Mastering Online Merchandising: A Comprehensive Guide

Mastering online merchandising can make or break your store's success. This means going beyond what your competitors are doing and finding the right strategies and tools to level up your store. 

How? 

By implementing the techniques outlined in this comprehensive guide. 

Here, you will find a collection of advanced digital merchandising techniques and expert hacks you need to take your store, its merchandising, and your marketing strategy to the next level. 

Let’s jump in. 

Understand the Role of User Experience in Effective Merchandising  

Even the smallest tweak to your store’s UX can boost product discoverability in a big way — and it’s critical that you do. 

A well-designed UX not only makes it easier for customers to find and purchase products but also enhances their overall satisfaction and loyalty to your brand. By focusing on the key elements of UX, you can create a more engaging and efficient shopping environment that drives conversions and boosts sales. In other words: visual merchandising! 

Here are the top four elements of an optimized UX that works together with advanced merchandising performance

1. Intuitive Navigation and Layout 

A well-organized and easy-to-navigate website doesn’t just enhance user experience. It allows customers to find the ideal product — quickly and efficiently. This, after all, is the aim of any digital merchandising strategy. 

On the flip side, effective merchandising ensures that the site layout is intuitive. 

This means clear categories, filters, and search functionalities, all of which reduce shopping friction and encourage store browsers to explore more products.

2. Personalized Shopping Experience

By creating a more personalized shopping experience throughout your store design and flow, you help put just the right product in front of a potential customer who is actively looking for it. 

This directly drives your merchandising strategy to deliver personalized recommendations, targeted promotions, and dynamic content — all of which increase engagement and conversion rates. 

At the same time, effective online merchandising enables you to leverage data-driven insights to offer personalized suggestions that match a browser's preferences and behaviors. Thus, creating a more relevant and enjoyable shopping experience.

3. High-Quality Product Displays

Every element of your product page plays a vital role in product merchandising. 

Whether it’s a 360-degree product display, a simple feature highlight, your sizing chart, a product description, or a product video — everything should help customers fully understand your product, its features, and what problems it will solve for them. 

After all, your product page is your biggest conversion trigger when it comes to digital merchandising. 

We can also turn it around. 

Implementing an advanced online merchandising strategy ensures your product displays are visually appealing and informative by default. This enables your shoppers to make informed purchasing decisions — improving sales, reducing return rates, and driving both loyalty and retention. 

4. Seamless Checkout Process

Other critical elements of your UX are your cart pages and checkout flows. 

Your overall user experience and merchandising strategy can work tirelessly to get your potential customers to the finish line, but you still need to get them over it. This means that without a smooth, efficient checkout process, you increase the chances of cart abandonment and set up your merchandising performance to fail. 

On the other hand, by ensuring an effective merchandising strategy, you can integrate a user-friendly checkout experience with minimal steps, multiple payment options, and clear calls to action. This ensures you improve your customer experience enough that the transition from product selection to purchase is as seamless as possible.

Invest in Online Merchandising Automation

Now that we have a better understanding of how user experience drives online merchandising effectiveness — and vice versa — the next step in upgrading your digital merchandising strategy is implementing automation to elevate your merchandising from effective to pro. 

While automation technology and AI tools streamline inventory retail management to ensure products are always in stock and available for purchase on one end, they also enable you to offer dynamic, personalized product recommendations, increasing the likelihood of first-time and additional purchases on the other. 

It also strengthens data analysis — providing you with insights you can use to further push the performance of your merchandising and marketing strategies. In fact, it is virtually impossible to have an optimized online merchandising strategy without at least a basic level of automation. 

But don’t settle for basic. Investing in a robust merchandising automation tool, such as Kimonix, will enable you to: 

  • Optimize your product categories and collections to showcase just the right product to the right shopper at the right time 
  • Leverage AI to predict trends and adjust inventory  
  • Combine 1:1 product personalization with important retail parameters to boost sales while reducing overstock 
  • Automate and personalize cross-selling and upselling strategies to increase average order value 
  • Implement real-time optimization based on dynamic marketing and online retail KPIs 

And the potential results of investing in the right merchandising tool? 

Online Merchandising Automation Case Study 

DailySale upgraded its digital merchandising strategy using Kimonix's advanced automation and AI-powered tool to dynamically sort products based on real-time data, effectively optimizing its varied inventory. 

Best Seller category exmple

This multi-parameter strategy, which combines real-time marketing with AI capabilities, led to a remarkable 221% increase in year-over-year CTRs. This move was crucial for efficiently managing their broad product range and improving overall performance.

