This first appeared as an article in Internet Retailing magazine’s July 2008 issue. A pdf of the magazine article is attached.
The inaugural meeting of the European eCommerce Forum (ECF) was held in Amsterdam in April – the culmination of four years of conversations with leading retailers. Ian Jindal and Joris Beckers, co-founders of the Forum, reflect upon the genesis of the ECF, the pressing issues in ecommerce and the next steps for the Forum as preparations start for the next meeting in London this October.
If the first wave of the commercial web was characterised by customer acquisition, then the second was the development of dimensional or faceted navigation (in which retailers attempt to increase online sales by helping customers find the most appropriate products more easily). The current drive is towards cross-channel integration, in which store, web, paper and phone all work seamlessly together from the customer’s perspective. This latest phase simply shows, however, that we haven’t really finished the work started in the ‘browse’ phase – the work of “merchandising” our product to customers.
Online merchandising is often misunderstood, or seen as simply the online correlative of traditional retail merchandising – the organisation, planning and ranging of products online. This is not to denigrate in any way the complex work of merchandisers, but rather to point out that on the web ‘merchandising’ is the very heart and soul of “selling”.
We know that on the web, despite our advances in technology and skills, the two invariable limitations are time and space: the amount of time a customer will dedicate to our site (given the increasing number of calls upon their online attention) and the maximum pixel area of their screen, which limits the number of items we can show at any one time.
We’ve mentioned elsewhere in this issue the notion of the web as a store with ‘elastic walls’. Retailers can now offer hundreds of thousands of SKUs via the web, yet the presentation of these products is akin to letting customers wander directly through an untidy warehouse rather than a flagship store! Online the concepts of ‘visual merchandising’, adjacencies, ranging and category management have some analogies (user experience, site journeys, elementary product grouping, web analytics) but the practices are fragmented.
Thinking of our offline colleagues we could see that the disciplines of category management – product ranging, selection and presentation taken to the level of strategic art-form – and visual merchandising had much to teach us online. We also saw that in some ways we have an embarrassment of riches online: deep and extensive analytics, including insights to behaviour, contexts and of course the in-depth information on products, baskets and profitability. Closing the loop, we could also see information on returns, contacts in call centres and other operational data (either via the web platform or enterprise CRM systems).
The challenge and opportunity therefore were to take the best of offline strategy, online analytics and tools, and to combine these to develop the art and craft of selling online – to present the best combination of products to the customer so as to maximise the retailer’s profits. As Joris pointed out, “online we have a lot more customer interaction data to make Category Management potentially work better than offline where there is less data”.
This was the conversation I had with Joris in 2004 and we enthused about the insights and demands of some of the leaders in etail. Both of us came into contact with other passionate, enthusiastic retailers and during each conversation there was a desire to meet and share ideas with other professionals.
The impetus for finally organising the Forum came as a result of a change in the questions we were hearing. No longer was it enough for retailers to install very capable merchandising systems, nor to learn how to use them well. Rather, retailers were beginning to look to a time when all of their competitors would have equally capable systems and the needs therefore was to develop the insights, approaches and intense customer focus that would distinguish the retailer, irrespective of system.
The inaugural meeting was held in Amsterdam. We decided at an early stage that the Forum would be a private exchange for the most senior subject matter experts across Europe. Invites would be personal (and not just “someone from Big Company X or Y”) and we would focus upon companies with complex operations, operating at scale (€70million or more online) and focused upon innovation and excellence. Joris noted how pleased he was that “Over 50 senior online business leaders from across Europe responded to the invitation to work together for a day and attempt to advance the art of online selling in meaningful and practical way”. The Forum is a strictly no-sales, confidential space for peers and this spirit of joint endeavour characterised the day (so much so that Joris didn’t even mention his company when introducing himself!).
We had invited expert speakers from disparate, non-ecommerce disciplines to give us insight into approaches that might inform our work. We took as a theme how research could help us mitigate the challenge of limited ‘space’ online.
The first presentation was from Martin Heinsbroek of McKinsey, taking as his theme “From Granular Insights to Targeted Actions”. Martin took as his case study the transformation of Signet Bank into Capital One, and the lessons to be drawn about data-driven insights and the benefits of experimentation (as part of a rigorous and consistent test-analyse-implement business-wide culture). The lessons for retailers were clear, especially given our enviable access to web analytics, trading metrics and the ability to A:B test online.
We then stood back from the data and were treated to an inspiring presentation from Ian Worley, Director at Flow Interactive, on “The power of cross-channel research to uncover granular merchandising insights”. Ian took as a starting point the ethnographic research approach – observing customer behaviour while shopping (covered in Internet Retailing earlier this year). Taking case studies like the Early Learning Centre (and others that we’re unable to quote) Ian showed how significant insights from offline research may have very subtle impacts on the website, yet still be remarkably and demonstrably effective. The learning here was that profit uplift comes from a combination of an holistic view of the customer’s needs, behaviours and preferences; putting the web as part of a cross-channel engagement strategy; robust research and analytics and finally a ruthless focus on delivering the customer’s expectations and needs rather than web design and features in isolation.
In the afternoon we were treated to a tour de force from Ed van de Weerd, VP Merchandising at Albert Heijn Supermartkets. It’s difficult to convey in print the combination of popping eyes, dropping jaws and mental lightbulbs illuminating as Ed took us on an insider’s tour of Category Management within supermarkets. Feedback afterwards was unanimous that the strategic approach to range, stock, pricing and brand positioning was a revelation, and that as a group there was a real enthusiasm to adapt this discipline to etail.
All of the presentations elicited detailed questioning and in between each session we allowed plenty of time for discussion – or so we thought! At each break no-one would leave their tables since they were deep in conversation – in October we’ve taken note and will allow even more time for idea and issue sharing…
Feedback from delegates was very positive and the agreement is to come together twice a year with members conducting joint experiments throughout the year and feeding back to the group.
We’ve also been working on the next agenda which – although not yet finalised – will continue our quest to learn everything we can from our offline colleagues. We are looking at present at the area of Visual Merchandising. Joris has been considering the ‘convergence of product merchandising and advertising’ and, via the Forum, his hope is to “achieve a point someday where we know as much about selling online as we know today about selling in the real world”.
At Internet Retailing we’ll be bringing the learning from these sessions, along with the debates and issues, to the pages of the magazine and features on our portal. We’re also interested to hear your thoughts on the key issues, challenges and opportunities in online merchandising – do let us know, and help set the agenda for progress in online selling.
The ECF was jointly founded by Ian Jindal and Joris Beckers, and is supported by Internet Retailing and made possible by the generosity of Fredhopper.com. Invitation of the Forum is strictly by invite only to senior retailers with experience of complex businesses with over €70million in online sales, but we are always keen to find ways to engage peers and disseminate learning. Please address thoughts, along with suggestions for members that we may have missed in error, to firstname.lastname@example.org.
Some of the companies represented in the Forum are:
Otto, Vergelijk, Telegraaf Media Group, GAME Stores Group, Figleaves.com, Thomas Cook, Conrad, Neckermann, Interflora, E-consultancy.com, V&D, Maxeda, Nedis Group, Marks & Spencer, Clarks, Adidas, Ferio, Bijenkorf, KPN, Waitrose, Quelle, arvato systems GmbH, Mexx, Albert Heijn, Woolworths, Bol.com, Samsonite, Procter & Gamble, Toys R Us, Acuista, Manutan International, Lovefilm.com, Manutan International, House of Fraser, B&Q, Apple, Amazon, Staples, La Redoute, HMV, Sainsburys, Next, Redcats, H&M.