How To Make Merchandising Decisions


Every online retailer has his or her own approach to making merchandising decisions, based on their background and training, their products, their historical experience and the amount of time they have worked on strategies.

If you are like most business owners, you do some things pretty well, but wish you knew more about how to make decisions and worry that you are working too much on gut feeling and not enough on hard analytics.

Do you ever wonder if your approach is very different, pretty much average or substantially more sophisticated than other online retailers?

The 8th Annual Merchant Survey Report, based on a first quarter 2009 survey of 190 ecommerce executives and released in April by research and advisory firm The Etailing Group Inc., provides excellent insight into this question. As part of their survey, Etailing Group researchers asked marketing executives how they make their decisions about strategy. The answers are revealing.

As you might expect:

– Ninety two percent base their decisions on web analytics

– Seventy three percent based their decisions on sales history

– Sixty eight percent base their decisions on conversion data

One of the greatest advantages of the Web is the ability to quickly and easily track so much about customers. Pay per click analysis, landing page analysis, referral analysis, conversion rates all paint a picture of activity by your customers and potential customers. Every online retailer should be looking at their web analytics and know enough about what they mean to make decisions using their guidance.

However, there are some other techniques those marketing execs use that begin to show some of the art of marketing. For example, fifty six percent of marketers use ‘gut feeling’ to help them guide their decisions, a statistic that may make some of the less data driven entrepreneurs on the Internet feel a bit better.

Another technique that is substantially easier on the web is benchmarking against competitors and fifty percent of retailers look at benchmarking data such as search engine page ranking, Alexa website rank, page views and number and placement of pay per click ads to make merchandising decisions.

The increased interaction with customers through data collection during registration for newsletters, emails and RSS feeds allows thirty percent of marketers to use profiling as a way to make decisions. Customer reviews are used by thirty nine percent of marketers.

Many marketers also rely on more traditional bricks and mortar techniques as well. For example, fifty eight percent look at inventory data, forty nine percent use product margin and forty five percent use sales ranking as a guide.

How do you stack up against the survey participants? Do you have systems in place that allow you to access the kind of data resources that more and more marketers are using? Are you taking advantage of the uniquely open nature of the Internet to benchmark yourself against your competitors? Are you balancing that gut feeling decision making with solid data that allows you to make choices among products, weed out the non movers, establish loss leaders and create cross sell and up sell combinations? If not, it is a good time to start.