September 28, 2006, 12:00 AM

Big Deal

By letting suppliers peek through at analytics, is increasing sales through better trade deals.

If a merchandise supplier wants space on’s home page, it better be ready to deal. Just as big retail chains exert pressure on their suppliers to cut better prices and trade promotions deals in return for prime shelf space,, armed with web analytics data that show suppliers the impact of effective merchandising and promotions, is pushing a similar strategy. And it’s the analytics software that bolsters the strategy, creating a program that most offline retailers can only dream of.

As most retailers know, one of the toughest challenges in merchandising is choosing from among thousands of products which ones to feature in a limited amount of space. They need to select products that catch the eyes and wallets of shoppers as well as merchandise with higher margins to drive the most sales and profits.Getting cooperation from suppliers in providing the hottest products and promotions can help retailers decide which products to display.

“Having the right products on our pages makes a difference,” says Daniel Cotlar, chief marketing officer of’s parent company Global Custom Commerce.

The difference at is a 30% increase in gross profit margin per customer visit and stronger overall sales compared to a year ago, when it began sharing analytics data with its suppliers to create more finely tuned merchandising displays and promotions, Cotlar says. And it’s the sharing of analytics results like the sales impact of more elaborate product displays, notices of faster production times and discounts on popular features that has made that difference.

The strategy should play out strongly as Global Custom Commerce elicits supplier assistance in promoting its customizable products and reaching its goal of grabbing more of the 95% share of the blinds market controlled by retail chains and other stores. “It’s not top of mind yet for people to go online to buy blinds,” says Global Custom Commerce founder and CEO Jay Steinfeld.

Playing the game
For years big retail chains have held sway over many of their suppliers, getting them to offer promotional benefits and other favorable contract terms in exchange for the most noticeable space-or any space-in a store’s limited interior real estate. It’s unusual for a small, specialty online retailer-indeed, for any online retailer-to play the shelf-space game with suppliers, experts say.

The strategy has been slow to come to Internet retailing for several reasons, says Sucharita Mulpuru, senior retail analyst at Forrester Research. With only so many promotional dollars to spend, retailers and suppliers have been more inclined to focus on bricks-and-mortar stores. “Online has been a small piece of the pie,” Mulpuru says. “Suppliers haven’t cared as much about online space, and retail store merchandise buyers haven’t wanted to lose any promotional money to the web channel.”

But things are changing, though more so in some retail categories than others, she adds. In the computer hardware and software category, for example, 44% of sales are online. Retailers in this category are exerting more clout with suppliers to receive better promotional and contract terms in exchange for profitable exposure on web pages. “The more highly penetrated a category is in online sales, the more likely suppliers and retailers will be to start cooperating online,” Mulpuru says.

Moreover, the online channel offers something the bricks-and-mortar channel can’t-software that can capture, store and analyze virtually every move a web shopper makes. This highly valuable customer data can be put to practical use in merchandising, marketing and other efforts by suppliers as well as retailers, and it’s playing an important role in getting retail trading partners to cooperate on contracts and promotions.

Indeed, using such web analytics has brought into the shelf-space game, even though it’s not what many would consider a likely player. “When suppliers see our analytics data, it gives them a lot more confidence that we can grow with scale and control, and that they can be a part of that growth,” Steinfeld says. “As a result, we can get better deals.” initially decided to use sales and customer traffic data in dealings with suppliers after observing Wal-Mart Stores Corp. “Just because we’re a niche player doesn’t mean we don’t take the ideas of competitors who are larger and came before us,” CMO Cotlar says. Wal-Mart, noted for its system of sharing retail sales forecast and manufacturing production data with its trading partners, also is known for the clout it holds over suppliers.

What’s going on
“You hear about Wal-Mart sharing real-time information on what’s going on on their sales floors with suppliers, then limiting costs from its suppliers,” Cotlar says. “That’s one of the things that led us into this. Once you have data in your hands about what’s going on on your web site, you can think about how you can benefit from it with suppliers.”

Effective analytics data, which gathers with an application from Omniture Inc., can range widely. By showing the impact on sales of better product descriptions, price discounts, product displays and other forms of merchandising, analytics provides the proof suppliers often need to invest in promotions.

Most suppliers are quite interested in looking at all this data when offered the chance, Cotlar says. has shared data with a few of its suppliers that showed the impact displaying products along with complementary items and offering free upgrades have had with other suppliers’ products.

The analytics data added credibility to suggestions made to suppliers, such as displaying wood blinds in room settings or letting shoppers move up to popular, higher priced models at no extra charge. “We use analytics to experiment with everything-promotions, Buy button styles, customize-and-buy offers,” Cotlar says. “We’re trying to look at every product, every generator of traffic and every promotional campaign to see how we can optimize conversion rates.”

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