How to Build a Winning Online Merchandising Strategy

If you want to boost sales and profitability, you’ve come to the right place. The most effective way to do just that is by implementing an advanced eCommerce merchandising strategy. 

Why? 

As eCommerce technologies evolve and competition rises, it’s vital for online store brands to be able to continuously show the right product to the right potential customer at the right time. 

This means maximizing onsite store real estate, moving to advanced multi-parameter product sorting on- and off-site, and being able to manage, monitor, and optimize strategies in real-time. 

This post will take you through the vital steps online brands should follow to create a converting eCommerce merchandising strategy. Feel free to click and skip ahead to any stage. 

  1. Understand the Core Trends and Technologies Driving Advanced eCommerce Merchandising 
  2. Review Your Core eCommerce Merchandising and Display Elements 
  3. Use Inventory Optimization to Factor In Retail and Marketing KPIs  
  4. Go All-In With Multi-Parameter Product Sorting 
  5. Optimize Your Merchandising in Real-Time Using the Right Data 

But first, if you’re new to online merchandising, here’s a short recap: 

What Is eCommerce Merchandising?

eCommerce or online merchandising is how a brand sorts and displays products on its store site while using brand-specific KPIs to determine what products to show where, when, and to whom.

In other words, it’s the strategic product placement across the entire customer journey designed to:

  • Attract and engage customers and ‘window shoppers’
  • Get the right products on display at the right time
  • Convert potential shoppers
  • Promote specific products based on KPIs
  • Bring more targeted traffic to online retailers

Step #1: Understand the Core Trends and Technologies Driving Advanced eCommerce Merchandising in 2022 

There are three 2022 eCommerce trends that retailers should consider and keep an eye on when building a winning eCommerce merchandising strategy: 

1. Fine-Tuned Personalization 

Personalization is a driving force behind online shopping, to the point that shoppers and potential customers expect shopping experiences that are unique to them.  

With growing expectations, technology and strategies are evolving to incorporate buyers’ unique behaviors and other real-time data to streamline merchandising and the shopping experience. 

Here are some eCommerce personalization trends you can expect to grow in 2022:

  • Cookieless personalization and data privacy 
  • Increase in 1:1 personalization 
  • AI-powered product personalization
  • New mCommerce personalization for omni-channel retailers 

2. More Innovative Artificial Intelligence (AI) Technologies 

Another advancing technology driving eCommerce merchandising is AI. According to Forbes, these will be 2022’s biggest AI trends:

  • Autonomous vehicles
  • Low-code and no-code AI
  • The augmented workforce
  • Creative AI 
  • Cybersecurity AI 
  • AI and the metaverse
  • Bigger and better language modeling

From product recommendations and sorting to augmented reality, the applications for AI in streamlining merchandising strategies will be vital in being able to adapt in real-time. 

Pro Tip: The list of AI-powered tools for eCommerce managementeis growing daily. Applying these new AI optimization options to merchandising is vital to long-term profitability. Kimonix is the first AI-powered, holistic eCommerce merchandising solution that synchronizes sales data, inventory analytics, and insights on your customers’ preferences to create smart collections that boost sales, optimize inventory, and maximize margins. You can find out more here.

3. Advanced Inventory Management and Optimization Tools 

Finally, more sophisticated inventory management and optimization will also increase in 2022. It’s becoming more and more critical to optimize inventory management and optimization, with the latter playing a significant role in building an advanced eCommerce merchandising strategy that converts. 

Why? 

Because a winning eCommerce merchandising strategy should take into account marketing and retail KPIs, which in essence is what inventory optimization will allow you. But more on that later! 

As online retailers grow, tracking inventory and managing logistics without advanced technology will be almost impossible. 

Here are some additional warehouse and logistics management trends that are expected this year: 

  • The introduction of more drones 
  • Big increases in inventory management, and optimization and warehouse automation solutions 
  • Growth in sustainable warehousing practices 
  • Higher demand for last-mile delivery and new technologies to handle the increase 

Main Takeaway: To compete in your niche, it’s vital to stay on top of growing trends and optimization technologies. If a customer is unable to see the right product at the right time, they will head to your competitors. Using the right technology plays a key role in doing just that.

Step #2: Review Your Core eCommerce Merchandising and Display Elements 

A good eCommerce merchandising strategy should take the entire shopping journey into consideration. This includes mapping out your best merchandising real-estate and matching product sorting and display to intent. 

