Ecommerce Merchandising?
The purpose of this post is to kick off the topic of ecommerce merchandising planning. For me, retail ecommerce merchandising refers to the entire process of inventory planning and management in an ecommerce group.
Superior merchandising is fundamental to ecommerce success. Getting the merchandising right is arguably more important than marketing the assortment. The one precedes the other. Without buying right, you simply do not have a sustainable online retail business.
Merchandising planning
Here is how I break down the ecommerce merchandising planning process. I see it in terms of planning the right: products, vendors, terms, placement (bricks and/or clicks), quantity (inventory), quality, price point, mix (assortment), timing (product life cycle) and definitely the right measurements (the right GMROI?). I’ll touch on just a few of these points today with the intent of sharing few tips that may help you.
The Right Product
What to sell? The first way to answer that question is to find out what others are selling and what buyers are looking for. To do this you need to do some market research.
Here’s an easy and no-cost place to start: Amazon best sellers. View the best sellers on Amazon by category (browse node). You can do this directly by visiting Amazon.com or by leveraging their web services (AWS). In either case you’re monitoring two things, product best seller rank by category and Amazon sales rank by category (and product group). In both cases the lower the number the higher the sales velocity.
Armed with the best seller information you can do an ASIN search on Amazon or a UPC search on Google Product Search to understand the competitive offer landscape of those items.
The Right Terms
Once you know, 1) what you’d like to sell, and 2) what your offer needs to be in order to sell it, then you’ll need supplier terms that will allow you to market the products with above average conversion success. Before you pick up the phone and call suppliers, put together a spreadsheet model that calculates the terms you’ll need on a per product basis for landed product cost (including any co-op online advertising allowances). You should figure at least 10% of the price point in terms of marketing cost. It could be as high as 30% for some items.
MAP Pricing: Also, pay careful attention to issues such as minimum advertised pricing (”MAP”) restrictions. Probe the vendor as to what is allowed in terms of ways to “market around” these restrictions in advertising, on the product page and in the shopping cart.
Promotional bundling: If your supplier will not budge on MAP restrictions then make sure you ask for help in providing free or special pricing on accessory bundles or add-on products. This will help to increase the strength of and differentiate your offer from your competitors.
Return policies: Make sure you negotiate generous return policies that at least match your own company policies. This is key. You want to be able to offer a satisfaction guarantee on all the products you sell and you need your suppliers to support you in this.
The Right Offer
Online competitive offer intelligence in an ongoing process. Once you’ve committed to inventory or an ‘open to buy’ merchandising plan, then monitor your competitor’s offers online. Report competitor’s MAP violations to your vendor / supplier / OEM immediately. Document them clearly. You don’t always need to be the lowest price but you always need to have the best offer. Your offer is made up of: product price point, product availability, shipping latency, shipping offers and prices, promotional offers / rebates / coupons / bundles, etc. and your merchant ratings.
Questions/Comments? Let me know your thoughts? What’s important in ecommerce merchandising?