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Merchandising session
- 1. eMerchandising Enhancing the Online Shopping Experience ____________________________ part 1 of 3
- 2. Presentation Overview Part One • What is Online Retailing • What is Online Merchandising? • Aspects of Online Merchandising • The Internet as Retail Channel • Merchandising Drives Revenue _________________________________________________________________ Part Two • Customer is Key • Design Strategies Part Three • Online Merchandising Tools • Online Merchandising Techniques • Net Take-Aways
- 4. What is Online Retailing? Components of a winning online retail organization: • DESIGN | MERCHANDISING | OPERATIONS
- 5. What is Online Merchandising? Merchandising: • Is the art and science of how the products, features, and services are displayed, advertised, and promoted. • Helps create the experience you want your customers to have. • Creates selling opportunities.
- 6. What is Online Merchandising? Product presentation greatly affects how well a product sells
- 7. Aspects of Online Merchandising Get products to jump up and hit shoppers: • Make an item the focus or feature. Get products out on their own: • Position products where they can stand out from the competition. Practice the art of adjacencies: • Place one item next to another to generate sparks (sell more of both).
- 8. Aspects of Online Merchandising
- 9. The Internet as Retail Channel Why is it viable? • Time-Conscious Consumers • Quality and Selection of Products • Warranties and Guarantees • Credit-Card Companies • Security of Transactions • Relationship-Building Tools
- 10. Merchandising Drives Revenue • As competition and clutter increases, more attention needs to be focused on in-store marketing, or merchandising. • Many purchasing decisions are made and can be heavily influenced at the point-of-purchase.
- 12. Merchandising Drives Revenue The best retailers make merchandising the core of their business: • Merchandising performance is a key driver of retailing success. • Amazon: New Ideas, New Features.
- 13. Merchandising Drives Revenue: $$$
- 14. Merchandising Drives Revenue: The Magic of Merchandising
- 15. Merchandising Drives Revenue: Key Tips • Promotions and featured products appeal to holiday shoppers. • Effective promotions and merchandising significantly raise holiday revenues.
- 16. Merchandising Drives Revenue: Key Tips • Communicate special offers clearly and early in the buying process. • Place featured items above the fold on the Home page. • Use brands, categories, and situational merchandising to suggest products.
- 17. Merchandising Drives Revenue: Key Tips
- 18. Merchandising Drives Revenue: Setting Business Goals Business defines • How the product is to be perceived • How much is available for sale
- 19. Merchandising Drives Revenue: Setting Business Goals
- 20. Merchandising Drives Revenue: Objectives • Attract new customers (increase conversion rate). • Increase volume of sale (increase AOV). • Give customers more chances to buy more often.
- 21. Customer is Key: Features of Online Shopping Online shopping provides customers: • Limitless Selection • Price Comparison • Convenience • Speed • Information
- 22. Customer is Key: Benefits of Online Shopping
- 23. Customer is Key: Benefits of Online Shopping Customers shopping online can: • Grab and Go (save time) • Search/Browse (limitless) • Info-Fuel • Get/Stay in Touch
- 24. Customer is Key: Benefits of Online Shopping
- 25. Customer is Key: Understanding is Essential Successful sites compel customers to: » BUY NOW » GO to the Store » CALL to purchase or for more information
- 26. Customer is Key: Understanding is Essential To achieve these desired actions, it’s imperative to know your customer
- 27. Presentation Overview Part One • What is Online Retailing • What is Online Merchandising? • Aspects of Online Merchandising • The Internet as Retail Channel • Merchandising Drives Revenue _________________________________________________________________ Part Two • Customer is Key • Design Strategies Part Three • Online Merchandising Tools • Online Merchandising Techniques • Net Take-Aways
- 28. © 2002 Novator Systems eMerchandising Enhancing the Online Shopping Experience ____________________________ end of p art 1 of 3
Editor's Notes
- Online Merchandising: Enhancing the Online Shopping Experience Title screen
- First. Thank you to the editorial team. This presentation is about online merchandising and in part one we’ll discuss What it is. Why we are discussing it. Aspects of online merchandising. The internet as Retail Channel and how merchandising can drive revenue in this medium. The net takeaway will be a merchandising checklist for e-commerce sites to be used as an site evaluation and sales tool. -- Many shoppers have a hard time finding just the right product. These shoppers, or "browsers," are just glancing at the products that pass in front of them. Because browsers don't have specific products in mind, they need help visualizing how the products before them can meet their needs.
