM system, and the ability to technically manage larger assortments. More specifically, he observes that…

 Processes have to be set up to manage the information in the PIM system. Price mechanisms have to be set up to manage the margin for which products are sold. Just adding 30 % margin to all products might be a simple thing to do, but it does not take into consideration the actual logistical costs, perceived product value by the customer, and competitors’ prices. Likewise, when suppliers stop selling a product, the product also has to be removed from the assortment of the wholesaler or retailer. 

Once a product is sold, the product has to be ordered, possibly repackaged at the company’s warehouse and delivered to the customer. To do this, logistical processes have to be set up in the ERP system, especially when the ERP system does not yet know the product just sold. With the external and internal processes set up right, companies are able to expand their offering very fast. WarmteService for example was able to expand its offering from 20,000 products to 150,000 products in less than 1.5 years

End quote. This is a broader and more accurate view of the processes that need to be put in place to implement a successful long-tail strategy. As Ted Hurlbut put it, “The Long Tail is not an argument merely to carry broader assortments. It is not an argument to expand into unrelated categories that stretch customer’s expectations and the retailer’s core expertise. It is not just about capturing the add-on or plus sale. It is rather a demonstration that there is business to be done in carefully selected items that deepen assortments in a retailer’s niche that appeal specifically to the customer’s imagination.”

In conclusion, it should be clear that the long-tail model is a compelling territory for innovative customer experiences*. PIM has a respectable place in the model insofar as it allows retailers to quickly respond to product demands by facilitating the creation of relevant assortments in a timely and efficient manner. 

Drop shipping is an interesting example of long-tail strategy that will be analysed in one of the upcoming posts. Stay tuned! 

References

- J. Abraham, Product Information Management, Management for Professionals, Springer International Publishing Switzerland 2014 

Aberdeen Group, The Instant Power of All-Channel PIM: Increased Sales and Competitiveness, December 2011.

PIM for long-tail, Heiler whitepaper


*I am not a blind believer of The Long Tail. I see few grey areas that various authors have spelt out greatly. If there’s interest, I will plan to extend on this fascinating subject.

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Informatica and Heiler – Better Together

Access to information has always been extremely important to people and organizations. In an increasingly complex and interconnected world, data is an essential competitive advantage for companies. With rapidly growing data volumes, increased complexity, and high market speed, our goal is simple: to easily connect people and data.

Turning data into business outcomes has always been our value proposition at Heiler Software. Using the value of data and information potential is totally in line with the positioning of Informatica. Unleashing the potential of information will help to make the careers of our customers, partners and employees even better.

From beginning of all conversations, from the announcement of the acquisition in October 2012 until today, Informatica’s managers and employees always stuck to the promise they made. That is a great commitment for our employees and customers. Now Informatica has announced the exciting news that the acquisition of Heiler is completed.

Heiler is now a part of the Informatica family. Our entire team is looking forward to the future with Informatica. For Heiler, the door for an exciting and successful future is wide open. Informatica will provide our customers and our employees a promising perspective in a dynamic industry.

Hundreds of customers rely on Informatica’s multi-domain MDM platform to manage customer, location, and asset data, and synchronize accurate master data across operational and analytic systems. I am sure Informatica is committed to being a trusted partner and will work to ensure success with all Heiler’s products.

Heiler has just released PIM 7 to speed up the time to market with all products, across all sales and marketing channels. Also, since March 2013, Procurement 7.1 is available. Informatica is known for innovation. I am convinced that Informatica will continue investing in our business. Their goal is to generate real-time commerce business processes and create a unique customer experience for our customers’ business. Our award winning PIM fits in the Universal MDM strategy to deliver to one vision: Enabling our customers to offer the right product, for the right customer, from the right supplier, at the right time, via the right channels and locations. It is all about inspiring.

Joining the forces will allow our customers to leverage Informatica’s expertise in data quality and data integration to deliver greater business value. With Informatica’s Data Quality offerings, our customers will be able to further accelerate the introduction of your products to market. Additionally, customers will be able to easily onboard data from their suppliers, then distribute to its customers and partners electronically with Informatica B2B. We share a common goal to establish the combination of Informatica MDM and Heiler PIM as the gold standard in the industry.

Another benefit of the acquisition is that all customers will receive world-class support from Informatica’s Global Customer Support organization, which delivers a comprehensive set of support programs including 24×7 support across 10 regional support centers. Customers have ranked Informatica as #1 in customer satisfaction for seven years in a row. In addition, Informatica’s strong global partner ecosystem brings the right resources to solve business and technical challenges across more industries.

By reaching this important milestone my mission as CEO of Heiler Software AG will be fulfilled. Personally, I’m going to stay connected to Informatica and I am excited to get involved in the future of this excellent and innovative company.

The future of Universal MDM is close to my heart.

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Rolf-Heiler

 

Rolf J. Heiler, born 1959, married, three children, graduated in 1982 in Business management, majoring in IT and process organization. In 1987, Rolf Heiler founded Heiler Software GmbH. From 2000 Heiler Software was quoted on the stock exchange in 2000 in the “New Market” sector.

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