Actionable insight for online merchandising

With the exception of a handful of ecommerce websites I think there are huge opportunities for retailers to improve their macro (number of orders over number of visitors) conversion rates. I don’t think the majority of retailers have actually taken ecommerce all that seriously and that is where the opportunity lies.

For many the website was a bolt on channel and rather than recruiting expertise to manage and run the website (I don’t believe the skills existed anyway), staff were usually commandeered from other areas of the business and usually these were quite junior with little or no online skills. My theory is that you don’t know what you don’t know. As the internet established itself to be a truly credible channel there has been very little investment in skills and training to really drive the potential of the website and what you are left with is rapid growth and lots of back slapping when actually you could have doubled the conversion rate and improved the average order value by 30%. But the analytical skills were lacking and there was no visibility that this was even possible.

So maybe this post (and the subsequent three posts) will help to offer a little guidance into how to drill into all that analytical data in order to pull out some serious actionable insight that will help the web team to effectively merchandise the website.

Selecting the right products to showcase and presenting them in a compelling manner increases overall customer satisfaction with a site. It also reduces the amount of time visitors spend finding the right product, increasing both their likelihood to convert, and to return again to transact with you.

This series of posts focuses on best practices designed to help online merchandisers monitor the performance of their product and promotional categories, analyse and improve product assortment, improve the navigation of product pages, and increase cross sell and up sell potential.

Merchandisers typically are responsible for optimising product mix and promotion. Merchandising decisions typically must meet a number of requirements across brand, sales, and inventory goals. Merchants must work closely with marketing, creative, and back-office teams to drive overall merchandising success. To do so requires not only cross-functional coordination but also the autonomy to drive product assortment and placement decisions on the Web.

I recommend several best practices for optimising product mix and promotion, including:
 Monitoring Category Performance – Analyse key ratios for product and promotional categories to identify opportunities to improve conversion.

Driving Product Exposure and Effectiveness – Measure the exposure and effectiveness of products to increase conversion through appropriate placement and promotion decisions.

Improving Product Page Design – Evaluate product page design to improve the placement and creative for key features.

Increasing Cross Sell Opportunities – Improve conversion and customer lifetime value by delivering relevant cross sell recommendations to visitors.

Monitoring Category Performance
The goal is to analyse key ratios for product and promotional categories to identify opportunities to improve conversion.

Step 1. Isolate data for the promotional or product categories you want to evaluate.

Step 2. For each category, calculate the transactions as a percentage of totals for the site.

Step 3. For each category, identify the ratio of transacting sessions to (product) viewing sessions to understand overall merchandising effectiveness.

Step 4. For each category, identify the ratio of product views to items transacted, to understand creative effectiveness.

Step 5. For each category, identify the abandonment rate. To place abandonment in context, consider creating an abandonment index. An abandonment index is calculated by dividing the abandonment rate for the subcategory by the abandonment rate for the parent category or site. An index greater than one (1) represents a higher than average abandonment rate; an index lower than one (1) represents a less than average abandonment rate.
6. Present these findings in a table for easy comparison.


1. Focus on categories with high percentage of transactions or revenues – These represent the most important categories for your site or division. Driving small improvements in these categories often represent a larger opportunity than focusing on less important online categories.

2. A low transacting/viewing sessions ratio indicates a merchandising problem – This ratio measures how effective your overall product offer, creative, and pricing is at driving visitors to convert. If this ratio is much lower for a subcategory than it is for the overall parent, consider investing in improvements to this subcategory.

3. A high product views/items transacted ratio indicates a creative problem – This ratio is effectively a “look to book” ratio. If it is high, this means that visitors view a product frequently, often searching for more information and returning to the product page before converting. Consider investing in improving content descriptions, images, and comparison tools. It could also be indicative of a pricing obstacle; check on competitor pricing or discounts to uncover potential issues.

4. High abandonment indicates a pricing or process problem – Frequently, visitors will use their cart as a placeholder for items that they like. Abandonment may indicate that competitive price pressure is occurring. Consider reducing price or offering promotions to induce conversion. Alternatively, visitors may have issues with the checkout/application/booking process. Investigate process abandonment to address issues with key site processes.

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Google shopping tips

Now that Google shopping is a paid channel people are more likely to be concerned about costs and quiet rightly so.

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Dr Dre Beats Olympics Ambush Campaign

Working for a retailer I know how tightly locked down the olympics were to companies not on the official sponsor list. Thats what I love about this campaign by the people behind rapper Dr Dre and his Beats branded headphones. They succeeded in gate crashing the London 2012 Olympics with an ambush marketing campaign that saw British athletes including Laura Robson and Tom Daley endorse the music entrepreneur’s Beats By Dre headphones range. Continue reading

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Just how big is amazon?

This is a nice little graphic giving you some idea just how big Amazon really is.


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Week 27 UK Online Retail Metrics

Click on the link below to view the latest year on year performance of various UK retail categories. This also includes mobile trends as well as desktop.

If you see anything in there that is interesting post a comment or get in touch if you would like some more insight. Continue reading

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