Secrets of Online Merchandising

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 ( 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
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.  [FusionBrand]

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