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Latest Issue: Nov/Dec 2018

Online merchandising and the need for Plan B

One of the questions clients often ask me is “How do we add new merchandise, particularly in a new product category?” To me, the answer is a Perpetual Plan B and is one method where you can use web-generated merchandise knowledge to grow the catalogue.

There are many general principles I’ve learned while being a catalogue “consultant”, one of which is that most catalogue companies keep doing what works until it no longer works – the problem is that most don’t have a Plan B to replace what is no longer working.

You may have read how a fire two weeks ago at a factory that supplies parts to the Ford Motor Company forced Ford to shutdown production of the F-150 pickup, North America’s most popular selling vehicle, and lay off 3,600 workers. The plant that caught fire was a non-Ford plant, but obviously one on which Ford’s manufacturing cycle was extremely dependent.

For such an important part of its business, don’t you think Ford would have had a Plan B” in case something like this happened? A Plan B that did not include laying off so many workers? It’s like Budweiser running out of beer cans.

The smart cataloguers recognize that merchandise is the heart of their success, and that they must keep a constant flow of new products coming in. They recognize that even their most popular products get tired, and need replacing. They have an intense program of new product introductions, which is what I call the Perpetual Plan B.

It is this flexibility afforded by merchandising online (web and mobile) that makes this method of merchandising so effective. Sadly, I believe it is often under-utilized by cataloguers and ecommerce companies.

Let’s go back to our previous question of “how do we add new merchandise, particularly in a new product category”? This is a tough question for me to answer because clients expect me to give them a specific formula, using their existing data to find a hidden gem. Plus, they want an answer (such as sell more red pillows) that is immediately successful. I wish it were that easy.

Let’s be honest – most of you don’t put any resources into new product or merchandise R&D. You know you should, but you believe that your success rate with new products is better when you just wing it and select products based on gut instinct, rather than actually doing research into what your customer needs/wants.

The usual cycle is that one of your merchants spots something they think is fabulous at a show or on a trip overseas. They bring it back, you look it over and decide, “Yes, let’s run with this.” Jumping on this new product or product category is Plan A. But you believe in the desirability and sales potential of this product (or new product category) so much, you fail to think about Plan B at the same time.

Here’s an example. I read the other day that in their first year of business, Beard Bro did $1 million in sales on their website and Amazon selling the product below, a “tool” to help you shave around your beard.

But by 2017, sales fell to $127,000. The reason? The product was simply a piece of plastic, which was easy for competitors to copy and sell on Amazon. Beard Bro has since scrambled to put together Plan B and has developed a line of beard shampoos and colognes, but I’m sure they never expected the loss of sales they experienced on their initial product.

That’s one of those traps of selling on Amazon that the Amazon consultants never tell you about. But that’s another story….

So, what does this have to do with merchandising online? Everything.

In the “old” catalogue days, new product introductions revolved around a new drop of the catalogue. Merchants had only so much space to play with for the introduction of new products. They had to protect sales from existing products that were known winners, but they also had to take some chances to introduce new products. So, they had to be selective and pick the ones which they thought would do well.

That was before the incessant, omnipresent competition which exists on the web today. Not only do you still have competition from other catalogues, but you’ve got hundreds of competitive websites, and of course Amazon. Something must change.

In my opinion, the old way of introducing a limited selection of new products, based on the merchants’ understanding of the products are over. Today it is “partly” a numbers game, especially in hard goods. (We are going to come back to why “partly” is in quotes in a minute). Whereas one or two versions of a new product in the past may have sufficed, today you need to be thinking about Plan B right from the start and introduce five to ten versions of a new product – but online first, and only online. Let the customer tell you which ones are good or bad – and drop the ones which aren’t selling. It is a perpetual Plan B.

Realize that you must look at this in a completely different manner than you ever have before. You can’t commit to a container shipment of any one of those five to ten products up front – not on the initial attempt at selling. Recognize that you don’t test all of them at once. You test three – and determine the winner. Then test two more against that “winner” and see if it is still the strongest version of the product. Keep testing one product against another until you determine the top one or two out of the original set.

Those winners are the ones that get included in the catalogue. But that doesn’t mean that you eliminate the others from your online presence if they generate an acceptable level of sales. Just because a product is not good enough to go in the catalogue does not mean it should not stay on the web/mobile site.

Yes, I know. Your creative department is going to complain that you’ve asked them to shoot photos for ten products (they all look alike!) and write ten blocks of copy (how do I differentiate these?) But that is the price of playing in the fast lane of merchandise today. Tell creative that you don’t need Ansel Adams to do the photo shoot, or Oscar Wilde to write the copy block. Get it done and get it done fast. Because tomorrow there will be another group of new products in another category.

Keep it moving = Plan B.

Restraint is required, as you don’t want your product assortment to look desperate, unfocused, or confused. But take a stand. One of the biggest mistakes I see cataloguers and ecommerce companies make is to introduce too few products in a new product category. You make a few tentative steps, but don’t take on enough products in the new category to say, “Yes, I’m a leader in sales of this product.”

That’s the beauty of merchandising online – you can have depth and breadth in a new product category that may not have been affordable in a catalogue, because consumers want to buy from someone that they think knows and owns the market.

Here’s an example: Kotula’s catalogue carries a line of Harley-Davidson products

I’m no Harley fan, but this spread (and a 3rd page of Harley products) caught my attention. I wanted to see if they had additional Harley products online, beyond the 16 shown in the catalogue. Sure enough, they had 109 Harley related products on their website.

This is how you can use web/mobile generated merchandise knowledge to grow the catalogue. Kotula’s can use their online sales as an indicator to select which products should go in the catalogue. From the 109 total Harley products, those which not only sold well online, but which lend themselves well to the catalogueenvironment get selected for the catalogue. They can use online performance to keep tabs of what additional new products are outselling existing ones, and with the help of a “web to catalogue factor” determine which additional products are worth moving to the catalogue for future mailings.

This is the opportunity that so many of you are missing – using your web/mobile site as an incubator of products for the catalogue instead of the other way around. But, it also makes your web/mobile presence the pre-eminent place for you to be selling, not the catalogue.

It’s 2018 – time to think like a web/mobile merchant and not as a catalogue merchant. You’re a web/mobile merchant if you have 109 products in one product category online, and only 16 in the catalogue. You are a web/mobile merchant if you are using online generated sales data to influence which products go in the catalogue. You are a web/mobile merchant if you think of merchandising a new assortment online first before ever giving any thought to putting that category in the catalogue.

But hold on for one last thought. I said earlier that merchandising online was “partly” a numbers game. That is true. But loading up your website with a bunch of mediocre products just to see what sticks to the wall is not the way to being a successful merchant. There still must be innovation, exclusivity, and something unique behind each new product introduction. More important, the merchant must be the champion of each new product or product category. They must have the passion and grit to ensure that each new product performs as best as it can. The merchant must risk their reputation to introduce and support each new product.

The problem is not a lack of new products – the problem is a lack of true passion to sell them!

by Bill La Pierre, Datamann USA