Online Merchandising Strategies

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worldBuilding a profitable and scalable e-commerce business requires flexible merchandising and an effective infrastructure. Flexible merchandising (delivering value and quality in meeting customer needs) is covered in this article. Effective infrastructure (building efficient processes to create the information required for flexible merchandising) is covered later in the article.

Flexible Merchandising

The keys to effective online merchandising are simple: the site and sales process should be interesting, dynamic, appealing, and, most importantly, relevant to each shopper. Relevance means having the flexibility to provide a range of merchandising techniques to suit the needs of different shoppers, or the same shopper in different buying situations. Here is a collection of flexible merchandising strategies used on e-commerce sites—product locators, problem-solving techniques, and customer relationship tools.

Product Locators

Product locators help buyers find the products they need, often by using both a classification scheme and a search mechanism. Products need to be classified so buyers can easily locate them on your site. The efficient way is to incorporate classification data into the product detail and let e-commerce tools generate the Web pages as needed. The alternative is to laboriously paste the product data into Web page templates at the desired locations—and repaste if the site design changes. The following are some product locator strategies enabled by product classification data:

  • Categories
  • Visual catalog
  • Parametric comparison
  • Table of contents

Categories

Many e-commerce sites organize products by category—beginning with a broad classification, such as clothing, and narrowing in steps, such as outerwear, until individual items, such as mountain parkas, are reached. This metaphor organizes products in a familiar way like paper catalogs, and buyers click through Web pages to reach real products.

Visual Catalog

An electronic components supplier provides a visual catalog that makes it easy to navigate by inspecting a tree of products and selecting items that look like the ones needed. This metaphor, which can be developed with custom templates, helps the occasional buyer who doesn't know industry terminology. The supplier also provides search tools for frequent buyers that use full-text descriptions, product codes, or competitors' product codes.

Parametric Comparison

A PC accessories reseller lets the buyer pick product models and accessories from pull-down menus and then presents a table of items that match. Then, the buyer can compare specifications of individual items against each other and select which to buy. This metaphor, available with custom templates, creates virtual mini-catalogs on the fly to suit buyer requirements.

Table of Contents

More sites are adding table of contents features to supplement the other access methods. Some sites have multiple tables of contents that include products, services, and online information. Each entry jumps to a page of items or a visual catalog.

Problem-Solving Techniques

Locating products is one thing, making the sale is another. Problem solving (matching the right products to the customer's need) increases the chance of closing the sale and bolstering volume. Successful matching requires linking product uses to needs. The following are some problem-solving techniques made possible by product usage attributes:

  • Questions and answers
  • Up- and cross-selling
  • Accessorization
  • Customer relationship tolls

Questions and Answers

A technical products reseller provides a question-and-answer interface that leads the buyer through a dialogue governed by an expert system. This metaphor, available in most custom templates, helps the buyer clarify the requirement and identify candidate solutions at the same time. Such expert systems require linkage of recommended solutions to specific products. The reseller could also provide search tools for text descriptions, model names, and product codes.

Up- and Cross-Selling

Sites are beginning to add up-selling and cross-selling capabilities to enhance per-sale revenues. Up-selling offers more capable (and more costly) versions of a product. Cross-selling offers a complementary product to be purchased at the same time to expand the range of problems solved. Up- and cross-selling require links between models with varying levels of capacity and features and links to products with complementary uses.

Accessorization

Some sites focus on providing all items needed for specific uses, problems, or applications. For example, road warriors who want a portable printer may also need specific cable, batteries, power supplies, replacement print cartridges, ink tanks, special types of papers, helper applications, portable scanners, and even online access to clip art—all items that can be classified as "for use with" the portable printer.

Customer Relationship Tools

The customer relationship data, such as product preferences, past purchases, and demographics, can help shape merchandising strategies, if the relationship information is recorded in data attributes. The efficient way to employ customer relationship data is to accumulate preferences and purchase history on an ongoing basis in a customer profile—and ensure that this data can be linked with product detail for subsequent promotions. This approach is being adopted by increasing numbers of retailers and direct marketers for their customer loyalty programs.

Or, you can analyze past sales data and classify customers after the fact. This is difficult if product descriptions are the usual haphazard abbreviations shown on invoices. The following merchandising techniques can be based on linkage of customer relationship attributes to product information:

  • Customer preferences
  • Past purchases
  • Contracts
  • Customization/personalization

Customer Preferences

Keeping a record of preferences can enhance your relationship with customers in many ways. For example, maintaining the customer's preferred payment method reduces form fill-in at payment time. Size, color, texture, style, genre, lifestyle, and language preferences can simplify the purchasing process and enhance sales for clothing, housewares, sports gear, music, books, periodicals, and other goods. Customer preferences need to tie back to category or item-level attributes to work effectively.

Past Purchases

Records of past customer purchases, especially equipment, can enhance sales opportunities for extended warranties, supplies, maintenance, upgrades, and add-ons. Past purchases of supply items can drive seasonal or customer-specific promotions. Leveraging purchases data is straightforward if the product codes used in recording the original sale are accurate and meaningful.

Contracts

Much business purchasing is done under supply contracts. Contracts can be administered systematically online if discounted items are explicitly listed in the contract (in other words, a contract-specific version of the catalog is prepared). Tiered discounts are often based on purchase volumes by commodity class, which requires accurate classification of product items.

Customization/Personalization

Meeting customer-specific requirements can cement your relationships. Customization requires data fields at the item level, carrying them through the order process. Business-to-consumer examples include storing measurements for make-to-order clothing and custom-fit bicycles in a profile, and enabling custom selections of music on CDs. Business-to-business examples include storing specifications for make-to-order servers, routers, lab equipment, and specialty chemicals in a profile, and enabling custom configuration of personal computers and servers

Finally, product locators, problem-solving techniques, selling strategies, and customer relationship tools all rely on attributes to associate products with one another, merchandising techniques, and customer groups. Until recently, it has been difficult to rapidly deploy new merchandising strategies, because of the need to add new attribute fields and update existing field values for catalog entries.

A post by DavidHolcomb (1 Posts)

DavidHolcomb is author at LeraBlog. The author's views are entirely his/her own and may not reflect the views and opinions of LeraBlog staff.

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