Treasure hunt

Prior to June 2006, finding the right item at DelightfulDeliveries.com, an online retailer of gift baskets, could be daunting. A search for cookies, for example, would return 39 pages with more than 460 products.

But all that changed when Delightful Deliveries Inc. began using software that melds site search and merchandising functions. In addition to giving shoppers the ability to search by product category, price and occasion, the software enables the retailer to link paid search and e-mail marketing campaigns and Google AdWords to customized landing pages. So a shopper who performs a Google search on cookie bouquets, for example, instead of landing on the retailer’s home page goes directly

to a customized landing page featuring a seasonal selection of cookie bouquets.

“Depending upon what the customer types into the search bar,” explains CEO Eric Lituchy, “besides just coming back with the relevant products we do merchandising specific to that search.”

Since implementing the site search and merchandising application from Mercado Software Inc., last year conversion rates consistently have been 25% higher than corresponding months in 2005, Lituchy says. Orders per visit have increased 50% and there has been a 100% increase in units bought per visit, he adds.

Searchandising

Like Delightful Deliveries, many e-retailers are using site search tools to gather information about customers to boost sales through more targeted merchandising. Now they’re adapting site search to tap into non-traditional search categories, such as customer product reviews and informational content, and to work with web analytics programs.

Using site search to personalize merchandising efforts is not new. In fact, the term ‘searchandising’ was coined several years ago to describe the concept. Many site search tools identify and fix failed searches, produce search results and navigation options most likely to lead to sales, and push products based on a retailer’s other business objectives, such as increasing sales of high-margin items or reducing inventory of overstock merchandise.

But new site search products are incorporating more analytics, such as visitor behavior and clickstreams, to further refine the merchandising process, says Susan Aldrich, senior vice president at Patricia Seybold Group, a research and consulting firm that specializes in customer-centric I.T. strategy.

The push to make site search more analytical comes at a time when many Internet retailers are trying to dig deeper to get a feel for which promotions and products generate the best return on investment. “People need to know more than just how many searches they had,” Aldrich says. “Can you imagine running Macys.com based on how many times people searched for perfume? How would that tell you what to promote? How does that tell you how successful your promotions are?”

In earlier forms of searchandising, a search engine would make cross-sell or upsell recommendations based on what a customer bought on an earlier visit. However, that strategy has flaws, contends Phil Braden, director of customer-facing solutions at Endeca Technologies Inc., a vendor of site search and merchandising software. For example, a customer who bought a book on Yoga might be shown Yoga merchandise every time he comes back to the site, regardless of what he is looking for on the return visit. “It may turn out that he bought that book for his sister and he doesn’t like to do Yoga at all,” Braden says.

Site search can fine-tune that merchandising process by making recommendations based on the customer’s current search query or category navigation choice. “Search and dynamic navigation elements are a give and take, a call and response between the user and the information systems,” says Joe Lichtman, director of retail product management at Fast Search and Transfer, a search technology vendor. “With each search, they’re telling you more about themselves and what they’re interested in.”

Feeding time

To get a clearer picture of what customers are searching for, Petco Animal Supplies Inc. expanded the attribute fields in its Petco.com database from five to 58 fields when it implemented Endeca’s site search tool, says John Lazarchic, vice president of e-commerce at Petco.

“We use site search to drive any aspect of what a customer wants to use to shop for the product, including traditional shopping navigation and search refinements—color, size, flavor and brand,” Lazarchic says. “But we also added some unique items to that customer refinement process—the ability to either sort or refine items by customer ratings and reviews.”

Petco feeds average ratings of its products generated by the Bazaarvoice Inc. customer review application into the Endeca engine to enable customers to sort products by customer ratings or reviews. The technology also has enabled an automated process that upgrades left-side navigation based on top-rated items. As products become rated better or worse, they automatically fall into or out of that top-rated category, Lazarchic explains.

“It really gives the customer the power to decide what way they want to find something,” he says. “As a retailer, you tend to get stuck in your own paradigm of what you call things or how you think things should be categorized. You quickly learn that customers don’t think of things in the same way you do.”

At Delightful Deliveries, Mercado staff culled data from the retailer’s catalog when setting up the search engine database. The data includes item number, product name, brand and price. But it added new information created by the retailer, including which gifts might be appropriate for certain occasions or recipients.

By adding even one attribute to a search query, a shopper can narrow results significantly, says Sue Chapman, senior manage of merchandising solutions at Mercado. For example, by entering a price range while searching for cookies, the results page returns 219 items, rather than the 464 products listed when simply searching for cookies. By searching for cookies to serve at a baby shower, results narrow even further. Delightful Deliveries customers also can use more complex search term combinations—for example, cookies, Mrs. Fields, baby shower—to more quickly find the product they’re seeking, Chapman adds.

Similarly, Macys.com uses dynamic browse refinements that enable shoppers to narrow down choices based on specific features, such as capacity and speed for blenders or warranty length and special features for watches. Macy’s, which uses Mercado software, also has implemented a feature that enables shoppers to compare the products in the shoppers’ refined search results.

What’s happening?

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In addition to incorporating more product attributes into the search engine database, many retailers are tying search results into their web analytics programs, says Aldrich, the consultant. “Instead of just saying there were 7,000 searches this week, or the most commonly searched item was ‘X,’ they report the conversion rate, for instance, for a particular search or product,” she says. “It’s not just the number of times something happened but the business impact of that.”