- The purpose of this presentation is to address the merchandising principles, tools and techniques we can employ to achieve the desired goals of our clients which is to grow their business: That’s why we talk a lot about: Increasing Average order value and site conversion rate. Note:Conversion rate is the percentage of browsers who will become buyers
- The components of a winning online retail organization starts with the notion that a store has 3 distinct aspects: Design- the site itself-the premises Merchandising- whatever you put on the site [store] and how it is displayed Operations-all the stuff that employees do [including customer service and store functionality]. -- These Big Three, while seemingly separate, are in fact completely and totally intertwined, interrelated and interdependent, meaning when someone makes a decision regarding one, a decision has been made about the other 2 as well. For example: Merchandising at the Gap a display scheme with wide, flat tabletops which are easier to shop than shelves or racks leading to higher sales. But the policy also determines how and where employees will spend their time - folding, neatening, straightening. This means sales clerks have to spend more time on the floor and less time ringing in sales behind the counter. This is a big expense but for the Gap, it’s a sound investment, the cost of doing business and mainly, it’s a conscious decision .
- Online Merchandising is -The presentation of products or services for sale on the Internet. -The Art and Science of how the products, features and services are displayed, advertised and promoted. -Merchandising helps create the experience you want your customers to have. -It is through the effective use of these features that selling opportunities occur. -- For the purposes of this discussion, let’s stipulate that shopping is more that the dutiful acquisition of what is absolutely necessary in one’s life. It is the kind of activity that involves experiencing that portion of the world that has been deemed for sale, using our senses-sight, touch, smell, taste, hearing-as the basis for choosing this or rejecting that. -It’s the sensory part of the decision-making process that’s most intriguing because how else do we experience anything.-- We buy things today more than ever based on trial and touch. Virtually all unplanned purchases - and many planned ones - come as a result of the shopper seeing, touching, smelling, tasting something that promises pleasure, if not total fulfillment.
- Successful brick-and-mortar retailers know that product presentation greatly affects how well a product sells, so they use merchandising techniques to maximize revenue. Many times, merchandising involves displaying groups of products rather than just individual products to create complete solutions. Retail stores implement merchandising techniques in their window and in-store displays. Catalogers apply merchandising by creating groups of products that convey a lifestyle or usage category. Show harry rosen
- What are the aspects of Online Merchandising we can employ to persuade customers -Get products to jump up and hit shoppers in the eye: Making an item the focus or feature -Get products out on their own. Positioning products where they can stand out from the competition -Practice the subtler art and science of adjacencies Placing one item next to another to create some spark and sell more of both -- Online merchandising specializes in designing materials that communicate sales messages at the point where the consumer is ready to make the purchase. As customers enters a website, they build impressions based on what they experience. Retailers have to accept the fact that we already have more stores than we need. The usual figure is that 80% of store sales will come from 20% of its clientele. So if stores are to grow, it will be by figuring out how to get more out of existing customers-more visits, more time in the store, more and bigger purchases.
- So the Gap now sells fragrances and candles. Club Monaco sells cosmetics along with clothes. If a customer come in and buys a $30 shirt and can be convinced to buy a$6 pair of socks, you’ve just increased sales by 20%. If she then takes a $20 belt, sales just role by 66%. So on the web, we have to let the juxtaposition do the talking, which provides suggestions to the shopper. A Merchandising technique such as Adjacencies are also about order - coming up with a sensible, logical sequence of products.
- The Internet is now a viable retail channel. We know this because -Time-conscious consumers are no longer inclined to spend hours shopping for goods and services -The quality and selection of merchandise continues to improve -Warranties and guarantees have removed the risk associated with purchasing unseen merchandise -The growth and monopoly of the large credit-card companies has made shopping easy -Relationship building tools such as frequent-shopper programs and other loyalty programs reward customers with convenience, discounts or special prices. -and general familiarity with the channel has grown
- Merchandising Can Drives Sales As we all know, many purchasing decisions are made and can be heavily influenced at the point of purchase, making merchandising an important focus for retailers -- Traditional retailers apply these proven merchandising techniques to their stores, so how can we apply these techniques to the website. as seen in the Harry Rosen Catalogue circulated earlier . It's clear that Harry knows how to merchandise products. The trendy lifestyle products receive a full-page, while other products were grouped together on a page, the use of xtreme close up quality photographs…you can almost smell the cologne on these guys. --
- The days of basic product presentation on e-commerce sites have given way to more sophisticated product merchandising and presentation. How do we use the space, content and functionality we have to design sites that attract customers: messages that shoppers actually read and making sure each message is in the appropriate place. Let’s look at what this means in the online world. Space are the pixels we’re to given to play in- the page. Content is what and how we occupy that space and functionality is how we interact in the space. -- These days, You actually have to make a concerted effort to avoid shopping today. Retailers are not opening stores to serve new markets. They are opening stores to steal someone else’s customers. While branding and traditional advertising build brand awareness and purchase predisposition, those factors do not always translate into sales.
