E-commerce Merchandising: Everything You Need To Know

E-commerce merchandising is changing.

While retailers in the early 2000’s were focused solely on bringing offline merchandising principles online, top e-commerce brands today are blending those original principles with customer data and artificial intelligence to enhance user experiences. They’re learning intent based on user actions, optimizing their product rankings with machine learning, and personalizing their websites at the user level.

The change is inevitable. And the only way to compete is to keep up.

This article details nearly every updated e-commerce merchandising strategy used today — from optimizing product pages to using data to personalize user experiences — so you can ensure your website is ready for the shift.

Navigation: 

  1. Modern E-commerce Merchandising Defined
  2. How Traditional Merchandising and E-Commerce Merchandising Differ (And How They’re Similar)
  3. Where to Start With E-commerce Merchandising
  4. Search 
  5. Navigation
  6. Visual Merchandising
  7. Data

 

But before we jump into strategy, how can we define modern online merchandising?

Modern E-commerce Merchandising Defined

According to Practical Ecommerce, e-commerce merchandising is “the art and science of displaying products or offers on a website with the goal of increasing sales.”

And that’s a great starting point. But to succeed, you have to dig deeper.

Great online merchandising isn’t only about displaying products enticingly — it’s also about optimizing your path to purchase no matter where users enter your website or where they are in the path. It’s about getting users to products they’re looking for (or products most likely to drive a desired business metric) as quickly as possible. It’s about connecting users with your brand and giving them a great experience.

Every strategy we discuss here will be centered around those goals.

How Traditional Merchandising and E-Commerce Merchandising Differ (And How They’re Similar)

“Really, eCommerce is just a new era of traditional retail, adapted to the new digital lifestyle we all live in.” – Ryan Lunka, nChannel

Store Layout

In traditional retail, “store layout” is of massive importance.

How can you position products to make them easily find-able? What products can you place next to each other to encourage multiple purchases? What path will customers take to find certain items, and how can you optimize that path to increase sales? How can you encourage customers to take certain paths?

While e-commerce sites don’t have physical paths and layouts, they do have digital ones.

Instead of positioning products in a physical store, you’re positioning them within your pages and navigation, planning information architecture and linking strategies to make products easily find-able, and using data to encourage users to view profitable products. We’ll dive deeper into each of these facets shortly.

e-commerce merchandising navigation structure

Image Credit: Smashing Magazine

Branding

The goal of branding is to elicit an emotion buyers can connect with your company/products.

Traditional stores use lighting, paint, color, music, and smells to represent their brand. While you can’t use “physical branding” (like music, smells, lighting, etc.) in e-commerce, you can make use of imagery, color, copy, video, unique website layouts, and more to give your users something special to connect with.

e-commerce merchandising branding

Image Credit: Fronks

Product Grouping

Grouping themed products is common practice in retail (ex. selling pool toys, chlorine, filters, pH testers, and solar blankets in a pack during the summer).

E-commerce stores have a different set of tools when it comes to product grouping. While you can’t group products physically, you can create themed category pages, use page linking and navigational techniques to tie similar pages together, send emails to customers with deals around a specific theme, upsell customers on product pages/shopping carts, and rank themed products for separate search queries (given those items don’t harm the search experience).

e-commerce product grouping categories

Grouped products on Sephora. Image Credit: Sephora


Want to learn more about serving users attractive search results and the limitations of optimizing search for “relevance?” Check out our recent webinar here.


Product Interactions

To replace the physical product interaction customers have in-store, you have to rely on well-written descriptions and high-quality images/videos to showcase relevant product attributes. If your products require sales assistance, you can use live chat to replace in-store salespeople.

Personalization

Traditional stores have in-person sales people who can personalize the shopping experience for buyers. Great personalization in e-commerce, however, is one of the harder challenges you’ll face.

You can still use live chat to replace salespeople if the product requires it, but most don’t. Instead, you have to get creative by using past customer data — like viewed products, search queries, clickstream data like CTR, bounce rates, add-to-carts, and more — to show customers products they’ll most likely be interested in. We’ll go over more strategies for personalization shortly.


