Merchandising Ð - FitForCommerce · insights into customer behaviors. With these modern solutions...

Merchandising–

What are we going to sell? That is the first merchandising question that all organizations must answer. From this flows a series of other critical questions, including how the products will be sold, where they will be sold and at what price.

Merchandising | 12 © 2019

BURNING QUESTIONS

• What tools do I need to optimize merchandising in my organization?

• How do I develop a differentiated merchandising strategy?

• How can data help inform my merchandising strategy?

In a world of endless aisles, marketplaces, nimble competition, and paid search, digital merchandising presents a unique set of challenges and opportunities. Organizations need to ask the following questions:

• How do we make our products and assortments stand apart?

• How do we make it as easy as possible for customers to find what they are looking for?

• How do we determine the right price to keep product selling and maintain profitability?

Today’s merchandising tools and platforms are supported by the power of data and machine learning, making it easier than ever before to yield valuable insights into customer behaviors. With these modern solutions come the opportunity, and increasingly the obligation, to make data-driven decisions faster and in a more personalized manner.

TOOLS AND TRICKS OF THE TRADE

Every successful merchandising strategy is supported by technology solutions to enable the merchandising team to execute in the most efficient way possible. It is

MERCHANDISING TOOLS

1. Product Assortment Management

2. Product Content Management

3. Advanced Analytics Platforms

4. Searchandising

5. Product Recommendations

6. E-Gifting

7. Competitive Pricing & Promotions

8. Price Optimization

OUR TAKE: Know the customer journey

Understanding your customers’ journey is essential in any good merchandising strategy. Develop processes

to get shoppers to the desired product as easily as possible. Continuously test content and optimize on-site

search, banners, product recommendations, landing pages, category and product detail pages.


imperative that the tools used can be leveraged across teams. This ensures that all assets are shared and that consistency is delivered across all customer touchpoints, without causing internal chaos.

There is an ever-increasing array of tools and platforms available that enable merchants to manage merchandising disciplines. Some of these tools are offered as part of the ecommerce platform, while others are offered as standalone solutions.

Many organizations struggle with determining whether their digital commerce platform’s merchandising capabilities are sufficient to support their strategy. The short answer is: “It depends.” Different organizations will have unique needs and varying resources. Some platforms come with sophisticated merchandising capabilities, while others only offer the basics. Depending on the objectives, resources, and platform used, a retailer may opt to leverage its ecommerce platform’s merchandising functionality or implement third-party merchandising solutions to augment the function.

Product Assortment Management

To grow and manage continuously faster-changing assortments – sourced from an array of vendor types and sold through myriad channels – organizations need technologies that enable quick adoption and marketing of new products on their site and through marketplace partners.

Some of these capabilities come standard on many modern ecommerce platforms. However, depending on the complexity of assortment and business model, specific tools and platforms exist for each of them, allowing greater control and customization of content.

Product Content Management

Product content is at the heart of digital commerce, and it is a critical aspect of consistent omnichannel experiences. For manufacturers and suppliers, the effective management of product content is critical, as the content is often distributed to retailers, marketplaces, and everywhere the product is sold.

Product Content Management (PCM) solutions, most often used by manufacturers and suppliers, allow for collaboration around the creation of product data. PCM solutions include Product Information Management

OUR TAKE: Product information is as important the products you sell

Product information (images, descriptions, specifications, attributes, etc.) is today as important as the

physical product itself. Without product information, digital shoppers cannot discover, research, compare or

make an informed decision.


capabilities with Digital Asset Management and Syndication capabilities for distribution to marketplaces and everywhere the product is sold.

As brands and retailers continue to prioritize and invest in product content, digital leaders will go one step further to improve product content syndication. Syndication provides consistency across channels and gives buyers and consumers the most complete and relevant shopping/buying experience.

Advanced Analytics Platforms

Advanced Analytics Platforms provide actionable insights that allow organizations to truly understand the performance of their assortments and focus their efforts where they will have the greatest impact. Most modern platforms leverage machine learning to provide predictive analysis and include customized dashboards and visual representations of data for rapid digestion of results as well as drill-down capabilities that allow for understanding the factors that drive success. Perhaps most importantly, these platforms empower business users to quickly ask questions and obtain answers without being dependent upon specialized analysts.

DID YOU KNOW?