Here are the most essential merchandising elements (touchpoints) to include in your strategy: 

1. Homepage Merchandising 

We know that one of the most important elements in your merchandising journey is your store’s homepage. 

For example, Very.co.uk store uses geolocation to show campaigns based on the weather near the user.

ecommerce home page personalization example

The key to successful merchandising is matching your homepage experience to specific users and how they came to be on your site, AKA personalization. 

But not just any personalization; 1-1 personalization. 

Personalization ensures that homepage experiences are tailored to each specific shopper using advanced AI-powered tools to help browsers and shoppers find the products they are looking for.  This includes: 

  1. CTA personalization 
  2. Headlines and heroes personalization 
  3. Product and category selections personalization (advanced product sorting

Pro Tip: Categorizing products the right way on your homepage means showing the right product at the right time to the right potential shopper. When this is combined with advanced merchandising and sorting that answer marketing and retail KPIs, you can boost profits and sales. But more on that a little later in this post.

2. Collections and Category-Based Merchandising

How you rank your products within your collection category pages is one of the most important elements of your overall merchandising strategy. Not only do you want to ensure that the right shopper sees the right product in your displays, but you obviously want to ensure you are moving the right stock. 

In short: boosting sales and profits. 

This is something that omnichannel retail brand Swarovski (IL) has achieved with customized multi-parameter sorting strategies for their collections while using advanced AI to continuously optimize collections based on real-time data. This strategy increased their brand profits by 8% in just four weeks. 

Of course, you also want to ensure your UX is sound and includes: 

  1. Product image selections 
  2. Strategic search filter options 
  3. Product ratings 

 This is something that Steve Madden understands and achieves well. 

steve madden collection page UX example

3. Product Page Merchandising  

Merchandising strategies don’t stop once a potential customer clicks to a retail brand’s product page. Everything about product pages should be optimized to display the product in all its glory. This includes optimized: 

  1. Product specifications and options 
  2. Product images and videos (including 360° views) 
  3. CTAs 
  4. Detailed product descriptions 
  5. Cross and upselling product displays 

These should all be tailored to your specific audience, market, and brand. Skullcandy, for example, has optimized their product pages in such a way that each page is a landing page. 

good product page UX example skullcandy 2
good product page UX example skullcandy 1

4. Onsite Promotion Merchandising 

Another vital piece of merchandising real estate is your online promotions. It’s even better if you can personalize them (and the products or collections) to specific users.  

Take a look at Old Navy’s onsite promotion strategy, which includes: 

  • Coupons for specific products and collections
  • Strategically placed promotions 


onsite promotion example 2
onsite promotion example 1

Onsite promotions shouldn't stop there. By combining advanced merchandising strategies with promotional landing pages, stores can push products aligned with inventory optimization KPIs and shoppers' needs and intent. 

5. Email Marketing and Other Offsite Marketing  

An online retailer’s email marketing and offsite promotions/marketing are the last core element of your merchandising strategy. 

By using merchandising triggers for email and other offsite marketing, stores can: 

  • use important real-time product data to react to internal (inventory) and external (market shift) changes 
  • target customers and potential shoppers who are more likely to be interested in buying them  

The best and most streamlined way to do this, especially for more established stores with a vast number of categories, is with merchandising trigger automation. 

Automation that combines individual shoppers’ onsite behavioral data with general cohort data to develop tailor-made email marketing landing pages that drive conversion. This is something that our advanced merchandising solution can definitely assist brands with. 

Main Takeaway: Advanced merchandising is more than just category product sorting. Every part of your website, as well as off-site marketing, plays a crucial role in building a well-optimized merchandising strategy.

Step #3: Use Inventory Optimization to Factor In Retail and Marketing KPIs  

The next step in building a winning online merchandising strategy is combining marketing and retail goals. To truly be profitable long-term, it’s not enough to just focus on marketing KPIs such as conversion rates and revenue. This is where inventory optimization comes in. 

In short, eCommerce inventory optimization is the balance between a brand’s service-level goals, changing demand and supply market volatility, capital investment, stock margins and levels, and other important retail KPIs.  

