PIM doesn’t cost you, PIM pays for itself!

The question of how much a PIM system costs is undoubtedly important—in fact, it is the second most important question. The most important question, however, is when and how a PIM system pays for itself.

For companies, this question is often difficult to answer because, in addition to obvious savings and increases in turnover, many other factors play a role that are not apparent at first glance. This is because many processes in use have been unchanged for so long that the considerable potential of a PIM system to simplify and speed these up is not obvious.

A good example of this is the management of large amounts of data. Companies that work a lot with Excel often wish for improved efficiency through better large-scale maintenance. In reality, however, most PIM systems are compatible with other tools, which means that the need for bulk maintenance is completely eliminated along with the associated effort.

Time to Market

Time to market refers to the time it takes for the product to get from ideation stage to market launch.

Evaluations from realized projects have shown that the time to market is significantly reduced, for example from 20 working days to 5. This reduction is achieved by:

– Parallel processing instead of sequential data transfer

– Immediate maintenance of information as soon as it is available instead of only when required

– Centralized data maintenance in one system instead of decentralized maintenance and subsequent merging

– Error detection and correction through quality assurance and optimized processes, avoiding time-consuming corrections and changes

What are the benefits of shortening the time to market?

– Obviously, a new product can be sold earlier if it is available earlier. If the time to market is shortened, you can sell this product three weeks earlier.

– In addition, a product launch is expected to be in high demand and many preparations such as trade fairs or marketing campaigns are orchestrated precisely on this product cycle. A long or delayed time to market therefore has a major negative impact on sales.

– It must also be taken into account that the customer may then buy from a competitor and do so permanently.

Calculation:

For a company with a total revenue of €50 million with 50,000 articles.

Every year, 10% new articles are added, i.e. 5,000. The current time to market is 20 days, which can be reduced to 4 days, meaning that the 5,000 articles can be sold 16 days earlier.

With PIM, you can generate €363,000 more revenue.

Translation Costs

Translation costs can be significantly reduced as information is maintained centrally in one place, avoiding duplicate translations. It is also easier to identify changes so that content that has already been translated does not have to be translated again.

By using AI, translations or at least pre-translations, can be carried out almost cost-neutrally, fully automatically, and in a matter of seconds.

Calculation:

We assume 250 new products per year that need to be translated into 5 languages. On average, a product has approximately 1,000 translation-relevant words. This results in 1.25 million words or 6.25 million characters for all target languages. At a character price of 0.00002 cents, this results in costs of €125.

Without PIM, the translation costs amount to €125,000.

With PIM, the costs amount to only €125 euros, i.e. a factor of 1000 less.

Conversion Rate

The conversion rate can be increased by around 30 percent through higher shopping cart checkouts. However, this average value varies greatly depending on the industry and target group (B2B or B2C).

By consistently maintaining product data, suitable components, as well as cross-sell and upsell offers, this can be better managed, which also offers the customer greater added value.

AI is increasingly demonstrating its value by automatically adjusting cross-sell and upsell results to factors such as region, age, and time of year.

Invoice:

We assume online sales of €20 million, with additional sales of €5 million through marketplaces.

The current conversion rate is 3%. KPIs and evaluations from existing projects have shown that this 3% could be increased by 30%, resulting in a conversion rate of around 4%.

Of course, this depends on various factors: quality of the existing store, B2C or other sectors.

With PIM, a 1% increase in the conversion rate can increase sales by €7.5 million, which, with an EBIT margin of 7%, means an increase in profit of €0.5 million.

Maintenance Costs for Online Store and Portal

Without a PIM system, considerable additional expenses are required to make the data accessible to the online store or in a portal. This is because channel-specific data has to be added manually, such as different categories, technical data, or texts of different lengths. Adapting to the requirements of different sales channels takes a lot of time and effort, as every detail has to be processed and adapted individually. This manual processing increases the susceptibility to errors and leads to inconsistencies in the published information. A PIM system automates and centralizes these processes, making data maintenance more efficient and less prone to errors.

