Across all retail verticals suppliers pay retailers to promote their products inside physical environments. So why don’t they do it online?
Across all retail verticals, in every region of the world, suppliers pay retailers to position and promote their products inside physical environments. So why don’t they do it online?
There are several factors behind the challenge of online merchandising, the combined result of which is that supplier funding on retail websites has been largely underutilised.
Firstly, the way people shop online can be fundamentally different to the way they shop in store.
Groceries are a good example. Online, customers have a favourites section, and they have already added products into that section, often by scanning a till receipt from a visit to a store. The favourites section is where their journey starts, and often ends. Customers don’t browse, and it’s difficult to tempt them into new products or impulse buys.
Digital merchandising space
The underlying technical infrastructure that drives many retail platforms can also make it difficult to create space available for merchandising.
Almost every page on retail websites is sorted into the default order of bestselling or low to high. The difference between physical and digital retail environments is striking.
In a physical store, you don’t rearrange your shelves every week by bestselling. You absolutely could, but you don’t, because you know that there’s a better way to merchandise the space.
A third challenge is that when suppliers want to support products in a physical store, retailers know the value of that space.
They understand the most in-demand locations. However this same process doesn’t work as well online.
“To sell digital merchandising space consistently across the week is challenging – it’s better to do it in real time”
Simon Harrow, Elevaate
Using a rate card to determine the price of online space leads to both undervaluing and overvaluing locations. In certain verticals the amount of transactions varies widely from day to day.
So to sell digital merchandising space consistently across the week is actually quite challenging – it’s better to do it in real time.
The retailer monetises the peak to get more money up front, and the outcome for the supplier is that they’ve driven sales, volume, and profit.
Until now, it’s been difficult to get online retailers to merchandise and promote product in the same way as happens in physical stores. Making this possible online unlocks millions in supplier funding for retailers, while increasing awareness and sales for suppliers. It’s an evolution in merchandising that creates value for everyone.
- Simon Harrow, chief executive at digital merchandising firm Elevaate and former Kiddicare chief operating officer