Now that we have the preliminary information out of the way, let’s talk about the basics of great e-commerce merchandising.

Where to Start With E-commerce Merchandising

As we’ve established, merchandising is all about selling more products. But to sell more products, you first need an in-depth knowledge of how to sell:

“In order to sell better online you need to know the fundamentals, or essentials, of persuasive selling,” said Mark Hall in his Smart Insights article. “These same principles apply whether you’re selling face-to-face or on a website. Only by doing so will you achieve your overarching merchandising goals: more add-to-carts and conversions, triggered by higher click-throughs on your website’s sales pages.”

…and every great salesperson starts with the customer:

Understand Your Customer (Deeply)

Why are customers coming to your site?

What products are they looking for? What are their expectations? When customers are viewing products, what attributes do they care about most? What questions do they have? What are their concerns & objections? What language do they use when describing them?

The answers to those questions affect every aspect of your website — from the products you show on your home page, to the information you include in product descriptions, to the photos you use across your site/products, and more.

(An even deeper understanding can come from personalization, but we’ll talk about that soon.)

A great way to learn this information is through customer discovery interviews. Even if you’ve already conducted some in the past, it’s worth talking to new customers occasionally to gain new insights.

Another important thing to keep in mind:

Jobs To Be Done

When customers purchase a product, they aren’t just buying a product. There’s always an underlying reason for the purchase — whether it be a desired change in lifestyle, change in character, or something else.

In other words, the customer has a “Job to be Done (JTBD):”

“A Job to be Done is the process a consumer goes through whenever she aims to change her existing life-situation into a preferred one, but cannot because there are constraints that stop her.”

JTBD describes how a customer fundamentally changes or wishes to change by purchasing a product:

e-commerce jobs to be done example

Image Credit: Intercom.com

What are your customers’ “Jobs to be Done?” To sell more products, understand the underlying reasons why they’re purchasing and how you can convey to them that your product will help them complete those jobs.

Earning Trust

Without the trust of your users, convincing them to buy from you won’t be an easy task.

There are many things you can do to earn trust:

Website functionality

Is your website fast? Does it load properly and without issues on any device? Do all your website’s features (search, navigation, etc.) work across devices?

When we talked with award-winning customer experience expert, keynote speaker and WSJ/NYT best-selling author Shep Hyken, he had the following insight:

“As an online merchandiser develops their site, they must constantly keep the customer in mind for ease of use and functionality. You can spend a lot of time and money working on the selling, copywriting, marketing of the products on the site, but when the customer finally gets to the site, the experience must be easy, convenient and frictionless, or all will be for nothing.” – Shep Hyken (www.Hyken.com  Twitter: @Hyken)

Quality

Are all your product visuals up-to-date and high-quality?

Trust Signals 

Are you showing users the trust signals they care most about?

For instance, if you sell clothing, product reviews or user-generated images of happy customers wearing your products work well in earning a user’s trust. If you’re selling higher-ticket items, however, case studies or long-form reviews may work better.

e-commerce user generated content example

User-generated content on Urban Outfitters. Image Credit: Vendhq.com and Urban Outfitters

Benefits

Do you offer benefits your customers care about and are they displayed prominently (ex. Free shipping and free returns, etc.)?

Customer Support

Is your customer support high-quality? Many times, great customer support is the difference between permanently losing a customer and gaining a new evangelist.

Know Where Your Buyers Are At

When a user lands on your site, how can you best tailor his/her experience based on their stage in the buyer’s journey?

If your users land on your site for the first time, you need to make it incredibly easy for them to the product pages they’re looking for. If your user is a returning visitor, you need to tailor your website around what you know from their past experiences.

We’ll talk more about the best methods of doing this shortly.

Search

To sell more products, you must ensure users can find the products they’re looking for — fast.

