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Unlocking eCommerce Success with AI Merchandising Strategies

Saanika Budhiraja
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Artificial Intelligence is transforming the retail landscape with AI merchandising. One such reason is that many retailers are facing issues with manual merchandising as old ways simply no longer cut it. Discover why and how retailers are adopting real-time merchandising solutions to enhance efficiency and effectiveness in eCommerce.

Redefining retail strategies with AI-driven smart merchandising

Smart Merchandising is a software solution that uses data-driven techniques to help retailers improve their e-commerce stores. Smart Merchandising solutions give marketers and merchandisers the tools needed to optimise product selection, pricing, promotions, brand building and more, all in one place. The best part? AI makes Smart Merchandising even more accurate and informed by getting rid of all the guesswork.

Manual online merchandising is time-consuming and requires a lot of effort with every change of season and with every new stock arrival. Not only that, but it's often biased and dictated by the back office pushing products while ignoring each shopper’s unique needs and wants.

In a world where online experiences don’t match in-store experiences, and where online stores only have a few seconds to capture shoppers’ attention, AI comes to the rescue to assist e-commerce managers in creating the most effective online retail shopping experience. Smart Merchandising is improving efficiency and decreasing effort for teams, all while improving the sales results and shopping experience.

How AI merchandising drives efficiency and effectiveness in online retail

1. Watch holiday season sales roll in

Whether it’s Black Friday, Cyber Monday, Back-To-School, Christmas or Valentine’s Day, AI can dynamically merchandise new and existing products, through automation and optimisation.

Here are just a few benefits of Smart Merchandising during the holiday season:

  • contextual recommendations
  • automatic stock updates
  • removing bias from data
  • merging retail season stock updates with the rest of the catalogue

AI gives retailers deeper insights into customer behaviour to inform accurate, real-time recommendations. Data analysis should form a crucial part of your AI strategy as data is an incredibly valuable tool in understanding your customers’ motives and needs to better enhance the customer journey. Using the data provided by shopper behaviour, AI can instantly suggest products that pair well or are often purchased together.

What’s more is that by utilising AI, you can dynamically merchandise any stock changes and updates that come with the holiday season. AI automatically takes into account price changes and stock updates that haven’t built enough clicks to be popular.

These real-time recommendations help alleviate some of the hassles that come along with big campaigns and ensure the customer journey is optimised to its full potential.

2. Use AI and Smart Merchandising to reduce friction and ‘out of stock’

Every product has a winning chance with Smart Merchandising that’s not based on historical data. AI can help remove the bias from your data and automatically show products based on the shopper's unique journey.

Low stock levels on popular items? AI takes size, style, and categories into account to only show products that are in stock – with the result being reduced friction and frustrations due to showing products that are unavailable in the shoppers’ size, for example.

Smart Merchandising also gives you better insight to plan your inventory in advance to avoid out of stock and only show relevant products that are available.

3. Use intelligent price optimisation to maximise your profit

Intelligent or smart pricing is a strategic way to optimise your business and adapt prices based on data from customers and the market. Big e-commerce players such as Amazon and Alibaba use price intelligence to adjust the price of their products in relation to peak sales hours, available stock units and other factors – and it’s all geared by AI.

Some AI-driven price optimising strategies include:

  • Price optimisation: helps find the best prices for products based on competition, consumer demand, inventory levels and other factors.
  • Price elasticity: refers to how sensitive consumers are willing to buy products at different prices because of brand loyalty, customer perception and specific times.
  • Price anchoring: is the psychological phenomenon of focusing on the first figure a shopper sees when making decisions, which may lead to overestimating its value.

4. Use shoppers’ unique tastes and preferences to cross-sell and upsell

AI in retail merchandising can help businesses identify customers who are likely to buy more products, resulting in an increase in AOV and basket size. According to Salesforce, AOV is 26% higher when shoppers click on AI-powered product recommendations.

AI shopping and smart product suggestions can also recommend products based on customers’ real-time data, as well as past purchases, all resulting in an increased conversion rate, and repeat sales. A smart merchandising solution such as Shopbox will let shoppers know which products go together best to cross-sell or up-sell without annoying customers (recommending things they don’t need) or losing them altogether (not offering any relevant recommendations).

For example, if a customer is buying an item such as winter boots and an accessory like gloves, a product recommendation like a hat or scarf could complete their outfit based on their unique style and taste.

5. Save enormously on time and effort with AI Smart Merchandising

Staff shortages and overworked marketers can hurt efficiency and profitability, so it makes perfect business sense to use AI to automate time and effort, especially on tedious tasks.

E-commerce managers and merchandisers rejoice as AI automatically takes care of product assortment and frees up their time from manually creating thousands of different combinations of stock-keeping units (SKUs) for each season or trend. Not only that but an AI shopping experience removes the human bias in analysing, so e-commerce managers can rest assured knowing their product recommendations, product placement and promotions are accurate and relevant.

But it’s not only online stores that benefit from AI. In-store merchandising can be improved by using the data from online sales too.

6. Effortlessly improve your customer experience and journey

AI guarantees that your shoppers get the best possible experience on your website that is unique only to them, and not based on biased personas that have been created previously and may be out-of-date. With each click, shoppers see infinite product permutations based on what they have expressed interest in already.

Whether the shopper is browsing the homepage, looking at the product details pages or going through the product listing page, AI-powered Smart Merchandising can show the right products at the right time and place by learning and adapting at every step of your shopper’s journey.

An example of ai-driven smart merchandising on a sportswear eCommerce site

Smart Merchandising will help you manage and grow your business with full visibility, flexibility and control to make faster, smarter decisions.

AI combined with smart merchandising ultimately deliver better customer satisfaction, loyalty and repeat purchases (which are all important factors for an eCommerce business).

The goal of AI-driven smart merchandising is to increase sales by reducing stockouts, showing more relevant products to each visitor and by helping you manage stock updates without any manual effort. With a Smart Merchandising solution, you'll have the ability to display a wide range of products on your online store in any way that suits the needs of your customers. As a result, customer engagement and dwell time will increase and conversion rates will improve by giving customers what they want when they want it — and at the right price!

Realise your eCommerce potential with smarter merchandising

Let’s face it, without AI technology, the retail merchandising process is tedious and time-consuming. Luckily, there are many ways to become a smart merchandiser with artificial intelligence solutions for retail that will help improve efficiencies and effectiveness. Paired with your SMART goals for merchandising – you have a winning strategy in place.

But AI isn’t the only aspect that’s shifting the retail landscape for good. We’ve created an entire guide to help you embrace the change with ease. Ultising AI and other eCommerce merchandising tools mean you can focus on more productive tasks, while your business automates sales. Download your copy here.


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