By the end of 2021, online trading volume will approach $5 trillion. Accordingly, the amount of data about products is growing worldwide and locally in each commerce market. As the data increases, so does the complexity of managing it. And that’s why we need PIM or MDM. Both systems are designed to cope with this chaos and take control of product data.
Let’s consider the difference between them.
Scope of PIM and MDM
Before diving into the details, let’s take a look at how these systems were originated. In the late 90s, the Internet was gaining massive popularity, and sophisticated companies started online businesses. They turned into e-commerce giants later. As these businesses grew, they began to face effective data management, namely, centralized processing and storing information about products, customers, marketing channels, etc.
The available resources for e-commerce 20 years ago did not solve this problem — it created difficulties. Businesses faced a lot of manual work, inaccuracies, challenges in data analysis, critical nuances in different sources, and other challenges. It was difficult to publish information about products among various channels in a well-designed and relevant format.
The first PIM and MDM systems emerged as a natural and unavoidable answer to these problems. The software products were specifically created to take control of large flows of undesignated information. Creating, enriching, keeping up to date, analyzing, transmitting, and publishing product content has become significantly more manageable with these systems.
So what are PIM and MDM systems, and what is the difference between them?
PIM vs. MDM
- MDM (Master Data Management) is a data single-source for enterprises, including goods, employees, and customers.
- PIM (Product Information Management) is software that manages product data individually. Thus PIM is essentially a highly specialized MDM for e-commerce.
Some data fields represent specific areas of data in the MDM system. It could be the field “employees,” “transactions,” “products,” or any other sphere of a company’s life. In this point of view, the PIM system is a very product-focused version of the MDM, but only with products as the primary field.
If it’s still not clear, what are the differences? Then here are 3 fundamental questions that will help you select what fits your business model.
Question 1. What do you need to automate?
If it is work with products, then chose PIM.
If you need to automate the business in general, chose MDM.
Question 2. Which data is more important for you?
PIM manages data for transmission to external sites and channels. MDM manages data for internal corporate usage.
Question 3. Do you prioritize flexibility or comprehensiveness?
If it’s flexibility — chose PIM. If it is comprehensiveness — MDM will be more suitable for you.
In summary, MDM systemizes data across different aspects of the business, making it easier to manage large, complex, and disparate data sets.
- MDM can improve business operations through centralization. The system allows you to make changes from anywhere and reflect them globally for all participants in real-time.
- The system helps to comply with regulatory requirements for various types of information, for example, through validation.
- MDM ensures data consistency and relevance for any tool, channel, or platform.
- The system eliminates inconsistent data entirely or at least dramatically reduces it. These categories of data can have a severe negative impact on business operations.
- Master Data Management provides clean, accurate, and valuable data for analysis.
- It eliminates the typical complexities of scaling up a business.
These are not all the MDM features, but they are the most typical for retail and e-commerce.
In fact, MDM systems are so extensive that their implementation and configuration can be associated with a significant investment of time, effort, and money. Modern MDM’s use artificial intelligence technologies. Such algorithms, for example, can be responsible for reconciling information, determining the degree of its reliability or relevance, eliminating inaccuracies in the data.
As we clarified above, PIM is like MDM for e-commerce, responsible for product data. Many retail companies chose PIM because it is often a faster and more economical option. Managing products and the content associated with goods is the most crucial challenge for retailers in the online market, especially if they massively sell on marketplaces or launch a unique market themselves.
But if PIM is more highly specialized, this does not mean that the system is more primitive. Modern PIM systems can do significantly more:
- Provides products data centralization, which solves a whole class of potential problems.
- Allows you to manage an unlimited number of attributes for products. In addition, you can flexibly configure each attribute and specify the obligatory nature of the attribute for a specific channel.
- You can also customize product categories, change them, update or redefine. Categories can be described in the system in different ways for different channels.
- The systems allow you to automatically evaluate the quality and completeness of information about specific goods. It will not always be a simple validation. You can use complex algorithms to solve these issues.
- PIM allows you to manage priorities. You can specify preferences for merchants on the marketplace who are responsible for generating content. Which products should they time-to-market first, and which ones can they save for later? Which channels are the company’s priority right now: marketplace or branded internet shop?
- You can upload data for all third-party sources like CMS, marketplaces, ERP, or WMS.
- You can define a specific workflow for goods. For example, the product should be reviewed first by the content manager and then by the brand manager. Accordingly, each product receives the status: “Under review” or “Ready for online publication.”
- PIM allows you to store and customize product images. You can specify when the photo will need to be updated, whether the picture is a document (for example, an ISO certificate), etc.
- The system provides the ability to describe products in different ways for different channels. For some social networks, you can use specific images, for the site — other photos, for the marketplace — third ones. The same applies to text descriptions or prices.
Which companies need a PIM system?
PIM returns many benefits to retailers:
- Reduces efforts required to upload data across multiple channels.
- Provides more accessible communication between different departments working with products in the company.
- Reduces the time and labor required to write marketing materials for go-to-market products.
- Minimize errors.
- Extensive analytical capabilities.
- In addition, PIM systems help to reduce operating costs in general.
The last point of this list is especially interesting. There is a plethora of research on this topic — for example, a lot of information and summarized data can be found in the book “Product Information Management — Theory and Practice” by George Abraham, Head of Research and Consulting at Ecommerce Europe.
According to this book, employees spend about 25 minutes processing only one item. Today’s retail calculates hundreds of thousands of such positions, and these costly 25 minutes add up to hundreds of labor hours. It takes about 416 hours to process just 1000 SKUs. At the same time, the automation of processes using a PIM system can reduce these time expenditures practically down to nothing — up to 4 minutes per 1 commodity item.
Goods enter the market significantly faster due to more convenient and quicker work with product information and automation of many processes. It means goods start to return a profit more quickly. In general, after PIM implementation, listing speed will increase the time-to-market products by an average of 350%.
You need a PIM system if:
- You have a vast online store with goods that number in the thousands.
- It’s hard for you to calculate exactly how many SKUs are currently available through various channels or in stock.
- Your products have detailed and complex descriptions. Product descriptions may vary from channel to channel. Or these are descriptions in different languages.
- You need to work with marketplaces and other channels but face difficulties when exporting goods to various e-commerce sites like Amazon, eBay, and others.
- You need to collect product data from charts and various other sales history such as ERP or accounting systems.
List of popular PIM and MDM systems for e-commerce
The PIM and MDM systems market is most developed in the EU and the USA.
Here are five of the most promising players:
Akeneo. Many retail companies globally use a popular French system for marketing and technical data management, such as Liqui Moly, Renault, Playboy.
Scallium. IT product for the e-commerce market. It processes product cards, works with import and export to any other external systems and sales channels: online stores, marketplaces, online catalogs, advertising platforms like Google Shopping, and imports and exports, among others. One of the public client cases — marketplace for Leroy Merlin (Vostok).
Inriver. In addition to the classic functions, this PIM enables you to take action on recommendations to maximize the efficiency of your online and offline business processes.
Pimcore. A complex system that is recommended primarily for multilevel catalogs, with an intricate hierarchy with many interrelationships. Its opportunities are most closely to MDM.
Plytix. This system is explicitly focused on teamwork with product data.
A professional centralized data management system such as MDM or PIM is essential to your success in e-commerce as it ultimately impacts sales. The previous twenty years of active use and accumulated statistics reveal that these systems really work and support corporate strategy.