It’s easy to view search and merchandising as two separate entities, but this isn’t quite right:

“Search is a discipline in and of itself,” says Kevin Laymoun, Director of Sales at Constructor. “…whether you’ve invested in search, merchandising, or both, the time has come to shift away from looking at both of these necessary systems as free-standing silos, and instead work toward integrating them into a seamless process that continuously learns from your buyers—a system that is worthy of continual investment and improvement.”

Let’s look at some ways you can optimize on-site search for sales:

Invest in good (i.e. modern) autocomplete

According to Nacho Analytics, autocomplete can boost conversions by up to 24%.

Good autocomplete, however, does more than estimate basic user queries. E-commerce giants are now combining Natural Language Processing (NLP) algorithms with autocomplete to present query results that approximate user intent. These algorithms are commonly used to:

  1. Correct phonetic misspellings, keyboard proximity typos, punctuation nuances, and omitted character typos. Is it “blue ray”, “blue-ray” or “bluray?” It’s officially spelled “blu-ray”, but you shouldn’t require users to know this to get good results.
  2. Detect synonyms to serve relevant results to users. If a user is searching for “suntan lotion,” good autocomplete will recommend “sunscreen.”
  3. Identify word importance to better understand what results will most likely lead to a conversion.
  4. Add support for multiple languages to give the best search experience to any visitor.

 

For performance reasons, autocompletes often use separate indexes or more advanced optimizations. For some helpful advice your engineering team can use, check out this article on how we’re continuously optimizing our trie-based spell corrections at Constructor.


Want to learn more about serving users attractive search results and the limitations of optimizing search for “relevance?” Check out our recent webinar here.


Embed product listings in the search bar

Embedded product listings work great for encouraging clicks through search.

But that’s not all: our own data tells us users are twice as likely to convert on products they’ve clicked from embedded product listings.

Automatic results re-ranking

Great search systems automatically re-rank search results for products most likely to lead to a conversion.

A basic example of results re-ranking is as follows:

If 40% of users who search for “laptops” purchase the laptop in the 8th search position and 22% purchase the laptop in the 5th search position, it would make sense to re-rank the 8th laptop higher (perhaps in one of the first few positions) and the 5th laptop closely following. Other laptops that users don’t frequently purchase should be moved down in the search results.

Great re-ranking systems, however, don’t only re-rank exact-match product results. They also re-rank attractive products.

Take a look at these results for “baby carrots” on Amazon for example:

“Hummus” ranked for the “baby carrots” search query. Image Credit: Amazon.com

Although “hummus” was not part of the search query, Amazon knows their users frequently purchase hummus along with baby carrots, so they’ve included it in the results. But that’s not all.

Amazon found it profitable to rank “hummus” for the “baby carrots” query not only because their users tend to buy hummus with baby carrots, but also because when users see the hummus, they can better picture themselves eating baby carrots with a tasty condiment — thus making the baby carrots more attractive.

Personalization

According to Forrester, “77% of consumers have chosen, recommended, or paid more for a brand that provides a personalized service or experience.”

Personalization should affect every facet of your search — from your autosuggest results to the products you rank for any search query.

e-commerce search personalization

If a user tends to buy organic milk over regular milk, organic milk should appear first.

Moreover, great personalization is more than simple segmentation covering demographic data like gender or age.

Personalization is about learning your individual customers’ preferences based on their historical data and previous interactions with your site. With every search, click, bounce, add-to-cart, and purchase, your users are telling you what products they prefer to buy. It’s your job to show them more of those products.

Poor navigation has the same negative effects as poor search.

When users can’t find the products they’re looking for, they assume they aren’t sold on the site and leave — many of which never return. With this in mind, you’d think more retailers would focus on optimizing navigation; however, this is not the case — especially on mobile devices.

In a mobile e-commerce usability study conducted by Baymard, 50 e-commerce sites were given a score from -100 to 100 based on their navigational usability. The results were less than favorable:

Over 70% of the sites studied had navigations scoring 35 or below, with mobile search performing even worse (only one site scoring above 40).