That in turn enables retailers to discontinue items that aren’t selling or push items that customers are most likely to purchase.

Jewelry e-retailer Ice.com is using site search and analytics technology to automatically display the top sellers in whatever category a customer is searching, along with all other items in the category. The top sellers list changes as the shopper narrows the search criteria. A customer searching for gold earrings will get a list of the best-selling earrings at the top of the results page, as well as a list of all other gold earrings. If the shopper asks for earrings made of 14-carat white gold, the top sellers list will include only earrings made from 14-carat white gold.

Ice.com uses a site search and analytics system from Celebros to tag every item listed on the site. The system traces every time someone searches for, clicks on or purchases an item. “It’s tracking almost every single action that happens on our site, then feeding it back into the engine, and saying based on this search this is what consumers are looking for,” says Ice.com CEO Shmuel Gniwisch.

This ability to track the best-selling items is particularly crucial to Ice.com because consumers looking for jewelry typically want to buy what’s hot, Gniwisch says. “Consumers want to know what’s selling,” he says. “If we show them what’s new, that doesn’t mean they’re going to buy it. They want to know what other people are buying, so that’s what we try to do.”

Since implementing the site search and analytics system about 1 1/2 years ago, conversion rates at Ice.com, which uses no other merchandising tool, have increased 25% to 50%, depending on the time of year, Gniwisch says.

Happy landing

On Petco.com, the site search engine changes featured products and best sellers as a shopper narrows down a search query. For example, if a customer is searching for red dog apparel, all best sellers and featured items on the landing page will be red. “It intelligently gives the customer recommendations based upon what they already told us their preferences are as they’re shopping,” Lazarchic says. Petco also uses that feature for its specialty stores, such as its free-shipping store. “Anything we apply free shipping to is automatically flagged and automatically sent into the free-shipping store,” he adds.

The site search and merchandising system also enables Petco to cross-sell items to consumers accessing its pet-related content. “We assign attributes to an article the same as we assign attributes to a product,” he explains. So a shopper who is reading an article on housebreaking puppies, he adds, also will see products that have attributes for puppy and housebreaking.

Even searches that produce negative results can prove valuable to a retailer, giving clues about new merchandise to stock. “Let’s say somebody is searching for product ‘X’ or manufacturer ‘Y’ and we don’t have those on our site,” says Allan Dick, general manager at retailer Vintage Tub & Bath, which uses site search and merchandising technology from Nextopia Software Corp. “We’re going to start considering bringing those products on our site because we’re obviously attracting traffic for them.”

That’s been the case at Gardeners.com, where the word “fountain” consistently lands among the top 10 internal search terms. “People are coming to our web site and searching for fountains, yet fountains aren’t a very robust category for us,” says Max Harris, director of e-commerce at America’s Gardening Resource Inc. “It’s actually been a catalyst for our merchandising teams to source a certain product to put in the catalog or create some online-only offers.”

Many retailers also are using site search to drive marketing and promotions. “If someone does a search for chocolate chip cookies, we’ll give them a few different banners—perhaps a branded banner for Mrs. Fields cookies, a special banner offering a discount on a certain cookie gift basket or a general site-wide banner,” Lituchy says.

At Petco, different ads rotate based on where the customer is on the site. Shoppers searching for dog apparel see banner ads for dog items on the results page while shoppers looking for cat toys see ads for cat-related items. While implementing Petco.com’s site search engine, vendor Endeca created preset templates with different zones for content. Merchandise managers go into a template and write a rule for what ad content should appear when a certain search word is used.

Petco also is improving its site search experience by enabling customers to determine how many items they want to see displayed on a page. Customers can select the display of as few as six search results to as many as 50 per page. They also can choose either a list or grid view of the products. “Some customers prefer to see a lot of products above the fold, just seeing a picture. They don’t care about information,” Lazarchic says. “Other customers really want to see a description as they’re browsing for products.”

The very latest

The trend to add more analytical tools to site search is continuing. Mercado last month introduced Mercado 4.0, which integrates metrics such as conversion rates, customer reviews, inventory levels and product freshness. It uses web analytics data from Coremetrics Inc., Fireclick (a division of Digital River Inc.) and Omniture Inc., and customer reviews and ranking information from vendors such as Bazaarvoice Inc. and PowerReviews.

Mercado 4.0 also automates merchandising tasks that are inherently metrics driven. As such, e-retailers do not have to study search results reports on such things as what’s selling, what people are searching for, and what they’re searching for and not finding, and then manually create business rules in response, Chapman says. “When they turn on their systems, retailers will see live reports that say, ‘Here are the best sellers, here are the high conversion rates, here are the things people are searching for but can’t find,’” she says. “Then, when the retailer clicks on them, the system automatically creates a business rule.”

Fast Search and Transfer also has introduced software that automates merchandising by integrating real-time data into business rules. “Our customers are continually funneling data into our index so that merchandising rules can be affected by things like click-through, purchase data, availability and typical customers,” Lichtman says. Using the software, a retailer also can direct a shopper to a specific landing page based on Google and Yahoo keywords.

Ultimately, the benefits of tying site search to merchandising vary from retailer to retailer. For some retailers, such as Delightful Deliveries and Ice.com, the implementation of site search tools has brought in more sales. For others, like Petco, a reward comes in lower merchandising costs. “We’re probably saving half of a full-time employee a year in incremental labor just from not having to manually set up rules,” Lazarchic says.