What is digital product merchandising?

How do you sell a product when your customers can’t assess it in person: pick it up, feel what it’s made of, know its dimensions, see the true color, try it on, bask in the pleasing aroma that’s wafting through the store, chat with a salesperson about an item’s pros and cons? 

For retailers, that’s been The Question since at least the mid-’90s, when the Internet started to take off with consumers.

When vendors flocked online to sell their products in this new theater, they discovered that traditional store merchandising efforts like eye-level store displays and endcap product placement were pretty much useless in helping sell products. Online, they couldn’t provide dazzling shop windows, people to hand out promotional flyers on the sidewalk, or friendly sales assistants to listen and make suggestions. 

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Faced with this daunting ecommerce merchandising challenge, retailers had to figure out the ways they could exist in Cyberspace as opposed to actual retail space. They needed promising digital merchandising strategies. They had to come up with effective ways to entice their digital customers and steer them to the virtual point-of-sale checkout counter to close sales, or else.

And think up online marketing strategies they did. Some of their ideas failed, but others took off and became guiding principles. As online marketers assessed and applied data about how to please their online shoppers and gain their loyalty, through trial and error, they made their products more attractive. They gradually created the marketing genre of digital product merchandising and honed it to an art form. 

What is digital product merchandising? 

Digital product merchandising encompasses all the ways retailers can set up and promote products for selling online.

Make no mistake: selling products online, with no human sales assistants to step forward, no tactile opportunities to entice, no familiar store layout — isn’t an easy feat. Online shoppers are justified in feeling that if they can’t see or touch a product, why should they buy it?” Succeeding at this is like essentially convincing people to buy products after they’re able to window shop but nothing else. 

The good news is that reliable data can show online marketers clear paths to overcoming online-shopper reticence and ultimately making plenty of sales.

Product merchandising: how did it start? 

Let’s go back thousands of years, to ancient Greece. The outdoor public markets (agoras) — the equivalent of our farmers’ markets and grocery stores — are packed with merchants and tradespeople hawking different types of merchandise. It’s hot and dusty, and sandalled Grecians cruise past vendor stalls. Fat olives sit in a bowl for tasting, and someone shouts, “Get your olives here!”

Yes, way back in Sparta, product merchandising was a thing. Tradespeople offered food product samples, and customers could size up, smell, and taste the goods. “Try this cheese,” merchants would suggest. “Isn’t it creamy?” Experiencing was everything, and the benefits of early merchandising were abundantly clear.

In-store product merchandising today  

Fast-forward roughly 3,000 years, and effective merchandising — both on the sales floor in physical stores and the virtual floors of ecommerce stores — is still going strong. Of course it’s infinitely more sophisticated now, grounded in a wealth of data and human psychology. Still, the goal remains the same: entice prospective customers and convince them to make a purchase (plus add an upsell). 

For reference, popular product merchandising tactics embraced by brick-and-mortar stores include:

  • Enticing window displays. Treating their windows as the first port of call for people passing the front of the store, top retailers create virtual works of art using images, eye-catching colors, fashionable product collections, well-attired mannequins, and intriguing item arrangements. A good retail display in a window can work wonders, drawing in passers-by to check out the goods. 
  • Helpful signage. Shelf signage tells shoppers about items, plus guides them, often with attractive promotions such as Buy one, get one free (BOGO), half off, or flash sale. Savvy store retailers use signage to push straggling products and motivate browsers to act fast.  
  • Mesmerizing scent. Would you believe that using the right aroma in a brick-and-mortar store has been found to increase sales 11% and customer satisfaction 20%? Along with other environmental factors such as temperature, lighting, background music, and employee attire, scent helps create an immersive, pleasant atmosphere, which can easily translate into a rewarding shopping experience (the best “retail therapy” money can buy).  
  • Free samples. As in ancient times, with certain items, brick-and-mortar stores use the “Try before you buy” merchandising method. It’s been found to provoke reciprocity, whereby shoppers feel compelled to purchase an item in return for having received a free (sample) “gift”.  
  • Captivating in-store demonstrations. In-person product demos — educational and often interactive — have been found to be effective in selling to shoppers on site.

Achieving the digital equivalent

So how do proven on-site retail merchandising practices translate to digital selling success? Online retailers still need to attract shoppers, keep them engaged with content, and get them to faithfully buy products. It’s just that the methods they use must be completely different.

There are some parallels between the physical sales floor and the digital marketplace, such as the home page being akin to the retail store entrance. Online, you can offer on-demand videos that rival in-store product demos, for instance. But in general, it’s a separate science.

Regardless of the stark differences, the value of good digital product merchandising can’t be overstated, for two reasons. First, as Amazon has demonstrated, you can sell a gargantuan range of products online. With digital product merchandising and features like advanced search and personalization, people can instantly locate the products and services they need. And second, you can reach a much larger target shopping audience, while a brick-and-mortar store is an option only for those in the local vicinity (and even they may prefer to shop on the Web).

With these various benefits of merchandising in mind, consider these ways to maximize your merchandising abilities for the digital world.

Fine-tune your home page 

Your ecommerce store home page is where most people will land first, so making it supremely attractive to shoppers from the get-go is Job 1.

