The changing face of digital merchandising

Mar 2nd 2023 ecommerce

This 2-part feature dives into the transformational journey made by digital merchandising to drive positive ecommerce experiences. Part 1 unveils the top merchandising tasks according to our customers and how they think about developing their merchandising strategies. Part 2 will deconstruct the core components that make a superior digital merchandising platform necessary to drive business results.

Online shopping skyrocketed during lockdowns, but demand patterns have changed a lot since then. As part of key trends observed, consumers have made their way back into stores while continuing to expect outstanding digital experiences. Inflation continues to remain high and global economic conditions are still turbulent, all of which influence shopping behavior. In addition to looking for the best deal, there has also been an increased tendency to spread their purchases across several online shops. 

This creates a complex equation for online retailers, when now more than ever, increasing profitability is key. This business imperative needs to be supported by all functions within a company where all employees are building and prioritizing their objectives towards more revenue, better operational efficiency and lesser spend. One specific craft that has been pushed to transform more than others is Digital Merchandising.

Why? Digital merchandisers have the ability to influence almost the entire online shopping journey. Their strategies and campaigns drive business results. So much so, that their role has pivoted from a content webmaster to a multi-channel product discovery strategist. The experience they create along the buyer journey has direct business impact. First let’s look at what’s top of the task list for this group.

Merchandising tasks by importance

From a recent survey conducted by Algolia, here are the top 7 tasks ranked by merchandisers in our customer base in terms of value and importance. Not surprisingly, while ‘item findability’ was at the top, we also found that priorities differ by size and stage of the business for e.g.,  “Relevant Locally while Scaling Globally” was disproportionately less important for SMB companies (who presumably don’t operate on a global level as compared to their enterprise counterparts).

Top 7 tasks ranked by value and importance.

Conversely, the most common top challenges they shared were:

• Volume of products/categories created new scalability challenges
• Poor merchandising capabilities lacking the superior tooling or solutions
• Lack of data for continued optimization 
• Repetitive/Manual tasks worsened by a large volume of products

Looking at this in totality, merchandising workflows fall in two big buckets: Automation and manual. According to our respondent base, the ideal split between the two is ~70% automation and  30% manual. The emphasis on automation would allow people to focus on more strategic and/or complicated tasks. Most teams thought they were falling short of their ideal ratio, currently doing too much manual work. They want to implement more automation, but often find themselves focused on the urgent day to day tasks. More specifically, their workflows would be a mix where manual tasks would still provide value for exceptional or atypical instances to be reflected in their automated flows.

Another important –and related– dimension expressed was the dynamic between creative and data driven activity/strategies. Approximately ~70% viewed Digital Merchandising as a data-driven activity. Customers found that by using big data, they could derive the most successful answers towards accomplishing the key tasks mentioned above like optimizing KPIs’ etc. On the other hand, creativity predominantly played a role in things like ideating on experiments for new messaging, categories, etc., building visual experiences, like page layouts and product images and other goals like building a differentiated brand image and competitive distinction. 

This is an ideal blend of art and science with one taking precedence over the other depending on the problem at hand. An experimentation lead at an enterprise retail brand said, “It’s all about making sure that the website is merchandised or is stylized so products are promoted and visually shown in a specific way that boosts sales and trading.”

At Algolia, we believe this is possible through smart merchandising capabilities that harness the combined power of data and AI to build fast, relevant, scalable and high conversion experiences. In part 2 of this series (coming soon!), we’ll share the key tenets that are integral to a high performing digital merchandising solution designed to help merchandisers succeed!