Why Product Sorting Personalization Is No Longer Enough
Yes, product sorting personalization creates a better shopping experience for your customers. However, it’s just a small part of your whole eCommerce merchandising strategy and alone, ignores vital business goals.
Additionally, brands relying purely on product sorting personalization for eCommerce merchandising are stuck in the vicious eCommerce Pareto principle cycle, which states that 80% of a retailer’s profits are generated by 20% of their products.
Simply put, brands that prioritize personalization alone as a product sorting parameter are caught in a loop where potential shoppers and customers only see a small fraction of the available products.
This means 80% of a store’s product inventory is likely to become non-moving inventory, and non-moving inventory can eat at your profits in a big way.
In this post, we look at why product sorting personalization is no longer a successful eCommerce merchandising strategy, and what eCommerce managers should be doing instead.
1. How Product Sorting Personalization Costs Profits
We’re not saying there isn’t a place in your merchandising strategy for personalization. However, brands that go all-in on sorting personalization for collections and category pages could be reducing their potential profit by as much as 30%.
Let’s say you’re managing a growing online fashion brand that relies solely on personalization for product category sorting.
When a potential shopper or previous customer visits your category page, they’re likely to only see products they have previously bought or shown interest in without regard to margins. Should they buy again, the next time they visit your store, they are likely to see the same or similar product selection again, with category pages showing products based on user affinity and behavior.
Non-moving stock costs you in storage, handling, and physical deterioration, as well as lost margins – AKA profits. When your products are seasonal, such as with fashion, retailers are stuck with only two options at the end of each season:
- Using big discounts and promotions to push non-moving inventory before the end of the season, sacrificing on margins.
- Giving away old stock should promotions fail.
However, with the right merchandising and inventory optimization strategies, retailers can quickly spot decreased activity or reduced inventory turnover well in advance, and factor those parameters into their product sorting strategies without sacrificing personalization.
By building an advanced product sorting strategy that doesn’t rely solely on personalization analytics, but instead factors in important parameters that adjust to a specific business’s key marketing and retail KPIs.
Don’t take our word for it.
Let’s take a look at some important performance metric changes that Swarovski IL saw four weeks after moving from a personalization-only product sorting strategy to an advanced product sorting strategy. They:
- Increased revenue by 8% and increased overall conversion rate by 18%
- Reduced non-moving inventory by 29%
- Increased daily sales of top products by inventory volume by 72%
2. Why You Need to Build an Advanced Product Sorting Strategy Beyond Personalization
An advanced product sorting strategy should take your specific business goals into account. Yes, advanced personalization is one of them, but it is just a piece of your product sorting puzzle.
Instead, an eCommerce merchandising manager should consider the following metrics when building an advanced product sorting strategy:
- Product demand and price competitiveness in the market
- Conversion rates
- Product reviews (ratings & total amount)
- Real margins after discounts
- Sales quantities or revenue amount
- Inventory value
- Days to finish inventory
- Variants stock ratio
- Days since back in stock
- Days in store
In other words, you need a mix of parameters tailored to your specific needs and goals in order to improve both the buyer’s shopping experience and your profits.
Deciding which parameters to include in your product sorting strategy will depend on your specific business goals, current market conditions, and your inventory optimization needs. When done right, this can drastically improve conversion rates and profits.
This is something that another one of our merchants, RadioShack, are masters at: combining key business parameters into converting product-sorting strategies using Kimonix’s advanced merchandising automation.
3. Boosting Profits with Smart Multi-Segment Collections
To really compete in the growing online shopping niche, retailers need to switch from personalization-only product sorting to one that uses a variety of key parameters. This means creating a multi-segment collection that takes into account key marketing KPIs, inventory analytics, and customer preferences.
You also need these collections to be able to automatically adjust to real-time market, brand, and inventory changes. This will ensure that your store automatically:
- Pushes down out-of-stock inventory or pushes up new products
- Pushes up tags
- Adjusts product grouping
- Creates a tailor-made collection for each individual customer or potential shopper
Final Thoughts: Combine Product Sorting Personalization with Key Retail Metrics to Boost Profits
Ultimately, to break the vicious cycle of profit loss that comes with using personalization-only product sorting, you need a tailor-made strategy that adapts in real-time. Doing this manually will be virtually impossible, even with a large product tagging team.
Therefore, to stay competitive and boost profits with multi-segment product sorting, retailers need machine learning and AI, especially for those with growing or already large inventory lists.
This is where Kimonix comes in.
Kimonix synchronizes sales data, inventory analytics, and insights on your customer preferences to create smart multi-segment collections that are tailor-made to boost sales, optimize inventory, and maximize margins.
Ultimately, it combines real-time sales and inventory data with insights on your shoppers’ preferences. This gives merchandising managers complete control and maximum agility for their collections, so they can create a unique product sorting strategy based on their specific business needs.
Ready to upgrade your product sorting strategy to an advanced level? Our merchandising gurus are standing by!