How to increase your sales and ROI with optimized ecommerce merchandising

Mar 15th 2023 ecommerce

What happens if an online shopper arrives on your ecommerce site and:

• Your navigation provides no obvious or helpful direction for their search?
• Your product detail pages take ages to load?
• The site is full of poor-quality product photos for your SKUs?

Ack. Without a second thought, they’ll probably frown, sigh, abandon your site, and go find one of your competitors ASAP. And they certainly won’t be back.

It really can come down to a one-chance scenario to impress your digital visitors. And in the age of Big Data, the ways you optimize merchandising for exceptional online or mobile experiences (or you don’t) can genuinely make or break your business.

Get it wrong, and it will be your potential customers running away in droves. Get it right and you’ll unlock opportunities for driving a higher conversion rate and revenue for your site, plus strengthen your customer fan base and loyalty at their every touchpoint. 

Optimizing a merchandising strategy for a product lifecycle is nothing new for retail, of course. Strategies are continually being mapped out and finessed to leverage the opportunities of modern retail, and not just for ecommerce businesses. But as the pace of technology accelerates, the focus on how companies use the merchandising analytics tools at their disposal to achieve higher sales and ROI is increasing.

So how can ecommerce businesses most efficiently and successfully optimize their merchandising for website and mobile shopping experiences? 

The COVID effect

According to the US Department of Commerce, 2020 was the first year ecommerce sales outperformed in-store retail sales, which isn’t surprising given the COVID-19 pandemic and stay-at-home orders. The pandemic shook up an industry that was already in the throes of adjusting to digitization. Consumers were spending less time in stores, and with COVID, that intensified.

Now that people are used to skipping the physical store experience, their shopping often occurs exclusively online. The pandemic trend continues, with Shopify reporting that global ecommerce sales are expected to reach $8.1 trillion USD by 2026. 

So it’s safe to say that your potential customers today are likely to be influenced as much by QR codes as by gorgeous shop window displays, by cross-platform social media campaigns as by flashy billboards along the freeway, and by a personalized user experience (UX) as by a welcoming sales floor. How, where, and when online you offer products and deals and markdowns to attract shoppers and meet your customer needs matters.  

Mobile users are also a force to reckon with. Did you know 28% of consumers are using their mobile devices to enhance their shopping experiences in stores, for example, when they’re looking for deals? And even when shoppers make it into a store in person, they may just be checking to see if specific products have better buying options online, or if something that’s out of stock on the sales floor is still available online, before making their retail purchasing decisions.

When a prospective customer visits your site or engages on social media channels, or opens an email and discovers a discount code, it’s Go Time for you. Having your prospective loyal customers find what they want fast is crucial, and so is making the most of any and all opportunities to drive additional sales. How can you be ready? By optimizing your online visual merchandising and making the process of product search and discovery unobtrusive.

Data and retail analytics are your essential tools. Whether you’re tracking your online shopper or customer behavior, doing demand forecasting, creating unique customer profiles in order to provide on-target personalization, managing your supply chain, handling inventory management, or checking your merchandising optimization analytics, the ways you make use of your digital tools is sure to profoundly impact your business processes and ecommerce business.

What’s ecommerce merchandising optimization? 

Ecommerce merchandising optimization may be a mouthful, but it means simply ways a business can use its website to drive conversion and revenue. Fundamentals include the UX, search and discovery features, personalization, and layout and design. 

The origins of merchandising optimization date back to before the Internet age. In 1927, an investment banker named Paul M. Mazur defined it as “the responsibility of the merchandise division to provide for the consumer merchandise of the right style and quality, in proper quantities, at the right price, and at the right time.” 

How this is achieved differs with various factors, including your retail industry, customer demographic, and size of your organization. For instance, a traditional mom-and-pop store might focus on converting footfall into sales and building a local supply chain. By contrast, a multinational corporation might instead seek to navigate complex global supply chains and fulfill the demands of its large audiences across various demographics, geographies, and cultures. 

But essentially, merchandising optimization is the same for ecommerce businesses as for any other type of retail business. Which means that as shoppers choose to buy products online — and increasingly so via mobile — ecommerce merchandising optimization must be laser focused on making people’s web and mobile experiences as valuable as possible.

