Average Merchandising is Not Acceptable in Amazon Era
Competing in a world dominated by digital powerhouses like Amazon.com makes it virtually impossible to excel without prioritizing effective merchandising — supported by the right tools, processes and people. Our focus at the e-tailing group has always been on merchandising, as we see it to be a key differentiator in digital selling.
Therefore, we were surprised to find that in a recent survey of retailers, brands and catalogers conducted on behalf of Sweft, sellers acknowledge that specialized merchandising processes and tools are needed, yet despite being a priority, are mostly not implemented and the financial impact not understood.
Inefficient merchandising processes can lead to many seemingly small costs distributed across the company that have a cumulatively large impact. Workflow fundamentals must be in place that foster access to product information, the ability to properly plan assortments, guaranteeing timely product launches and related marketing campaigns. Additionally, the people factor shouldn't be undervalued as clear roles and responsibilities along with communication among departments must be a mandate.
To underscore our findings, I will highlight three top-line issues, key learnings and share anecdotes that bring these findings to life.
Merchandising Processes Lack Sophistication
The majority of respondents rated their merchandising process average (five or under) in terms of sophistication.
Most suggested that the processes in place can do the job, but that optimization opportunities abound. A lack of tools causes retailers to seek workarounds that often involve manual efforts. Some acknowledge that their businesses have changed and their merchandising systems haven't kept pace. Those merchants with old-school models in place have many pain points as merchandising isn't set up for evolving digital demands and shorter cycle times. Most retailers face challenges in organizing themselves to sell online where a combination of too many time-consuming processes coupled with too many individuals wreaks havoc on the efficiency model.
Every aspect of the merchandising workflow is only seen as adequate at best.
In terms of workflow, we asked retailers to evaluate assortment planning, access to product information, sample management, product launch workflow, creating and managing content, coordinating marketing campaigns, and collaboration between departments.
Access to product information and collaboration between departments had the highest number of retailers identifying themselves as only adequate. Creating and managing content saw significant discussion as many of those interviewed either didn’t have the right product details — including technical product information — or they struggled with photography. Others couldn’t access information efficiently or in a timely fashion hampering efforts. Some cited siloed data across channels or the marriage of disparate systems causing challenges. Communication was also identified as an issue, with the web team for one retailer suffering from compressed time frames for getting products live, despite other teams being aware of the product much earlier yet not communicating.
Unnecessary Delays Are the Result
Product launches see delays 69 percent of the time, with gathering product information and photography being the biggest culprits and a factor for one in two retailers.
Once again these two aspects of merchandising must be addressed as they serve as the foundation for successful marketing. Retailers had varying vantage points, but one stood out for me: "the end-to-end process can be quite laborious from vendor setup to launch," and delays can happen at any point. Given the nature of the merchandising process, many describe challenges they faced along the way and workarounds they had to put in place to circumvent the roadblocks to efficient execution.
Sample tracking and having a good process for requesting and receiving them top the list of sample management concerns, and are a factor for one in two retailers. Ironically, even producing one’s own samples didn't ensure being in a better position or having the right final specs in a timely manner.
Marketing campaign delays are occasionally an issue for the majority of retailers surveyed (56 percent), and the reasons stem from product delays to poor communication between departments for one in three retailers. Those retailers that faced challenges in this area have found workarounds that included changing out products or delaying campaigns.
Surprisingly, spreadsheets are the de facto tool in merchandising, used by 94 percent to support product launches. They're universally used when other systems or processes aren't in place or up to par. Higher satisfaction levels were seen by one-third of those surveyed that had implemented additional technology to help manage launching products, such as in-house solutions or product information management software. This suggests the importance of moving beyond spreadsheets to improve merchandising.
The Challenges Are Significant and Worth Addressing
Challenges are widespread as organizations are struggling with systems that are inadequate for their needs (75 percent), insufficient information for decision making (44 percent), and a lack of clarity in roles/responsibilities (38 percent).
Retailers acknowledged issues with everything from a lack of training to poor product information that hampers product setup and launches. From a systems’ perspective, some referenced substandard tools and commerce platforms not fully integrated with other systems also posing problems.
For brands more recently embarking on direct-to-consumer models, they don't have sophisticated processes in place for e-commerce that leverage the rest of the organization. Additionally, the roles and responsibilities have yet to be defined to ensure the necessary support is in place.
Several catalogers lamented that their often-antiquated systems and processes haven't evolved with the digital world, and it seems simply too complicated to get things done. A lack of streamlining means processes are often unclear, with products not launching in a timely fashion and marketing campaigns delayed. “It’s not always a tech-related issue, and sadly it takes us three months to build a product page, which is the same as launching a catalog,” shares one merchant.
Data posed problems as well. Many survey respondents noted that even with tools in place, their use of data remains rudimentary. A mass merchant emphasized, “With so much data, the organization doesn't always have faith in the numbers and quick access is virtually impossible.”
Retailers also reveal that teams don’t take a holistic view of the business, and as one person said a “fuzziness” around roles and responsibilities is problematic. On the plus side, e-commerce getting a seat at the table has helped one retailer advance its merchandising cause.
Prioritize Merchandising Now
With all of the pressure from online retailers and marketplaces, the days of poorly organized and manual merchandising processes are clearly past. Accomplishing effective merchandising workflows is the first step to competing on an even playing field with the best that digital commerce has to offer. Empowering merchants with tools designed for the digital era is a key next step.
Merchandisers must be on high alert, prioritizing workflows that start with information access and smart assortment planning, ensuring product launches and market campaigns are timely. People with clearly articulated roles should be in place, complemented by communication that facilitates a smooth merchandising process. The resulting efficiencies and opportunities will best position retailers for profitable growth.
Lauren Freedman is president of the e-tailing group. The e-tailing group has provided merchandising insight to online retailers and thought leadership to the technology industry for over 20 years, working with retailers of all sizes, platforms and point solutions. Lauren can be reached at LF@e-tailing.com.
This research was sponsored by Sweft, a collaborative merchandising platform that's an end-to-end solution for faster product launches.
Related story: Top Performing Brands in the Eyes of a Mystery Shopper