Retailers shift their ad spending from TV, radio and print ads to digital ads.
Retailers achieve merchandising success online via an assortment of technologies and tactics.
If salespeople could control shoppers’ thoughts and perceptions, imagine the revenue gains. Unfortunately for retailers, The Amazing Kreskin has his own site to worry about. But speaking with shoppers one-on-one can yield results; the best salespeople long have cultivated the art of reading-and working-shoppers who enter their domain. Web retailers, though, depend largely on what shoppers do, not what they say.
Furniture and home furnishings e-retailer Broadspan Commerce LLC is keeping a sharp eye on what shoppers do. In late 2006 the e-retailer combined web analytics with site search and merchandising technology to deliver a dynamic view of its shoppers. The combination paints a picture of what shoppers and customers have viewed and purchased. Based on analysis of that data, the technology assembles product choices that shoppers view as parts of home furnishings collections, arranged by contribution to profit margin.
This is how the retailer created its Shop by Collection online merchandising display. So, if a shopper is searching for a canopy bed, for example, the technology ensures the first products at the top of a page will be from the top-selling maker with the greatest margins and the highest conversion rates. Below will be products such as area rugs and bedding that help shoppers envision how a grouping might work in their homes.
“There are many related products in our category of 10,000 or so items,” says CEO Brian Beck, “and we’re able to put them together on the web.”
For e-retailers like Broadspan, determining how to position a product online is an ever-changing process driven by carefully created strategies and self-developed or commercial software. This merchandising software is evolving, making tools more sophisticated and measurements of web merchandising efforts more detailed, says Lauren Freedman, president of The E-Tailing Group Inc., a Chicago-based web retailing consulting firm. Merchandising tools now, for instance, are being used to better position products that result from site searches, she adds.
The data collection and product collections are working for Broadspan’s DirectlyHome.com and TotalBedroom.com, the company’s two main e-commerce sites, as well as Buying-Bar-Stools.com. “On DirectlyHome.com, where we implemented a lot of our Shop by Collection and featured product groupings, average order value has increased from $442 in the first quarter of 2006 to our current level of $519, more than a 17% increase,” Beck says.
In addition, Broadspan Commerce has realized a 65% increase in the number of on-site searches on DirectlyHome.com since implementing the search and merchandising technology, Beck says. And the conversion rate for shoppers that search is 30% higher than overall site conversion, he adds.
In many ways, web merchandising has become a science. Based purely on data, online retailers can spontaneously alter product displays based on shopper behavior and the avenue through which shoppers arrive on a site. Online retailers today have many electronic tools to help corral information on shoppers and use it to position products. Merchandising tools include product description aids, rich media that provides alternate product views, merchandising-enabled site search, product visualization, and audio and video technology.
Online retailers are increasing use of these tools to ensure the way they display products meets customer and business strategy needs. For instance, e-retailers are making significant investments in rich media, Freedman says. Use of product zoom is on the rise-81% in 2006 vs. 79% in 2005, according to The E-Tailing Group’s Mystery Shopper review of 100 e-commerce sites.
Further, web retailers increasingly are adopting alternate product views in merchandising strategies. Enhanced product views are important in many ways. The Q4 2006 Mystery Shopper review shows 57% of the 100 sites offer alternate product views, up from 45% in 4Q 2005. These tools go a long way toward building customer confidence, Freedman contends. “It makes customers feel like they’re getting what they want,” she says.
Establishing customer confidence is a key merchandising challenge because of the nature of electronic storefronts, says Karen E. Van Ert, director of marketing and business development at AtomicPark.com LLC. The e-retailer specializes in computer software and hardware, gaming products, and consumer electronics.
Build or buy
As web retailers learn about merchandising tools to position products effectively they must decide whether to build applications or look to vendors. Many specialized tools, like rich media, are purchased from outside vendors, Freedman says. However, most of AtomicPark.com’s merchandising technology, as well as search engine marketing and web performance monitoring applications, has been developed in house by a team that includes marketing and I.T. staff.
Broadspan Commerce also has developed most merchandising applications internally. It has a technology team that works on merchandising components such as a “quick link” feature on product category pages. The tool moves shoppers to headboards, for example, in the bedroom furniture section without first sending them to the bedroom page.
While technology is important, successful web merchandising requires a marriage of technology, merchandising and marketing-a marriage that takes plenty of nurturing, experts say. For example, in addition to marketing staff, AtomicPark.com’s merchandising team includes four programmers-two that focus on the web and two that develop applications-and a designer. Blending I.T. and marketing experts ranks high on the web retailer’s list of reasons why merchandising efforts are paying off, Van Ert says.
“It’s great to have I.T. in the mix, and they speak our language. That’s not always the case in web retailing,” she says. “This takes merchandising to a higher, more technologically developed level. Merchandising has the same strategies and concepts on the web and in a store. But there are all these tools available for e-commerce.”
AtomicPark.com’s owner had full-time software developers onboard from Day One, Van Ert says. Almost all application development is done in house, as was its recent site redesign. “Our designer and web developers tracked how customers purchase and worked that into the design,” Van Ert says. “Now that it’s built-in, we can easily change product displays as customers’ preferences change. It saves a lot of time on the back end.”
One tool the retailer bought, though, was web analytics software from WebTrends Inc. The application tracks shoppers on AtomicPark.com, which helps Van Ert make merchandising and advertising decisions. For example, analytics determines products getting the most and least attention. “My systems analyst tells me where to spend or cut back,” she explains. She communicates analytics-driven ad strategies to application developers so they ensure products are merchandised to fit ad campaigns.