Digital merchandising: how to do it in 7 steps

Have you mastered the art of digital merchandising on your e-commerce site? Digital merchandising is a crucial part of a successful e-commerce business. It is the secret to engaging shoppers and guiding them towards a purchase. When done intelligently, your buyers are not only more likely to buy the goods you are promoting, but they will enjoy interacting with your digital shop. This means significantly increased conversions!

implementation digital merchandising

Successful digital merchandising today is one that:

  • understands the importance of the link between brand and trade
  • understands how buyers behave
  • learn their data inside and out
  • develop an eye for the visual
  • connect visual experiences to business objectives
  • predict what buyers will look for
  • understands the customer journey and how to optimise it
  • think differently when it comes to customising for customers
  • understands that it is about the consumer, not the device or the channel

This is quite a list! Frankly, it is no wonder that many digital merchandisers feel overwhelmed by the thought of offering an e-commerce experience that sets their shop apart. The challenge lies in connecting all that information and capability practically.

Digital Merchandising: using data and insights

As a digital merchandiser, you have access to a great deal of data. By analyzing this information, you can better understand what triggers the purchase mechanism and increase conversion rates.

How is it done?

It is easy to be overwhelmed by all the data at your fingertips. Tap into customer-oriented data to influence purchasing decisions:

  • popularity and quality: this could be a combination of data from ratings, reviews, Facebook likes, Pinterest pins, and web data analysis, e.g. page views and shopping cart additions, which can indicate the popularity of an item and the quality perception of buyers
  • freshness: when buyers are looking for trends and/or shop with you frequently, we recommend showing the freshest items at the top of your search results or in your recommendations.
  • availability: only show products for which you have an inventory on hand and which meet the buyer’s specific interests and requirements.
  • financial data: use data such as margin to influence the products you promote and maximize profit. For example, you could show an item in the same category that the buyer is viewing, but which offers 5% better margins than the item you are searching for.
  • inventory: don’t show an item in your physical shop that is not available for purchase, so don’t do it online. Make sure you can integrate digital merchandising features with your inventory levels so that you don’t get caught out.

Combine data points to move the needle on conversion rates.

Today’s digital merchandisers are combining data points to influence conversion. Imagine displaying a best-selling product at healthy inventory levels on a lister page or in a recommendation or promotion that offers more margin than the item currently being viewed by a buyer and is also the most highly rated by your customer community. In this way, you are not only offering relevant items, but those that will offer better results for your business.

What is the impact of not doing so?

  • Lower profits
  • Negative customer experience
  • Static merchandising experience

Digital Merchandising: showing the right products to the right buyers

If buyers are new to your site or are comeback customers, they prefer all the items they are most likely to buy. That is why it is crucial to use sophisticated ranking, sorting, and positioning strategies to display search results. After all, the way you position and display search results on your site directly affects conversion rates.

How is it done?

First of all, you have to understand how ranking affects the behavior of buyers. In short, buyers make purchasing decisions based on the attention they give to items. Prioritize relevant rankings.

Most buyers are easily distracted. After all, we tend to have limited attention spans, especially when we are immersed in a visually engaging online experience. To captivate and keep shoppers from clicking on another site, it is necessary to show them the most interesting and appealing products possible. with that said, to make the shopping experience manageable, consumers often make trade-offs on what to consider for purchase based on the effort and time spent locating the product on a lister page, in addition to ”normal” factors such as product price. The top positions on the lister page gain more attention. In essence, the position of a search result on the lister page together with external signals such as visible discount badges influence how buyers click and interact with what is displayed.

Using the data at your disposal, including data on previous purchases, browsing history, Pinterest pins, Facebook likes, inventory levels, and click trends, you can intelligently determine rankings on the search list page to display the most relevant products. By optimizing to prioritize the display of products most likely to attract your buyers, you can positively influence conversions. You also instill confidence in your buyers when they see you present the most relevant and quality products in response to their searches.

What is the impact of not doing so?

  • Lack or loss of customer confidence
  • Below-average conversion rates
  • Items that never sell.


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Digital Merchandising: putting the rules around your recommendations

Done well, recommendations can enable product discovery by connecting buyers to products they may not always know they want or need, delivering impressive results for you in the process. The key is to provide the most relevant recommendations possible.

How is it done?

Do not trust a ”black box” engine to achieve this, as no one can magically serve up the most relevant recommendations. While predictive algorithms are needed, you want control over what is shown. The ideal approach is to apply a combination of algorithms and rules to optimize recommendations, e.g. ”only show this recommendation on this page” or ”only show this recommendation to this type of buyer”. Keep in mind that you need data to feed the recommendation engine, in particular purchase history and behavioral data. At the same time, think about how you apply weighting to influence recommendations. For example, an ”add to cart” is more valuable than a simple display and a purchase is more valuable than an ”add to cart”. Finally, decide which of your pages will present recommendations.

What is the impact of not doing so?

  • Low average order value
  • Low ”items for customer visit”
  • ”naked” pages when the customer expects recommendations

Digital Merchandising: Mash-Up Content, Commerce and Community

digital merchandising requirements

Today’s online retailers need to entice shoppers to return to their e-commerce shops again and again. You can do this by making your site a destination hub that goes beyond the sale to offer interesting and relevant content that attracts traffic, engages visitors and inspires shopping.

