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The Ultimate Guide to Ecommerce Merchandising

15 Minute Read

Objective

Merchandising means different things to different people. In the brick-and-mortar retail space, it’s mostly about a product’s physical location. What is next to, above, and below that product? What aisle is it in? Where is it placed in that aisle? What signage is surrounding it?

Much of this is dictated by contractual obligations from manufacturers and producers, but the end goal is to ensure that products are easy to find, and that the way they are presented is appealing to shoppers.

Not all of this translates seamlessly over to digital sales. There are no shelves, no signs, and no aisles. So what is ecommerce merchandising all about?

Presentation.

There may not be physical aisles, shelves, or signs, but the way products are arranged and viewed on a web page is still important and meaningful.

The objective of this guide is not to tell you how you should merchandise your ecommerce store, but rather, we want to introduce you to the many different ways that product presentation and arrangement can be manipulated and enhanced on your store. This ranges from optimizing your data to your search results.

We’re consulting with experts in various fields to bring you the most comprehensive guide to merchandising possible. This is module 1.


Why merchandise?

There are a lot of different reasons you might want to merchandise, but the two most prominent reasons seem to be 1) corporate directives, and 2) marketing coordination.

In the former case, brand managers or others may be concerned with the aesthetic of your category and search pages. For brands (online stores selling their own brand of products), it’s fairly common to hear that products need to be arranged in a particular order to craft or manage their brand aesthetic.

In the latter case, we’re usually hearing from retailers that they need to coordinate landing pages, category pages, and search pages with promotions, and social and email campaigns.

Additionally, some retailers want to merchandise because it can help them increase sales, conversions, brand loyalty, and many other engagement metrics.

All of these reasons are perfectly valid and useful in their own way.

MODULE 1: PRODUCT ARRANGEMENT

The way products are physically arranged is probably what’s most commonly thought of when we hear the word “merchandising”. It is incredibly important that this be logical and predictable if shoppers are to enjoy shopping on your store. While brick-and-mortar stores have planograms that dictate each product’s location down to the millimeter, few online retailers even consider taking the time to do the virtual equivalent.

It’s true that this would take quite a bit of time, and you may not have the time to curate your entire store, but here are a few areas you might consider focusing your effort.

  • Search results
  • Category pages
  • Brand pages
  • Landing pages

Each of these areas could use some fine-tuning in order to improve the overall ecommerce shopping experience in most cases. To start with, let’s take a look at how search results and category pages can be merchandised.

Search Results & Category Pages

Very likely, there are thousands of unique terms entered into your search bar each and every month. It wouldn’t be prudent of us to suggest that you manually organize product rankings for each of these, but spending some time on your most popular searches can be beneficial, even if your site search is powered by a third-party provider.

In this example, a SearchSpring customer has chosen to manually arrange many of their most searched key phrases.

While the purpose of a search engine is to display products related to the search term, these search engines aren’t designed to present these products in a visual way. Without going into exhausting detail of how these search engines work, it would be helpful to know that it’s mostly a matter of matching the keywords in the query with keywords in product meta data. Engagement scores (CTR, conversion, add-to-cart, etc.) do generally affect rankings as well, but manually selecting the most relevant products and placing them in a coherent or contextually logical order can make the shopping experience more enjoyable in certain cases.

Here are a few examples where this manual curation makes sense:

  • Separating products from accessories (i.e. Nintendo Switch consoles vs. Nintendo Switch controllers)
  • Grouping related products (i.e. matching bikini tops and bottoms)
  • Grouping similar items (bikini tops, then bikini bottoms)
  • Grouping brands (as you would on a store shelf)
  • Rotating products (i.e. moving products from page 3 to page 1)
  • Promoting favorites
  • Promoting on-sale products
  • Matching in-store planograms or statements

While there is certainly reason to be cautious about overriding algorithmic search, let’s dig deep into a couple of examples where manual curation makes a lot of sense.

Separating Products from Accessories
The example we’ll use separates the Nintendo Switch game console, from its accessories (controllers, adapters, cables, docks) and from games.

All of these things are relevant to someone searching for “nintendo switch”, and it’s important to keep in mind that some of the people entering this query are looking for accessories and/or games. This is something you would want to confirm by referencing Google Analytics.

Looking at the Search Terms report under Behavior, you’d want to look at these data points:

1. Search exits
A significantly higher than average exit rate would likely indicate that the results visitors are seeing are not satisfactory. Again, this does not necessarily mean that the search results are “irrelevant” to the query in a broad sense, but might indicate that most shoppers are not interested in the accessories and games that are showing up. This could be further confirmed by looking at data point number 2.