Following these navigation guidelines will ensure your site isn’t in the red:

Filters and Faceted Search

Faceted search is essential for increasing conversions on broad queries — like “women’s dresses” or “laptops” — and for products with multiple features.

“Once we were able to build faceted search into our navigation, sales exploded” – to the tune of 2.7% lift in average order value.” – Rollie Nation representative.

Understand what product features your users care about most — whether it’s color, size, brand, or something else — and display them on the page such that users don’t have to work to find them (i.e. the facets should fit the context of the search query). For instance, if a user is searching for “blazer,” you may decide to rank facets like “fit” and “jacket style” higher in the navigation. If they’re searching for “pants,” facets like “inseam” and “front style” would be ranked higher.

You can also display important filters on your product images:

Image Credit: Baymard Institute

…but there’s more to faceted search than filters and layers.

E-commerce stores can now combine personalization with faceted search to provide even faster navigation experiences to users. Take this grocery website as an example:

For a search query like “milk”, you may decide to include a “Nutrition” facet with filters like “fat free,” “kosher,” and “gluten free” in your navigation.

This would work fine for new users — but what if you know one of your users likes organic milk? Most sites would simply show the user the same filters in the same order. But with personalization, these filters (and other related filters, like “kosher”) can be re-ranked to make it easy for the user to select what they care about:

Once the user tells our personalization system they like organic milk, facets like “Organic” and “Low Fat” are automatically ranked higher in the navigation.

Trending, Past Viewed, and Recommended Products

Some users come to your site open-minded. Some may be looking for a specific, in-season product, and some may be looking for a product they purchased before.

For users with an open mind (and also for users trying to find one thing), you can include trending products on your home page like Sephora:

Image Credit: Sephora

…or, you can recommend complementary items to users who’ve viewed or purchased similar items:

Image Credit: ASOS

You may even decide to implement these tactics for every single product page:

Image Credit: Amazon.com

To take it further, you can use your customers’ wish list data (or even better, their clickstream data) to personalize these recommendations.

Retargeting can also be used to redirect users to product pages they’re most interested in viewing, like in this example from ASOS:

When I visit asos.com, I’m automatically redirected to their “Mens” page.

Tip: While retargeted redirects can be powerful, taking those redirects further with personalized categories and products on your redirected page can give users an unrivaled site experience.


Want to learn more about serving users attractive search results and the limitations of optimizing search for “relevance?” Check out our recent webinar here.


Menus

If your product categories are limited, you may choose to use a simplified menu like Big Chill:

Image Credit: Big Chill

Conversely, if you have many categories, you may choose to use categorized mega menus:

Image Credit: GameStop

There are some challenges that come with larger menus, namely in the position of parent/child categories and how different users interact with them.

For instance, if you’re a user on Best Buy looking to purchase sound bars for a home theatre system, how would you find them on a mega menu? Would you look under the “Audio” category, or would you look under the “TV” or “Home theatre” categories?

It’s different for every user.

It’s important to include the same subcategories under different but related parent categories. In the previous example, Best Buy lists sound bars under both.

Visual Merchandising

Visual merchandising is more than just having a pretty site. It’s a start — but as a baseline, your site should be:

  1. Easy to navigate
  2. Attractive
  3. Usable on mobile and desktop
  4. Welcoming
  5. Trustable
  6. Optimized for the user’s buying journey

 

Let’s go over how you can use visual merchandising principles on each of your pages to achieve those goals:

Home Page

When a user lands on your home page, think of them as if they were standing outside your store. How can you entice them to enter and look around?

Above the fold

After landing on your site, most visitors look at the “above the fold” (ATF) section first:

Image Credit: neilpatel.com

Are there any trending products you can show here to entice users? Any sales? Any new, interesting products?

ATF copy is also just as important as the products themselves. What features or benefits do your users most resonate with for each product in display? How can you concisely describe those features and benefits to your users in their own language? How can your copy convey the “feeling” of your brand?

