Tried and true merchandising works as well online as it does offline
By Lauren Freedman
As a merchant, when I think of June, I think Dads & Grads. It’s one of the few times in the year when you get double seasonality and so it’s an excellent time for merchants to bring out their best in onsite and e-mail merchandising. It’s also an important time to reflect on first half performance as we get ready for the all important end-of-the-year shopping season.
That’s why we conduct our online merchant survey in the first quarter—the results can be useful as retailers upgrade their online shopping experiences going into the second half. This is the second year that we’ve done our Annual Merchant Survey. Each year we received responses from over 200 merchants who answered 40 questions regarding the overall state of e-commerce and specifically online merchandising and marketing.
In the survey, we presented merchants with a list of online merchandising features and asked them to assign a value from 1 to 5, with 5 being most valuable, then ranked them from highest perceived value to lowest. A key shared value from this line-up is: features that ranked high overall are ones that perform universally, regardless of category. While other features may have significant value in one or two categories, these highly valued features are tools applicable to any merchant.
Value vs. penetration
Additionally, there are many iterations and execution tactics that merchants can take to deliver on each of these features. For instance, implementation of a seasonal promotion can be as simple as a banner link to a page with a few top products or as elaborate as a seasonal destination that incorporates specialized search and gifting tools along with live chat to connect customers with experts who can handle special needs on an individual basis.
Next, we compared the merchants’ rankings of features with the penetration that these features have achieved within e-retailing sites, as determined by our 5th Annual Mystery Shopping Study. Interestingly, we found that there is not always a correlation between the value that merchants place on features and their penetration in online retailing.
While we present our findings as merchandising techniques that should appeal to all merchants, we stress that merchants evolve their sites in stages and that best-in-class functionality cannot always be implemented on first effort. Consideration of shortcuts and simple techniques to test your customers’ interest in a specific functionality is a smart starting point.
Tactics that merchants can act on are top of mind in today’s ROI-centric and tough economic climate. It is always wise to start with several high-level recommendations, but we have drilled down to specifics with each merchandising hit so merchants can immediately address each of these issues.
Merchandising home runs
1. Seasonal Promotions
4Q Penetration: 77%
Retail is still about creating demand for product throughout the year. Smart merchant planning, starting with seasonal promotions, is still most effective in driving business. As most of these promotions are consistent from year to year, it always will be about serving up the most engaging product to meet the needs of each customer and category. Just as they do offline, retailers need to keep a promotional calendar, yet with the understanding that the web creates a greater ability to be flexible and change tactics as seasonality, assortment and business objectives dictate.
2. Keyword Search
4Q Penetration: 88%
Efficiency rules for today’s time-starved shoppers. Keyword search, when executed well, takes the directed shopper immediately to the product of interest in the shortest time. It’s then up to the merchant to perform. Not surprisingly, this is an area where the significant time and dollars being invested are resulting in ROI for merchants. Make sure search is in working order, as directed shoppers will not return to a site with ineffective search. If search is performing, a merchant can optimize this heavily trafficked location with hot product relevant to the initial query.
3. E-mail as a Merchandising Tool
4Q Penetration: 72%
Hands down, the web is still a marketer’s dream. Even today with spam challenges, stuffed mailboxes and declining e-mail conversion rates, this cost-effective tool still delivers results. Merchants must now address these industry challenges while continuing to test formats, lists and creative to garner the returns they need. To succeed, each retailer needs to know the industry benchmarks for e-mail and how it stacks up. Continually test offers, creative and subject lines. Personalize to achieve stronger results. Test both newsletter formats and quick alerts to understand the value of information to your customer base.
4. Sales and Specials
4Q Penetration: 95%
Merchants always have product to liquidate. That’s why sales and specials continue to rank high. The web remains an ideal liquidation vehicle and should play that role, given its quick sell-through potential. Kudos to merchants who are segmenting their files to identify off-price buyers as a way of increasing conversion rates for their outlet wares. Pick your seasons and the best way to liquidate product. Determine if that means an outlet store or sales alerts and take advantage of this savvy online shopper who trolls the web.
