eView: Searchandising -- An Unmet Promise

March 13, 2008 By Joe Lichtman

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For years, e-commerce search vendors have been touting the fusion of search and merchandising, or searchandising. Conversion rates and average order values will skyrocket, the vendors say, when merchandisers utilize the "conversation" of search to tailor promotions for each shopper. But for all the demos and ROI justification, most online retailers simply are not searchandising.

It's not because of a lack of tools. Leading search vendors provide tools that allow online merchandisers to create search-based promotions on the live storefront. These tools have their value in that they enable retailers to capitalize on the most commonly searched keywords (if I search for a "TV" on a consumer electronics site, for example, a retailer can dynamically display a "10% off" sale on TVs). But the sheer breadth and unpredictability of shoppers' searching habits (which change every hour, day, week, month and year) makes it impossible to manually searchandise the thousands of search queries that are entered every day on major sites.

While searchandising has value, it clearly is not the answer to personalized merchandising. Instead of trying to predict and react to searches with custom merchandising messages, a truly personalized storefront records each individual shopper's searches and combines them with other "facts" about him: what products he viewed after a search, what purchases he made, what reviews he read along the way, and any other information he explicitly or implicitly provided about himself (e.g., where he lives, how old he is, etc).

With a partial or complete picture of every shopper, the storefront itself can become personalized. The homepage will display recommendations based on related items and previous searches. Category and landing pages will show personalized product selections and promotions. Most importantly, search relevancy and navigation will become personalized (meaning you and I will get different search results because we're different people with different interests).

If this sounds like a picture of the future, think again. One needs to look no further than the 800-pound online retail gorilla to see that personalized merchandising is becoming a reality today.

Amazon: A micro-store for every shopper
Just as offline merchandisers are thinking in a customer-centric mindset, Amazon has created a complete customer-centric experience by building, in a sense, a micro-store for each and every customer. Everything about the Amazon experience is dynamic, not static, and becomes more personalized the more you shop.

I recently visited Amazon after getting a new computer. With no stored cookies or registered profile, nothing on the store appeared personalized for me at first. As a test, I ran a few searches: one on kids' toys (I have two under 10), one on Michael Crichton (my favorite sci-fi author) and one on iPhone (you want one too). Then, I returned to the site a few hours later to find the following promotions on the homepage (in order):

* A "Recommended for You" box spotlighting King Kong and Terminator 2: Judgement Day DVDs. (Merchandising message: If I like Crichton, I must like sci-fi movies.)

* An Xbox 360 bundle promotion. (Merchandising message: If I'm searching for an iPhone, I must be a gadget hound.)

* A promotion for Braun shavers. (Merchandising message: I'm male.)

* A "Find Fun for Under $5.00" promotion for kids' toys. (Merchandising message: I'd better buy my kids something if I'm buying myself something.)

* A "Customers With Similar Searches Purchased" promotion. (Merchandising message: There are others like you here, and they buy these things.)

Mind you, this is the Amazon homepage. It's the most coveted merchandising real estate on the site, and it's completely automated, dynamic and personalized just for me.

Can you be like Amazon?
According to research from Gartner, two fifths of U.S. consumers now expect retailers to offer them personalized promotions. But according to Forrester, only 16 percent of retailers are using personalized recommendations tools. Now is the time to get personal before your competition does.

Online storefronts with advanced site search and faceted navigation allow shoppers to instantly filter hundreds of thousands of SKUs to just the five or 10 products they are interested in. Every dynamically generated search results page is an opportunity for an e-tailer to present contextualized merchandising messages that match a shopper's expressed intent.

Like Amazon, you should be focused on building a personalized online shopping experience that is based on personalized search, navigation and recommendations. What's important, though, is that you look at personalized merchandising as a cohesive strategy. The personalization pieces -- your search engine, navigation engine and recommendations engine -- must work together as one. Only then can you ensure true personalization and have a single point of management.

While a dynamic, personalized storefront will automate some aspects of the online merchandising process, the role of the online merchandiser will become even more critical. There always will be a need to overlay the right set of business rules to align personalization with the key needs of the retailer. The benefit of the personalized storefront is that it allows you to merchandise for future conditions instead of reacting to past trends and data.

Joe Lichtman is vice president of product management at FAST Search & Transfer, a Needham, Mass.-based provider of search technologies. Reach him at joe.lichtman@fastsearch.com Note: Amazon is not a FAST client. 

*This article is excerpted from an article that originally appeared on E-Commerce News on Aug. 20, 2007.

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