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07/31/2008

Roadmap to Searchandizing

Searchandizing is a software e-commerce application that combines buyer search with vendor merchandizing. The technology is now edging closer to electronically replicating the persuasive consumer/sales representative encounters that were the customer-service paradigm in traditional retailing.

It's a win-win for both sides. By transforming routine online searches into true Web site navigation, searchandizing makes it easier for browsers to find and buy products anywhere, anytime. At the same time, it offers retailers innovative ways to respond to their queries through automated and more effective marketing and promotion techniques.

What it Means
Searchandizing, or the convergence of navigation and merchandising functions, allows online shoppers to get to the products they want faster. Searchandizing also creates a deeper understanding of customer behavior. This is critical in helping retailers put together appropriate merchandise selections.

Searchandizing tools also reduce the time from the initial product request to the final purchase. It helps guide consumers through the retailer's inventory by offering relevant product suggestions to consumer queries. "After our Mercado Faceted Navigation system turned basic searches into true navigation," says Ratnakar Lavu, vice president, technology, macys.com, "our conversion rates went up."

The initial product suggestions are based on general attributes such as price, style, size and brand. Later they become more personal and specific. At the same time, searchandizing systems also can serve retailers' needs such as handling seasonal promotions. "On our Web site's  landing page for Mother's Day, we wanted to feature cameras in different colors," says Brad Schwarz, Spokane, WA-based e-commerce manager, OneCall. "Endeca's Information Access Platform (IAP)  version 5.1.2  enabled us to use  triggers for anything that might be of value to our customers."

"For a Mother's Day gift, color may be one of them in addition to other basic attributes or categories such as in stock and digital camera," says Schwarz.

Searchandizing helps achieve long-term objectives as well. "For us, it's not simply about increasing our conversion rate," says Schwarz. "We want to relay that we are knowledgeable, thoughtful and caring. So even if consumers don't buy anything this time, we know they will come back when they are ready to buy something else.

Searchandizing helps us improve the customer experience, extend the product dialogue with consumers and build our brand."

At OneCall, the Endeca solution increased Web site up-time and eliminated the need for daily maintenance that plagued earlier systems. It uses rules-based logic to automatically refresh product content and merchandising zones on 8,000 SKUs of camera and other electronics every 10 to 15 minutes.

And it is easy to use. IT staff takes only a few minutes to set up and test new business rules before it shows up on the Web site. "Once you set the rule," says Schwartz, "the system populates the site automatically and simply."

Such a business rules-based approach enables retailers to merchandize based on the latest market and product trends as well as customer data. " In the past, people made these decisions," says Lavu. "Now business logic embedded in the system determines where we display and how we promote products on the site. But we still maintain flexibility and agility by over riding the rules when needed."

Consequently, searchandizing tools automate and simplify traditional promotional strategies that highlight bestsellers, high-margin, overstock or seasonal items as well as offering inducements such as free shipping or price discounts to more tightly targeted segments.

"But searchandizing is not just about software," says Rob Garf, former vice president and general manager, retail strategy, AMR Research. "It's more a matter of corporate philosophy and strategy. It also puts more control in the hands of consumers at the front end of the transaction. That's not possible with in-store shopping."

However, getting a handle on the current penetration level or status of searchandizing is not easy. "It difficult to track since searchandizing is not a high-tech category. Currently, about 70% of retailers are installing their next-generation e-commerce platform. Many are looking very closely at searchandizing solutions."

What's at Stake
Searchandizng also can help retailers introduce effective multi-channel selling. "Our system enables us to provide the most relevant response to customer inquiries," says Lavu. "It gives us another way to analyze a 'no-response' query, when our Web site does not stock requested items. We hope searchandizing suggests other ways that customers can order them through our call center or by dropping into their local Macy's store."

Channel consolidation will become easier. By electronically linking various retail channels, searchandizing tools eliminate the hassles of requiring consumers to leave the Web site to phone the call-in center or visit a store. On the flip side, retailers will enjoy company-wide access to inventory, making it easier for all sales staff to promote available products as well as to up-sell or cross-sell. For example, OneCall plans to link customer preferences from its other channels, such as its call center, with the Web site.

At macys.com, the long-term goal for searchandizing is to extend the reach of its Web site. "We are taking steps to strengthen our Web  site by branding the experience and involving more online social communities," says Lavu.

For its part, OneCall has adopted a different strategy for expanding the scope of its searchandizing system. Says Schwartz, "We would like to include social networking or personal recommendations used by other online retailers such as amazon.com."