E-Commerce Assortment Planning and Merchandising 101

I find myself scrolling and scrolling through product after product on many websites. From my perspective, as a retail consultant and a consumer, basic assortment planning and merchandising is often getting lost amid all the wonderful technology and in the e-commerce space.  Many online retailers are forgetting (or never learned) the “art and science” of assortment planning and merchandising. I see opportunities for basic improvement in these areas every day:

Assortment Planning

Merchandise Hierarchy and Navigation

Home Page Presentation

Product Page Presentation

Assortment Planning – Many e-commerce businesses suffer from “over assortment”. In “bricks and mortar” the assortment is naturally limited by space and by inventory investment. In the ole Catalog business the assortment is limited by paper, printing, and postage cost – another form of space. And, inventory investment. These traditional limits on assortments don’t exist in the same way online. In fact, it’s fairly easy to put an image online and begin to sell the product.

For discussion purposes, I’ll break e-commerce into two worlds, “commodity” and “specialty”.  “Commodities” are highly identifiable products or brands. K2 skis are an example.  Shoppers search for their skis on Google. They often pick the best price. They arrive at the selected website via the product page.  “Specialty” exists in multi-channel and in online retailers. “Specialty” has its own brand (even though they may carry other brands) and often its own private label products. I’ll use Nasty Gal, an apparel retailer focused on young women, as an example since it’s in hyper growth mode. More customers enter a “specialty” website via the home page versus product pages.

Assortment planning from a customer selection standpoint is more crucial for the “specialty” e-commerce retailer. But, basic merchandising, where the retailer focuses or limits their assortment on behalf of the customer (and the brand) often isn’t a priority. The poor shopper has to scroll down pages and pages of styles if they choose to spend the time. Inventory investment and cash flow, is another reason to limit the assortment – too much. And, customer satisfaction can be lost by carrying too many styles if one can’t keep the sizes/colors in stock for the customer – too little. “Sku rationalization” or “culling” is the “science” of assortment reduction. The “art” of developing your assortment is crucial also. Brand positioning among other things must be considered. (See my blog, Assortment Planning Part #1 – Six Factors to Consider When Developing Your Assortment Strategy for more.)

This is not “as” true for “commodity” websites. But, “commodity” websites still have some shoppers entering via the home page versus the product pages.  (There is a Google Analytics report which shows this flow and “drop offs” very well.) And, most companies still need to manage inventory investment and cash flow along with stock outs and the customer experience.  

Merchandise Hierarchy and Website NavigationMerchandise hierarchy (the way products are organized and categorized in any retailer) is primarily an internal merchandising tool in traditional retail. From my perspective, a good merchandise hierarchy has never been more important than it is in the growing e-commerce space. It should be the basis for shopping and navigating the website.  I usually suggest that the merchandise hierarchy have no more than four levels (ie division, dept, class, style). An example is Women’s, blouses, long sleeve, and then the specific styles are shown – in three clicks. Most often the merchandise hierarchy runs across the top of the website. “Double merchandising” or “browse taxonomy” is also extremely important. This comes in the form of additional “sorts” or “features” often down the left hand side of the website. Price, brands and colors are great examples of “sorts”. New, best sellers, SALE, and Holiday are all examples of other “features” that may rotate down the left hand side of the website or on the home page. All this is much easier with a well thought out merchandise hierarchy focused on the way the consumer shops. (See my blog, Five Top Tips for Creating a Merchandising or Product Hierarchy for more.)

Home Page Presentation – From my perspective, many websites simply try to do too much on their home page. There are just too many messages. I suggest limiting messages to two or three – in addition to basic navigation. And, the messages need to be prioritized. In general, the first message – especially for “specialty” - is about the brand. What is the brand positioning and what is unique about the brand? This must be presented in a clear manner on the home page. The second priority should be what is going on right now that’s compelling for your customer. Maybe it’s outdoor dining or maybe it’s a new product or technology. It could also be a sale or other promotion. The final but most important feature is “shopping” (ie where and how to quickly get to products – merchandise hierarchy from above). The home page can be treated just like the windows and entrance to a “brick and mortar” store or the cover of a catalog. You want to get shoppers to “come in”!

Product Page Presentation – Ever heard the saying “product is hero”?  That is certainly true on product pages. Photos must clearly show the “product” and its features. So often photos are not compelling or they don’t show the product (and true colors). Descriptions (sizes, colors, fit, and features) must be clear. Remember, that in “commodity” businesses this is where the customer usually enters the website. So, price is probably the most important to them.  Tools that help compare products, show like products, and show customer reviews are great. But, nothing is as important as showing the product, its features, and price very clearly first! On these pages, the customer is “in the store” or “flipping through the catalog”. This is where they need to easily see what they want or need in order to buy!

To summarize, there is a wonderful opportunity in e-commerce to improve:

Assortment Planning

Merchandise Hierarchy and Navigation

Home Page Presentation

Product Page Presentation

I’d love to hear about your needs in these areas. I can be contacted at Janice@JLSearsConsulting.com or 206-369-3726.