May 11, 2012
Walk the floor of any retail trade show, and you’ll hear merchandisers singing a familiar tune: “Many products don’t sell, but just as many customers don’t buy." That’s a hard pill to swallow when you’re tasked with moving inventory. Add to that the merchandiser’s range of responsibilities, and you’ve got a recipe for acute pain.
If you’re an online merchandiser, three tasks likely summarize your core business challenges:
For years, merchandisers have relied on a kaleidoscope of ineffective solutions to address these problems. Fortunately, there’s a single prescription for each one of these ailments. But the merchandiser’s real trump card isn’t just about reducing pain; rather, it's the ability of her product recommendation endcaps to truly maximize the website’s revenue per session and average order value.
What Are Endcaps?
Most of us are familiar with endcaps in a physical store—i.e., displays at the end of each aisle designed to catch the shopper’s eye and sell more product. In the brick-and-mortar retail world, endcaps are considered to be the premier retail space. They allow retailers to: generate significant incremental sales by bringing awareness to a product; encourage impulse purchases; and generally increase basket size through cross-selling and upselling.
This retail real estate is so valuable, in fact, that beverage, snack food, and consumer product manufacturers often pay hefty fees (sometimes in the millions of dollars) to retailers to get their products featured on retailers’ endcaps.
In the ecommerce world, the same rules apply. All of the Internet Retailer top 10 sites make use of endcaps in their merchandising, and half of them feature endcaps on their homepage. Amazon.com, the #1 online retailer by volume (and an extremely data- and results-driven company), devotes a significant portion of their homepage to endcaps. As of this writing, the Amazon homepage for a returning shopper devotes a staggering 70% of the total page real estate to endcaps (including 51% of the above-the-fold real estate).
The reason? Endcaps work. They drive revenue as well as shopper awareness and engagement, virtually anywhere on your website. The key to success with endcaps is to use them as your tool to put the right product in front of the right consumer at the right time.
Surveying the Market
The previous generation of product recommendation engines fell short of addressing the merchandiser’s true pain points. At a tactical level, they added to—rather than alleviated—the merchandiser’s challenges. But today, merchandisers are gaining the initiative once again, with the ability to:
It’s all about handing control back to the people who understand their customers the best—the merchandisers—because as one Monetate client remarked, “There is no offer, jingle, or promotion that can substitute for real-time relevance.”
If your product recommendation endcaps aren’t delivering the way you want them to, it’s time to start asking why.