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An Introduction to Online Merchandising

An Introduction to Online Merchandising

Merchandising is very important for any retail business, and that includes e-commerce. But, at least on the surface, the options for merchandising online seem severely limited. A store in a mall or a shopping center can manipulate physical space to influence the flow of traffic, strategically position product- or brand-specific displays, adjust shelving, hang attractive graphics on the wall, modify lighting to create moods, pipe in music, even introduce scents.

In contrast, the screen of a mobile phone, where roughly three out of every four online sales take place, measures only a few square inches. It would seem that there’s not much to work with in that tiny space, but that’s not completely true. In fact,  when online merchandising is  driven by data as well as design, it can deliver great results. 

We won’t skip over design and content, but our primary focus in this guide will be on the contribution that data can make to site success in terms of business metrics like click-through rate (CTR), conversions, average order value (AOV) and the like. In particular, we’ll detail how the search bar, where 43 percent of consumers  begin their e-commerce journey, can become one of your most powerful merchandising tools.  

Design and content

Merchandising is both an art and a science. Here’s a brief review of some merchandising best practices related to design, freshness and interactivity that can’t be easily quantified but definitely deserve some attention.

Be true to your brand. Some people view brands as collections of typefaces, color palettes and rules about how to use the logo. Some insist that a brand must offer a clear promise, and stand for something. No matter how you see your brand, your e-commerce site must reflect it and be consistent with your other sales channels. 

Look good. High-quality photography not only helps customers make a buying decision. It also shows that you respect the products you offer enough to give them the visual attention they deserve. Your site’s aesthetic design also counts. For high-end products, elegant design may be required, but if your site is intended to quickly meet utilitarian needs, it should still have appropriate design. It should look utilitarian. 

Give your customers a reason to visit. If you regularly offer new products, seasonal specials, short-term sales or other content that changes often, you’re giving your customers a reason to visit beyond practical needs. McDonald’s sells 550 million hamburgers in the U.S. every year, but they still introduce new products on a regular basis.

Be relevant. Merchandise related to seasonality and holidays is an obvious example of relevance, but there are many more. Sporting events like the Super Bowl or the Olympics, social trends like the growing focus on sustainability, even social causes can give extra life and personality to your site.

Leverage user content. Reviews are essential, but you may be able to go further. Some sites feature customers’ Instagram shots that include their products in action. You can also display banners with positive customer comments in large type.

Create an interactive shopping experience. These days, if you’re buying a pair of glasses online, you can see how they look on your face with the help of your device’s camera. Some sites let you see what furniture will look like in your house or apartment before you buy it. The technology exists for lots of interactivity. It just needs to be put to use.

Data-driven search

The practices outlined above are important, but creativity and flair can only take you so far. Online merchandising needs to be driven by data, and nowhere can data make a more powerful contribution than in the search bar. To repeat, 43 percent of visitors to e-commerce websites go straight to the search bar. Furthermore, these searchers are likely to be your best customers. In one study, consumers who used the search bar converted 1.8 times more often than those who didn’t. Introducing merchandising techniques directly into site search can have a massive impact on the bottom line. This practice is often referred to as “searchandising.”

Searchandising defined 

The practice of searchandising revolves around controlling the order in which search results are presented, that is to say, how they’re ranked in a list or presented on a page. As it turns out, the order in which results are presented is very important. A recent study based on literally billions of Google searches indicated that 28.5 percent of visitors clicked on the first organic search result, and that the first three accounted for over 50 percent of all click-throughs. On Amazon, 35 percent of visitors click on the first search result. In short, controlling the ranking (order) of results puts you in the best possible position to offer your customers exactly what you want them to see first – and ultimately, to buy. 

Just to be clear, the searchandising solutions we’ll be discussing here enable the same amount of control whether the visitor is searching for a specific item, e.g. “dress socks,” or simply browsing the men’s clothing section of your site (These two online activities are sometimes described as search vs. discovery.) 

Driving factors for searchandising

Although the search engine may know a lot about language, products and even the user who’s searching, there’s also a lot it doesn’t know. To take just one example, a search engine doesn’t know the margins on your products, which ones have positive reviews, which ones are on sale, and so on. Here’s a more complete list of some common factors that might influence the way you want your results to be ranked. 

  • Margins. The best match to a query, and even the highest-priced match, might not have the best margin and therefore not be the most profitable.
  • Best sellers. Sometimes it makes sense to push best-sellers to the top because, well, they’re best sellers.
  • Reviews. Product pages with at least one review have conversion rates over 350 percent higher than those with none, so ranking these items higher makes sense.
  • New arrivals. More visitors than you may realize are visiting your site to find out what’s new, and such items are good candidates for pushing to the top.
  • Discounts and on-sale items. Offering a discount or putting a product on sale is often a tipping point for potential buyers. It’s also a way of moving items with a short shelf life or dealing with overstocked items.
  • Cross-sells. Some items are more likely than others to elicit cross-sells that ultimately increase the order value. In fact, you might want to include a couple of cross-sell items in the search results. 
  • Loyalty program status. Rewards and special deals on specific items may be available to members, and these should be boosted. 
  • Return rate. Returns are expensive, and it makes sense to boost products with the lowest rates of return.
  • Site branding. If your brand competes on price, like Walmart, you might want rankings to reflect that. On the other hand, if your goal is to be perceived as upscale and exclusive, price will not be a factor, and ranking should put more elegant (and therefore more expensive) items at the top.
  • Time sensitivity. In general, products related to holidays, like Easter egg dye or Christmas ornaments, need to be pushed intensively for relatively short periods of time and then buried (with the exception of post-holiday sales).
  • Shelf life. Food products are an extreme example of time-sensitivity. Anything susceptible to spoilage can benefit from high rankings. 
  • Seasonality. Thousands upon thousands of products are affected by the seasons, and displaying the appropriate product – a snow shovel vs. a garden shovel, for example – will provide a better customer experience as well as increasing the likelihood of a sale.
  • Stockouts. About 15 percent of customers who encounter an out-of-stock item will go to another site, so it’s clearly best to bury those items.