You can read more here

Online Merchandising Automation Tools 

Looking for additional tools? Here’s a good eCommerce merchandising tech stack list to consider: 

  1. Kimonix’s advanced product sorting and online merchandising
  2. SealApps Back in Stock alerts
  3. Yieldify’s customer journey personalization and segmentation 
  4. Hotjar’s advanced analytics
  5. Cogsy’s automated inventory management

Upgrade Your Visual Merchandising Techniques

Once you have the right automation technology and AI tools, the next step in mastering online merchandising is to refine your visual merchandising techniques and strategies. 

Similar to in-store merchandising, online visual merchandising involves strategically presenting products to engage customers. When done right, it can increase time on site, increase AOVs (average order values), and improve conversion rates. 

It also ensures brand accessibility while building brand loyalty and trust.

The key elements of your visual merchandising include the homepage, layout and navigation, category pages, product pages, and the cart and checkout process — but it doesn’t stop there. 

Effective online digital merchandising strategies highlight the importance of social proof, optimized product sorting for retail KPIs, and leveraged machine learning for category management. These approaches help reduce costs, boost sales, and enhance customer experience. 

Let’s look at four critical visual merchandising techniques to help you level up your overall merchandising strategies. 

1. Develop Themed Collections and Seasonal Displays

The first visual merchandising technique to test is seasonal or themed collections. 

By organizing products into these categories, you can enhance shopping engagement and relevance — both of which drive conversions. But to do this profitably, you need a good level of automation that factors in potential shoppers' preferences and behaviors, backend goals, margins, and inventory optimization. 

You also want the ability to refresh your collections and displays according to things such as current trends, holidays, or consumer preferences.

Let's say you're launching a "Back to School" collection in August. 

Visual Merchandising Example:

Using automation, you could strategically curate a themed collection that appeals directly to college students, featuring essentials like backpacks, hoodies, and casual shoes. This would also enable you to dynamically use data from past purchases and current trends to ensure the selection resonates with your target audience.

However, you want to make sure that your automation tool also continuously monitors inventory levels, automatically replacing out-of-stock items with similar products.

This approach not only keeps your collection fresh but also maximizes the potential for conversions by offering timely and appealing product selections to your customers.

Here’s a real-life example of this strategy in action from Five Below. As you can see, they offer a variety of themes, from age-related collections to style supplies.

[Source: Five Below]

2. Conduct Data-Driven A/B Testing for Visual Layouts

Every element should be tested and optimized continuously. 

Whether it’s a whole product page, an email product collection campaign, a homepage promotional display, or just one change in a CTA — you want to regularly test different visual layouts, product arrangements, CTA copy, product description layout, and minor visual elements, through A/B testing. 

This will help you farm for deeper analytics to compare performance metrics such as click-through rates and conversion rates across different setups to find the optimum combination for your market and store. 

Here are some tips on how to successfully design A/B tests: 

  • Define your objectives and identify KPIs to measure your test effectiveness 
  • Select the audience segment for the A/B test and formulate specific, testable hypotheses 
  • Design variations with noticeable differences from what you are testing 
  • Include a control group without any changes 
  • Distribute visitors randomly between the control and test groups to maintain objectivity 
  • Run the test long enough to collect robust, statistically significant data 
  • Evaluate the results to determine which variations performed better 

3. Enhance Visual Merchandising with Heatmap Analytics

Heatmap analytics is a data visualization tool that uses color-coded maps to show how users interact with your store. It highlights user intersection, visually showing you where they click, scroll, and spend more of their time. 

This kind of analytics tool has the advantage of enabling you to identify popular areas, optimize layout, and improve navigation to enhance the entire shopping experience. Heatmap analytics also provide insights into the user journey across various pages, highlighting potential drop-off points and areas of friction that may need attention. 

For example, if a heatmap analysis reveals that the top right section of your homepage receives the most clicks, you could consider placing your top-selling or highest-margin products there. Here’s an example from the Lucky Orange Heatmaps & Replay Shopify app

 

Heatmap for shopify

Additionally, by combining A/B testing with heatmap data to compare various layouts, you can more effectively determine which configurations yield the highest user engagement and conversion rates.

Pro Tip: To take advantage of heatmaps even further, you can use segmented heatmaps to understand the behavior patterns of different user groups (e.g., new visitors vs. returning customers), enabling more tailored merchandising strategies.

4. Implement AR (Augmented Reality) Features

Let’s talk AR. 

Incorporating AR technology into your visual online merchandising enables your customers to better visualize products in their own spaces (or on themselves!) before purchasing. 

This feature is especially valuable for items like home decor, fashion, and accessories. Let’s look at some corroborative stats. 

  • AR features can enhance customer engagement, with some retailers seeing a 20% increase in user-interaction times
  • Implementing AR can boost conversion rates by up to 40%, enhancing customer purchase confidence
  • AR helps reduce return rates by up to 25%, cutting costs associated with returns and exchanges

Let's say you're an online apparel brand targeting fashion-forward consumers. 

