In the April DealerNews special edition, I wrote an article about on-line merchandising that primarily covered the visual presentation of the products you will be selling. Things like the text descriptions and the images. This month’s column is going to expand on that and cover some advanced internet merchandising technologies and concepts.
Most e-commerce platforms have essentially two methods of merchandising product: manual and automatic.
The most basic manual approach is the “category view.” A user clicks on a link to see helmets, a page loads that lists all of the products in your store’s database that belong to the helmet category. This happens because as you “load” products into your site’s database, you identify them with either a keyword of, Helmets, or you place them into a category that you create called Helmets. This is typically the absolute minimum needed to organize your store’s inventory into logical groupings. I can’t emphasize enough how important it is to deeply understand the organizational capabilities of your site’s software so that you can organize your inventory properly. Mistakes made with your product organization or taxonomy at the start can cause major headaches in the future.
The next class of manual merchandising is placement of products within the content of your site. One example is “contextual commerce.” Example: placing goggles, knobby tires, large gas tanks, flat repair kits, etc. throughout a story on a desert race across Nevada.
Finally there are manual assortments that are tied to a particular product and act as cross- or up-sell suggestions. Cross- selling example: an assortment that consists of an oil filter wrench, a funnel, and oil that display when someone is viewing the detail page for an oil filter. Up-selling example: high-quality leather jackets on the page for a lower cost textile jacket. Creative copy writing for the leather jackets may entice the shopper to spend more on the leather jacket.
Next we’ll turn to the Holy Grail of e-commerce, automatic or intelligent merchandising, also referred to as personalization. It’s the dream of offering exactly the right product to exactly the right shopper so the money beams directly from their pocket to your bank. It’s the “Customers also bought”¦” or “We think you may also be interested in”¦” selections you see when you shop on line. It’s achieved when the databases that run your site are combined with robust software that analyzes the aggregate behaviors of past shoppers and correlates it with specific behavior and demographic information of a current shopper. Once this correlation is complete, the system has a model of this shopper, and can offer products that are more likely to be purchased. The goal is to get to the point where the software provides the one-to-one sales that the best salespeople in your shop provide to your customers.
There are some negatives to automatic merchandising. A benign failure would be offering children’s merchandise on every visit to a rider that doesn’t have children, but purchased a kid’s T-shirt for a nephew’s birthday last year.
A more negative failure is what happened to WalMart last holiday season when their merchandising system offended customers and generated negative PR for the company. Walmart’s system began making recommendations for highly inappropriate DVD titles on a page for a DVD series on the civil rights leader Martin Luther King. Obviously an intelligent merchandiser would never have made those associations. However, WalMart’s system was not a person, and it was simply creating a correlation based on some super-secret computer code that said, “Hey, this would be a good idea”¦” Obviously it was a very bad idea, and WalMart paid a price for it.
Automatic merchandising is not quite the magic bullet that people are hoping for when it comes to the utopia of one-to-one personalization. It has proven to do things like increase average order size and conversion rates however, so it should have a prominent place in your online merchandising toolkit.
In summary intelligent application of real-world merchandising skills as well as the latest technology will make a good internet store into a great e-commerce website that will keep your existing customers happy, and generate many new satisfied customers in the future.
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