Digital merchandising: What is it? (And why is it essential for e-commerce brands?)

Updated August 2, 2024.

Shopping has always been a visual experience, from captivating storefront displays to mannequins showcasing curated outfits. In today's digital age, this visual aspect of shopping is more crucial than ever. Despite the convenience of physical stores, online shopping often creates a disconnect between consumers and products. For digitally native brands, effectively presenting merchandise is essential to drive purchases and attract new customers.

A robust digital merchandising strategy can set a brand apart, influencing customer intent and boosting sales. By understanding sales data, building cohesive product collections, leveraging personalized recommendations, monitoring inventory, optimizing search and filter functions, and utilizing user-generated content, brands can create a seamless and engaging shopping experience.

Investing in digital merchandising is essential for e-commerce success. While developing and maintaining a strong merchandising strategy requires effort and advanced technology, it ultimately fosters dynamic customer relationships and drives purchases. Stay ahead of the game by continuously evolving your digital merchandising techniques to create a captivating online shopping journey for your customers.

What is digital merchandising?

Digital merchandising, also known as online merchandising or e-commerce merchandising, refers to a variety of strategies designed to market and sell products online. Simply put, it's all about how a brand sells its goods.

Digital merchandising includes branding, personalization, content strategy, product positioning and placement, image creation, and more. The goal? To generate traffic and convert customers.

But to really understand merchandising online, it's necessary to look at where it started.

Offline retailers have used visual merchandising techniques like floor plans, color schemes, product displays, and clever lighting for centuries to entice customers. The difference between visual and digital merchandising is physicality. Visual merchandising focus on how products are perceived offline, while digital merchandising is focused on how products are curated and marketed, online.

What is the purpose of digital merchandising?

Over the past few years, we've seen a seismic shift in online shopping. In 2023, global retail e-commerce sales reached an estimated $5.8 trillion. Projections indicate a 39 percent growth in this figure over the coming years, with expectations to surpass eight trillion dollars by 2027.

With such a large boost, it only makes sense that online merchants are investing more resources to support their digital storefronts through merchandising.

Digital merchandising enables brands to create a personalized, curated, branded journey for their customers from the moment they enter their website - all the way through to the checkout.

By incorporating e-commerce merchandising into your marketing strategy, there's a distinct advantage of differentiation from a plethora of similar brands.

Let's face it - there are a ton of e-commerce brands out there! In fact, studies show that there are somewhere between 12-24 million active e-commerce sites; however, less than 1 million of these sites generate over $1,000 in revenue each year.

A strong merchandising technique is key to providing an optimal end-to-end e-commerce fulfilment experience with unforgettable digital connections. Plus, when done right, digital merchandising can influence customer intent, leading to an increase in purchasing.

Why is digital merchandising important for e-commerce brands?

It's no secret that today's e-commerce space is increasingly more competitive than it was just a couple of years ago.

For brands to succeed, they'll have to pay close attention to their brand storytelling and their own business goals - and now these overlap. The goal is to create an online experience that not only influences buying behavior, but also gives your audience exactly what they're looking for.

Investing in new digital merchandising techniques provides an e-commerce store with the chance to level up the shopping experience - one that inspires shoppers to make purchases again and again.

6 ways to implement digital merchandising like a pro

1. Use sales data to understand how your products are performing

The data doesn't lie! In fact, looking at your audience's behavior through numbers and data is your ultimate knowledge center.

For e-commerce merchandising, it's essential to understand your products and their performance. This way, you can present relevant products in a strategic manner, rather than hosting everything on the same playing field.

Try separating your products into high-performing and low-performing groups to better understand where to place them within your digital space. For example, you can spotlight your most popular items on your home page or on your social media platforms.

2. Build 'collections' via your product imagery

Thanks to social media, consumers are fascinated by aesthetics and branding.

Whether it's a filter that creates a cohesive, vintage look on your social media page, or a "collection" of clothing within the same color scheme displayed together, developing a content strategy and curating products that complement each other creates a space very pleasing for your customers.

If you're a fashion brand, think about h0w flat lays on social media allow you to tag and cross-promote different products that your audience may be interested in - and go a step further by creating an engaging visual display.

Likewise, building 'collections' or 'style edits' on your website follows the same visually-pleasing process of providing easily-accessible, relevant content while building a path for your customers to navigate on their shopping journey.

3. Leverage personalized product recommendations

There's a reason why shopping malls and department stores are full of mannequins; They offer a quick guide to what is currently in store. Plus, they help to inspire shoppers with an entire outfit and cute accessories that match - talk about easy shopping!

In an online shopping space, however, there aren't digital mannequins walking around an e-commerce site's homepage (though there are signs there could be in the future). So, what can digitally-native brands offer instead? Personalized product recommendations.

Recommending products that "fit" together is the perfect way to create your own online digital mannequin. Even better? Pulling products that are relevant to your customers' browsing history.

Flo & Frankie offers a great example with their "Complete the look" section that spotlights accessories for customers based on whatever products they're currently viewing.

4. Monitor inventory levels

While inventory levels don't exactly sound like the most exciting part of online shopping, they do play quite an important role.

Imagine online shoppers' experience if they are super excited about a particular product - only to find out at the last minute that it's no longer in stock. An experience like that could deter them from shopping with your brand again.

Managing merchandise inventory properly and setting the right re-order points for your most popular products is a surefire way to avoid a negative e-commerce experience.

Try taking it one step further with inventory visibility - include a countdown when products are getting low in stock. Not only will your customers appreciate the heads up; they'll be more inclined to make a quicker decision!

5. Make it easy for customers to filter and search your product catalog

As an e-commerce brand, your search feature is your secret sauce.

Online customers rely on your search bar to get them what they want. Instead of having physical merchandising displays that a shopper can see as they walk around a store, your search features create a digital landscape for your customers as they make their way through your website.

Giving potential customers the ability to find what they're looking for in a few simple clicks is the key to a seamless, positive buying journey. Try the below to ensure a spectacular searching experience:

• Avoid "no results" by tagging your product search terms with synonyms. For example, "jumpers" and "sweaters" should yield the same results.
• Allow customers to create filters based on brand, style, size, colors, and more to even further narrow search results.
• Make sure your bestsellers or trending items appear at the top of your search lists. This way, your customers won't have to scroll endlessly to find your top pieces.

6. Utilize user-generated content to drive conversions

User-generated content (UGC) is one of the most valuable forms of content a brand can have. It provides social proof, builds trust, and expands your brand’s reach to audiences you may not even be in contact with yet.

One way to get UGC in front of your customers is to include the ability to upload images in the reviews section of your product page. This way, your potential buyers have a chance to see the item in action, while reading current customer verdicts. Additionally, you can include a section where your customers will be featured on your product page (as long as they tag you via social media).

Should e-commerce brands be investing in digital merchandising strategies?

YES!

A strong behind-the-scenes merchandising strategy is what differentiates leading brands from the rest and drives purchases. It's a great way to foster dynamic relationships.

Like most initiatives that bring value, developing a merchandising strategy for your site is not all fun and games - it requires hard work. While there are many merchandising elements that can be implemented by directly editing your site layout and scheme; there are plenty of others, like inventory visibility and understanding which products are most popular, that require investing in more advanced e-commerce technology.

The fact is, digital merchandising techniques are always evolving, meaning you will need to continuously check your brand to stay ahead of the game. Are you missing out on anything that could turn your store into a journey of dynamic, digital experiences?

All in all, the good news is there are a ton of merchandising strategies that digital stores can invest in - all with the same goal - to create the most enjoyable, engaging experience for customers.