UPC CATALOG VENDORS SEE A GROWING MARKET
SINGLE SOURCES WHERE RETAILERS AND MANUFACTURERS CAN SHARE SKU DATA ON-LINE
Byline: MAUREEN CONDON
NEW YORK — Use of the electronic UPC catalogs by apparel retailers and manufacturers continues to grow and other industries are beginning to look at the catalogs as a way to increase efficiency as well, according to officials at the catalog companies.
“The UPC catalog is apparel-based,” explained Tari Bach, product manager for Quick Response Services, Richmond, Calif., one of three vendors who offer electronic catalogs. “About 70 percent of the UPC catalog is apparel and shoes. Other sections are non-apparel.
“I believe 30 to 40 percent of the market is using the electronic UPC catalogs,” Bach said. “QRS has 1,205 vendors loaded on our catalog, and 230 in the pipeline. We have 4,500 customers — retailers and manufacturers. We perceive ourselves as the market leader,” Bach said.
Spokespeople for the other two electronic catalog companies, GE Information Systems and Sterling Software, declined to specify the number of customers they had on-line, but both said the business is growing steadily.
“We’ve signed up a significant number of customers in the last two months,” Jack Hyer, marketing product manager for Sterling Software’s Network Services Division, Dublin, Ohio, said. “If people are going to sign up, they usually do so in the fall.”
Kevin Poole, Central region manager for GE Information Services, headquartered in Rockville, Md., said, “Seventy percent of the major department stores are using the electronic UPC catalogs, and a lower percentage of smaller department stores are using them. The penetration among soft-goods manufacturers is 10-20 percent, and those are the larger manufacturers.”
Poole said, “I expect that in the next few years, the 10-20 percent of manufacturers using electronic catalogs will increase to 50 percent in the apparel industry.” And companies that don’t embrace electronic catalogs, EDI (electronic data interchange) and bar codes may find themselves out of business, he added.
The advantages for both apparel manufacturers and retailers in using the electronic UPC catalogs are evident, according to officials from all three catalog companies who explained how they work.
“Our UPC catalog,” says GE’s Poole, “has been in existence since the ’80s, and the primary reason retailers and vendors use it is for a common store of product information. So a vendor has only to store information in one place and a retailer only has to go to one place to get it. The information travels over the GE Computer Network, which uses land lines and satellites.
“In using the electronic catalog, the first step for a vendor is loading its product catalog into the UPC catalog. Vendors can load it by tape or EDI transmission, computer to computer. The vendors can specify that their product information be made available only to the retailers they designate,” Poole said.
“Retailers can access the information in our UPC catalog in two ways,” he added. “They can browse on-line, or request that changes and updates be delivered to them automatically by EDI transmission.”
Poole explained that retailers access the catalog prior to ordering, adding that the actual ordering takes place outside of the catalog, through EDI.
There is a per-access charge, Poole explained. “For a small vendor, that could run $100 per month, for a large vendor, $1,000. So it is an economical way to get information.”
“From a promotion standpoint, the electronic catalog lets you com-municate information in a matter of minutes,” Hyer said. This increases the speed with which new items can penetrate the market.
Besides speed, another benefit of the electronic UPC catalog is efficiency in communication, according to Hyer. “Prior to EDI, when a manufacturer created a product, he’d sell to a retailer and they’d assign an SKU number to it. Manufacturers had different ID numbers for the same product at different retailers. Typically, the retailer would want to order the product by his SKU number, not the manufacturer’s ID number. The UPC code simplified it.”
The UPC code is specified by the Uniform Code Council, so it uniquely identifies each garment in terms of size, color and style and manufacturer, Poole said.
The structure of the UPC code prevents two manufacturers from having the same codes. The first digit is the system digit. The next five are the vendor number assigned by the Uniform Code Council and the next five define other features of the product, Hyer explained. “Related information is also stored in a record under the UPC code number. Some retailers want price information in the record — in some cases the suggested retail price, or the retailer wholesale price. Some vendors maintain special sections of the catalog for different retailers that they have different deals with,” Poole said.
“We are enhancing the catalog to include an on-line cross-referencing capability through our network so that when a retailer downloads the UPC code, they can cross-reference it to the SKU in their own store,” he added.
“Without the UPC catalog, you are sending out a lot of paper and duplicating a lot of effort in communicating data between the retailer and manufacturer in order to keep the data current and updated,” said Bach.
“Our business is the catalog,” continued Bach, whose QRS electronic catalog has been on-line since 1988. “We are the industry remarketer for Advantis, the value-added global network that we use, which is part of the IBM Global Network. We send out software for Advantis. We remarket to anyone in retail. When you sign up for value-added retail, you get a mailbox and we take a group of mailboxes together to Advantis and we get a 20 percent discount from Advantis.
She explained that another benefit of the UPC catalogs is the reliability of the data. “The quality of our data goes through lots of checks before it is loaded and we have compliance teams that work with the vendors to make sure the data is accurate and retailers’ needs are met,” Bach said.
All of the catalog vendors agreed there is still a large market for them to penetrate. “There’s still a big market out there made up of smaller companies. The technology in prior years was not cost-effective for the smaller users, so we are coming up with products to help them. We have Windows and EDI-to-fax now, and we are looking at other offerings that will enable them to play in the EDI market,” Bach said.
She explained that with EDI-to-fax, QRS converts the requested catalog information and faxes it to the smaller user.
She also noted, “We are converting the catalog to be Windows-based in the first quarter of 1996, in addition to running it on the old application. The big push for the UPC catalog came from the department store industry. But now we’re getting a lot of interest from sporting goods, the computer technology industry and the recording merchandise industry. They are all looking to get something started.”
“The benefits to apparel manu-facturers in a department store arena are translatable to other markets. Mass merchandisers, the hardware and the housewares industries are looking at it,” Poole added.
All of the electronic UPC catalog companies are looking at the Internet as a possible way for both retailers and manufacturers to access their catalogs.
Bach said, “We have a cross-functional team meeting weekly to look at the Internet and see how it will fit into our business. We are looking at security issues. We think the Internet is something to be taken seriously.”
Hyer said, “Sterling is looking at the Internet and is a member of the CommerceNet, a consortium of companies based Menlo Park, Calif., that is exploring the Internet. We will respond if the market wants it. Security of information is an issue.”
Hyer added, “With most tech-nologies, there are leadership players and that is true in the Internet. The business issue of documentation and partner security are a gray area. Twenty-four to 36 months from now you might see an escalation of use of the Internet.
“The Internet is a medium to get information, but you still have to launch the inquiry and get the answer back from the network. So there has to be some payback to change from EDI,” Hyer said.
The payback might be the fact that if the electronic UPC catalogs are sited on the Internet’s World Wide Web, with its graphic display capabilities, then retailers would be able to look up not only the UPC code and related information in a record, but they would be able to view a picture of the item on their computer screens.