Merchandise Your Way to E-commerce Success

By Sue Chapman

With thousands of companies selling products online, it takes more than sexy site design and a shopping cart to be competitive and profitable. Increasingly, online merchants are realizing it takes well-tuned merchandising strategies--and seamless execution of those strategies--to keep shoppers engaged, and to not only achieve higher conversion rates, but bigger orders too.

BOTH ART AND SCIENCE
Online merchandising needs to be a mix of art and science that includes metrics-driven merchandising, seasonal strategies, and strategies that pick up where web marketing leaves off. Additionally, the power to do really great online merchandising must reside in the hands of line-of-business users--those with revenue responsibilities, not the IT or web guys.

When we work with retailers, whether they are proven brands or emerging pure-play Internet retailers, we first must understand what their top e-commerce imperatives are. We then work together to develop a plan to achieve them. But regardless of the goals an individual retailer might have, there are strategies and best practices we always recommend.

DON'T LEAVE CUSTOMERS STANDING AT THE DOOR
Imagine this scenario. You're a retailer who relies heavily on marketing to get shoppers into your store: you drop flyers to homes, you pay top dollar for prime billboard space and you run expensive commercials on radio and television. You do all this, but you fail to staff your store properly with professional, knowledgeable and service-oriented sales associates. Now think about this scenario in the context of doing business on the web.

Sure, shopper traffic is vital to your success. But are you doing everything you can to close business on your site and increase order value? Are you fully leveraging those web marketing investments?

The merchandising strategy we recommend for many online retailers is something we call landing page optimization (LPO). We recommend LPO for our retailer clients who depend heavily on web and e-mail marketing to drive customers to their site. Shop.org recently reported that SEM programs cost online retailers $21 per order on average. Retailers tell us that given what they spend to drive traffic to their site, it isn't enough to simply convert shoppers to buyers--online retailers need their customers to buy more than one product per session. And that's where LPO as a merchandising strategy fits in. It helps you sell more by highlighting promotional content that is not typically on the product page, upselling the shopper from the original product to a more profitable or more expensive model and cross-selling other products that might be complementary or simply an attractive impulse buy.

MAKE YOUR SEARCH SELL
You probably haven't thought about your search box as a merchandising tool. Well it is, and it's often the first experience your prospective customers will have on your site. In e-commerce, every customer click is a sales opportunity. But to seize it, you need search functionality that balances the quality of search--the ranking and relevancy of search results--with the ability to control what products appear where in that results list.

Of course, some shoppers will prefer to browse your site. You have the opportunity to help those shoppers make decisions, too. Dynamic browse refinements let you take them by the hand and guide them through your virtual aisles. Take the example of a customer looking for "diver watches," but who doesn't know that is what they're called. So, he just searches for "watches." In addition to a list of watches, the search returns general attributes such as brand, price and gender, along with refinements specific to watches, such as waterproofing, warranty or strap type. By clicking on waterproofing, he finds the diver watch he was looking for. Allowing shoppers to narrow their search by attributes helps them find products that fit their buying criteria and make purchase decisions quickly.

SELL UP, SELL DOWN, CROSS-SELL (JUST DON'T LEAVE MONEY ON THE TABLE)
Have you ever walked into a store and asked the sales associate for a particular item, only to be told, "no, we don't have it"? Alternatively, have you ever been offered similar or complementary items? Which experience did you prefer?

Everyone is curious about what they could get if they spent a little more. Offer a "compare products" feature. It'll display key functional or feature comparisons, and it's also a great up-sell tool. Cross-selling increases average order size and ensures that shoppers consider accessories. An effective down-sell strategy helps shoppers get a great deal, and assists you in clearing end-of-season inventory. And of course, there's got to be an alternative you can suggest if you don't have exactly what the shopper requested.

LET YOUR PRODUCTS MERCHANDISE THEMSELVES
Anticipating all the ways shoppers might go about looking for your products is a near-impossible task. Site search can help overcome this challenge. Here's how:

Merchandising for "results contain." Creating merchandising rules that address every possible search and browse scenario that could return a product, brand, or merchandising action (e.g., banner) is too complicated for any merchandiser. Using what we call results-based merchandising, rules are triggered by the content or structure of a search results set (or an empty result set for that matter), regardless of how the shopper generated those results. Results-contain merchandising also can be used to automatically do brand promotions. Where the majority of the results are from a specific brand like Nike, a Nike banner can be displayed and Nike products pushed into the upsell zones and to the top of the results list.

Merchandising for a category. Merchandising strategies also can be implemented when the results contain a majority of products within a particular department or category. Take the merchandiser who wants to display a promotional DKNY bedding banner, but only if the majority of the results are DKNY products from the bed and bath department. Because DKNY includes products that span across multiple departments, the merchandiser will quickly create a single rule to display the banner only if the majority of results are DKNY bed and bath products.

Alternatives to "no results found." When a search yields no results, a dead end "no results found" is traditionally displayed to users--and the opportunity to make a sale can be lost. Turn this into a selling opportunity. Keep shoppers engaged by guiding customers to other products and areas of your site, suggesting alternative products, promoting clearance or seasonal products or displaying ads or promotions.

Merchandising for low results. Search and browse results sometimes yield just a few products. In addition to complementing low results with alternative products or promotions, savvy merchandisers might take the shopper directly to the product page if there is only one result for a search, or remove refinement options if there are less than 10 results.

SELL BY THE NUMBERS
Effective metrics-driven merchandising uses external data and scheduling to score products and influence search results according to dynamic external data sources and a strategy timeline. External data sources include web analytics conversion rates, related products, best sellers and backend data like gross margin, inventory levels, etc.

An example of a metrics-driven merchandising strategy can be found in the complete cycle of seasonal products. At the beginning of spring, a manager pushes new arriving sandals to the top of the results list to increase sales. The search "sandals" is scored primarily using gross margin information. In the middle of the season, the merchandiser wants to promote best-selling items, determined by analytics data. Toward the end of the sandal season, the merchandiser starts to promote the sandals with the highest inventory.

THINK MERCHANDISING
Regardless of the nature of your business, you can be extremely successful in the crowded web marketplace. Adopt a merchandising philosophy, remembering that each time shoppers enter your site, they engage in a dialogue with you. If you truly commit to merchandising and active selling, you can turn browsers into buyers and repeat buyers.

Sue Chapman is the director of merchandising solutions at Mercado Software, a leader in e-commerce site search, navigation and merchandising. She can be reached at schapman@mercado.com.