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February 20th, 2024
Just like a meticulous shopkeeper rearranges store displays, restocks shelves, and refreshes their product selections on a regular basis, ecommerce companies perform various tasks to keep their online storefronts looking slick.
Ecommerce merchandising is the process of optimizing the presentation, organization, and promotion of products to enhance the online shopping experience.
Ultimately, the goal is to drive sales. This means making periodic, incremental adjustments — updating product listings with high-quality images and detailed descriptions, highlighting new customer testimonials at the top of the product page, and analyzing website traffic data to gauge performance.
Ecommerce stores must be attuned to changing consumer preferences and use data to inform their strategy. Is the conversion rate on a specific landing page low? Rewrite the product description and add keywords to the product title. Are customers abandoning their carts? Ensure shipping costs are displayed upfront.
Strategies for ecommerce merchandising excellence
Ecommerce merchandising best practices optimize product presentation through thoughtful curation, compelling visuals, and a smooth purchase experience.
Product management and curation.
Curating a relevant product catalog is foundational to ecommerce success. Conduct market research to thoroughly understand your target market’s needs, wants, and preferences.
Keep an eye on seasonal trends. Does your audience follow TikTok influencers or read trade magazines? Consider how media consumption can sway purchase decisions.
Aside from curation, product management also requires thorough upkeep of product metadata. Periodically update product descriptions with new SEO keywords, swap out product images, and ensure items are properly indexed in site search.
Utilizing product videos.
Videos bring items to life, highlighting details — eg: stitching quality, materials, sheen — and demonstrating the product in action, explaining its features and benefits better than text or images alone.
Consider producing various types of product videos, including: demo and tutorial videos, behind-the-scenes videos, 360-degree views, and customer testimonials.
Enhancing credibility through social proof.
Humans are heavily influenced by others’ actions, a psychological trope known as “social proof.”
Endorsements from others raises a product’s desirability. Marketers leverage this by highlighting testimonials and user-generated content (UGC) to emphasize an item’s popularity and perceived trustworthiness.
Here’s how to use social proof to drive sales:
Collect customer reviews: Offer incentives (eg: discounts on future purchases) for customers to leave a review of your business. Display a mix of positive and negative reviews for authenticity.
Feature testimonials: Gather written or video testimonials from happy customers and display them prominently on your website.
User-generated content: Encourage customers to share their purchases on social media and tag your business. Repost these mentions on your official social media channels to show real customers enjoying your products.
Display trust badges: Display SSL certificates, security seals, or industry-specific certifications.
Low-stock alerts: Scarcity creates a sense of urgency, galvanizing customers to make a purchase before the item runs out.
Crafting a cohesive brand identity.
Brand identity encompasses everything from a company’s visual standards (eg: logo, typography, colors) to brand voice and customer experience. Customers should know what to expect from the business, such as on-time delivery, high-quality goods, or 24/7 customer support.
Craft a compelling brand story detailing how and why the business was founded, and what values it espouses. Next, create a distinctive visual identity that implicitly tells this story. For example, if the brand stands for sustainability and supporting the work of skilled artisans, choose an earthy, nature-inspired aesthetic.
Define the brand's tone of voice, whether it's friendly, formal, humorous, or authoritative. Use this tone consistently in all written content, including product descriptions, social media posts, and emails.
Optimal site-search techniques.
Site search optimization enables customers to find specific items, boosts product discoverability, and helps retailers increase conversions. Here’s how it works:
Advanced search algorithms: Automatically handle spelling errors, synonyms, and natural language queries. Implement semantic search technology to understand the intent behind user queries.
Autocomplete and suggestions: Assist users as they type search queries. Display relevant product names, category pages, and popular searches in real-time.
Filters and faceted search: Enable filters based on categories, price range, brands, sizes, colors, and other relevant attributes. Faceted search allows users to narrow down their search results quickly.
Personalized search results: Analyze past purchase history and browsing behavior to offer personalized recommendations within search results.