2. Search refinements
This figure tells us how many times people who searched for “nintendo switch” tried another variation. Any time this number is greater than 0, it means they didn’t find what they wanted, and needed to add or remove words in the search box. So they might have searched for “nintendo switch” initially, and then went on to add the word “console”.

3. Time after search
This figure tells us how much additional time the visitor spent on your site after completing this search. Higher numbers are generally better.

4. Average search depth
This figure tells us how many additional pages were viewed after completing the initial search. If this number is between 1 and 2, it could mean that they clicked on a product, and then went on to other areas of the site. If it’s higher than that, this probably means that people didn’t find what they wanted and went on to try other search queries.

It’s important to look at these data points together to get a picture of whether or not these search results are working for your shoppers. If the overall picture indicates that shoppers aren’t finding what they want (high exit, high refinement, high average search depth), you might try merchandising the results, and then comparing engagement scores.

What would this look like?

The way BestBuy.com has chosen to handle this precise dilemma is a great option. Not only have they manually arranged the results so that consoles are at the top, they provide a few options above the search results that essentially serve as curated filters.

Doing it this way ensures that everyone is taken care of. So while most shoppers entering this query are probably looking for a console, the ones who aren’t don’t have to refine or expand their search.

This is a great way to merchandise if you’re primary goal is to increase sales and engagement metrics.

Grouping related products
In some limited scenarios, it may make sense to group products that are related to one another. This adds an aesthetic coherence to the page, making it easier to find items of interest.

In the below image, swimwear retailer Mikoh groups products that are matched together in pairs  similarly to the way they’d be hung on a rack at a store. This could work for certain broad searches or categories.

PinkLily (pictured below), groups items in the same category based on their color. Again, this is very similar to the way the retailers merchandise their items in physical stores. Of course, filtering options are still available, allowing shoppers to hone in on what they want if they know what they’re looking for.

For those that aren’t sure of exactly what they want to buy yet, this style of presentation can help to introduce them to the variety of options available within that category.

Again, this is perfect for retailers who are interested in increasing the performance of this particular page.

Grouping similar products

In some scenarios, it might make sense to group products that are similar to one another in order to provide a logical progression through a search. On BestBuy, for example,  a search for “MacBook Pro” doesn’t tell the search engine a number of important things. What size is the shopper looking for? What color do they prefer? Do they want new or refurbished? How much storage do they want? Touchbar or no touchbar?

Filters and sort options are a great way for the user to navigate through their results, but that requires action on their part. In many cases, the shopper will end up refining (adding more specificity to) their search or abandoning it altogether if they don’t see what they want immediately. Grouping and sorting products so that they appear in a logical order could improve the chances they’ll stay on the page.

BestBuy could place the newest versions first, then last year’s models, then the models from the preceding year. Whether or not that’s the correct choice can be determined by looking at analytics data. For example, are the new laptops the most popular?

This example allows a brand experience (Apple) to be controlled, and can help improve (or at least avoid harming) the perception of that particular brand.

Grouping brands
In brick-and-mortar retail it’s very common to place items from the same brand next to each other on the shelf, or on the same rack. This is helpful for a couple of reasons. First, if the shopper prefers a specific brand, it will make it much easier to find those products. Second, many brands produce products that are meant to be purchased or used together. These same principles can just as easily be applied to shopping on a virtual store.

As in the Mikoh example above, a bikini top and bottom from the same brand might perform better if placed near each other in search results.

In another example, a search for “nintendo switch controller” on a site like BestBuy will display results from a few different brands. However, many shoppers might prefer not to purchase 3rd party controllers, and in that case, it would make sense to have a visual distinction between 1st party accessories from Nintendo, and all 3rd party options.

Rotation and promoting favorite products
If you get a lot of repeat visitors, there’s a good chance that many of them are viewing the same sections on your site each time. On a site like PinkLily, for example, visitors might come once every few weeks and view the “dress” category page.  Likely, they’re hoping to see something new and fresh. If new products aren’t introduced to your inventory that frequently, rotating products is a good way to ensure that they see something different each time.

On the other hand, if your traffic consists of mostly new visitors, it may be hard for them to find your best products. In that scenario, manually bringing those products that have received high review scores to the front can help them find what will most likely be interesting to them before they bounce. It’s important to mention that having a sort option that does this is essential, and this manual curation should by no means replace this functionality. Rather, high review scores are a signal that a particular product is relevant, and moving it to the top for your new visitors could be helpful.

This can be a purely conversion-driven approach, but could also be used to coordinate with marketing.

Promoting on-sale products
If you want to coordinate your site experience with your marketing campaigns to draw more attention to deals that are available on your site, you do have a few options. Many retailers put banners on their home page and place contextual messages about BOGO offers inside of the shopping cart. However, one avenue you may not have considered before involves moving on-sale products to the top of relevant searches and category pages.

