What Does a Successful E-Commerce Merchandising Strategy Look Like?
By Kait Spong
When you actually sit down and think about it, isn’t it crazy that the earliest days of trade and commerce date back to the Neolithic period in the year 10,000 BCE? From there, development continued in Mesopotamia (3,500 BCE), in Egypt (3,000 BCE), and on the Silk Road (130 BCE), an extensive network of trade routes that connected the East and West.
And even though it’s still difficult to pinpoint the exact time when merchandising began, all of these different iterations of commerce played a significant role in shaping its global history, fostering its economic development, and promoting its cross-cultural interaction and understanding.
E-commerce merchandising is no different. Like its historical predecessor, it's a sophisticated process that blends science and art, combining creative elements with data-driven decision-making to create relevant, personalized shopping experiences.
Yet, if you're looking to scale your business, your merchandisers can’t do this alone — they'll need the right technology. Before we get into what to look for in an e-commerce merchandising tool, let’s explore the topic of e-commerce merchandising, its similarities and differences from traditional merchandising, and the hottest trends surrounding it today.
- E-commerce merchandising is the art of strategically presenting products on your e-commerce site to boost sales and customer satisfaction, requiring data-driven insights and AI-powered personalization for success.
- Differences between e-commerce and traditional merchandising include digital platforms, virtual customer interactions, product presentation methods, global reach, and 24/7 operation.
- To excel in e-commerce merchandising, brands must embrace trends like AI-powered personalization, zero-party data, and sustainability, while leveraging an advanced software tool to optimize their product offerings, resonate with their customers, and create engaging shopping experiences.
What Is E-Commerce Merchandising, and Why Does It Matter?
E-commerce merchandising involves strategically presenting and promoting products on your e-commerce store to boost revenue, foster customer satisfaction, and bridge the gap between offline and online shopping. Think of it in its simplest form: display layout, product curation and categorization, and promotional activities that create compelling user journeys for your online shoppers.
As the digital landscape continues to evolve, your brand must leverage an effective e-commerce merchandising strategy, using a combination of data-driven insights, personalization, and artificial intelligence (AI) that goes beyond your brick-and-mortar store. By optimizing and refining your e-commerce merchandising efforts, your brand will ensure its short- and long-term success. A well-merchandised online store improves brand perception and offers a competitive advantage in the crowded commerce space.
How Is E-Commerce Different From Traditional Merchandising?
Even though e-commerce and traditional merchandising both aim to present and promote products in an appealing manner to drive sales, they differ in several key ways:
- Platform - E-commerce merchandising takes place on digital platforms, like websites and mobile apps, while traditional merchandising occurs in brick-and-mortar stores
- Customer interaction - In e-commerce, customer interactions are virtual, with no face-to-face communication or physical touchpoints. Traditional merchandising relies on in-person interactions where customers can physically examine products before purchasing them.
- Product presentation - E-commerce merchandising utilizes high-quality images, videos, and detailed descriptions to showcase products, whereas traditional practices rely on what's called visual merchandising (e.g., physical displays, product positioning, and/or store layout)
- Global reach - E-commerce sites cater to a global audience, allowing businesses to expand their customer base without geographical limitations. Traditional merchandising is restricted to the local area of the physical store.
- Operating hours - E-commerce stores operate 24/7, providing customers with constant access to products and services, while brick-and-mortar stores have fixed operating hours that limit the times and days customers can shop
Despite these differences, both approaches share a common goal of displaying products appealingly to encourage purchases — and even increase purchase size — for expedited business growth.
What Are the Most Popular E-Commerce Merchandising Trends?
Now that you’re aware of the similarities and differences between traditional merchandising and e-commerce merchandising, here’s a look at the most popular e-commerce trends happening in the market. Among them are AI-powered personalization, zero-party data, and an increased focus on sustainability — all of which contribute to more engaging, responsible, and successful e-commerce merchandising practices.
Everyone has been talking about AI, particularly generative AI like ChatGPT — and with good reason. Generative AI is expected to be the next phase of technological development, similar to how the internet, cloud computing, and smartphones shook up the technology industry (and greater society) when they were first introduced.
But few have connected the dots between large language models (LLMs), the technology behind generative AI, and the e-commerce product discovery space. Sure, this type of technology will be capable of many things within the e-commerce ecosystem, but it’s crucial to consider how it will transform one of commerce’s most important practices: merchandising.
Through advanced merchandising algorithms and machine learning (ML), AI can analyze vast amounts of customer data to provide tailored search results, filters, product recommendations, promotions and sales, and marketing campaigns. This level of personalization helps customers find products or services that align with their needs and interests, resulting in a more fruitful shopping experience for them and more revenue for your business.
Unlike first-party data, which is collected through cookies and online tracking, zero-party data is explicitly provided by the customers themselves — usually in exchange for personalized experiences or other incentives. Since customers willingly share their preferences and interests in exchange for something that benefits them, zero-party data helps build trust and transparency, fostering stronger customer-brand relationships.