Grow from $1 million to $100 million
Explore our collection of resources filled with actionable strategies, expert insights, and everything you need to increase ecommerce sales.
Personalization in ecommerce merchandising
Customers expect a tailored shopping experience that enables them to easily find the products they’re looking for and receive personalized offers.
User behavior analysis.
Data on user behavior reveals a treasure trove of information marketers can use to better meet consumer preferences.
Page views, purchase history, emails opened, and items wishlisted reveal many things, including, but not limited to what the consumer wants and/or needs, and what prices they are willing to pay.
Marketers can feed this data into product recommendation algorithms, email marketing automation software, and CRM software for advanced personalization.
Product recommendations.
Personalized product recommendations are a standard feature on ecommerce websites, especially for online stores offering a vast product catalog aimed at different customer demographics.
By upselling and cross-selling complementary products that align with the customer’s browsing and purchase history, ecommerce stores increase the chances of a sale. Personalized recommendations can appear in search results or on the homepage of the ecommerce site, in email promotions, and retargeting ads.
Alternatively, offer contextual recommendations (eg: suggestions based on current seasons, trends, or the customer’s location), or highlight best-selling items.
Retargeting strategies.
Retargeting helps ecommerce stores win back cart abandoners or website visitors who bounced by showing them personalized ads.
Use website pixels from your ad platform of choice (eg: Google Ads, Facebook Ads) to track user behavior on your site. Display targeted ads to would-be customers as they use search engines and browse social media networks or other websites.
Dynamic retargeting ads let businesses display specific products the user viewed on the site or left in their cart.
Measuring ecommerce merchandising success
The bottom line is that a successful ecommerce merchandising strategy can lead to increased website traffic and sales.
Website traffic and conversions.
Every website visit heralds a potential sale. Measure website traffic to monitor the total number of visits to the company’s website. Analyze traffic sources, such as search engines, social media, or paid ads, to understand where traffic originates.
Compare the ratio of new versus returning customers. A healthy balance of both indicates customer retention and continuous acquisition. Bounce rate measures the proportion of visitors who leave the site without interacting.
Conversion rate indicates what percentage of website visitors completed a desired action (eg: signing up for a newsletter or buying an item). Analyze each step of the conversion funnel (such as product view, add to cart, checkout, and payment) to identify drop-off points and optimize the customer journey.
Customer lifetime value.
Customer lifetime value (CLV) measures the total revenue an ecommerce business can expect to generate from a single customer throughout their relationship.
Here’s how to calculate CLV:
Customer lifetime value = Average purchase value x Purchase frequency/Customer lifespan
Average order value (AOV) measures the typical dollar amount of a single sale, while purchase frequency determines how often the average customer buys from the store in a given year or month.
Customer lifespan indicates the timespan over which these purchases are spread, or the total length of the customer relationship.
Seasonal and promotional analysis.
Promotional marketing campaigns can call for a large upfront investment, so it’s critical for businesses to measure the ROI and identify the most effective promotional strategies to repurpose later.
Examine past sales data to determine demand fluctuations throughout the fiscal year, and identify any seasonal trends. For example, do holiday-themed items perform as expected? Does demand for sunscreen rise or fall in the winter? (Hint: Many people travel to warmer climates during winter, stimulating the demand for sunscreen).
By identifying trending products, a business can introduce new products or limited-edition items in conjunction with holidays, seasons, or viral social media trends, and offer more targeted promotions that appeal to customers’ sensibilities.
Trends shaping ecommerce merchandising
Brands are using technological innovations to enhance the customer experience by boosting product discoverability and using trust signals to ensure customers feel confident in their purchase.
Leveraging AI for enhanced personalization.
AI can analyze loads of customer data in seconds to analyze individual user behavior and group customers into segments. This paves the way for next-level personalization. Segmenting customers based on behavior and preferences enables businesses to target each group with personalized ads, email marketing, and product recommendations.
AI can also predict customer behavior based on historical data, flagging customers at risk of churn or surfacing automated pop-ups to website visitors before they bounce.
