E-commerce

Deconstructing smart digital merchandising
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This is Part 2 of a series that dives into the transformational journey made by digital merchandising to drive positive ecommerce experiences. In Part 1, we unveiled the top merchandising tasks, according to our customers, and how they think about developing their merchandising strategies. In Part 2, we deconstruct the core components that make a superior digital merchandising platform necessary to drive business results.

 

The top 3 tasks (findability, KPIs, catalog exposure), perfectly illustrate why merchandisers want to rely on data-driven, AI-first merchandising platforms that also leave room for creative control. The best solutions need to smartly combine automation with control,  to enable merchandisers to focus on more strategic and/or complicated tasks. So, what does smart digital merchandising entail?

  • A Data-driven approach
  • Controls for manual and automated optimizations 
  • An easy-to-use merchandising platform
  • Transparency

A Data-driven approach

Data drives relevance and ranking, which in turn drive revenue. Whether derived from your index or user behavior, high-quality data optimizes how you promote popular and trending items, or more generally, how you present your business to your customer base. A data driven approach is one where the merchandiser’s intent is to optimize for business metrics (KPIs such as CVR, AOV, Items per Order) by using data like reports, analytics, inventory levels, popularity scores, website conversions etc. It is continuous and dynamic with a closed loop. A powerful search engine with AI-algorithm capabilities, like Algolia, is essential to drive this.      

Controls for manual and automated optimizations 

With AI-assisted merchandising, do humans still need to play a role? Yes. But not the tedious kind. AI enables digital merchandisers to focus on more strategic tasks like building campaigns that compliment the more quantitative, machine-friendly automation. We have consistently heard about the fear factor associated with giving up controls to AI models but as we’ve covered further below, this boils down to transparency and the ability to understand decisions made.

Control should always complement automated merchandising. So then, what is the optimal blend and who decides? This is for each merchandising team to determine. While some solutions providers may aggressively push prescriptions and opinions, we believe this is a balance each brand needs to arrive at. We give you the controls, you decide. 

Every situation varies and the need of the hour is different – In some cases, it’s 90% automation, with the remaining 10% left for merchandisers to get specific. At other times, the balance might shift to 50/50, where the merchandiser manages hard-to-detect trends, on-the-spot product changes, business decisions altering due to seasonality, a need to introduce new brand guidelines and strategic alignment to company-wide objectives, while the machine continues to control the order of the results.

How should you think about balancing automation with control?

Let’s look at some examples where we can see this balance between automation and control:

  • Pinning items can be a simple drag & drop process, but the overall order of the search results should be data driven.
  • When there are too many products to manage, data should be in the driver’s seat. But control in this case can mean making the experience visually appealing.
  • Data can drive categorization and navigational choices to redirect users to category pages. AI driven category page listings can be viewed as complementary to specifics determined by a merchandiser’s vision and strategy or business needs like promotions and seasonal events.

An easy-to-use merchandising platform

Digital merchandisers are laser focused on driving revenue by boosting sales performance and optimize for business KPIs. Part of their strategy also involves creating visually engaging brand experiences. Some parts of their workflows are responsive while the rest is planned. To be able to switch modes quickly and efficiently accomplish their goals, they rely on a merchandising solution that helps create and maintain these strategies. Key tenets of a highly performant solution are:

  • It must be tailored to the mental model of a digital merchandiser and therefore easy to navigate
  • It contains all the levers and capabilities in one single location driving efficiency
  • It offers a range of functionality giving the merchandiser the flexibility to choose and apply/modify as needed
  • It can scale automatically without friction thereby contributing to the ease of use
  • It provides real-time visibility into performance for the merchandiser to pivot in an instant    

Also at the top of everyone’s list is to be as no-code as possible, this reduces the dependency on development teams, allowing digital merchandisers to move faster, more autonomously. 

Transparency

There is no doubt that the concept of ‘transparency’ is an oversaturated one. However, with every new addition to our platform, we strive to peel back the layers to provide deeper, granular visibility. In Digital Merchandising terms, the role of transparency is to show what configurations exactly led to a conversion, a trend, or poor performance and such. 

At the end of the day, being able to understand the interplay between manual controls and AI optimized decisions is a must. At Algolia, our opinionated view is that digital merchandising is its best form with human-assisted AI optimizations. Even so, a merchandiser should be able to clearly understand why the AI model made a decision and then be able to choose to keep it as is or override.

Metrics tracked, how they are displayed and how they are actionable are equally important flavors of transparency so that the merchandiser can gather from these insights and make the next move.  

Choosing ‘your’ smart digital merchandising solution

The new normal for consumer behavior continues to be redefined. It is dynamic and complex. Economic reality is a force to reckon with pushing businesses to get creative coupled with strategic investments. On the one hand, digital purchase behavior is here to stay. On the other hand, with acquisition costs skyrocketing, brands are thinking about how to maximize conversion when shoppers can close a browser with the blink of an eye.

Now more than ever, personalized experiences are table stakes throughout the customer lifecycle and need to be easily, efficiently and effectively enabled by your smart digital merchandising solution.

Contact our team to learn more or request a demo!

About the authorsBenoit Reulier

Benoit Reulier

Reshma Iyer

Reshma Iyer

Director of Product Marketing, Ecommerce

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