“On most websites, it’s the copy that has the biggest influence on conversions,” Peep Laja, Founder of Conversion XL told us. “…yet so few companies actively work on optimizing their copy. It’s often delegated to junior people, interns even. The mindset of ‘writing good copy is easy, anyone can do it!’ seems pervasive. Or the copy got written years ago, and nobody ever touched it since. So much extra revenue is to be had through copy optimization.”

Fronks, an organic nut milk brand, takes no shortcuts when describing their main products ATF:

Image Credit: Sleeknote, Fronks

Fronks also does a great job conveying their brand personality through copy. Instead of describing their Cocoa drink as a “smooth, refreshing organic nut milk with strong hints of Himalayan cocoa and creamy dark chocolate…” they simply say:

“This one’s Cocoa.” Their brand voice is human.

Storytelling

In journalism, there’s a concept called the “inverted pyramid” that’s used to effectively capture reader attention and convey information in a logical manner:

Image Credit: Wikipeda

Many e-commerce sites take this approach when designing their home page. Take Sephora for example:

Image Credit: Sephora

At the top of the page, they display some of their newest own-brand products. In the middle of the page, they display more important sections, like products that have just arrived, Editor’s picks, top-rated products, and personalized product recommendations. And finally, at the bottom of the page, they display some relevant rewards, sweepstakes, and coupons that some users may be interested in, but some users may not.

Social and Authority Proof

Trust is the precursor to sales.

Of course, a fast, well-designed, responsive website is necessary for gaining a user’s trust — but how can you go the extra mile? Many e-commerce brands today choose to prominently display social proof indicators — like great reviews or testimonials — on their homepages.

On-hover product reviews.

If you’ve been featured in any major publications, authority proof (like logos) can also be used on home pages.

User-generated content can be even more powerful and genuine than basic reviews.

If customers are posting photos/videos on social media featuring your products, you can include that content on home pages or product pages to further boost social proof (and even introduce a bit of FOMO):

e-commerce user generated content example

User-generated content on Urban Outfitters. Image Credit: Vendhq.com and Urban Outfitters

Collections

“Collections allow customers to self identify with the items they are looking for and dive deeper into the site for increased engagement (which will up your search rankings) and hopefully conversion.” – BigCommerce

As a gereral rule, your collections should:

  1. Have clear, on-brand, attention-grabbing images
  2. Have readable text over the photo
  3. Be easy to navigate (grid-style collections are popular at the moment)
  4. Be diversified — test both themed product groups and individual sets of products, like best sellers or personalized category recommendations (more on this soon)

 

Some retailers today are even personalizing their category pages. Instead of showing the same products ranked in the same way, they’re uniquely ranking category page items based on what they know their users like to purchase. This level of personalization should carry across every category page on your site. If you know a user tends to purchase organic products, you can re-rank organic products in Yogurt, Dairy, Meat, and other category pages.

Want to serve personalized experiences to users across every facet of your site? Learn how Constructor.io can help.

Product Pages

The information you display on your product pages — like descriptions, images, filters, and more — should be completely tailored to your users.

What product information do they care about most? What questions do they have about a product? What aspects/features of the product are they trying to learn about? What are their common objections when deciding whether to purchase a product?

Here are some general best practices you can follow to address those questions:

Enhanced Browsing

If a product has multiple variations, allow customers to sort by those variations.

Images

Images are the closest thing users have to holding a product in their hands. Bad images can leave users with anxiety about your products.

  1. Include multiple product angles that showcase important details. If you’re a clothing store, allow users to view your product down to the stitches and hems.
  2. Include on-hover magnification to allow users to view even smaller product details.
  3. You may even decide to include a 360-degree view of the product.
  4. Show your products in action. This allows users to better understand if a product can help them complete their “Jobs To Be Done” like we discussed earlier.

