Merchandising strategies that drive sales and ROI

Apr 5th 2023 ecommerce

How do you stand out in today’s competitive online marketplace? Especially when you can’t use  traditional in-store retail window displays or other seductive, eye-level ways to get prospective customers’ attention?

Your online shopping prospects are searching and scrolling in your ecommerce store or app every day, looking for the best offers and high-quality products. You have only 8 seconds to grab their attention, says Microsoft. You need their eyeballs glued to your home page, landing pages, category pages, and product pages; you need to give them the best browsing and buying experience that, in turn, helps you make your sales goals. 

As with creating marketing strategies and planograms for physical brick-and-mortar stores, to achieve this feat, it helps to start with a strategy — a retail merchandising strategy, to be precise. A detailed plan that aims to please your shoppers. And, most importantly, one that makes a positive financial impact.

What is a merchandising strategy? 

A merchandising strategy refers to the planning and execution of activities to increase your online store revenue and improve your customer satisfaction. Its facets could include upselling, cross-selling, promotions, sales, limited-time offers, and product recommendations. 

Merchandising strategies work best when they’re tailored to meet your online retail store visitors’ needs throughout their customer journey. You want them to enjoy a unique, personalized shopping experience that leaves them wholly satisfied and wanting to come back.

The benefits of doing this work effectively for your ecommerce site can be significant. Successful strategic merchandising can ensure that your online business differentiates itself from your biggest competitors, and, of course, substantially increases your revenue and improves your ROI. 

Why you need a merchandising strategy

What did Sun Tsu, Susan B. Anthony, and Abraham Lincoln have in common?

They certainly didn’t have ecommerce businesses and need to improve their conversion rates. But they understood that they needed a sound strategy in order to succeed in achieving their lofty goals.

It pays to think like an industry leader, specifically one who can effectively lead your online shoppers. By coming up with and applying a well-thought-out ecommerce merchandising strategy, you can potentially:  

Boost sales 

Through utilizing merchandising strategies, you can build a welcoming online shopping experience that also conveys a sense of urgency for your demographic to purchase. The evaporating attention span of the average potential customer — visible in traditional retail locations like malls and supermarkets, on social media, and on retailers’ sites — makes it imperative that you can grab shoppers’ attention fast and then give them what they need to make good purchasing decisions.

For example, limited-time offers are retail solutions you can heavily promote across your website to appeal to shoppers’ buying instincts before they jump offline. As every search experience is different, and potential customers will land on different pages depending on what they enter in the search bar, it’s more effective to do this broadly to get as many views as possible. Banners, separate offer pages, and other forms of visual merchandising can help make this strategy work.

Be more competitive 

Your in-depth merchandising strategy needs to differentiate you from what competitors offer so you can attract more shoppers and, with a little luck, turn them into dedicated, loyal customers.  

How can you differentiate? One idea: do a little digging to see if there’s a gap in the market that your competitors have somehow overlooked. Could you meet that need with the right merchandising plan? Maybe add an exclusive bundle or upsell a superior complementary product?

Improve your customer experience 

One way to improve your competitiveness is ensuring that you provide an engaging, user-friendly shopping experience from start to finish. When shoppers land on your website, finding what they need is imperative, otherwise they’ll drop off, perhaps with a half-full shopping cart. A merchandising strategy must be tailored to what shoppers want, and while this of course includes the right products or new products, a smooth user experience is just as important. A winning user experience and great visual merchandising make it easier for people to decide what they want and make purchases in just a few clicks; this can work wonders in boosting your bottom line.

If you have a Black Friday promotion, for example, that covers a range of products, you’ll want your shoppers to be able to find your exclusive deals quickly. A page with snazzy visuals and an easily navigable structure, plus easy search functionality to take people to exactly what they want, will enable them to seamlessly evaluate and purchase. 

Make better decisions moving forward 

When a merchandising strategy works, it works. Shoppers make valuable purchases and you generate the business growth you’re looking for. But there’s more to it than immediate growth. When you implement the right strategy, you can also apply its successes to your future decision-making based on the insightful sales data and details on customer behavior you collect. Then you can take decisive action on streamlining product selection, pricing, and placement to continue your winning streak.

5 successful online merchandising strategies  

One successful merchandising strategy is a good start; implementing multiple results-generating strategies can obviously take your business even further. And by combining effective strategies, you can create even more ways for shoppers to learn about and buy your products or services. 

Consider driving your ecommerce sales and ROI with these strategies: 

Fries with that  

Upselling and cross-selling encourage your customers to buy more. Not sure of the difference between these two? Upselling is when you offer an expanded (“superior”) version of the product. For instance, when people go to a fast-food restaurant, they get offered a large portion of fries to replace the regular size.

