Secrets of Online Merchandising

One out of every seven consumers who walks into a store makes a purchase. For shoppers on the Web, it is fewer than one out of 50.

It wasn't supposed to be this way. After all, shopping on the Web from the comfort of home was supposed to be so much easier.

The reason for the gap? Merchandising.

In stores, merchandising is a highly developed science that's explored every sensory angle to get consumers to open their wallets. Some clothes are stacked on tables instead of hung on racks because they have 'pettable' appeal. To encourage lingering, aisles are wide so shoppers don't brush one another.

'Sale' signs are placed 5 meters inside the door to give shoppers time to 'decelerate' from the outside world. Add-on sales are encouraged by grouping combos and ensembles together. Even the specialized lighting uses a spectrum that promotes calmness and relaxation.

Retailers know they live or die by their merchandising skills. By taking advantage of psychological and other factors, merchandising makes the sales experience as simple, pleasant and profitable as possible. By contrast, many commercial Web sites demonstrate little merchandising. Most, unfortunately, are still coming to terms with even the basics of usability. This explains why about two-thirds of shopping carts continue to be abandoned.

To witness superb merchandising, go to an Ann Taylor store. Look at how store windows focus on season fashions. Inside, ensembles are placed together in various combinations, echoing the storefront. Wardrobe basics are placed toward the back 'zone' to encourage store traffic. Note how the lighting, signage and fixtures work together to highlight the fashionable (i.e., high-profit) items.

Now visit the Ann Taylor Web site (www.anntaylor.com). It is optimized for the Ann Taylor woman -- elegant, efficient, stylish. It not only meets all ebusiness basics (clean look, fast-loading, search function), but, more importantly, mirrors the store. The highlighted fashions are usually the same ones featured in store windows and in current marketing programs. Seasonal fashions are displayed in ensembles. Women can browse or find exactly what they want quickly through the search function.

Anne Taylor represents a superb example of a key FusionBranding principle: Merchandising unity.

Merchandising unity extends classic retail merchandising principles to the online world. Merchandising unity means online and offline capabilities, and experiences are the same wherever possible. Policies are consistent. Shoppers have the same simultaneous access to inventory, shipping and other information. Such merchandising unity gives customers the integrated experience that is critical for branding.

However, merchandising unity is the exception. Many well-known retailers even established their online activities as separate subsidiaries. However, companies are re-integrating their online efforts. They're remembering that customers are customers. That's whether they visit a store, buy from a catalog or visit a Web site. Customers see you as one company, and get confused when online and offline experiences vary. Worse, they get frustrated when policies such as returns in one realm are not recognized in another.

To create merchandising unity:

o Understand how shoppers shop: A fascinating book that distills more than 20 years of frame-by-frame video analyses of shoppers in stores is Why We Buy by Paco Underhill. It is required reading for everyone involved in branding. Equivalent online research is still emerging, but several firms offer both online and in-store videographic and behavioral research services that help companies develop multichannel marketing and merchandising strategies.

o Understand the purchasing process: Offline, consumers can look, touch and compare. They can even try clothing on. Since that's impossible on the Internet, provide as much visual and descriptive content as possible. Companies like Bloomingdales, Macy's and Blockbuster use software that can rapidly display one image in different sizes. A 'zoom' feature can execute close-ups. Other sites have virtual dressing rooms. At J. Crew, lifestyle images show people using the products, often from different angles. Product
descriptions are complete.

o Understand the complexities: Allowing consumers to seamlessly shop and return goods online and offline is critical. About 58% of online retailers, including Nordstrom, Borders and Kmart, let customers return purchases to stores, according to an Accenture study. However, complicated issues are involved, including sales-tax policies, and which part of the business is charged for the returns. Goods must be inspected, repackaged and put back into inventory after crediting the customer. Make sure the necessary operational
capabilities are in place.

Merchandising unity impacts sales in two ways. First, consultant Creative Good estimates that online businesses could gain an additional $6 billion in unrealized sales by improving merchandising and checkout. Additionally, good online merchandising can increase retail traffic, since many consumers are researching online and shopping offline. By the same token, a poor experience can hurt sales. Jupiter reported that 70% of online buyers would spend less money at a traditional retailer after a bad experience at the retailer's site.

Companies also need to think about merchandising in the coming demand economy. How will you integrate merchandising efforts with such devices as PDAs, mobile phones and interactive TV? Can you merchandise on tiny screens? Although Forrester predicted that such devices will represent less than 10% of online sales by 2005, most of these sales will be high-profit, impulse items.

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(c) 2004 Nick Wreden. All rights reserved.