Product assortment isn't a new concept in the digital age. It is a vital strategy that brick-and-mortar and ecommerce owners use to increase their ROIs and other KPIs.
In traditional retailing, as well as e-commerce businesses, product assortment strategy is valuable. The effectiveness of assortment planning is dependent on how customers interact with the product and the brand.
Creating a product line that sells is both an art and science
A product mix that is effective must have both intuition and data-driven thinking.
Your business will have the competitive edge it needs to increase revenue and website traffic by studying consumer preferences and buying habits, as well as the inventory data and the best merchandising tools.
What's product assortment?
Product assortment is the product combination a business offers to customers in order to maximize sales. FMCG goods, for example, tend to sell better and have a lower profit margin. Jewelry, on the other hand has a higher margin but is not sold as quickly.
Product assortment is also a key component of determining which inventory a business depends on. A profitable product assortment strategy is essential. Product assortment has two main components: depth and breadth/width.
The store's product depth is the number of different products it carries. This could include colors, sizes or other features. The store's product selection will be deeper if there are more variants.
A 'Product breadth' refers to the number of products that a store sells. Target, for example, offers its customers a wide range of products, including apparel, groceries and electronics.
Why retailers need to create a product selection strategy
A product assortment strategy is crucial to a company's success. This is why it is important to plan ahead for the purchasing of products. Strong product assortment strategies maximize revenue and profit, and reduce risk. It can also help to drive inventory decisions.
A well-planned assortment strategy is essential to increase sales and expand customer base. This is important because it will determine the products that customers are exposed to and influence their purchase decisions.
A business owner should remember that not all products are equal. It will be more difficult for customers to decide whether they want to purchase a product line that offers many options. It is also a double-edged weapon as too many options can cause customer dissatisfaction and negatively impact sales revenue.
A retailer must also understand the concept of product selection and conduct extensive market research to determine the preferences, needs, and environmental factors of customers. An online clothing store might have a selection of winter clothes on its landing page for cold weather, and light cotton wear during summer.
Online retailers need to monitor buyer and visitor experiences online in order to keep up with the rapidly growing e-commerce market. Businesses can improve their results by studying the ever-changing consumer behaviour carefully. Current brands are choosing to be more competitive in online markets by focusing on segmentation and product selection.
How to Create an Effective Product Assortment Strategy For Your E-Commerce Store
One product assortment strategy is not right for every business. There are important points to consider in order to make profit from the assortment strategy that a business chooses. These points can assist retailers in making informed decisions before they decide on a product mix.
- Identify the market and research the sector
It will be easier for retailers to choose the market they prefer to work in. A business owner will already know what your brand is and what value it offers customers. An assortment strategy will be easier to create. The target audience will still be confused if there is any ambiguity.
A small shop that caters to a niche market will likely have a wide product selection in a specific category. A store that caters for diverse age groups or people of different genders will also have a comprehensive product assortment strategy.
However, each store does not have to use the same product assortment strategy. It can vary depending upon the market and the preferences for their target audience.
- Understand the dynamic nature and preferences of consumers
Accept the fact that what a consumer bought last week may not be what he wants two days later. Consumers will look elsewhere for better choices and more variety if you fail to meet their expectations. One of the biggest pitfalls for businesses is not keeping up with changing demands from consumers.
Retailers have new tools that allow them to not only increase their inventory but also monitor the public's online and in-store behavior. These tools will provide insight into the buying habits of customers and help to determine the business's assortment strategy.
Social media is a vital tool in today's age to help people determine their consumption habits.
- Observe market trends at both the national and local levels
Even if a retailer needs to develop temporary assortment strategies, he should. Market insecurity can make it difficult to predict the future, as was the case during the pandemic. Customers' buying habits changed significantly as a result.
Fashion was one of the industries facing an existential crisis. Fashion sales plummeted after remote work became the norm and lockdown was enforced. The sleepwear and loungewear segments grew in popularity as formal wear like blazers and pants were replaced by casual and informal clothing. Retailers began to sell fashionable masks to match the apparel, in an attempt to capitalize on the increasing dependence on face masks.
Retailers didn't have to be able to only offer what they were good at; they could adapt to meet the needs of their customers and provide products that they needed.
- Analyze Sales
Analyzing sales and inventory data can help you decide how many units of a product to order. This inventory can also be used to help formulate an assortment strategy.
A retailer might consider adding more products from a specific brand to his inventory if a product is sold out. This will allow him to have a wider range of products. The retailer might also notice that customers buy different sizes or colors of the same product. This should be used as an indicator to replenish the stock. It is choosing to have a wide assortment strategy.
- Strong visual merchandising can increase sales
An effective visual merchandising strategy is crucial for assortment planning in e-commerce.
By aligning your marketing, sales, operations and design efforts, you can gain an edge over your competition. Visual merchandising is a form of product display that attracts customers and encourages them to purchase. Visual merchandising is used in both traditional retailing and online retailing. Visual merchandising is a tool that helps customers navigate the buyer's journey in an e-commerce environment.
This marketing strategy helps buyers to be exposed to relevant product categories before they move on to another site.
- Fix Product Issues
You must fill the gaps to avoid being outdone by your competitors. To fix the issue in pricing or product categories, compare the breadth and depth your product selection.
- Historical data to forecast future assortment strategies
Online retailers can use historical data to help them plan their assortment. The past data can help online retailers understand which product categories have attracted the most revenue and which products were sold out too quickly. It can also be used to identify weaker assortment planning strategies.
You can use data to establish benchmarks for the type of assortment plan that your company can benefit from.
- Track Competitor Pricing
A sound pricing strategy is an essential part of assortment planning. You can track the pricing of your competitors to achieve this. If the pricing isn't favorable, customers will not be satisfied, even if the assortment planning is good. A poor pricing strategy could also result in a stock of unsold inventory that is put up for sale at low prices.
Peace of mind competitor price data collection service pricing method, known as competitive pricing intelligence, will also be used. This is an approach that allows an ecommerce store to set prices for its products based on market conditions. It can also be based on multiple parameters provided by the same store. It is difficult to see the price game in the market, so it is important to be proactive when setting prices.
- Cross-selling is possible by considering complementary products
Cross-selling is a great way to increase your profits when making assortment decisions for ecommerce. Cross-selling will help you see how different products can be combined.
Cross-selling allows customers to buy products with higher profit margins as well as other products that they may need. Cross-selling is a profit-increasing tool that is effective in e-commerce.
How web scraping can help create a profitable product assortment strategy
E-commerce and retail businesses use creative advertising methods to promote their products. One example is video marketing (e.g. YouTube ads). It is difficult to measure the customers' reactions to ads. However, web scraping allows retailers to extract their customers' comments and help them understand their sentiments, moods and reactions. Web scraping can help retailers determine if there's a market for the product. Web scraping will prevent product overstocking, which can lead to wastage and higher profits.
Web scraping is a great way for business owners to understand their competition and find out what's helping them rise or stay on top of the market. This will allow you to see which products are driving your profits and which ones are driving customers away. It will be easier to avoid the same mistakes made by the competitors. A retailer owner should have a variety of products that are in demand enough to support different market competitors using the data from web scraping.
Web scraping gives you real-time insight and allows you to remove products that aren't bringing in any profit. It also helps to change your product assortment strategy. You can, for example, swap inventory with products that generate higher revenues. The data also allows the retailer to determine if there is a need for new products. This is where the key point is made: Product assortment is a continuous process.
Are you looking for a web scraping service that can manage your product assortment? Ficstar can help you learn more.