If you can believe it, we are now more than two decades into the digital generation of merchandising. Beginning in the late 1990s, ecommerce fundamentally changed the way the job of the merchandiser was performed, and over the past 20 years, it has evolved tremendously.
The first ecommerce websites were extremely similar to print catalogs, and their purpose was mainly to establish a retailer’s presence online. When you think of a print catalog, for the most part, everyone gets the same thing in the mail — the same products, laid out in the same order, at the same time. These first ecommerce experiences were also homogenous: every visitor saw the same assortment, in the same layout, and had the same experience.
Segments were the first major evolution in personalization. Technology allowed retailers to divide their customers up into smaller groups (maybe based on location, age, or some other criteria), and would personalize based on those characteristics. In the last several years, it’s become the standard for personalization that most ecommerce websites have adopted in some shape or form.
At Constructor, we think AI is ushering in a new era of ecommerce that will once again redefine the role of the merchant. AI is allowing retailers to move from segments of many to the elusive segment of one, where each unique shopper gets an experience completely tailored to their needs.
In our latest webinar, Leverage AI-Enhanced Merchandising and Personalization for Ecommerce Success, I sat down with Brendan Witcher, VP Principal Analyst, Forrester, and Valery Bezrukova, VP Product, Constructor, to discuss this generational shift and how ecommerce retailers should prepare.
Takeaway #1: A Large Percentage of Visitors Aren’t Coming to Your Website to Buy
Many retailers are laser-focused on optimizing their websites for conversion.
While this is a completely logical approach, Brendan pointed out that 95-97% of visitors to ecommerce websites are not necessarily there (at least initially) to buy products. Instead, they’re often coming to figure out whether or not they should be buying products from that retailer, or from somewhere else.
In other words, it’s no longer just about getting the conversion, it’s about getting customers to understand that there’s value in doing business on your site and giving them a reason to return when they have a need.
There are different tactics retailers can use to help support this type of intent, such as displaying educational content alongside products, enhancing browsing experiences, or offering product finder quizzes to guide them along their journey.
Every visitor has a certain expectation in their mind of how long it will take to find a certain product. If a customer expects it to take 10 minutes, and it actually takes five, not only does it build affinity and trust in the retailer’s brand, it might also mean an extra five minutes spent browsing and potentially purchasing additional products.
In summary, it’s not just about showing products. It’s about how quickly you can show a potential customer the right product and give them the confidence that they’re buying it from the right place.
Takeaway #2: Consumers Are Being Trained Outside of Retail to Be More Conversational with Search
It’s becoming more and more common for consumers to formulate their queries as long-form questions rather than keyword combinations.
Ten years ago, if you were trying to find a new pair of jeans, you might search something along the lines of “blue jeans men size 32×30.” With the increasing adoption of technology like ChatGPT or even voice search, consumers are becoming more comfortable formulating searches as questions, like “What are the most comfortable mens jeans under $50?”
Another way to think about it is that consumers have gone from using keywords to describe a product they’re trying to find to using more natural language queries to describe a problem they want to solve.
General search engines, like Google, have become pretty good at showing decent results for these types of searches. But many ecommerce sites haven’t caught up. As Valery pointed out during the webinar, there’s a real risk that if a shopper has already done research somewhere else, they can find a solution somewhere else, too, if you don’t serve their needs fast enough.
To support customers’ evolving needs and provide attractive results for these more conversational queries, retailers should look to adopt technology like Generative AI and transformers. These emerging technologies facilitate more human-like, accurate interactions in their chatbots and across all facets of product discovery.
Takeaway #3: AI Will Promote More Creativity and Strategic Thinking
In discussions about how AI will transform ecommerce over the coming decades, many merchandisers might be left wondering how it will impact the way they perform their jobs.
In the last decade or so, many merchandisers have observed that their jobs have become more data-driven due to the wider availability of customer analytics. While this is certainly not a bad thing (it’s enabled many improvements in customer experiences), some feel that it’s taken a bit of the art out of the role.
Fortunately, both Brendan and Valery predicted that AI will help promote a more strategic focus that will, in turn, enable more creativity. With AI handling many of the more manual, time-consuming tasks, it will allow merchandisers to focus on the overall experience they want to curate and find new and exciting ways to delight shoppers.
As mentioned earlier, the majority of shoppers aren’t coming to an ecommerce website planning to immediately purchase a product. They often intend to educate themselves about a particular product, the problem it solves, and build confidence in their selection of both the item and the retailer.
This means that merchandisers will need to spend more time thinking about the overall process of finding a product and the dialog they want to have with the customer online. Are they presenting the right experiences to satisfy the next step on that journey?
For example, if a retailer can discover that a shopper is training for a triathlon, can they help that shopper not only select a pair of running shoes, but recommend other products they should consider to help with their training? In what situations should they present helpful content rather than a product, or a conversation with an AI Shopping Assistant?
AI can help immensely with productivity by automating manual tasks, but it requires human input to guide the overall strategy and tell it what it should be optimizing for. That means merchants can and should spend more time thinking about their business objectives and the experiences they want to deliver for their customers, rather than tinkering with dials and knobs.
Merchandising decisions are often a trade-off. For example, when a new product is released, you might consider slotting that product in a top position to promote it. It may lead to more conversions, but it may also hinder the overall customer experience if the product isn’t necessarily attractive to every visitor. So, should you promote the new product, or focus primarily on the customer experience?
AI can’t make this type of strategic decision for you, and the answer will vary based on the specific situation, but it can help you execute faster and more consistently once you’ve determined your priority for that moment.
Embracing the Future of Ecommerce
AI is pushing retail forward into a new era of online merchandising. The future is heavily personalized, conversational, and human-centric. We think this presents some really exciting opportunities for merchandisers to bring creativity back into their role and have more time to focus on strategic decision-making.
Interested to hear what else our panel had to say about leveraging AI-enhanced merchandising and personalization? You can check out the full webinar here.