 

Product descriptions

Optimized product descriptions give users every piece of information they care about most in a short, concise, easy-to-read manner. For more complex products, you can include an “Expanded Details” section:

Image Credit: nvidia.com

Extra Details

On top of displaying relevant product information, you can also show users other products that go well with the item they’re viewing, products that others have viewed after viewing an item, or products that other users typically buy in combination with the viewed item:

Image Credit: ASOS

Cart

Think of your cart page like a checkout line in a store — but instead of up-selling customers on gum, candy, or other random nicknacks, you can recommend complementary products to users based on the items in their cart.

Bonus points for personalizing in-cart up-sells.


Want to learn more about serving users attractive search results and the limitations of optimizing search for “relevance?” Check out our recent webinar here.


Data

Throughout this article, we’ve briefly discussed different ways you can use customer data to streamline merchandising. Let’s dive deeper into some common data points used to improve user experiences and increase conversions:

Basic Segmentation

While simple demographic segmentation can’t be classified as “personalization,” there are some basic data points you can use to serve better user experiences:

Age

What types of products do users in different age groups tend to purchase? You can use this information to customize the trending products you show on your home page, the categories you recommend, the products in those categories, and more.

Gender

If you know the gender of your user, you can also customize which products they see across your site.

Geography

Do users in different parts of the world purchase different types of products? Do they purchase different types of products at different times in the year? Can you recommend products with smaller shipping costs based on the locations of your users?

History

Are your users first-time visitors or returning shoppers? For first time visitors, you may decide to show trending products or categories prominently on the home page to capture their attention. If they’re returning, you can show products they’ve recently viewed or recommend products based on their viewing habits.

Autofilling

If you know what payment methods a customer uses what address they typically send items to, the checkout process can be simplified by autofilling this data for the customer. If a user typically purchases multiple quantities of an item, auto filling that quantity can also speed up the add-to-cart process.

Device

Do users on different devices tend to purchase different types of products?

Detailed Personalization

While segmentation only requires basic, easily trackable data, personalization uses much more detailed data on how users interact with your site to serve next-level user experiences. Personalization is harder to get right, but the payoffs in terms of conversions and revenue are worth it.

Search habits

What types of products do your users usually search for, and how do they search for them? How can you customize your user’s search experience from those habits?

Google does an amazing job at customizing search (and more importantly, autocomplete) based on past searches. For instance, if I search for “breaking bad poster” in Google, complete the search, then type “b” into the search bar, all the results shown are related to “Breaking Bad:”

You can also use your user’s search habits to personalize the products that appear in different specific queries. For instance, if your users tend to search for “organic” products, you can weight your search algorithms to boost organic products for every search query.

Add-to-cart habits

Search habits are a great indicator into what products users want to see more of, but the products they add to cart and purchase are a much better indicator. These actions should have a greater effect on the weighting of your personalization algorithms.

Global user habits

Using what you know about your general user population’s actions, you can quickly personalize every user’s experience from the get-go.

For instance, if you know a majority of your users like to buy “red wine” after adding “red meat” to their cart, you can rank red wines higher in the search results for “wine” after users add “red meat” to their carts.

Ignored products

In the same way you can personalize product recommendations and search results based on what users search and add-to-cart, you can also decrease the likelihood users see products they typically ignore after a search.

For instance, if you know a user doesn’t typically purchase cereal from “X Cereal Brand,” you can rank cereal products from that brand lower when the user searches for “cereal.”

Combining data

If you have customer loyalty programs, the data on each of your users can be combined with any of the above recommendations to serve hyper-personalized experiences to each user.

While each individual personalization tactic will work to serve better user experiences to your visitors, the best personalization systems use data from every interaction a user takes on a website and apply it across the website as a whole.


Want to learn more about optimizing on-site search to drive real business metrics?

For years, retailers have optimized search solely on “relevance,” hoping the results that users want to see (and the results that drive important business metrics) appear at the top.

This is exactly wrong — and it’s not how companies like Google and Amazon optimize their search.

We just hosted a new webinar discussing the limitations of optimizing search results for “relevance,” and the 3 attributes retailers should focus on to drive real business results from search. Check it out here: 

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