How is it done?

Firstly, you need to understand what content is relevant to your customer base and target audience. Then you need to discover communities and other online venues that produce this content. Since variety is the spice of life, don’t limit yourself to text. Look for videos, infographics, Twitter feeds, reviews and other types of content. By curating this content, you can establish your site as a content hub that creates a bond between you and your customers and encourages them to buy more from you over time. The key is to seamlessly blend the commerce experience with the content and community experience so that consumers can easily act on an impulse to buy. One way to achieve this is to display items related to the content shown, customized to the person’s interests.

What is the impact of not doing so?

  • Buyers can instead reach competitors’ sites
  • Traffic will decrease
  • Customer confidence will decrease

Digital Merchandising: optimize to meet product search and discovery

In digital merchandising, your ultimate goal is to offer products that will inspire buyers to purchase. To provide relevant products in search results, you need to understand your customers and the language they use to describe your products.

How is it done?

Think of the search box as more than just a box: it is a way to connect buyers to your products. By studying how buyers search on the spot, you will understand what to optimize and which products to promote.

Push products according to search terms and phrases

A rule of thumb to keep in mind is that buyers search in different ways, depending on their purchase intention. When they are in the discovery phase and looking for inspiration, they often search in a less refined way for a single word, e.g. a brand or a category. These types of searches often represent a large volume of general search activity, and this is when buyers are most receptive to catalog browsing. As their purchase intent increases, customer searches are more refined through the use of two or three words, such as a sub-category or brand plus product type. This is when it is appropriate to offer more specific promotions and use classification strategies about the search phrase. At the higher end of the spectrum, when they are most intent on making a purchase, buyers often use four or more words in their searches for a specific product name or version. Since the buyer is ready to buy, here you should focus on delivering the right result.

Give customers feedback on their research

At the same time, be sure to provide a meaningful response when buyers search for unusual or uncommon terms or phrases rather than providing a random set of results. For example, the onsite search engine might display a message saying “We found nothing matching the search term” and might suggest another known phrase. The point is never to leave a buyer without guidance. At the very least, explain why your site is displaying the search results shown.

Think globally

In today’s e-commerce world, you should assume that your site can be visited by buyers from anywhere in the world. With this in mind, it is crucial to optimize your site in a way that is relevant to cultural nuances and preferences. On an execution level, this means you need to know the various search terms used for the same item by buyers from different cultures and geographies and offer relevant results. At the operational level, this means that you have to manage digital merchandising centrally so that you can offer a consistent experience to all shoppers, regardless of their location.

What is the impact of not doing so?

  • Lack of sales opportunities
  • Receiving negative customer feedback
  • Losing buyers to other e-commerce sites

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Digital Merchandising: Shoppers guides through the shop

merchandising for digital channels

In a physical shop, merchandisers organize and display products, according to ”visual merchandising” techniques, so that shoppers find it easy and intuitive to search for items. You should offer the same experience in your online shop. At the same time, when shoppers explore the aisles of a physical shop and do not see what they are looking for, they are often inspired to make an urgent purchase of an item that catches their eye. Ideally, you want to provide the same kind of inspiration online.

How is it done?

You can offer an intuitive shopping experience that allows shoppers to explore your shop by continually optimizing search and on-site navigation so that shoppers find what they want. Start by making shoppers feel they can easily find items through intuitive and dynamic shop navigation and customized catalog filtering in different contexts. It guides shoppers as they search by suggesting search terms or displaying recommended items directly in the search box. Similarly, advise shoppers to search if they cannot match search terms and show the best sellers or recommend items purchased by other shoppers. Visitors to your site will appreciate the information and that you have shown them items they might like instead of leading them down a ”dead end”.

What is the impact of not doing so?

  • poor customer experience on the site
  • above-average bounce rate
  • losing to the competition

Digital Merchandising: optimize and customize for the buyer’s context

The more you know about the context of the buyer, the more relevant the shopping experience you can offer and the more loyal your customers will be. For this reason, it is important to link contextual data to merchandising activities.

How is it done?

Your mantra should be ”It’s not about the device or the channel – it’s about the buying experience”. Start by understanding how your customers interact with you and what their goals are in these interaction journeys. Then make sure your search, navigation, and merchandising tactics dynamically adapt to different customer contexts. For example, in a mobile scenario, you might want to offer easier filtering and navigation than in a desktop scenario. At the same time, you may want to link mobile geolocalisation to the location of your physical shop. Just be sure to remain device-independent because it is too expensive and time-consuming, not to mention frustrating, to try to keep up with all the changes. The key is to focus on what shoppers are doing on their devices, not what devices they are using, and then customize their experience accordingly.

What is the impact of not doing so?

  • Reduced customer loyalty
  • Lack of differentiation from competitors
  • A static, non-reactive customer experience

If you are passionate about this topic and want to learn more, I recommend our Digital Storytelling Course. If, on the other hand, you have a broader interest, I recommend: the Course on Innovative Start-Ups.

If you want to get expert advice, request a free strategic consultation for your business



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