Calculation:

Let’s assume 5,000 products and 50,000 items are sold. Every year, 5% new products are created (10% new items) and 3% of existing products are changed.

In addition, there are 12 manual store updates per year, either from additional sources or through a monthly full update, and content must be updated in the store.

Without PIM, this results in an annual maintenance expense of 156 days, which is equivalent to internal costs of €52,000.

With PIM, these costs can be avoided completely, as there will no longer be any product maintenance in the store or portal; the data is made available 100% and fully automatically via an interface.

Maintenance Costs for Marketplaces

The situation is similar when it comes to exporting to marketplaces. Here too, the data must be converted or even entered manually, as the required data structure often cannot be provided directly. This leads to delays in sales on these platforms and incurs additional overhead. The need to customize data for each marketplace significantly increases the workload and slows down the sales process, which can result in lost potential sales. A PIM system could solve these challenges by providing a unified and flexible data structure that can be easily adapted to different marketplace requirements.

Calculation:

We assume a revenue of €5 million on the marketplaces. Of a potential 10,000 items, only 5,000 items are offered and instead of just a singular marketplace, one additional marketplace could be connected.

With PIM, a revenue of €5 million could be increased to €8 million, i.e. €3 million more in turnover.

Price List and Data Sheet Creation Costs

If product information must be displayed in price lists or on data sheets, there is often no automated way to do that without a PIM system. Here too, the data has to be laboriously re-entered and kept up to date. This often means that data sheets or translations are not provided for all products in all languages. With a PIM system, on the other hand, these tasks can be completed fully automated, ad hoc and without manual intervention, significantly improving the availability and up-to-dateness of product information. A PIM system enables consistent and efficient maintenance and distribution of product data across all channels, which increases productivity and reduces errors.

Invoice:

We assume 2 price lists in 5 languages. Creating a master price list takes 10 days, with each language taking another 2 days.

In addition, creating 500 data sheets takes 8 hours per data sheet.

Without PIM, the total time required, including changes, is an astonishing 520 days, which ties up considerable internal resources.

With PIM, price lists and data sheets would be generated fully automatically, based on initially defined layouts. Manual effort is therefore no longer necessary.

Continuous Revision Costs

While creating content is initially manageable, it becomes really complex when changes are introduced. Relevant corrections must be made to all sources and target systems, including all manual transformations. Changes are then often not implemented at all or only with a delay. In addition to the high manual effort involved, this means that incorrect information remains online for too long. A PIM system makes this process considerably easier, as changes are managed centrally and automatically transferred to all channels and systems. This not only reduces the costs involved, but also ensures that the information is always up-to-date and correct.

Invoice:

At 5% new products per year, this represents around 250 new installations per year for a total of 5,000 products.

Without PIM and therefore without a central source, product maintenance takes around 12 hours, and that is a very conservative estimate. In total, it can take 375 days.

With PIM, maintenance costs will be reduced by 80%, according to statements from customers who had comparisons before and after PIM. In total, only 75 days of maintenance will be required, i.e., 300 person days less.

Duplicate Maintenance

It must also be assumed that although content is available and is maintained, its current state is often either unknown or cannot be tracked. This inevitably leads to unnecessary duplicate maintenance. Without a central system such as a PIM system, there is a risk that employees will edit or update the same information multiple times because they do not know that the data already exists or where they can find it. This duplication of maintenance not only causes additional work and costs, but also increases the likelihood of errors and inconsistencies in the data. A PIM system ensures that all content is centrally available and easily accessible, avoiding duplication of maintenance and improving data quality.

Calculation:

You can calculate that with 5,000 products and 50,000 articles, it takes 1 minute per year to update these assets again, or to re-enter existing information somewhere or to create redundant information.

Without PIM, this would take 115 days per year.