In this image, BestBuy has moved discounted 4K TVs to the top of search results for “4K TVs”.

It’s very important that the items you promote are highly relevant to the search term. For example, if the query were “4K HDR TVs”, you wouldn’t want to promote anything that didn’t strictly fit those requirements. That would likely hurt engagement scores for that particular search, or result in people mistakenly purchasing a product.

Beyond manual curation, it’s possible to set up rules that can arrange product too.

Here are a few examples of where rules-based product arrangement could work for you:

  • Boost high-converting products
  • Boost high margin products
  • Boost trending products
  • Promoting in-stock products/demoting out-of-stock or low-stock
  • Boost discontinued for promotions
  • Sale / not on sale
  • Boosting/demoting products based on demographic (gender)
  • Demote products with missing images
  • Demoting accessories
  • Boosting based on contractual obligations or agreements
  • Boosting for seasonality (global boost of summer dresses, winter boots)
  • Boosting products over a certain price (this could also be used to demote accessories or related products i.e. xbox controller batteries)

Automatically boosting based on these kinds of business rules can be done by default (across the entire site) or used contextually to great effect.

Boost high-converting products
By default, some SaaS search providers do some automatic boosting based around how products perform. For example, on SearchSpring, after a search for “dress” is completed, some dresses with high engagement scores may be moved to the first few positions.

Rules like this can be applied globally on many stores, increasing the visibility of products that people seem to be most interested in. So regardless of whether a visitor is on a category page or a search, the highest converting products could be boosted to the first positions.

In theory, this kind of automated boosting would increase exposure to the products that are selling the best at the present moment.

Boost high margin products
For many retailers, conversion rates may not be as impactful or as important as margin. Those that sell a mix of their own house branded products and third party ones would make more money on a sale of their own.

In these cases, it may make more sense to boost products that have higher margins, while retaining the overall relevance of products on a particular search or category page.

To use BestBuy as an example again, while they are a retailer, they also sell the Insignia branded items, which is their house brand. A $50 iPhone case from Apple will have a margin somewhere around 5%, whereas a sale of a $50 iPhone case from Insignia might be closer to a 50% margin. Assuming all else is equal and boosting 1st party brands doesn’t hurt BestBuy, it might be in their immediate financial interest to increase exposure to these products.

Boost trending products
Depending on the industry you operate in, piggybacking off of trends in the market could be a viable sales and marketing strategy.

For example, if you sell graphic t-shirts, what’s popular today may not be popular tomorrow. Rather than manually arranging products on a day-to-day basis, an automatic rule could be set that boosts the products that have been the most popular over the last 24 hours.

Promoting in-stock products
Many online shoppers find it infuriating when they find the item they want on a search or category page, only to find out that it is out of stock when they land on the product page.

While you can’t prevent products from being out of stock, you can create an automatic rule to demote these items on your category and search pages. This will make them less visible to shoppers, preventing them from becoming frustrated.

This works best on pages with many similar products. For example, on an apparel site, demoting out of stock “shoes” on the “shoes” category page. This might not work great for narrow or highly-specific searches as it may end up promoting less relevant products if those that are exact matches are out of stock.

Sale/not on sale

During special sales and promotions, it would make sense to improve the visibility of products that are involved. It’s crucial to coordinate with your marketing team to ensure that people have no problem finding the specific products they may have learned about through emails or social media.

A rule can be created in order to place on sale products on the top of a specific search or category page, followed by the products that are not on sale.

Alternatively, a specially crafted landing page could be used.

Boosting products based on demographic
Many retailers cater to many demographics, but receive an overwhelming amount of traffic from one in particular.

For example, costume sellers often find that despite carrying costumes for male and female characters, the overwhelming majority of the sales are for female costumes. Even a search for “spiderman” (which by default is a male product) might mostly result in purchases of female versions of this costume being clicked on and purchased.

In this case, a rule could be created that would promote female products above male ones. Of course, this would make it harder for the few male shoppers to find what they want, but it would make shopping easier for the majority of visitors. As always, testing and measurement are encouraged to determine whether or not this is beneficial.

Demote products with missing images
Outside of making shopping easier, rules can simply be used to improve the appearance of your category and search pages. One example of this would be to demote items that are missing product images.

Demoting accessories
As mentioned a bit earlier, certain searches and category pages could be greatly benefited by separating products from accessories. The example earlier demonstrated the value in separating Nintendo Switch consoles from accessories. When people are searching for “nintendo switch”, or navigate to a category designated “nintendo switch” this might make sense.

This can be useful for many other industries such as automotive, B2B wholesale, or even jewelry.

Editor’s note:

Additional modules are on the way that will help you understand other aspects of merchandising including:

  • Product data best practices
  • Image best practices
  • Product recommendations
  • Product page design

Stay tuned.