Product content syndication is content that is automatically pushed to multiple channels from a centralized

platform. Brands and manufacturers syndicate their content to increase brand awareness, product

information consistency, SEO and conversions.

DID YOU KNOW?

71 percent of retailers agree the

main benefit of having detailed

product content is more sales. This

is closely followed by the ability to

personalize customer experiences.3


Catalog Management / Taxonomy

Beyond having the right site structure and browse path, it is critical to have all the options readily available for customers to hone in on what they are looking for. Category pages with faceted navigation that includes the details customers care about, by category, allow customers to quickly find and buy – even when there are hundreds or thousands of results.

DID YOU KNOW?

84 percent of retailers in the FitForCommerce

Omnichannel Retail Index have implemented

faceted navigation wherein online shoppers can

select multiple attributes at a time.4

SEEN IN THE FIELD

Nordstrom helps shoppers find products faster by providing simple and clear

navigation choices and robust filtering options. The department store has also taken

steps to improve sort functionality with a “sorted just for you” feature which sorts

results based on a quick quiz where the shoppers identify brands they like or dislike.


Searchandising

As assortments grow into the tens and hundreds of thousands, or even into millions of SKUs, the ability to easily find products has become a huge challenge for shoppers, and thus, for retailers. In B2B, this challenge is intensified as B2B product catalogs often surpass B2C in sheer volume.

Customers increasingly turn to the search function to find what they are looking for. Basic searchandising (using search to actively highlight what the customer is looking for) is table stakes for today’s ecommerce players and includes such capabilities as:

• Rich and customizable auto-complete, featuring products, brands, categories, etc.

• Fully-addressed user typos

• Semantic search that understands customers’ words including feature search such as “suede jacket”, thematic search such as “spring jacket” and compatibility search such as “iphone cases”

• Results that include filtering facets which are dynamically generated to facilitate the rapid selection of products

For many leading retailers, search has increasingly taken over merchandising. Search technologies are making it easier for customers to find what they are looking for and putting the control of advanced merchandising tools into the hands of the business team. Modern search tools leverage machine learning, enabling results to grow smarter through use, improving the relevance of results.

In addition to advanced text search, retailers need to prepare for visual search and discovery experiences.

DID YOU KNOW?

Over 40 percent of customers will abandon

a site if they can’t find what they are looking

for within 2 minutes.5

SEEN IN THE FIELD

e.l.f. Cosmetics helps customers quickly

find exactly what they are looking for via

suggested results that include specific

categories, products, images and pricing.


Digital shoppers are increasingly embracing the use of photos and visual search as part of their discovery process. Sixty-two percent of younger millennial shoppers are comfortable with the ability to search products by image and 57 percent are comfortable with shoppable content.6

Recommendations

Algorithm-driven recommendations have proven to outperform hand-selected ones because they leverage data about aggregated customer behavior on site, favorites, and the actions of other site visitors.

Most digital commerce platforms include recommendation functionality. However, some organizations opt to improve their recommendation capabilities by implementing third-party recommendation engines and personalization solutions. These solutions often provide innovative features that allow recommendations to be driven by the actions and preferences of individual

DID YOU KNOW?

Retailers are taking note of the impact

of recommendations. According to the

FitForCommerce Omnichannel Retail Index:

• 90 percent display images of recommended

items on the product detail page

• 68 percent leverage the cart to provide

recommendations for purchasing additional

items8

SEEN IN THE FIELD

J.Crew includes a “shop the look” feature on

both category and product detail pages to

inspire shoppers and make it easy to purchase

a complete look.

DID YOU KNOW?

There are over 600 million visual searches on

Pinterest each month. Image-based Pinterest

Ads have an 8.5 percent conversion rate, and

Pinterest is projected to clear $1 billion a year

in ad revenue by 2020.7


shoppers – from clicks and site searches, to individual cart adds that reveal shopper preferences for attributes of color, style, size, gender, category, and more.

Advanced preference centers allow customers to provide explicit preferences for what they care about (activities, brands, sizes, etc.), enabling further personalization of recommendations, however, many still forgo the immediate opportunity to gather more information about the individual customer.

According to the FitForCommerce Omnichannel Retail Index, 33 percent of leading retailers in the US have implemented outfitting or “complete the look” functionality on product detail pages. Adopted by forward-thinking apparel retailers, the outfitting solutions that power these features leverage sophisticated AI and machine learning to automate outfit creation, personalize the experience and improve results over time.