With PIM, this task can be completely eliminated.

Search Costs

If there is no unified system, such as a PIM system, in which information can be centrally stored, searched and immediately found, many employees in the company spend a considerable amount of time simply looking for the information they need. This search effort not only leads to frustration and loss of time, but also to inefficient work processes. With a PIM system, however, this search frustration is immediately eliminated, as all relevant product data is centralized and easily accessible. This allows employees to use their time more productively and focus on value-adding activities, which increases efficiency throughout the company. In addition, a centralized system improves collaboration and data consistency, as all employees can access the same, always up-to-date information.

Calculation:

We estimate 10 employees who create or maintain product data and 50 employees who regularly use and search for product data.

Without PIM, each employee spends 2 hours searching per week and each consumer spends 1 hour per week. This amounts to a search effort of 250 days.

With PIM, searches continue, but the effort is significantly reduced to only 50 days by a centralized source, which amounts to a reduction of 200 days per year.

Cost of Returns

Incorrect, incomplete or out-of-date product information is a major contributor to returns. In some sectors, such as the fashion industry, other factors also play a role, but studies show that incorrect product data alone is responsible for 20% of returns—a problem that could be avoided with a PIM system. The cost of returns is made up of the take-back charges, an average of 10 euros per return, and the possible loss of the product. Even more serious, however, is the fact that dissatisfied customers may buy from a competitor next time. A PIM system helps to minimize these problems by ensuring that product information is correct, complete and up-to-date.

Invoice:

We assume a return cost of €10, plus lost sales must be factored in.

Without PIM, we assume a returns rate of 5% (knowing that this is very industry-dependent and can be up to 50%) and this results in costs of €120,000.

With PIM, the return rate can be reduced by a tenth, i.e., from 5% to 4%, thus reducing costs by €€25,000 and also reducing lost sales by €125,000.

Less Maintenance Costs for Exports

In addition to the interfaces to target systems, there are usually numerous other exports that are used both internally and externally. These exports are often created manually or partially manually, which entails additional effort and risks of error. Without a central system such as a PIM system, employees have to prepare, update and distribute this data manually, which is time-consuming and inefficient. With a PIM system, these exports can be automated and standardized, improving data quality and significantly reducing manual effort. This leads to more efficient workflows and ensures that everyone involved always has access to up-to-date and consistent information.

Calculation:

We make a very conservative estimate of only 2 different exports. These exports have to be produced every 2 weeks and the time it takes to create each is 4 hours.

Without PIM, this results in an expenditure of 20 days, i.e., internal costs of €6,000. With more exports, the cost increases linearly.

With PIM, the data is generated fully automatically and no effort is required.

Summary

Of course, the parameters of the example company depicted here does not reflect any real world company. The calculations within a parameter are also either too optimistic or too conservative.

However, the message is clear and very conclusive: PIM pays for itself, and very quickly. Therefore, the question of the actual costs of a PIM system and its introduction is not relevant. It is much more important to calculate when the ROI will be achieved, and this time is usually less than two years. The question that should rather be asked is why you should invest in a solution that pays for itself within 24 months, reduces internal costs in the long term, boosts sales, increases data quality, significantly shortens time-to-market, and greatly simplifies entry into new markets.

In order to eliminate the barriers to PIM introduction, we provide various implementation models. This way, external costs can be greatly reduced with a certain amount of in-house work and a step-by-step expansion. Click here for more information on the implementation models:

PIM IMPLEMENTATION MODELS

GOT QUESTIONS? FEEL FREE TO ASK!

Each company has unique requirements, prerequisites, and data, which is why every PIM project must be approached individually. On behalf of Y1, I can offer you a customized solution and personally advise you. Get in touch by arranging an initial consultation.

Marc Kulow berät zu PIM-Lösungen, egal ob PIM-Integration, PIM-Upgrade oder allgemeines PIM-Projektmanagement.