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Merchandising as a discipline

 

If you want to know how far ahead of the curve any retailer might be, simply look at their org chart. There’s usually everything you need to know in that one simple diagram. How teams are organised, who reports to whom and what they call themselves are all useful indicators of their retailing maturity. 

 As an ecommerce consultant, regardless of which aspect of ecommerce I’m there to consult on, I invariably ask to see their org chart, and one of the first things I check for is the existence of an online merchandising team.

 Now, the name may change from retailer to retailer but if there’s a team whose purpose appears to be the management of screen real estate, then I know I’m working with a retailer with some experience.

 

Screen real-estate as a resource
Screen real-estate, that catch-all term for the totality of your digital selling space, is a valuable resource and, like any resource, it requires careful management. This is a critical point. It seems self-evident when written down in black and white, but a cursory examination of most ecommerce sites suggests that this is a truth not universally acknowledged nor understood.

Not only is it finite, screen real-estate, when measured per visitor, is tiny. Compared to physical stores or paper catalogues, levels of product exposure online are but a fraction of most retailer’s actual offering. Its value, therefore, as the only means of showcasing and selling your wares online should be self evident.

The absence of a team dedicated to managing and optimising screen real-estate is indicative of a retailer who has yet to transfer those hard-won learnings and understanding from the old world of physical retail to the new world of ecommerce.

Do we really need a team?
You may be questioning my postulate that all resources require management, or at least that they need managing by a team. Can’t screen real-estate be managed by one person, as part of his or her wider role? After all, most of it is managed by machines and is largely automated.

How many people are really needed? The answer depends on the size of the ecommerce operation, the number of products they sell, how many customers they have and, crucially, what tools they have to do the job. But I have yet to find a major retailer for whom the answer is not ‘greater than one’, i.e. a team.

As a rule of thumb, if you count online revenue in multiples of millions (dollars, pounds or euros) then you likely require a team.

What do they do?
My definition of online merchandising is ‘the selection and presentation of products and content to make best use of screen real-estate’, and that’s it in a nutshell. They are the people who decide what to place where, and to whom, in order to best meet the company’s objectives.

Most online retailers have people who do aspects of this work – somebody has to stack the digital shelves – but it’s rare to find a team whose function overlaps perfectly with this description.

And the aspect that is usually missing from their remit is ‘making best use of’.

Objectives
To know whether each part of screen real-estate is being utilised to best effect is difficult. To answer the question one first needs to have a clearly defined objective, for which progress towards it can be measured. One then needs to be able to test alternative courses of action (merchandiser rules or interventions) to see which best meets the objective – the better course of action is rarely self-evident.

Of course, matters can be com-plicated by the existence of multiple objectives. Profit contribution is the usual overriding concern for a digital channel, but sometimes merchandisers are asked to maximise margin, increase average order value or shift left-over stock, none of which are necessarily in alignment with the objective of maximising profit.

Tools of the trade
They say a bad workman always blames his tools, but can a good workman do good work with bad tools? When it comes to the craft that is online merchandising the answer is no.

In essence, the online merchandiser’s role is to optimise screen real-estate, but the tools most teams have at their disposal fail some, if not all, of the above criteria.

Performance measures
The final piece of the jigsaw relates to performance measures. As it is for any function within a business, meaningful performance measures are critical to success. Without them managers are flying blind.

Most online retail activity remains shackled to that most meaningless of metrics, conversion rate, and online merchandising is no exception. But this need not be the case.

A good performance measure is one which can be directly linked to an objective, correlates strongly to the activities of a single group (i.e. not affected by third-party activity) and which makes resultant (corrective) courses of action self-evident (i.e. it should be obvious what do in the event of failure). (n.b. conversion rate fails on all three counts)

Do such measures exist? Yes, but it’s rare that they can’t be measured using the tools that most merchandisers have to hand.

 

Summary

Online merchandising is a nascent discipline. It has a lot of growing up to do. But things are changing.

In my experience, the leading online retailers have tackled, or at least begun to address, the following points:

Leading retailers are beginning to recognise online merchandising as a true discipline, are beginning to hire dedicated staff and are furnishing them with the right tools.

It’s now up to the online merchandisers to prove their worth.