- We know that the best retailers make merchandising the core of their business. Best Practice example Amazon showcases a new feature for viewing books. -- Merchandising performance is a key driver of retailing success. Disciplined merchandising — whether in stores, on the Internet, or through catalogues — can get the right products in front of high-value consumer segments, strengthen retail brands, and of course, enhance sales. Successful merchandising focuses relentlessly on assortment performance, and fosters an integrated organization that captures opportunities across functions and channels. Until quite recently, the marketing geniuses called the shots for how products would be presented to the world, and the guys in merchandising were left to sort out the petty details of how it would work at the retail level- in-store signage and displays. The two are switching sides. Suddenly, retailers realized to a growing extent, shoppers were making buying decisions on the floor of the store. That all added up to more dependence on merchandising, which lead the industry to grow from $5billion a year to a whopping $25 billion a year almost overnight. If you look back to the 70s all the leading retailers are gone or diminished. Woolworths. Marks and Spencer. Eatons. Competition is coming from outside their category. We're competing for very other demand on consumers time and money. The 3 hours spent at a movie is lost time to the rest of retailing. Ask question about this [the Leggs pantyhose story vs Secret]
- Effective Merchandising can significantly raise revenues for many e-commerce sites. • The average conversion rate for apparel sites is 1.8%. • The average order size for apparel sites is $81. On an average apparel site,increasing the average order size by 10%would add $8 per purchase. Increasing the conversion rate by 10%(a modest increase)would increase conversion to nearly 2%. For a site with $100 million in sales, the impact of these two changes would amount to $21 million in incremental revenue. $100 million x 1.1 (due to increased order size) x 1.1 (due to increased conversion) =$121 million. If the overall e-commerce industry raised average order size by a conservative 10% and raised conversion rates by a modest 10%,the increase in holiday revenue would total over $4 billion. $19.5 billion x 1.1 (due to increased order size) x 1.1 (due to increased conversion) =$23.6 billion --
- Here's an example of the terrible magic that merchandising can perform. Excerpted from a talk given by the vice president of merchandising for a national chain of women's clothing stores in which she deconstructed a particular display of T-Shirts: "we buy them in Srilanka for $3, then bring them here and sew on washing instructions in French and English”. Notice we don't say the shirts are made in France but you can infer that if you like- then we merchandise the hell out of them -we carefully fold them just right on a tasteful tabletop, on the wall behind we hang an enormous gorgeous photograph of a beautiful woman in an exotic locale wearing the shirt. we shoot it so it looks like a million bucks. then we call it an Expedition T-Shirt, and we sell it for $37.
- What can we learn from this and other research about Online Merchandising According to Shop.org: Featured products appeal to holiday shoppers. Merchandising are opportunities for retailers to boost revenues during the holiday season. In tests, customers were highly responsive to promotions and featured products, especially so because they, like most holiday shoppers, were shopping for a gift for someone else: • In 30%of tests, customers clicked on at least one featured product. • In 19%of tests, customers clicked on a promotion or special offer. • Some promotions were so effective that 50% of customers who saw the promotion clicked on it. -- Many customers appreciated seeing featured products on sites ’ home or category pages. In 30% of tests, customers clicked on at least one featured product, showing the importance of merchandising. -- Promotions and featured products appeal to holiday shoppers so effective promotions and merchandising can significantly raise holiday revenues for many e-commerce sites.
- LandsEnd, for example, featured two products on its Women’s category page, causing a third of customers to click to get more information on one of the products: Once again these highlighted products caught customers ’ attention because they were presented prominently and clearly. The interested customers considered buying these items even if they came to the site for something else. So key tips for online retailers are: • Communicate special offers clearly and early in the buying process. • Place featured items above the fold on the homepage. • Use brands, categories and situational merchandising to suggest products to customers.
- Featured products were particularly important on the toy sites tested ( eToys and KBKids ). Adult customers, shopping for children,were especially eager to get gift suggestions. This was particularly true when customers shopped for other people ’s children and had little idea of the children ’s preferences. Both KBKids and eToys let customers shop by age as well as by category. In tests, almost all customers shopped both by age and by category within a single session. Providing multiple ways to browse was helpful to shoppers eager to find ideas for gifts to buy. eToys ’ shop--by-age page is an example of thoughtful and varied merchandising. Why do you think this site ‘eToys’ appealed to customers: eToys customers who shop by age for a five-year-old see this well-rounded page: -The center of the page provides category recommendations. -The right-hand column features characters and brands. -The page offers customers over a dozen product or brand suggestions. -The suggestions range from brands (Lego and Barbie) to categories (books they can handle) to situations (Plan a Stress-free Playdate). -Because the product suggestions were prominently and clearly displayed, several customers in tests clicked into various products from this page.
