Retailers shift their ad spending from TV, radio and print ads to digital ads.
Matching consumers with brands then providing a shopping experience focused on a niche can increase sales.
There are tons of merchandise categories, and plenty of ways to get them in front of customers. And Eric Klose is constantly watching for the best way to make a match.
“We’re always looking, always listening for what might work, and how we can define a market,” says Klose, vice president of marketing for CSN Stores Inc., an online retailer with hundreds of web sites-each covering a niche reflected in its URL, like BeanBagChairsOnline.com, DinnerPlates.com and TheWokStore.com.
There are more to come, Klose adds. But CSN’s goal isn’t to reach a larger number of web sites, it’s to market whatever makes sense in terms of merchandise appeal and customer demand, he says. For example, if CSN already offers products like dining room furniture on a home furnishings site, but customers don’t seem to find its dining tables and chairs, it may decide to build a niche site on dining sets. “We listen to what our customers are saying, and if they can’t find what we already sell we move into it with a new site,” he says
Macro vs. micro
The strategy helped CSN to nearly double sales last year to more than $200 million, the retailer says. At ShoppersChoice.com L.L.C., which is also building out multiple niche sites in home furnishings, the strategy has led to sharply increased conversion rates, says CEO Mike Hackley.
Building a dedicated web presence to market a particular product category is a strategy retailers follow in different ways to suit their goals. While retailers like CSN and ShoppersChoice.com are building dedicated niche sites, other retailers, particularly those with strong established brands like Sears as the titles of their web sites, are creating microsites within their main e-commerce properties.
An overall trend in web merchandising, experts say, is finding the best way to match consumers with brands-or, in the case of CSN, ShoppersChoice and others, to virtually create new brands with web site addresses focused on particular products or categories-then provide a shopping experience dedicated to a niche. Thanks to the flexible capabilities of today’s e-commerce technologies, which support relatively fast rollout of completely new niche sites, or microsites based on search and navigation technology, retailers have more options than ever in developing online merchandising strategies.
“Retailers are ready for a revolution in web merchandising,” says Paul Miller, former head of direct commerce at Sears Holdings Corp.-operator of Sears.com, Kmart.com and LandsEnd.com-and now a Chicago-based independent consultant in retail e-commerce. Retailers today have more options to build broader shopping experiences within narrow niches, making it more likely shoppers will find something to buy instead of winding up in a merchandising dead-end, he adds.
Horizon Hobby Inc., for instance, a retailer as well as wholesaler of radio-control toy cars, model trains and learning toys, is emphasizing particular brands on HorizonHobby.com with in-depth microsites that incorporate consumer reviews-driven recommendations technology, says Sebo Dapper, former director of web commerce and now head of the retailer’s European markets.
By using site search-and-navigation technology from Endeca Technologies Inc. combined with cross-selling recommendations technology from Baynote Inc., Horizon Hobby has developed dedicated online “storefronts” to display groups of products by brand as well as category. Hosted on servers from Thanx Media Inc., the storefronts have produced a double-digit lift in revenue while enabling the retailer to improve merchandising of many products that would otherwise get lost, Dapper says.
“We have 80,000 SKUs, and this has allowed us to merchandise them on our e-commerce site better so shoppers wouldn’t just hit a dead-end on a product page,” he says.
Many of Horizon Hobby’s products-plastic assembly kits and metal die cast model cars and planes, for example-are relatively slow sellers that typically fall outside of primary display space. “No one has had the time to spend merchandising these items,” Dapper says.
But with storefronts focused on product categories or brands, Horizon Hobby now presents more of these less-known items in organized series of pages that make it more likely shoppers who want them will find them.
A storefront designated to the Losi brand of radio-control model vehicles, for example, lets visitors browse among colorful images of popular model cars, beach buggies and trucks, but on the same page shoppers can also view relatively obscure items like the plastic shell of a Losi model truck body.
A fan of model truck bodies doesn’t have to stop there. Adjacent links let him click into more detailed pages of related items from multiple brands as well as from the Losi brand only. As the shopper navigates, each new display of products offers links to continue browsing through related items and brands. “If a shopper searches on the term Losi, the site returns a mini Losi site instead of just a bunch of results,” Dapper says. “Losi might have thousands of products, but a shopper can get to all of them from the main Losi page.”
The storefronts as well as other sections of HorizonHobby.com offer cross-selling recommendations through Baynote, which specializes in generating recommendations based on shopping activity of consumers with a shared passion-like radio-control cars, Dapper says.
Baynote tags web site pages to monitor more than 20 sets of visitor activity such as the navigation patterns shoppers use before clicking on particular products or categories, whether and for how long they read supplementary editorial content, and whether they add items to carts and eventually purchase them. Gathering this data among groups of visitors showing similar interests, the Baynote technology automatically displays products new visitors are most likely to view and purchase, Dapper says. Certain criteria, such as whether a shopper places a product in a shopping cart, add weight to recommendations to give products a more prominent position in cross-selling displays.
“Endeca gives us the ability to help shoppers get to our products, and Baynote is taking that to another level,” Dapper says. “Baynote came up with good recommendations sooner than we expected. Our hobbyists are really into our products, and some of them probably know more about our products than we do.”
The generic brand approach