You could introduce an AR tool into your fashion merchandising strategy that allows customers to virtually try on different outfits using their smartphone cameras. This interactive experience helps them see how different clothing items fit and look on their bodies, enhancing the shopping experience and reducing the likelihood of returns.

And the possible results of implementing AR strategies? 

When fashion brand Rebecca Minkoff added 3D models and AR functionality to their product pages, they found that their shoppers were 44% more likely to add an item to their cart. 

The trick to any AR success, though, is ensuring that you: 

  • Test for your specific market and products before making a big investment 
  • Use high-quality models that accurately represent the real items
  • Promote your AR features in both on and offsite marketing 
  • Test AR-feature performance regularly 

Brands like Zara, ASOS, Adidas, and Nike are great AR inspiration examples. 

[Source: Time]

Implement These Advanced Online Merchandising Strategies

Finally, let’s talk about specific advanced digital merchandising strategies. Ones that will help you optimize your store while boosting profitability — and securing long-term success. 

Upgrading to more advanced online merchandising strategies will allow you to provide a highly personalized shopping experience that boosts customer engagement and loyalty. 

By leveraging tools, such as AI, and data-driven insights, you can optimize your inventory and marketing efforts, leading to higher conversion rates and increased sales — all while ensuring you are earning the most profit possible with each sale. 

Additionally, these advanced digital merchandising strategies enhance the overall user experience, making it easier for your customers to find and purchase products, ultimately improving customer satisfaction and building long-term loyalty. 

Both of which are vital for continued growth and long-term profitability. 

Here are our top four recommended advanced merchandising strategies to take your merchandising to the next level. 

1. Invest in Real-Time 1:1 Personalization Engines

The first digital merchandising strategy worth testing is the use of dynamic 1:1 personalization optimization. 

This is real-time personalization engines that adjust the shopping experience on the fly based on user interactions, enabling you to tailor your product merchandising to users' specific needs. 

These engines use machine learning algorithms to analyze a shopper's behavior in real-time and instantly personalize content, product recommendations, and promotional offers. This level of personalization can significantly enhance the shopping experience, driving higher engagement and conversion rates.

To implement this strategy, you should: 

  1. Clearly define your personalization goals with the aim of boosting conversion rates or enhancing customer engagement
  2. Select a robust personalization tool that offers real-time capabilities and seamlessly integrates with data sources such as CRM, web analytics, and inventory systems
  3. Use data analytics to craft detailed customer segments based on behavior, preferences, and purchase history
  4. Develop rules and algorithms to deliver personalized content, offers, and product recommendations, ensuring your system processes data in real-time
  5. Customize the user experience across various touchpoints, including the homepage, product pages, and email marketing, and continually A/B test to refine personalized content
  6. Evaluate analytics constantly to adjust strategies based on customer feedback and behaviors, and expand personalization efforts as you gain more insights

2. Opt for Predictive Analytics for Inventory Management

Predictive analytics and advanced digital merchandising strategies go hand in hand. 

By leveraging predictive analytics, you can better forecast demand and optimize inventory management. It also allows for better stock management, reducing the risk of overstocking or stockouts and ensuring that popular items are always available for purchase.

This is a strategy that big brands such as ASOS, Wayfair, Chewy, Glossier, Warby Parker, Casper, Gymshark, and Allbirds (using tools like Anaplan) have had great success with. 

To duplicate this, you need to analyze historical data and market trends in real-time using predictive models driven by AI. This will help you anticipate which products will be in demand — and when — but adjust to market changes as they happen. 

Therefore, to implement this strategy, you need to: 

  1. Gather past sales figures, market trends, and consumer behavior insights to form a comprehensive dataset for analysis
  2. Integrate advanced analytics tools that excel in predictive analytics for eCommerce 
  3. Develop predictive models capable of analyzing data patterns to forecast future product demand, adjusting for seasonal trends and market changes 
  4. Update your predictive models with real-time data to sharpen forecasts and adapt swiftly to market shifts
  5. Use forecasts to maintain ideal stock levels to avoid overstocking or shortages while ensuring high-demand items are readily available 
  6. Adjust strategies based on insights from predictive analytics to refine purchasing and merchandising strategies, optimizing inventory alignment with anticipated demand and reducing excess stock

What would this strategy look like in practice? 

Imagine you manage a fashion retail store. By leveraging predictive analytics in your retail management and merchandising, you can forecast demand for clothing items each season with precision. 

This ensures that popular styles are always in stock, minimizing both overstock and stockouts. It allows you to quickly adapt to market changes and maintain a seamless shopping experience for your customers.

3. Implement Hyper-Segmented Marketing Campaigns

Advanced merchandising strategies aren’t just for your eCommerce store website. 

