Most retailers think merchandising is just making products look pretty in a window display. That’s visual merchandising. However, eCommerce merchandising is something entirely different, and if you get it wrong, you’re bleeding cash through overstocked products that won’t sell and missed opportunities on products customers actually want.
Watch and listen to the episode
What eCommerce merchandising actually is
Retail merchandising isn’t about arranging products to look nice. Instead, it’s about getting five things right:
- The right product
- In the right place
- At the right price
- At the right time
- In the right quantity
Get any of these wrong and you’re not making the profit you should be. Launch a lightweight summer range in winter? You’ve failed. Stock gorgeous tops but forget to buy enough bottoms to match? Your range doesn’t work and customers won’t buy.
Why knowing your customer actually matters in eCommerce merchandising
Everyone says “know your customer” but most people stop at demographics. Anna’s teams used to have a board in the room when picking products, with specific details about the customer: her name, age, spending habits, how she’d use the product.
They’d literally hold up products and ask: “We love this. Does it fit our customer?” If not, it didn’t get bought.
However, once you’re past startup phase, you’ve got data. And purchases don’t lie. If customers consistently buy a certain type of product, that’s what belongs in your range.
Moreover, the trick is digging deeper than headline sales figures. You might see “occasion wear made £50k last year” and think it’s working. But dig into the data and you’ll find that revenue came from heavy markdowns, you barely made profit, and the few pieces that did work were versatile items customers could wear multiple ways.
That tells you something useful: keep a small selection of versatile occasion pieces, redirect that budget to products that actually make money.
The bestseller trap (and why variety matters for eCommerce merchandising)
It’s tempting to just buy more of what sells well. But Anna’s blunt about this: “Wear out bestsellers, they become boring, you’ve saturated your customer base, and then you’re going to start having to mark them down because you’ve sold it to everybody.”
You need variety. New products. Things that stretch your range. Nevertheless, you also need depth in your bestsellers. Stock out of a bestseller and you’ve lost that sale forever. That customer isn’t coming back tomorrow to check if you’ve restocked.
The balance? Anna uses an 80/20 rule. 80% proven sellers with depth of stock, 20% new products to test and keep things fresh. This isn’t a rigid formula (adjust based on your business), but it’s a framework that prevents both boring your customers and taking wild punts on unproven products.
Fast fashion changed everything (even if you’re not fast fashion)
The shift to fast fashion fundamentally changed customer expectations. Products arrive faster, trends move quicker, and customers expect newness constantly.
For online retailers, this means you can’t just plan big seasonal drops anymore. Instead, you need regular product introductions to keep customers coming back. Furthermore, you need to move faster when something isn’t working.
The advantage of online? You can test products quickly, see what’s working in days not weeks, and react fast. The disadvantage? Your competitors can do the same thing.
What the data actually tells you (and what it doesn’t) about eCommerce merchandising
Looking at data is useless if you don’t act on it. Anna’s seen too many businesses that review numbers, have meetings about numbers, then do precisely nothing about what the numbers are screaming at them.
The key questions to ask your data:
- Where are the exceptions? (The outliers tell you more than the averages)
- What’s the rate of sale? (Are products selling as fast as you expected?)
- How long will current stock last at current rates?
- What’s building up that shouldn’t be?
However, most people mess up because they don’t have their data systems set up properly. Consequently, they’re spending hours drudging through spreadsheets instead of seeing exceptions instantly. If your data process isn’t slick, you’re reacting too slowly.
Real-time data matters now more than ever. Anna’s blunt about it: “A day here is like a week before. It’s so critical.”
The worst sellers matter more than the best in eCommerce merchandising
Everyone gets excited about bestsellers. Nobody wants to deal with the products that aren’t shifting.
Anna’s key takeaway is that stock that’s building up is blocking your cash flow, forcing you into distressed markdowns that damage your brand, and preventing you from spending money on products that would actually sell.
If you’ve got a missed sale because something sold out? Frustrating, but that money’s gone. However, if you’ve got stock piling up? That’s money tied up that you can’t spend elsewhere, and it’s getting worse every day.
Anna’s specific, practical advice: go look at your worst sellers right now. What stock are you sitting on that’s not moving? Take action today. Be ruthless.
The problem won’t get better if you ignore it. Years of experience prove it never does.
What to do right now
Two things:
First: Look at your data today. If you’ve got a problem, deal with it instantly. Don’t have another meeting about it. Don’t wait until next week. Instead, understand what the data says, decide what action to take, then actually take that action.
Second: Identify your worst sellers. Find products where stock is building up. These are your bottlenecks. They’re killing your cash flow and blocking investment in products that would actually make money. Take action on them today, even if that means aggressive markdowns to clear them out.
Chasing bestsellers is exciting. Dealing with dead stock is boring and frustrating. Nevertheless, fixing your worst sellers will improve your business faster than anything else you do this week.
Blatant plugs
Connect with Anna on LinkedIn.
Hire Anna to help you at annawhalleyconsulting.com.
Learn more about the world of merchandising at the-merchandising-school.mailerpage.io
The gist
- eCommerce merchandising goes beyond visual appeal; it involves product selection, placement, pricing, timing, and quantity.
- Understanding customer behavior is crucial; deep data analysis reveals what truly sells and helps avoid relying solely on demographics.
- Variety is key; an 80/20 rule helps maintain a balance between bestsellers and new products.
- Stay agile; fast fashion has changed expectations, requiring frequent product introductions and rapid responses to data insights.
- Address worst sellers promptly; they block cash flow and hinder investment in profitable products, making immediate action essential.