- Before merchandising can do its’ magic, Online Business Goals must be established. The retailer asks: How do we want this product to be perceived. How much do we want to sell -- The impact of brand-name marketing and traditional advertising is diffused now because we all absorb so much of it. The role of merchandising has never been greater. Products live or die by what happens on the selling stage. You can’t waste a chance to tell shoppers something you want them to know. Just as fashion now comes from the street, the world of retailing is about following shoppers where they are going, merchandising paints the picture. Business Goals drives merchandising objectives.
- The role of merchandising has never been greater now that the impact of brand-name marketing and traditional advertising is diffused now because we all absorb so much of it. Products live or die by what happens on the selling stage. Let’s put things in perspective. The purely digital transaction. The web permits the entire consumer experience to be conducted in a digital format. Selling software, books, recordings, videos can be all downloadable. Purely digital transactions are appealing not only because they're infinitely cheaper, involving no manufacturing with its expenditures on labor or raw materials, and the web merchant doesn't above to worry about old-fashioned issues of fulfillment like distribution and delivery. So far, What's been Good online: airline tickets, computers, books, dvds, videos, gifts food, wine, flowers, even some clothing, since you weren't planning to try on that lingerie you bought for your girlfriend at Victoria's Secret anyway.
- The goal of Online Merchandising is to -Convert new customers [increasing conversion rate] -Increase the average sales transaction [Average Order Value] -Give customers more opportunities to buy, more frequently -- Marketing, advertising, promotion and accessibility can bring shoppers in, but it’s the job of merchandising, along with customer service and the site design itself to turn them into buyers. So far, we've seen that the web does best with merchandise that involves a certain amount of thought but not a lot of browsing, touching, prodding, or stroking. It also works for people whose circumstances force them to make compromises. Ask question: would you buy your groceries online?. Here a story about the woman with 2 small kids who swears that anyone would be better than her husband at picking out fruit and vegetables, so she uses grocery gateway.
- We’re all aware of the key advantages of Online Shopping. Online shopping can provide what the physical retailing cannot. -Limitless selection: in theory, you can create the biggest superstore known to man -Price comparison: using a search engine or shopping bot, you can search thousand of sites for the lowest prices. -Convenience: Shop anywhere, anytime of day you can get to the store in minutes flat and you don't evne have to get dressed. -Speed: Assuming that pages load quickly, you can zip through the store at your own pace, no waiting in line, no more friendly chit chat with the cashier, no time wasted in traffic jams Information: limitless amounts of product information can be summoned, and saved. In this regard, the web has succeeded wildly in giving customers direct, seemingly unbiased critiques of a product. Example, on amazon you can find both negative and positive reviews posted by readers.
- Why do customers want to Shop Online -- -Grab and Go- if there's something you're looking for -flowers, books, buy it fast and split
- -Browse when you have time to kill. Surfing can be a pleasure in and of itself. You can buy or not and in this casual environment, it's easy to abandon a site if you encounter any difficulties or distractions. -Search the web is a wonderful way to fins stuff we have no real-world access to. Look at the success of eBay. -Info-fueling. gathering specs and products reviews before you actually purchase, an event that may take place on or offline. -Getting in touch with a company to ask a question, file a complaint, make an inquiry [instead of using toll-free phones that keep you on hold forever. Somewhere at the intersection of these 2 lists, [why people buy and the advantages] lie the purpose and potential of online shopping.
- Somewhere at the intersection of these 2 lists, [why people buy and the advantages on shopping this channel] lie the purpose and potential of online shopping and the reason for our studying merchandising in this medium.
- What do successful sites compel us to do?. Three things. First of all Get Customers to press BUY right away, If not, Drive Customers to the STORE, and last of all, Direct Customers to CALL so that they can be engaged one on one -- Through merchandising, opportunity to reach out to customers are created: -Converting browsers (increase conversion rate). -Increase volume of sale (increase AOV). -Giving customers more chances to buy more often.
- So in order to achieve the desired action, it’s imperintive to know who you’re selling to. Price and convenience are the key reasons to purchase online but changes in our society also have a bearing on merchandising. These changes include time compression, aging population, geomarketing and market fragmentation. Markets size continues to decrease as competitors segment them according to values, lifestyle, demographics, geographics and product benefits.
- In part 2, we’ll explore why getting to know the customer is key and review some merchandising strategies to enhance the online shopping experience. Thank You for coming.
- Online Merchandising: Enhancing the Online Shopping Experience End of part one