Cross-selling, by contrast, is when you successfully suggest a related product to build a greater total purchase. For instance, when a shopper is in the midst of purchasing a big-screen TV, you may find that recommending a sound bar at a discount reminds them they’re looking to build a superior entertainment system with great audio, so that would be a perfect addition to their cart as they check out. This technique has been proven to work very effectively for many online retailers, in fact McKinsey found that cross-selling can increase sales by 20%.

’Tis the season for something

Seasonal merchandising is always going to be a big deal in online retail (not to mention offline retail). Whether it’s Easter, Halloween, Thanksgiving, or Christmas, the ecommerce calendar is full of promotional opportunities for engaging your season-celebrating shoppers. 

Tailoring promotions and products around holidays may seem like you’re trying to get a piece of a saturated market, but it’s a strategy that works every year for many businesses. In 2022, US holiday season online retail sales amounted to nearly $240 billion. Accelerated potential holiday revenue is worth factoring in when it comes to creating your merchandising strategies. 

On the phone 

Going mobile first is one of the most no-brainer steps you can take in terms of hitting ROI targets. Ensuring that your website is fully responsive and provides a seamless user experience for people using mobile devices is imperative, as 58 percent of all multi-device purchases are made on mobile. Following the herd may not always be practical in some aspects of ecommerce, but with mobile, it ensures being able to reach all your potential customers, whether they’re out and about with their phones or at home on their desktop computers. 

What else? 

Grouping related products together — the equivalent of creating themed retail displays in a physical store — is another successful ecommerce merchandising strategy. Think of every “Back to school”, “Welcome”, “Travel kit”, “Gift box”, or “Build your own” bundle you’ve seen. Bundles work well because you give the customer a logical reason to buy more.

For example, let’s say you run a beauty ecommerce website, and a new potential customer has just signed up. Welcoming them with an offer of a “Beauty starter pack” bundle is one way to encourage them to make an initial purchase, and if enough new shoppers respond, you could see an increase in your average order value (AOV) as a result.

Isn’t bundling the same as cross-selling? Not exactly. Grouping and cross-selling are different sides of the coin. Cross-selling is suggesting additional products (perhaps including some impulse items) at the point of sale. Product grouping is putting related products together to meet anticipated customer needs, so that these combo items are conveniently available and ready when they decide to do a search.  

What others think

Have you recently made a purchase online (or declined to buy something) based solely on other customers’ product reviews of the item?

In the ecommerce world, user generated content (UGC) is highly influential in terms of whether a shopper decides to click Buy. As in real life, real people’s real-time opinions are gold. Research backs this up, suggesting that customer reviews — a form of “social proof” — impact more than 80% of purchases. Another advantage of putting UGC up front: you can gain a level of perceived transparency with  shoppers, which can help you further position your company and brand as trustworthy. 

What’s recommended?

 You’ve seen them on Amazon and everywhere you make purchases online: “Based on the items you viewed”, “We think you’d like”, and similar-sounding prompts. Artificial intelligence (AI)-powered product recommendations work through a variety of algorithms and data to find the most relevant items for someone based on their past behavior, including clicks, searches, and purchases.

Say, for example, a customer has recently explored your sports website’s catalog, taking a concerted interest in product descriptions of the latest Adidas gear. The next time they show up, a “Based on items you viewed” prompt showcases a few product images they recently clicked, as well as items related to earlier purchases. You’ve now created a superior shopping experience for them that can influence their direction, lead to more sales, and build your customer loyalty.

Can I go straight to it?

Shoppers arriving on your site could be on a mission; if they’re like many people, they make a beeline to your search engine to get help pulling up specific products. What you provide when they search will likely affect their decision to purchase. So providing efficient site search results for shoppers is another effective merchandising strategy you can add to your toolbox. One priority: optimizing to ensure that the most relevant or popular related products appear first on their list.

You can also promote related items, for instance, best-selling products or limited offers, inside the search box. And as with other strategies, your search customer data can guide your future merchandising strategies, for instance, by identifying frequently searched products that you might want to spotlight. 

Create a merchandising strategy that pays off

In cyberspace retail, outpacing the competition means implementing bold merchandising solutions that engage customers all the way through a successful checkout. Incorporating the latest developments in AI, Algolia offers proven Search and Discovery technology to help you streamline your online merchandising battle plan.

Check out our new resource, the Merchandising Playbook, highlighting digital merchandising best practices for reaching your target customers. You’ll learn how to: 

• Optimize your business metrics 
• Measure the impact of your merchandising strategies 
• Run promotional campaigns 

Looking to take the marketplace by storm and drive your sales and ROI metrics off the charts?

We know how you can rock your merchandising, we have the best tools, and we’d love to help! Contact us today.