You should be implementing them offsite as well if you want to extend your brand reach, drive more traffic back to your store, and capture and pre-prime potential customers at various touchpoints in their buyer journey.

The best way to do this is by using hyper-segmentation to create highly targeted marketing campaigns. 

By segmenting your customer base into micro-groups based on granular data points such as purchase history, browsing behavior, and even social media activity, you can craft personalized marketing messages that resonate deeply with each segment. 

But to outshine your competitors, you also want to combine these campaigns with your dynamic merchandising strategies. This approach not only increases the relevance of your marketing efforts but also drives higher engagement and conversion rates.

Here’s an example. 

Imagine you're a brand selling premium fitness apparel and looking for fashion merchandising improvements. 

By employing hyper-segmentation and offsite campaigns, you ensure that your top-notch yoga pants reach fitness enthusiasts who've browsed similar items on other platforms. This targeted approach boosts the chances of connecting the right product with the right shopper, enhancing both engagement and conversions.

To implement this strategy, you should: 

  1. Leverage cutting-edge data analytics tools to gather and analyze comprehensive customer data across multiple touchpoints, such as purchase history, browsing behavior, and social media interactions
  2. Segment your audience into finely tuned micro-groups based on detailed metrics like purchase frequency, average order value, product preferences, and engagement levels
  3. Develop tailored marketing messages and creative assets for each micro-segment designed to meet specific needs and preferences
  4. Execute retargeting campaigns on platforms such as Facebook, Instagram, and Google Ads, targeting these micro-segments with customized ads and special offers
  5. Employ AI-driven recommendation engines in your offsite campaigns to automatically recommend products that align with individual users’ browsing and purchasing habits
  6. Use real-time analytics to continuously track campaign performance and make adjustments to targeting strategies, ad creatives, and promotional offers to optimize both engagement and conversion rates

4. Invest in the Right Merchandising Tool: Kimonix

Investing in a powerful tool like Kimonix is essential to elevating your online merchandising strategy. Kimonix uses advanced AI and machine learning to optimize product sorting, enabling highly personalized product recommendations that boost sales and enhance customer satisfaction. 

By analyzing real-time data on customer behavior, sales trends, and inventory levels, Kimonix ensures that the right products are always in front of the right shoppers at the right time.

Here’s how Kimonix can transform your merchandising strategy:

  1. Data-driven product recommendations. Kimonix uses AI to analyze customer preferences, purchase histories, and browsing patterns to provide personalized product suggestions, increasing the likelihood of cross-selling and upselling.
  2. Dynamic inventory management. Kimonix dynamically adjusts product displays based on real-time inventory levels and sales data, helping you avoid stockouts and overstock situations, thus optimizing your inventory turnover.
  3. Advanced pricing strategies. With Kimonix, you can implement adaptive pricing models that adjust prices based on market demand, and stock levels, ensuring competitive pricing and maximizing profit margins.
  4. Localized merchandising. Kimonix allows you to tailor product assortments and promotions based on geographic location, leveraging regional trends and preferences to enhance relevance and engagement.
  5. Performance analytics. Kimonix provides detailed performance analytics, enabling you to continuously monitor and refine your merchandising strategies based on actionable insights and ensuring sustained growth and profitability.

And more! 

Investing in Kimonix not only streamlines your merchandising processes but also drives a more personalized and efficient shopping experience for your customers. This, in turn, leads to higher conversion rates, increased customer loyalty, and improved profitability.

Get Your Free Demo Here 

Looking Ahead: The Future of Online Merchandising

The future of online merchandising is poised for a transformation and will become more interactive through the adoption of AR/VR and other immersive technologies. These innovations allow customers to virtually try on products, visualize items in their own spaces, and enjoy a more dynamic shopping experience. 

Leading brands like IKEA and Sephora are already harnessing AR to elevate their customer interactions, illustrating how interactive merchandising can significantly boost engagement and sales.

Moreover, the influence of AI and machine learning in online merchandising is set to expand, offering even more advanced tools for personalization and inventory management

These technologies will enable retailers to more accurately predict consumer trends, automate complex merchandising operations, and provide highly personalized shopping experiences. Key emerging trends include the deployment of AI-driven chatbots, predictive analytics for inventory management, and sophisticated customer segmentation strategies.

As online merchandising continues to quickly advance, focusing on seamless and tailored shopping experiences will be crucial. Retailers should invest in state-of-the-art technologies, keep abreast of industry trends, and be prepared to adapt their strategies accordingly. By embracing innovation and leveraging data-driven insights, retailers can stay competitive and meet the evolving needs of their customers.

Wrap Up 

Let’s recap… To master online merchandising and outperform your closest competitors, you need to:

You also want to make sure you are always looking ahead and staying on top of merchandising trends. 

Signing up for our weekly, high-value merchandising email is an excellent way to stay on top of current and future trends! 

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