  • Keep your “store entrance” uncluttered. Your home page (as well as any landing pages) should look clean and inviting, like a gorgeous merchandising display in a shop window. Visitors should be able to tell instantly what you’re selling and not be deluged by excessive detail or bombarded with ads. 
  • Point to search and navigation. People should be able to easily spot your magnifying-glass icon or search bar at the top of the page so they can quickly enter search terms. Your product category filtering should be straightforward and helpful as well.

Mimic brick-and-mortar practices

  • Highlight best-selling products. Just as an in-store merchandising product display in a brick-and-mortar store might feature bestsellers, you can showcase your best items on your category pages and product pages.
  • Use high-quality images. Colorful, vivid, professional product photos are key for effective visual merchandising. Ideally photos that allow shoppers to zoom in on item details. Providing the ability to get up close and personal with products — to the extent possible online — is a great way to impress potential buyers and nudge your bottom line.

Pull out the stops

When you’re merchandising online, it could take a virtual village to sell your products. Engaging digital marketing copy, thorough product descriptions, user-generated content like glowing customer reviews and social media testimonials (“social proof”), how-to videos, editorial pieces, related-item recommendations, and seamless omnichannel coordination might be part of the winning mix that converts shoppers to loyal customers and produces better average order values, higher sales, and a stronger brand.

Include strong calls to action

How do you get customers to convert? Placing prominent calls to action (CTAs) on your website is a good way to kick off a successful online merchandising strategy. You know, buttons like “Browse selection” or “View sale items.” For best results, make sure each CTA sits close to the top of the page for easy viewing.

Optimize for mobile shoppers

Did you know the majority of website traffic now originates with people using mobile devices? Plus, the percentage of retail sales produced on mobile has nearly doubled, from 3.5% in 2018 to 6.9% in 2022. That means digital product merchandising that factors in mobile-first viewing is probably going to pay off. To pique your mobile users’ interest and drive sales, your design and functionality should work flawlessly on mobile-size screens.

Use AI to personalize experiences

Shoppers expect a first-rate search experience with personalization, advanced filtering and sorting, and semantic search that “understands” their intent. Users spend 40% more, on average, when they’re treated to a personalized online shopping experience.

That means traditional search functionality based only on keywords probably isn’t going to cut it for your ecommerce site. Instead, to create a better experience for your shoppers, you can start by:

  • Collecting user data. With tools such as Google Analytics, user surveys, and user feedback, you can gather invaluable information about your prospective customers. The better you understand them from this data — their preferences, interests, browsing and buying behavior — the more effectively you can target your online merchandising to them.  
  • Making intuitive recommendations. That customer data you’ve mined from your website? It becomes gold when you use it for making product recommendations. You can get your customers’ attention by showing them relevant products that are based on their search history, past purchases, and niche interests.  
  • Providing excellent customer service. There’s no getting around the fact that ecommerce websites are not the place to go if you want to talk to a human. There are no salespeople waiting in the wings, ready to approach and point out cool new products. There is, however, 24×7 technology that can mimic human help across your digital channels: chatbots. Groans about talking to a bot aside, your shoppers may come away with the answers to their questions, they could end up making a purchase, and you could reduce your costs. Score one for online customer loyalty. 

A new digital merch world

When the Web was newly up and running, things were rudimentary with ecommerce. Online stores had ugly storefronts, super clunky interfaces, and largely text-based content. Retailers were interested mainly in convincing people to go online; truly effective online merchandising was only a glint in retailers’ eyes.

Since then, with the help of abundant case studies, things have changed fairly radically. Now:

  • It’s all about the shopper experience. Since ecommerce businesses have gone mainstream, the focus is on the shopper or customer enjoying a smooth “journey,” relaxing as they navigate to what they need, buy it, and, if all goes well, become a loyal customer. The right customer journey translates into ecommerce sales and higher revenue, plus enforces brand identity, so of course businesses are prioritizing great customer experiences as a way to jump-start their metrics.
  • Augmented reality (AR) is real. With AR, visual and other sensory data are overlaid on real-world scenarios to offer a better sense of whether items would work for shoppers. They might be able to virtually try on clothes or place a piece of furniture in a room. The ability to have a shopper assess different products, decide on, and go ahead and buy what turns out to be the right product, without ever setting foot in a physical store, is a digital merchandising feat to be reckoned with.
  • Search is “smarter.” The past decade has seen huge improvement in the quality of search for retail businesses. In addition to personalization, key elements of search-engine transformation include voice search and natural language processing. And retailers can also utilize search merchandising to increase online sales.
  • Chatbots are more “relatable.” As with other applications of AI, etail chatbots have more “humanlike” personas and can better simulate sales assistants, patiently answering questions and recommending products to enhance the sale of products with the best of ’em. 

How’s your digital merchandising?

Do you have an ecommerce merchandising strategy that’s not quite working? Want to overhaul your online retail merchandising strategy?

We hear you at Algolia. And we’re confident you can improve your customer engagement and conversion rates with the latest digital product merchandising techniques. 

Ask us about site search experiences and personalized recommendations for helping your online business win and stay competitive in the digital marketplace. We’re betting you’ll be glad you did.

About the authorCatherine Dee

Catherine Dee

Search and Discovery writer

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