Plus, it’s crucial to consider your company’s response to growing privacy concerns and stricter data protection regulations, such as the GDPR and CCPA. Fortunately, zero-party data offers a compliant solution to obtain actionable customer information without intruding on their privacy. With it, you can predict customer needs, optimize product offerings, and enhance the overall shopping experience — ultimately leading to better personalization.
Again, AI can help automate this process. By leveraging natural language processing and ML, e-commerce companies can not only automate the zero-party data collection process, but also use it to identify patterns and see recommendations of the best opportunities to optimize (aka “the low-hanging fruit"). Best of all, AI can detect any changes in customers’ behavior and adjust accordingly in real time.
Although younger generations of shoppers care about personalization and data privacy, they also show major concern for environmental issues. More than ever, savvy consumers are increasingly conscious of the environmental and social impacts of their purchasing decisions. The brands they shop with, the products they purchase, and the methods in which they shop are of the utmost importance.
Shoppers are now more inclined to support brands that prioritize eco-friendly practices, ethical sourcing, and fair labor policies, driving businesses to adopt sustainable measures throughout their supply chain. But offering environmentally friendly products, using sustainable packaging materials, and adopting energy-efficient processes are only first steps in appeasing this growing segment of eco-aware customers.
If you’re adhering to an e-commerce framework that focuses on fast fulfillment shipping as opposed to intuitive product discovery, then you might not be as eco-conscious as you believe. Through its focus on virtual presentation, e-commerce merchandising reduces the waste of merchandising itself. It also reduces pollution from brick-and-mortar stores and employee commutes. All in all, your dedication to eco-friendly business processes will solidify your brand in the eyes of consumers, while lowering resource consumption and expenses.
The Most Common Roadblocks for E-Commerce Merchandisers
E-commerce merchandisers face numerous challenges in today's fast-paced and competitive marketplace. Among the most common roadblocks are juggling multiple job roles and responsibilities, managing an ever-growing number of products and categories, and building more websites in various languages to cater to diverse, global audiences.
Juggling Multiple Job Roles and Responsibilities
Being a merchandiser has always been about balance — balancing artistry with science, balancing industry know-how with customer behavior, and more frequently, balancing the roles they have to play with daily workflows. Simply put, it's much more than product placement and inventory management, so, it isn’t uncommon to see merchandisers performing the following roles:
- Content Creator - E-commerce merchandisers are responsible for creating engaging landing page content for product launches and promotional events, showcasing products or services through visual and textual elements on their online stores
- Site Experience Designer - Going hand-in-hand with content creation, e-commerce merchandisers often focus on optimizing the website's layout, navigation, and overall user experience to reduce friction, improve conversion rates, and boost revenue
- Personalization Expert - They also must analyze customer data to tailor the shopping experience for each individual, keep track of patterns should those behaviors change, and continually reoptimize the experience
- A/B Test Specialist - Last but not least, e-commerce merchandisers must implement and analyze various tests to determine the most effective strategies for driving sales and repeat purchases in the e-commerce store
This ever-evolving balancing act for e-commerce merchandisers has made their jobs more challenging. With this workload, they can only make an average of 9-13 significant, positive ROI decisions in a given month, which will lead to stagnation for your online business.
Handling an Increasing Number of Products and Categories
For any commerce business, the goal is growth, but you can’t grow your business without expanding your product or service offerings. However, scaling can become a double-edged sword for merchandisers who have to manage the expanding number of products and categories. During these periods, merchandisers must continually optimize site structure, product categorization, and search functionality.
As your product catalog expands, it becomes increasingly more work to maintain accurate and up-to-date information, including product descriptions, images, pricing, and inventory levels. This leads to inconsistencies and errors that may negatively impact the customer experience, resulting in missed sales opportunities and a possibly tarnished brand reputation.
Building Managing More Sites in More Languages
When it comes to managing websites in multiple geographies and languages, it requires close collaboration with translators or localization teams, as well as a deep understanding of the cultural nuances and preferences of the target audience — that's a lot of work!
It's also important to stay informed of local market trends, regulations, and currency fluctuations when managing multilingual sites and coordinating promotions. But you shouldn't be hesitant to adapt your strategies to suit each region's unique demands. Failing to deliver culturally relevant and linguistically accurate content and product offerings can lead to miscommunication, diminished customer trust, and lost sales opportunities.
Now, with multiple brands under a singular entity, merchandisers have so much to think about, from products and audiences to branding — the list goes on and on. Often, these different brands are managed from various technology platforms, creating silos in a merchandiser’s workflow and hindering their ability to be as effective as possible. To overcome this challenge — and the many others we’ve discussed — commerce companies must invest in efficient e-commerce merchandising tools that can help them automate 80% of their workflow so they can focus on the other 20%.
5 Software Must-Haves for a Successful Online Merchandising Strategy
To ensure that any one of the e-commerce sites you manage stands out from the other online retailers and hits all of your important metrics, you need to leverage the right e-commerce merchandising tool. Here are five software must-haves to keep in mind.