It boils down to delivering an exceptional customer experience.

As management consultant McKinsey & Company discovered, 71% of consumers now expect personalized experiences. And they’re adamant about it: if they don’t get the kinds of personalization that meet their standards, 76% find it frustrating and unacceptable, and they’re likely to move to a competitor. 

How to hit the bull’s-eye

For an ecommerce business, helping a shopper discover something new, relevant, and valuable to buy is the equivalent of hitting a home run. To make this happen, and happen with multiple transactions, every type of customer interaction must be flawless.

Another wrinkle: shopper experiences are often occurring across multiple channels, and this presents a challenge for companies’ tracking behavior and understanding intent. Intelligent systems must be in place to ensure that company data is joined across all channels so shoppers can enjoy personalized experiences on product pages regardless of how they choose to shop. 

And online retail merchandisers must utilize their cross-platform data to inform merchandising decisions. In short, data-driven omnichannel analytics are the only game in town. 

With its machine-learning contributions and predictive abilities, emerging AI technology is playing an increasingly fundamental role in areas such as personalization and merchandising. Predicting customer intent helps ensure that stock is in place to fulfill orders and sell through can be achieved. Plus, artificial intelligence is a boon for unlocking patterns and insights in customer data.

The dynamic duo: search and discovery 

Although many components impact digital merchandising optimization, there are two especially relevant areas for ecommerce: search and discovery. 

Search is straightforward. Most every ecommerce site has a search bar where shoppers can enter search queries to help them find what they need.

However, search systems, and the algorithms underpinning them, are not created equal. The speed with which search engines return search results and the relevance of the results directly impact the ability to build satisfactory customer experiences. Likewise, algorithmic merchandising sinks or swims based on the intricacies of the system in place. 

Discovery, as it applies to online business, is the art and science of guiding shoppers — who may not be actively searching for something — to products and services they may be interested in. Whether someone is casually browsing your site for the first time or they have specific purchase intent but haven’t gotten around to entering a search query, you have an opportunity to promote products and offers to attract their eye and potentially make a sale.

Six key tips

Picture a shopper or returning customer arriving on the home page of your ecommerce site. Fortunately, you’ve optimized to drive higher sales and return on your investment, so all is well. Here’s a rundown of what you’ve ideally done at that point:

• Rolled out personalization. You’ve started detecting your users’ trends so you can better guide them to relevant items and make the right product recommendations. With merchandising optimization analytics and the latest in AI, you’re able to deliver nothing less than exceptional experiences. 
• Kept things dynamic. A static site can kill the customer-centric vibe, so you’ve set up seasonal strategies that involve making time-restricted changes in line with marketing campaigns, new product releases, and your editorial calendars. 
• Overhauled your categories. A cornerstone of ecommerce, categories are often where customers go first on a typical user journey, whether they’re looking for something or just browsing your best sellers. You’ve optimized your categories and category pages. You hide, boost, bury, and filter items to guide your shoppers to rewarding discoveries. 
• Made all facets relevant. As part of delivering a better user experience and personalization that aligns with your customer preferences, you’ve made your facets supremely relevant to your shoppers’ needs, reordering them and their values to appear optimally for different queries and categories.
• Optimized for mobile folks. Realizing that your visual merchandising for mobile must be first rate, you’ve maximized your small-screen real estate, provided seamless mobile search and discovery, and added convenient options like voice search.

• Improved the entire user experience. Optimizing navigation is essential when it comes to ecommerce merchandising success, so you’ve shortened your shoppers’ paths to offers and relevant items in stock. You’ve secured a solution that offers drag-and-drop customization tools so you can easily make improvements to the UX design. 

Want better ROI? 

The bottom line is that without streamlining their ecommerce merchandising, most retail businesses will struggle to survive and overcome disappointing metrics. But with the right tools, which harness AI to facilitate powerful data-driven decision making, optimizing is not only inherently do-able, it’s likely to be a fairly major game changer for your business. 

Looking for a little help optimizing your ecommerce merchandising? No worries: you can give your merchandising team just what it needs to develop effective data-driven strategies using data analytics and Algolia Search and Discovery. With our visual merchandising tool Visual Editor, you can take control and start to drive up your customer satisfaction, sales, and overall success. Contact us at Algolia now to learn more!