When looking at the website optimization challenges of small-scale retailers, a common question is how ecommerce business with a small number of SKUs (i.e., less than 100) can effectively merchandise using rules-based and algorithmic approaches.
In other words, doesn’t merchandising require a large product catalog to be both effective and scalable?
The answer is no. But more to the point, the fewer the products you sell, the more effective your merchandising may be.
It’s About the Interaction
You may sell few products, but you don’t have few visitors. That means, on average, that each product will have a larger set of data associated with it, consisting of views, purchases, cross-sells and upsells, and other factors.
Let’s look at a hypothetical example where a retailer sells heating and HVAC systems. The same product —a space heater, let’s say—may be recommended to:
- Visitors for whom the current temperature is below freezing
- Returning visitors, because the space heater is a “New” item
- New visitors, because the spacer heater has become a “Top Seller”
- Visitors whose IP addresses correspond to wealthy ZIP codes, because the space heater is expensive
- Visitors whose behavioral history suggests an affinity for this space heater’s brand
Five approaches—all driven by a wealth of data about shoppers’ interactions with a single product.
Think about it: Online merchandising is driven by the interactions that shoppers have with your products, along with other points of data that affect shopping behaviors (e.g., weather)—not by your products themselves.
When designing a merchandising strategy, smaller may, in fact, be better.
Modern David Vs Goliath image courtesy of Shutterstock.