Gifting

Retailers leverage digital gifting to let customers shop later than ever, or shop when it is convenient for them and schedule a timely gift delivery.

The gifting industry started with e-gift cards that could be sent via email and up to the last minute - many retailers offered the ability to somewhat personalize the card with an image of the customer’s choosing. Next generation digital gifting allows gift givers to select an item and allow their recipient to choose the exact right size and color. As a result, gifts feel more personal and desired, helping retailers sell through product they already own and reduce returns.

SEEN IN THE FIELD

Instead of traditional gift cards Neiman-Marcus

shoppers can send more personal gifts allowing

recipients to select their own size and color.

OUR TAKE: Your gift card program should be a revenue generator

Merchandise your gift card program as thoughtfully as you would any major product line. Allocate enough

resources (cash, time, and site real estate) to ensure its success.


Price Optimization

It is no surprise that the Internet has created massive disruption in pricing. The competition is fierce, while customers are better informed and have higher expectations.

While dynamically changing pricing to respond to competitors may not be ideal for every organization, mastering pricing knowledge and nimbly adjusting prices accordingly has become essential to profitability. There are a number of technologies available to help organizations become more savvy about pricing.

Simple competitive price scraping has evolved to pricing platforms that provide insights into pricing and assortment opportunities vis-a-vis the competition as well as a view into their promotional behavior for in-season management and planning purposes.

Many organizations leverage these types of platforms to assure competitiveness. Increasingly, retailers combine this competitive data with the knowledge they have about their customers to selectively deliver offers and pricing that will make a difference – without unnecessarily discounting a product broadly.

Price optimization solutions that leverage machine learning benefit from the ability to crunch massive amounts of data in real time. These systems can be tuned to optimize revenue or margin performance while factoring in MAP, geography, inventory, competitive pricing, weather, past customer behavior and any number of other considerations.

DID YOU KNOW?

Increased price transparency, continued

consumer price sensitivity, and ongoing

competitor price aggressiveness are among

retailers’ main pricing concerns.9

SPOTLIGHT ON DATA

In today’s digital world, where products move

faster and shoppers are more sophisticated and

demanding than ever, retailers need nimbler

and more strategic merchants who leverage

data to support merchandising decisions

and technology to deliver more personalized

shopping experiences.

One of the advantages of digital commerce is

the easy access it provides to merchandising

data, transactional data, and customer behavior

data. More specifically, merchandisers have

access to vast amounts of data that can help

optimize merchandising strategies including

conversions, aov, product affinity, browsing

pathways, purchase data, social interactions and

customer demographics. This combination is a

powerful instrument to optimize ROI.

When supported by artificial intelligence and

machine learning, merchandising solutions

automate otherwise manual tasks, helping

retailers create more and better product content

and merchandising.

THIS REPORT IS BROUGHT TO YOU BY–

OUR MEDIA SPONSOR–

ChannelAdvisor has been on the front lines of e-commerce since 2001, helping retailers and brands connect with customers, optimize operations and grow sales channels. We’ve grown from a small company in a young industry to an industry leader at the forefront of a global revolution — with thousands of clients and billions of dollars in transactional revenue flowing through our platform every year. For more information, visit channeladvisor.com

Adweek is the leading source of news and insight serving the brand marketing ecosystem. First published in 1979, Adweek’s award-winning coverage reaches an engaged audience of more than 6 million professionals across platforms including print, digital, events, podcasts, newsletters, social media and mobile apps. As a touchstone of the advertising and marketing community, Adweek is an unparalleled resource for leaders across multiple industries who rely on its content to help them do their job better.

Adweek is part of the Beringer Capital portfolio that also includes BrandShop, a leading full-service partner that works with major consumer brands to employ digital commerce to increase sales, gain valuable consumer insight and create the type of end-to-end experiences that build loyalty and keep brands ahead of the competition. Learn more at adweek.com and brandshop.com

http://channeladvisor.com

http://www.adweek.com

http://www.brandshop.com

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FitForCommerce is a leading boutique consultancy that helps hundreds of online and multichannel brands and retailers make informed digital, ecommerce and omnichannel retail investment decisions. Leveraging years of experience, state-of-the-art tools, strategic diligence and tactical planning, FitForCommerce helps brands and retailers define strategies for growth, improve the customer experience, plan and hire the right organization, and find "best fit" technology solutions. | www.fitforcommerce.com

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