March 31, 2008, 12:00 AM

Breaking Out

(Page 2 of 2)

Similarly, Circuit City Stores Inc. delivers at CircuitCity.com a variety of product and service recommendations depending on the type of product. When viewing a large-screen television, for instance, the shopper can also choose among compatible accessories, specially priced package deals, and value-added services such as warranties and installation. The question to ask is whether your merchandise managers have the ability to define and present product recommendations in multiple, distinct ways, not only at a product level but also in other areas of the site (e.g., category/department pages, campaign landing pages).

4. Interactive shopping tools. Certainly one of the most notable advantages of the Internet channel is the ability to provide shoppers with a wide range of interactive, information-rich tools that help them find or create the perfect product to meet their particular needs. Whether it’s the “Cushion Solution” for outdoor furniture at Gardener’s Supply Company’s Gardeners.com, which is also a client; Timberland’s custom boot builder at Timberland.com, Blue Nile’s “Build Your Own Ring” at BlueNile.com, or any number of product comparison tools on other e-commerce sites, leading online retailers have come up with many innovative ways of helping customers shop more effectively, thus earning greater loyalty and repeat business.

What’s key is the ability to define the right product attributes-which may be unique to particular products and thus require an easy way to make changes to the catalog’s data model-and the ability to feed up-to-date product and inventory data to these web tools, so that the online experience reflects the most current products, options and availability.

The customer experience

The merchandising tactics described above not only require flexible, easy-to-manage product catalogs, but also have implications for other core e-commerce capabilities. For example, how should merchants handle product sets in search results? Do you show both the product set as well as the individual items? When refinement filters (e.g., price, brand, color) are selected, do the set-level or the item-level attributes apply? The answer may vary for different types of products, so the retailer needs the ability to control the customer experience appropriately.

When online retailers merchandise products in different categories and contexts, the shopping cart must handle these differences intelligently. For instance, in some cases where the product image may vary depending on the category in which it was viewed-the shopping cart needs to select the right image. If shopping cart cross-sells are based on category assignments, the system must understand the category context to determine which products to display. And when the shopper wants to navigate back from the shopping cart to the product detail page, she should be able to return to the same context in which the product was originally viewed.

Bundled product pricing presents challenges for both front and back-end systems. If “package deals” or other pricing promotions are based on a set of multiple products being purchased, the shopping cart must recalculate the right price dynamically if one of the items is removed. Later on, if the customer returns one of those purchased products to the retailer, the retailer must have defined business policies regarding the appropriate refund amount and have the ability to accurately execute the transaction.

Delivering on the brand promise

Unless you’re simply competing on price, the quality of your online shopping experience, in terms of ease-of-use, richness, and relevance, is paramount. To meet the expectations of today’s well-informed and discriminating consumer, online retailers must have the capability to execute the online merchandising practices described above. With this foundation in place, they can then look forward to taking the next step in areas such as dynamic merchandising (where site content, offers, products and presentation change based on multiple rules and analytics) and personalized merchandising and marketing (where these aspects of the site change based on the profiles and behavior of the individual customer).

Today, leading-edge adopters are learning what works and doesn’t work in these more advanced forms of online merchandising. The marketplace will continue to evolve, and meanwhile the enabling technologies will change even faster. In general, however, a fundamental need will remain constant: To provide merchants with the ability to easily and quickly change how products are merchandised on their sites, so they can respond to shifting customer tastes and competitor strategies.

Julian Chu is director of client success at Demandware Inc., a provider of on-demand e-commerce technology. He previously led strategy and business development at IBM Corp.’s multi-channel retailing practice. He can be reached at jchu@demandware.com.

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