Businesses can implement dynamic pricing to maximize profits in the context of real-time demand, competitor pricing, customer price sensitivity. Chatbots, visual search, and image recognition are other AI tools businesses can use to help customers find exactly what they’re looking for.
Utilizing user-generated content.
User-generated content makes brands more authentic. Potential customers will trust other customers to give their honest opinion, which is more convincing than any marketing claims a business can make.
Encourage customers to share product photos, unboxing videos, testimonials, and product reviews by running contests, giveaways, and sharing a branded hashtag for social media posts.
Advanced searchandising tactics.
Searchandising — a combination of the words “search” and “merchandising” — is an advanced technique online retailers use to optimize the search functionality of their ecommerce store.
Intelligent search algorithms use natural language processing (NLP) to decode the intent behind a search query, since customers don’t always know what they’re looking for. For example, they might type “thing to hold shower curtain rod” into the search bar when they mean “shower curtain bracket.”
Visual search lets users upload images to find similar items, while facets are granular search filters that narrow items down by price, color, model, to help customers find the right product.
Prioritizing a comprehensive customer experience.
Unlike the traditional retail experience where a customer walks into a physical store, decides what to buy, and walks out, the online shopping journey is complex.
When customers first visit a website, they should find a homepage that is easy to navigate, searchable, and provides personalized recommendations. Dynamic content, fast loading speeds, and a seamless checkout experience pave the way to a frictionless purchase.
If a customer runs into a snag at any of these touchpoints, the sale is potentially jeopardized.
View the customer experience holistically, including the post-purchase experience — brisk order fulfillment, on-time delivery, and responsive customer support.
Emphasis on social commerce.
Social media platforms such as Instagram and Facebook have integrated shopping features that allow businesses to create online stores directly on these platforms.
Businesses can tag products in shoppable posts, enabling online shoppers to view product details, and complete purchases without leaving the social media app. Merchandisers also have numerous ways to engage with their audiences, from livestreaming to interactive polls and social media advertising.
Adapting to omnichannel retail.
Through omnichannel retail, brands can offer a unified shopping experience across platforms. For example, if a customer initiates a webchat and the bot gives product suggestions, the customer could add these items to their wishlist.
Then, marketers could send automated emails if a wishlisted item goes on sale.
Some of the top features of modern omnichannel retail include a single customer view to integrate customer data from different channels and a cross-channel shopping cart.
Importance of sustainability.
Ecommerce has a sizable carbon footprint, from production to packaging and transportation. Intriguingly, emissions from packaging account for 45% of global ecommerce emissions, compared to 13% for transportation.
Eco-friendly packaging is made from materials that are biodegradable, reusable, or easily recycled. For example, some retail stores are opting for corrugated bubble wrap made from up-cycled cardboard.
Another key focus in ecommerce sustainability is last-mile delivery: the final leg of the delivery process. Incidentally, this accounts for up to half of total delivery carbon emissions.
By using route optimization software and micro-fulfillment centers, ecommerce companies can reduce transit times, transportation costs, and emissions.
Advances in supply chain optimization.
Supply chain optimization presents major opportunities for ecommerce businesses to cut costs while reducing their carbon footprint. Just-in-time inventory management, driven by predictive analytics, lets businesses reduce warehousing costs while meeting demand.
Automated robot pickers, conveyor systems, and automated guided vehicles (AGVs) can help streamline warehouse operations and reduce labor costs.
However, this can present a substantial upfront cost. An alternative for smaller businesses is to partner with a third-party-logistics (3PL) provider for outsourced warehousing, order fulfillment, and shipping.
The final word
An online merchandising strategy involves continuously improving business processes, A/B testing, and data analysis to ensure products are presented to customers in the most appealing way possible, while providing a user-friendly online and in-store experience.
Everything from rewriting product descriptions to supply chain optimization helps improve the shopping experience and drive sales.
Businesses must lean on their data to understand customer sentiment. Continuously track website performance using tools such as Google Analytics, and make adjustments accordingly.