If you work in the fashion industry, you know that Mondays are largely spent recapping what happened the week prior based on reporting received from retailers. Have you ever stopped to think about where your selling data comes from? Or do you simply accept the figures at face value, plug them into your selling recap on Monday mornings and move on? If you identify with question two, it might be time to ask more questions about the sourcing of the data – This is integral to the foundation upon which brands build strategy and partnership plans.
Two of the most common sources brands and retailers use to share data today are EDI 852 and direct retailer data feeds. EDI (Electronic Data Interchange) is a term in the retail industry that should sound familiar. EDI is a process used for many business operations such as Request for Quotations (EDI 840), Purchasing (EDI 850), Shipment Notices (EDI 856), and Invoices (EDI 857). However, when it comes to EDI 852, which is POS (point-of-sale) data, it seems to miss the mark in accuracy. The data captured through EDI 852 transmission, only represents data at a singular point in time. Contrary, a direct-from-retailer data feed reflects true sales and inventory values which restate over time based on any retroactive adjustments.
Consider what you know about data. Through your chosen source, data is expected to be “true”, so it can be used to draw conclusions to support or devalue an assertion. When you consider EDI 852 data (reported in units), elements are considered to be “true” – The operative word here is element. Specific elements in EDI 852 data are missing, such as returns. This “best practice” data set, only including sales and inventory units and dollars, provided by EDI 852, we’ve come to accept as “true” is derived from only partial calculations, so will be inaccurate and incomplete.
How can it be possible to populate sales dollars and inventory dollars when only provided with units, you might ask? EDI 852 uses retail price or AUR to extend the dollar volume deriving a value. But what does this value mean? Directional is the appropriate descriptor here, as values can be calculated without discounts, promos, or further dilutions. Brands and retailers using EDI 852 are likely overstating your sales and inventory values. Conversely, when you consider data provided by a retailer data feed, the best practice data set (sales units, sales $, on hand units, on hand $) reflects a true picture of what goes out the “door”.
Another hurdle for EDI 852 reporting is the “net vs. net net” conversation – Which is increasingly important given the rise of eCommerce. Net visibility means that returns are not reconciled to the door of sale. For example, if there are 100 units sold online during a ‘Buy More, Save More’, and 50 of those units are returned to stores, 50 units are shown as sold on eComm, but remain on-hand, spread across stores.
This skews performance, notably sell through, inventory, and original door assortment. As a result, many retailers have moved to net net reporting, where returns are re-aligned with the store of origin. In the case of net net, in terms of those 50 units, they would be attributed back to the eCommerce door, therefore maintaining a picture of what truly happened. Net net reporting is supported by a direct retailer data feed, providing the proper foundation for planning.
A challenge beyond return reconciliation is restatements. These are unavoidable, as week over week variances including timing of reporting and billing issues will always exist. Because EDI 852 only reflects data at a point in time, restatements are not reflected. If you’ve ever been on a call and you and your Buyer were speaking apples to oranges, you might be using EDI 852.
While there are key differences in EDI 852 and direct data feeds, there are similarities too. From both, reporting is available every Monday – You’ll be able to see data in terms of units, plus observe trends within the data. But the key question remains – Brands should ask themselves, would you rather speak apples to apples with your buyer or apples to oranges? The answer should be clear.