As we highlighted in our How Inventory Optimization Affects Profitability guide, poor inventory optimization negatively impacts stores in the following ways: 

  • Forces highly reduced promotions, costing big on profits 
  • Causes storage and backend flow blockages due to non-moving stock 
  • Skews focus towards best-selling products without reducing overstock or slow movers 
  • Skews demand forecasting metrics 
  • Creates lost profit potential when forced to radically reduce all stock prices 

Instead, brands that factor in inventory optimization are able to reduce overall costs and wastage while boosting sales and profits. To duplicate this, you will factor in the following to optimize merchandising strategies: 

  1. Demand forecasting  
  2. Inventory levels and replenishment
  3. Inventory storage  
  4. Product sorting 

Main Takeaway: If brands want to establish long-term growth, they need to factor inventory optimization into their overall merchandising strategies and adapt them in real-time to reflect goal and market shifts.

Step #4: Go All-In With Multi-Parameter Product Sorting 

Once you have planned out where to display products for maximum impact and factored in important retail and marketing goals, you will need to match these to your product sorting strategy. 

A multi-parameter product sorting strategy allows retailers to go well beyond product sorting personalization and include a multitude of metrics based on key specific goals. These include a combination of key product sorting parameters such as:   

  • Personalization based on real-time shopping behavior 
  • Margins and/or real margins (with discounts) 
  • Conversion rates 
  • Days to finish inventory (based on product daily sales rate)
  • Inventory value 
  • Sales by quantity and/or revenue 
  • Variants stock ratio
  • Number of days in stock 
  • Product reviews 
  • Product page views 
  • Best sellers   
online merchandising sorting strategy

[Source: Kimonix]

Pro Tip: Kimonix is the only advanced merchandising and product sorting tool that allows retailers to sort products, collections, and product marketing by unlimited parameters. You can sign up here for a free demo.

Here’s the thing: one of the most significant things contributing to profit loss is the eCommerce Pareto principle

However, by finding a balance between reducing non-moving inventory, boosting revenue, and maximizing margins within your product sorting strategy, brands can overcome this and boost profits by as much as 30%

Main Takeaway: The only way to compete in the current market and optimize profit potential long term is to use very advanced merchandising and product sorting strategies that consider multiple metrics and adjust in real-time to constant changes. This brings us to the final step.

Step #5: Optimize Your Merchandising in Real-Time Using the Right Data

Being able to both access and optimize merchandising, sorting, and inventory data continuously is what will really set your brand’s online merchandising strategy apart from other stores in your niche. This includes data that tracks performance for:  

  1. Site and brand
  2. Products  
  3. Categories or collections
  4. Retail KPIs
  5. Marketing  

It is vital to be able to continuously optimize this performance by staying on top of important product insights such as dynamic bestsellers lists, low stock alerts, new recommended product promotion suggestions, and more. 

This means monitoring inventory, sales, and engagement metrics for each product and collection in your merchandising strategy, and then using those metrics to optimize your sorting and merchandising strategy accordingly.

Main Takeaway: Whether your teams use advanced AI merchandising tools or do it manually, it’s vital for your brand’s profitability to be able to monitor advanced collection and product analytics and be ready to tweak your online merchandising strategy accordingly.

Final Thoughts: Building a Converting Online Merchandising Strategy Comes Down to Testing, Tweaking, and Optimizing

There you have it: five key steps to build an optimized, winning online merchandising strategy that doesn’t just boost sales but also drives profitability. 

To recap, a well-build merchandising strategy will: 

  • Use new eCommerce technology and trends to ensure merchandising strategies outperform competitors 
  • Make the most of critical online merchandising display elements 
  • Factor in inventory optimization KPIs and strategies
  • Take multiple parameters into consideration to optimize product sorting 
  • Be continuously optimized using real-time using key merchandising triggers and date 

Like with any business change, eCommerce managers and teams will want to test, tweak, and optimize every new merchandising strategy to ensure they have a high-performing strategy set up for long-term success. 

It would be even better if retailers can automatically test and select the most profitable product collections to boost profit potential. 

how to AB test product collections

Pro Tip: Automating your product sorting strategy will not just boost profitability but also increase conversion rates while cutting down on hours of admin. Kimonix is the first AI-powered, holistic eCommerce merchandising solution.

It enables small to large online retailers to create multiple segments within collections, giving complete control over the collection's infrastructure and setup. At the same time, AI will test, tweak, and optimize in real-time. You can sign up here for a free demo.

Still got merchandising questions? Get in touch! 


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