Item level data, or SKU data as it’s often called (short for stock keeping unit), is of utmost value to businesses globally. That’s because SKU data tells you what was sold. We know, we know: it sounds so simple we must be stupid. But in reality getting SKU data as scale is a disaster.
If you think across the retailing ecosystem there are only two parties who know (and by know we mean have the capability to know, but they’re mostly both aloof) what items were sold, for what prices, and when:
- The retailer
- The retailer’s POS
Until the advent of cloud POS the POS companies were in the dark on SKU as well, which might go down one of the largest blunders in modern history as other parties start usurping this value from the dumbass POS companies.
Why?
Advertising is a massive industry. Analysts predict that $1.3T will be spent on advertising globally in 2020. Yet the parties who spend the most on advertising are also generally the richest: suppliers.
Retailers, while massive in reach, are actually pretty poor as measured by earnings and profit. Suppliers on the other hand – think Kraft or Budweiser – make way more money on a unit basis. Often times the differences are nearly a factor of 10. This affords suppliers massive marketing budgets relative to those of the retailers and it’s been said that suppliers represent 75% of all ad spend.
And do you know what these suppliers and manufacturers need to understand before they spend money? How much of an item has been selling. Telling Nike that JC Penny’s sales were up 5% does nothing. Nike wants to know how many shoes were sold, what brands of shoes were sold, what colors and sizes of shoes were sold, etc. All of this requires that we know the SKU specifics. If you want some great background you need to read our earlier piece.
Any respectable advertising company thusly wants SKU data. The problem is that it’s really hard to get because POS companies by and large are some of the most incompetent and dysfunctional businesses on the planet. Seriously, how else would you describe someone who sits on top of a massive reservoir of oil while constantly receiving a steady steam of oil-drilling partners yet rebuffs them all to smell his own farts?
Pointy, among other investments and partnerships, affords Google the ability to gain better visibility into SKU data without needing to slam their face into the wall talking to the will-never-be oil sheik POS companies. From personal experience we know that both Google and Facebook have tried POS partnerships for somewhere around three years, with hardly any success (the furthest along are some of the cloud retail POS companies).
So the Pointy acquisition made lots of sense. Further, as we understand it, Google had a really challenging time with inventory accuracy even when integrated to a merchant’s POS. That’s because merchants do a horrible job of updating inventory and Pointy uses algorithms to ameliorate some of these concerns.
Think of it like this.
You’ve probably used Google Shopping (previously Froogle). Google Shopping pulls from inventory data of local retailers. Imagine Google’s level of pissed when a consumer decided to use Google Shopping to buy a red sweater from a local retailer only to drive to the retailer and discover there haven’t been any red sweaters in 3 months.
Oops.
The Pointy acquisition should serve as further proof that the online ad giants have a great deal of interest in tapping offline commerce (it’s still around 90% of retail sales after all). Unfortunately for the POS companies, entities like Pointy become a go-between, disintermediating the POS from the merchant and ad engine opportunity. And it’s not as if it’s Pointy is the only party doing this, as we’ve exposed in our writings over the past year; the advertising opportunity is simply too large for third parties like Pointy to ignore.
Then again, the POS companies are just going to build Google and Facebook themselves with their very non-payments and highly-honed software product cultures. Just ask them. No, seriously, ask them. Because why else would they turn away the oil-drilling partners when it’s obvious how large the global market for oil is?
Well, thankfully we are not one of the “dumb ass” POS companies. For many years we have provided tools for our clients to make use of their SKU data. However, getting a client to do something that will make them money and provide some ROI on their investment is equivalent to the old saying “it’s like herding cats!”
Nielson and Altria have been paying clients for data for many years, very few take advantage of it. I believe in client privacy and the fact that it is not my data to sell. Nielson will sometimes pay a POS company to retrieve the data for them, but I have not of Altria doing it.
Nielson rarely wants more than a select few in a market area.
This is true: Nielsen subscribes to modeling market share. They don’t need 100% coverage. The reason merchants don’t use the tools is because the tools are not made simple enough. Look at how we showcase AI in our tools (whatsbusy.com) and you’ll see how to overcome the friction of adoption.