BrainBlog for Nacelle by Jason English
Before e-commerce, merchandising used to be the ultimate game-changer in retail.
Advertising and arranging an assortment of goods in a store, from the display window to the organization of product categories, to the planogrammed end caps and shelf spaces arranged from top-shelf to discount pricing — that’s what used to set one retailer’s brand and top-line revenue apart from the next.
Today’s digital merchandising is in an entirely different league. It’s like the difference between playing 2-D checkers and 4-D chess.
The customer customization conundrum
Today’s consumers and business-to-business customers expect a digital experience that instantly offers products and services tailored to their needs, with an array of options and accessories delivered as quickly and cheaply as possible.
Confoundingly, this level of customization is hard to achieve because the sellers and suppliers needed to fulfill each transaction hardly resemble yesterday’s retail value chain.
Virtually any product has a deeper digital footprint than its basic specifications and price. E-retailers can partner, resell, promote or make offers based on the metadata surrounding each product and its suppliers, as well as the metadata surrounding its potential buyer and their perceived preferences.
However, as an industry, we haven’t gotten any smarter than our forebears about merchandising just because we’ve ‘gone digital’ or started talking about metadata. Retail chains have always maintained their audience metrics, sales histories and seasonal trends to help plan the assortment of SKUs and arrangement of each year’s offerings. That hasn’t changed.
Instead, the rate of change in customer preferences and demand is now happening much faster than any conventional merchandising plan can support.
Why is it so hard for today’s digital merchandiser to overcome the physical world’s limitations to reach customers with relevant options wherever they are?
Just-in-time manufacturing and marketing
The first wave of eCommerce in the late 1990s brought the supply chain concept of just-in-time manufacturing to the digital world. Companies like Dell thrived based on their ability to configure products to order with the help of a collaborative supplier network rather than maintaining huge inventory stocks or excess reserved capacity.
Fulfilling customer demand with build-to-order computers was a huge leap forward in efficiency and agility. Dell could market and feature products on their website that customers were likelier to buy, with order-to-promise dates that their manufacturers and logistics networks could deliver on.
But while this use case was certainly customer-centric, it was only valid for a vertically integrated high-tech value chain, where the enterprise buyer could dictate the specifications and data exchange standards at the center of the hub.
There are still modern merchandising lessons an enterprise could take away from this pre-Y2K just-in-time revolution, even if it’s becoming clear that only the world’s largest companies would be able to achieve leverage over their entire value chains, much less control the data within.
Read the entire BrainBlog here.