At least to some extent, these ranking and layout capabilities can guide the customer journey in much the same way that the aisles and location of product displays guide customers through a physical store. 

In fact, finding items on an e-commerce site is often easier and more convenient than finding them in a large store. Increasingly, ecommerce sites can include “experiential areas,” with catalog pages that feature clickable invitations to, for example, try on a pair of glasses virtually using your device’s camera or see what a new sofa would actually look like in your living room. 

Category pages

With Search.io, the process you go through to control ranking in a list can also control the layout of category pages, sometimes referred to as catalog pages or product collections.

The way products are displayed on a page makes a difference. The diagram below, based on a recent eye-tracking study, indicates how a site visitor’s attention is typically prioritized. With Search.io you can position the products you want to receive the most attention in the places where visitors are most likely to look (red in the diagram). 

Eye tracking studies indicate the priority your viewers will give to various parts of a desktop or laptop screen.

Searchandising in action

For searchandizing purposes, search results can be curated manually, or the process can be automated. With Search.io, manual curation is a simple drag-and-drop process, with no coding required. You simply put items in the order you wish, and that will be reflected both in search results and catalog pages. 

The benefit of manual curation is that you can rank results as precisely as you wish. The drawback is that, like any manual process, it’s time-consuming. For many ecommerce sites, the amount of time required to manually rank every search would be prohibitive, and the curating of results is typically limited to the top 20 percent of the total catalog.

Alternatively, you can use rules to automatically order (rank) and display content based on any criteria you choose such as brand, margin, popularity and so on — essentially, everything mentioned above in the section titled “Driving factors for searchandising.” 

The benefit is two-fold. First, there’s scale. You can set rules like, “display on-sale items first” and that will work across all categories and search results. Second, the rules can promote high-converting items within the category you’re merchandising. For example, if you have a sale on Nike shoes, you can use the rules to promote best sellers, highest inventory, or closest (by geo or in-store availability) to customers. 

With Search.io, you use relevance settings to adjust search results and category page ranking.

Dynamic boosting

What if you could let the search engine decide what item(s) to boost to the top based on the products that have the most and highest sales? Now, what if you boosted those items even more? 

Search.io offers dynamic boosting, which uses success metrics like clicks, purchases, conversions, margins, or any data you choose, to push the best results that are most likely to lead to higher conversions. It continuously learns and adapts to your site's performance to maximize business outcomes. 

Dynamic boosting sits on top of all the other rules you might have running during a merchandising campaign. In the Nike example above, dynamic boosting would give an extra lift — in search engine rankings and on dynamic category pages — to the best selling shoes. 

Banners

In addition to optimizing the way search results are ranked, Search.io lets you display banners to focus a visitor’s attention on a particular merchandising message. Banners can call extra attention to new products, new styles or colors, sales events, cross-sell items or any other sales or branding message. 

Personalization

One other aspect of searchandising that’s extremely important is personalization. It works, and there are plenty of statistics to back up this assertion. According to one study, 80 percent of consumers are more likely to buy when they’re offered a personalized experience. The importance of personalization is growing. Sixty percent of consumers in a 2021 study said they would likely become repeat buyers after a personalized shopping experience, up from 44 percent  in 2017.

Many retailers attempt to personalize using recommendation engines with algorithms to return results based on numerous data points, such as:

  • Gender
  • Rewards program status
  • Age
  • Social media likes
  • Geo location
  • Browser
  • Purchase history
  • Time of day
  • Site search history
  • Pages viewed

With Search.io, personalization occurs within the search itself or as customers browse the site. In practice, this means layering personalization on top of other searchandising algorithms. For example, if a woodworker is searching for a power drill, results can include brands or types of drills the buyer is most likely to purchase based on that buyer’s past viewing or purchase history, or any other factors you choose to leverage.

A/B testing

Testing is the key to continuous improvement in e-commerce. Most people associate A/B testing with offers, headlines, images, banner colors and the like, but A/B testing can be applied to search itself. For example, if search results are re-ranked based on the most popular brand first  vs. lowest price first, which set of results will yield a higher conversion rate? By answering questions like these, A/B testing can boost search revenue by 10 percent or more, and with Search.io it’s easy to execute. Here are some pointers to keep in mind.  

  • Use a sample size large enough to give relevant results. As it turns out, the obvious question -- How large is large enough? –  doesn’t have a simple answer. But the bottom end is at least 1,000 searches.
  • Randomize. Make sure every searcher for a given term has an equal chance of receiving results set “A” vs. results set “B”. 
  • Test for only one outcome at a time. For example, test for higher CTR or higher AOV, but not both. Attempting to evaluate multiple outcomes from one test only confuses decision-making. 
  • Don’t extend the test period more than a month. Any longer timeframe introduces new variables – changing weather, kids in school vs. home for summer, etc. – and these will potentially skew your results. 
  • Iterate. The winner of the first A/B test for any given search may not be the optimal set of results. 

Merchandising matters

Even on the smallest screen, there is room for creativity and innovation in merchandising. Data-driven ranking online merchandising – searchandising – is one of the most effective tools available. Search result rankings that are optimized and personalized lead to better business results, and Search.io delivers these results with a minimum of effort. If you’re looking to improve the performance of your e-commerce site, you need search no further.

About the author

Michael R. Stevens is a business and technology writer based in Berkeley, California.

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