We’re back with part two of our five-part blog series expanding on our Digital Maturity research. As a refresher, our five key insights from the research are below:
Barriers to Digital Product Creation (DPC): Retailers must overcome barriers to DPC adoption, such as insufficient organizational support, funding and talent.
External vs. Internal Resources: Retailers can use different types of resources for 3D assets and materials, from internal teams to third-party vendors.
Maturity: There has been a rapid increase in maturity since 2020, which will continue through 2024, albeit at a slower rate.
Investment: To support the rapidly increasing maturity level, we will see huge growth in DPC investment over the next two years.
Technology Adoption: Despite high maturity and planned investment levels, there is substantial room for increased adoption of key underlying DPC technologies.
For this blog, we sat down with several Kalypso subject matter experts to better understand how resources are leveraged to support DPC. These resources are grouped into two categories:
Internal: such as in-house centers of excellence and in-line teams
External: such as vendors, mills, agencies and other third parties.
What do we mean by Internal and External DPC Resources?
When talking about internal and external resources in the research, we focused on 3D assets and 3D materials. The former refers to three-dimensional digital files, which serve as interactive visualizations of products, while the latter refers to digital components that are used to make up 3D assets, which could include materials or trims, avatars or lasts, lighting and scenes. Both 3D assets and materials work together to provide a realistic digital representation of a product – from its general look to how the material shifts with movement. Additionally, this digital rendering can further benefit operations by supplying key information about the materials used. Having digital renderings helps designers visualize, manufacturers plan, and marketers sell.
While the research seeks to analyze resource allocation by its external and internal sources, this approach is a bit over simplistic. In practice, the separation between internal and external resource use is blurred by a complicated mix of often co-dependent activities leveraged at various points in the product’s lifecycle. Separating out the “mix” of resources fails to capture the nature of these relationships and may not accurately reflect the amount or type of contribution these resources have to a company’s digital product creation process.
Brendon Marczan, a digital transformation manager, says the issue is a bit more complicated than the survey would suggest. 30% of external vendor focus doesn't accurately portray how much or little they are contributing to DPC and oversimplifies codependent relationships between internal and external groups.
“Resources are further separated between upstream product development and downstream marketing and sales. There are typically more internal use cases in the upstream model, while a lot of downstream operations are outsourced,” Marczan added.
Upstream Use Case
When talking about DPC, upstream resource allocation refers primarily to the initial product design phase. DPC can be a powerful tool in R&D, as it can help designers collaborate and visualize more efficiently without needing to engage in expensive prototyping. At the same time, the digital representation of the potential product can help provide insights on the viability of using various materials. Since product design is a core differentiator in the RFA industry, companies tend to prefer to keep it in-house where they have greater control.
“The creative process is really a back and forth,” says Karime Nassar Alvarez, a senior manager. “There’s no way that you can just hand it off and expect results. A more effective approach is to push for rapid collaboration between designers and developers. To facilitate this, many retailers prefer to own the creative aspects of their digital brief to ensure clear design intent.”
Downstream Use Case
Once assets and materials are created, utilizing external resources in downstream activities such as marketing becomes more viable. It is becoming increasingly common for marketing teams to outsource their marketing asset creation for photography and other sales related activities. This reliance on outsourcing for consumer-facing content is linked to the need for higher fidelity models, interactivity, realism, and quality control processes. While upstream design creation is often internally well developed in the RFA industry, retailers are not quite as proficient in these downstream operations, which has led to a higher reliance on specialized 3rd parties. As the digital landscape transforms beyond Web2.0, there will be many downstream use cases.
An example of this in operation would be a customization application embedded in an e-commerce website. Instead of a static photo, a specific app could create more interactivity and customizability, such as giving the consumer the ability to change the printed graphic on a hoodie. Since customizability is becoming an ever-growing consumer demand, this can have profound impacts on final sales.
The “Stuff in the Middle”
No matter what resource is used, the processes and procedures that leverage them will ultimately determine the effectiveness of your DPC pipeline. Neither internal nor external resources can exist in isolation.
“There’s a common misunderstanding that a lot of our brands get themselves into,” warns Marczan. “They get the idea that they can rely entirely on external resources and get someone else to do it all. It’s actually really laborious for you to do that. Those brands fail to establish the infrastructure for distributing the requests, quality control, digesting and managing the content that is created for them. What do you do with the thousands of 3D files, renders, videos and components that you’ve just outsourced?”
Sophia Lara, a manager at Kalypso, agrees, emphasizing the issue of over-outsourcing. “If the internal teams don’t have the expertise, they won’t know how to communicate to the vendors. They need to know the right 3D concepts and terminology to provide constructive feedback.”
How to Plan Out Internal & External Resource Utilization
“You can’t just create a library of assets,” says Lara. “You can’t just have 3D SMEs on your team, and you can’t just rely on 3rd party vendors. A holistic approach is necessary, not only for governance, but also for strategy and enablement.”
While our research infers 90% penetration of DPC in the RFA industry, it fails to capture how much it is built into a company’s operations. Some companies may still be focused on 2D design, with their only use of DPC restricted to outsourced 3D renderings for sales purposes. Unfortunately, this isn’t the way to maximize benefits and create an end-to-end digital solution –DPC isn’t a quick fix to shop out to a third party, nor is it something that can be 100% integrated into in-house operations.
To truly leverage the benefits of DPC, the process should be implemented in product creation, downstream sales, and everything in between. At the same time, companies incorporating DPC will need to continuously monitor, develop, and improve the complex interactions between in-house and outsourced vendors, designers, manufacturers, and retail centers. While this may seem like a lot of work, the benefits far outweigh the cost, serving to shorten time to market, reduce expensive physical prototyping and enable new sales channels for an increasingly tech-savvy market. It’s time for the RFA industry’s product creation model to receive an upgrade to be resilient.
Don’t miss the next installment of our blog series where we’ll focus on maturity.
Sophia is a senior manager for Kalypso's Retail, Footwear & Apparel sector of the Consumer practice and specializes in Digital Product Creation. She's based outside of NYC and can usually be found tinkering on her computer with her mug full of black coffee by her side.
Karime’s role at Kalypso revolves around enabling clients to focus their NPD efforts on addressing business challenges across Retail, F&B and Life Sciences Industries. Karime is committed to enhancing client's performance by merging business strategy, product development processes, and information technology.
Brendon Marczan is a leader in Kalypso’s international Digital Product Creation (DPC) advisory team. Born and raised in Sydney, Australia, Brendon moved to London 8 years ago after being approached by cycling sportswear leader, Rapha Racing, to head up their Team Sky ‘Tour de France’ kit development. He went on to spend 18 months traveling with Bradley Wiggins and seeing Team Sky take the UK’s first Tour de France win.