5. Search/QuickShop or QuickOrder
4Q Penetration: 81%
(out of 57 Catalogers)
Bottom line: for shoppers this is still the best of both worlds. They get the benefit of excellent catalog photography, a quick-flip format plus an efficient option to buy online. It’s a time-saver by any account. For this customer, multiple item entry on a single page provides the optimal format. Highlight your QuickShop as part of your first-timers’ guide and display the feature in a prominent location on your site. Don’t forget to cross promote across all print vehicles.
6. Top Sellers
4Q Penetration: 56%
It is interesting to note that traditional merchandising tactics score home runs in this newest channel. As retailing will always be about hot product, positioning of top sellers remains strong online. Merchants are fortunate that in this non-linear environment they have an opportunity to creatively display such lists of products on the home page, by category and even at the product page level. When customers are unsure of what to purchase, these top seller listings can be the differential between exiting the site or buying a product. Determine prime locations to position best sellers. Test alternative locations from the home page and category page to the shopping cart to position for peak performance.
7. What’s New
4Q Penetration: 62%
Another traditional feature on our top 10 scorecard is the hard-hitting new product classification. I am always surprised that more merchants do not highlight their new items even more blatantly onsite. Certainly timely blasts of e-mail have been effective in showcasing new product. It would be our recommendation that merchants also use more graphically pleasing icons to remind customers of additions to their sites. Additionally, just as traditional retailers do at point of purchase or via their rotating main floor boutiques, maintaining special locations on the site will drive impulse shoppers to visit and buy more frequently. At a minimum, include a what’s new icon or text header, as key item selling has always been the bread and butter of retailing.
8. Affiliate Programs
4Q Penetration: 55%
Affiliate programs have become a mainstay of many merchants’ marketing arsenals, given its cost-effective nature. Continuing to be critical to the success of affiliate marketing are issues such as managing the programs; making sure partners are well selected and promotions well engineered; and constantly evaluating results to understand if the program is meeting its goals. Merchant feedback indicates that affiliate marketing is ideal as an acquisition vehicle but its role as a retention vehicle needs further assessment. Regardless of the stage of your affiliate marketing efforts, assess your promotional programs and corresponding revenue share. Understand what you need to secure the top partners you seek. Make it a priority to nurture those relationships rather than putting programs on autopilot.
9. Frequent Buyer Programs
4Q Penetration: 26%
This cross-channel retention tool delivers. As the web channel evolves and merchants move into retention vs. acquisition mode, these programs should garner greater favor. The optimal scenario is to enable customer utilization across all channels, thereby truly putting the convenience and choice into the hands of the consumer. Now’s the time test a loyalty program and cross promote it to ensure its success.
10. Personalization
4Q Penetration—(not measured
due to its varying nature)
As an early promise of the Internet, personalization is a tool we attempt to measure across the web. In its earliest application, a site addresses a returning customer by name, often followed up with personalized e-mails. A secondary and more sophisticated aspect involves dynamic merchandising based on product purchases or clickstream analysis. We are in the infancy of personalization, but we believe its potential is unlimited, with the caveat that the fundamental rules of merchandising must be followed. Work your upsells and cross-sells wisely to increase average order while simultaneously maintaining the respect of the customer.
Whichever online tactics a retailer chooses, there are still certain techniques that merchants must follow for mastering merchandising:
— Execute the basics well.
— Evaluate both onsite
and e-mail programs for opportunities to make enhancements.
— Don’t ignore conventional
techniques as those are often reinforcing learned shopping behavior.
— Test new tools and techniques
frequently to remain best of breed.
— Watch competitors and
best-of-breed players as there is little that is completely new in merchandising
and that cannot be emulated for a retailer’s unique brand and shopper needs.
Lauren Freedman is president of the Chicago-based e-tailing
group Inc. and author of the new book It’s Just Shopping. She can be reached
at lf@e-tailing.com.
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