Product Grid Editor
Any worthwhile e-commerce merchandising software will have algorithms that optimize for revenue. As a merchandiser, however, you’ll want to intervene with your own business objectives at times. A product grid editor allows you to organize and customize your product catalog with ease without the help of IT.
With an interface designed specifically for business users, your team can implement various merchandising functionalities, like boost, bury, lock, or block. They can also view what the search results will look like for a certain search query, category, or thematic page to increase revenue per visitor and average order value.
Audience Segmentation Capabilities
Understanding your target audience is key to delivering personalized experiences that resonate and keep them coming back for more. When you’re evaluating different software solutions, you’ll want to find one with advanced audience segmentation, enabling your merchandising team to group customers based on their browsing behavior, purchase history, and demographics.
Since every customer is unique and has different needs and preferences, different customers expect different results. For example, the search query for “shoes” may mean something completely different to a hiker than it does to a cyclist. With audience segmentation capabilities, you can tailor your product search, category pages, and product recommendations to better meet the needs of the specific segment of customers, improving all your key e-commerce metrics.
Ranking Diagnostics Tool
No merchandiser is all-knowing, and that’s where a ranking diagnostics tool can come in handy. Essentially, a ranking diagnostics tool is a debugging solution that provides clear insight into how products in search results are ranked. Analyzing various factors, such as click-through rates, bounce rates, and conversion rates, can help you understand why a product is showing up in a particular set of search results.
This way, your merchandisers can better understand the drivers behind a particular results set and determine which adjustments need to be made. For instance, the insights gathered from a ranking diagnostics tool can identify if a synonym should be eliminated, if there's an error in a specific product attribute within the feed, or if certain products need to be promoted or demoted. With this information, you can make data-driven decisions to enhance product visibility to drive more revenue.
A Smart Search Bar
An intelligent search bar is no longer a nice-to-have functionality for your online shop — it’s increasingly becoming a necessity of a successful e-commerce merchandising strategy. Look for a smart search bar that incorporates features like autocomplete, synonym recognition, spell correction, and semantic understanding into it. Also, consider a search bar with advanced filtering options that allow customers
Underneath search recall and ranking algorithms, which interprets visitor queries and ranks them accordingly, there should be multiple layers of personalization that take into account a shopper’s affinity for a particular product or service based on their past behavior (e.g., add-to-carts, search queries, or category views), current preferences, and user demographics. So, if a customer tends to purchase a certain brand of skin care products from your e-commerce store, then your digital merchandising tool should automatically respond to this information in the search results, category pages, and more.
Last but not least, recommendation widgets are essential to any e-commerce merchandising software you invest in. As another facet of the product discovery experience, recommendation features use ML algorithms to analyze customer data and offer relevant and personalized recommendations based on preferences, behavior, and history.
This whole other level of personalization improves customer satisfaction and also strengthens brand loyalty. Furthermore, these personalized recommendations can help reduce cart abandonment rates, as customers are more likely to complete their purchase when presented with items that align with their needs and interests. Thus, recommendation widgets shouldn’t be an afterthought when considering the best e-commerce merchandising software for your brand.
Balancing Automation and Expertise: The Dynamic Duo of E-Commerce Software
A robust e-commerce software tool is a harmonious blend of AI and manual capabilities, seamlessly combining the power of technology with human expertise.
AI plays a pivotal role in enhancing the overall efficiency of e-commerce operations. It excels in automating routine tasks, like some of the examples mentioned above — creating personalized recommendations, providing spell corrections, and relaxing the query for better results. Since AI can analyze vast amounts of data in real-time, it can also accurately predict consumer behavior (based on events, customer attributes, transactional data, etc.), helping businesses tailor their marketing strategies and product offerings. Additionally, virtual shoppers powered by AI provide immediate customer support, improving user experience and reducing response times.
However, the human touch remains invaluable in the e-commerce realm. Manual capabilities in a solution complement AI by enabling businesses to make nuanced decisions that require human judgment and creativity. Merchandisers still play a crucial role in selecting and showcasing products that resonate with their target audience, implementing seasonal and promotional planning, handling cross-selling and upselling, running A/B tests, and managing inventory, product categorization, and vendor relationships. The ideal e-commerce software tool harnesses the potential of AI to streamline operations while recognizing the irreplaceable role that human expertise plays in delivering a seamless and emotionally resonant shopping experience.
Let Bloomreach Show You How E-Commerce Merchandising Is Done
If merchandising is an ancient craft, then e-commerce merchandising is a modern art. But your merchandisers can’t do it alone and be impactful enough to scale your company. Success in today's digital marketplace demands a collaborative approach that combines the skills of your merchandising team with advanced technologies — like Bloomreach.
By harnessing the power of innovative tools, you can create an online shopping experience for site visitors that captivates customers and sets your brand apart from the competition. All you need to do is balance the time-tested principles of merchandising's past with the groundbreaking possibilities of the present and future. In doing so, you'll unlock the potential for sustainable growth and forge a successful path for your business.
Eager to learn more? Try our search impact validation, and experience firsthand how your business data plugs into Bloomreach Discovery.