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2. Why online merchandising is 1,000 times more important than offline merchandising. (And 6 Ways To Make Sure You Do It Right) technologies Why online merchandising is 1,000 times more important than offline merchanidsing. (And 6 ways to make sure you do it right) Okay. The title might border on hyperbole, but well say it a million times if we have to: in todays economy, online merchandising is far more important than offline merchandising. A bold claim? You bet. But were passionate in the belief that todays shoppers involve online product content and information in their purchase decision much more than other sources, making online merchandising 1,000 times more important than offline merchandising. At the very least, it is 980 times more important. Lets start by defining merchandising both offline and online with an anecdote that explains the difference between it, marketing and sales. Imagine an average store in an average city that sells office equipment and supplies. Marketing is what gets people through the doors of the store. That could be advertising, direct mail promotions, or a guy wearing a sandwich board handing out flyers. Merchandising is making sure that the products look attractive on the shelf, that on-sale items are in prominent locations, and that printer paper and office supply staples are located in the back of the store, making shoppers walk past additional products that hopefully catch their eye. Sales is handled by store clerks, answering product questions, making sure stock is available, and basically removing any obstacles preventing a shopper from making a purchase. Marketing = getting people in the door Merchandising = putting things on the shelves Sales = removing obstacles that prevent customers from buying them2 Easy2 Technologies - 1220 Huron Rd East, 7th Floor, Cleveland, Ohio 44115 - P: 216.812.3200 - www.easy2.com March, 2012

3. Why online merchandising is 1,000 times more important than offline merchandising. (And 6 Ways To Make Sure You Do It Right) technologiesWhat about online? 1 Give shoppers information, information and more information The purchase decision is the same as it has always been:Online marketing = driving traffic to the site it starts with the identification of a problem, research toOnline merchandising = connecting shoppers to the locate a suitable solution to the problem, evaluation ofproduct for which they are looking, educating them, alternatives, and finally, a purchase. What has changed isanswering their questions, and eliminating any obstacles that most of this process, if not all of it, is now done online.that keep them from adding the item to their shopping Even in cases where the purchase takes place offline, morecart and completing the sale. than likely it has been influenced by an online information search.Online merchandising is connecting the right productsto the right shopper, with the right information, at the 80% of all product searchesright time. Thats a lot of rights, right? Yes, it is, but it begin online, whether theunderscores the importance of doing things, well, right! product is to be purchased online or offline.So, why is online merchandising so much more important (Forrester Research , 2010)than offline merchandising? The reason is simple: onlinemerchandising HAS to be better because it is also acting 46% of all daily searches are for productsas a salesperson. In a brick and mortar store, there are and services. (SRI, October 2010)people whose responsibility it is to help sell products. Salesclerks, category specialists, even the person who makes For purposes of this paper, when we mention search,sure the products are in stock and on the shelf. They all we arent referring to search engines, SEO or SEM; werehelp remove obstacles that could keep a shopper from describing shoppers using the internet to researchpurchasing a product. Online, its just the shopper and the products they are interested in purchasing. It should notproducts - there is no one helping sell products so online be a surprise to learn that search is happening well beyondmerchandising has to play the role of sales, too. traditional search engines. In fact, searching for product information on retail sites is a preferred first stop, even toThe average in-store conversion rate for retailers ranges search engines.2between 20% and 40%1, but online conversion ratesaverage 2.6% according to Forrester Research. Ouch! Shoppers are more than twice as likelyRetailers have the basics of eCommerce down pat, but to perform product research on retaileronline merchandising is still an area of concern, yet a websites as they are on manufacturer sites.tremendous opportunity for growth. (ComScore)Its easy to improve your online merchandising with more Retailers: Offer as much informational product content oninnovative tools and technologies. Since youre reading this your site as possible because shoppers are starting theirpaper, youre already on your way! Good for you! search with you. Retailers should also note that there are really only two things separating one online retailer fromHere are six tactics to improve your online merchandising, another: product content and pricing / shipping. Providingand in turn, increase conversions and sales: shoppers with engaging and educational product content will help build loyalty for you and keep shoppers on your site longer. March, 2012 Easy2 Technologies - 1220 Huron Rd East, 7th Floor, Cleveland, Ohio 44115 - P: 216.812.3200 - www.easy2.com 3

4. Why online merchandising is 1,000 times more important than offline merchandising. (And 6 Ways To Make Sure You Do It Right) technologies 53% purchased from the retailer on whose Presented with a positive online shopping website they had spent the most time. experience, shoppers more likely to reward (Nielsen , 2008) retailers with brand loyalty, with 67 percent indicating their willingness to share a positive Visitors who engage in interactive product experience. Conversely, they can be verydemos spend an average of 4 minutes longer on unforgiving, with 72 percent compelled to sharethe site than those who dont, a 30% increase in a negative online experience with friends and site stickiness. (Internet Retailer 2004) , family, and 70 percent turning to a competitor as a result. (DemandWare, 2011)Manufacturers: Make it a top priority to create compellingmarketing collateral, image assets and product content, It is vital to give online shoppers the best experiencefor your site and for your retail partners sites. It is crucial possible, because if you do, they will sing your praises;that you make it easy for a shopper to purchase your if you dont, they wont think twice about sharing theirproduct and the easiest way to do it is to provide as much negative experience!information as possible in order to remove any obstaclesstanding in the way of a purchase. Product selectors are similar to buying guides, but are designed for shoppers who know what category of 2 Helpbuying guides find the right and your shoppers products with product selectors (because category product they need, but are not sure of which specific product. Selectors present shoppers with a series of questions that narrow down product choices based on navigation isnt enough!) their answers. They are perfect for large product lines, complicated products, or when multiple brands offer theDoes your site help shoppers find the right product? If you same products.answered, sure our category navigation does that, thinkagain. Category navigation is adequate when shoppers Choosing a buying guide or product selector dependsknow exactly what they are looking for, but when they on depth or breadth. A company that makes or sells adont, guided selling tools such as product selectors and complete line of power tools (drills, reciprocating saws,buying guides can help them help themselves, and build power shears, disc sanders, routers, etc.) should helpyour brand loyalty in the process. customers find the category they are looking for first, then focus on the specific product they need. Buying guides doLets use lawn mowers as an example. Category navigation this perfectly. Product selectors are the right interactiveis adequate is a shopper knows they are looking for a John tool to do that.Deere self-propelled mulching walk behind mower withpull start. But if the shopper doesnt know what type ofmower they need, or want a buying guide can educatethem and help them select the right mower. Questionslike, How large is your yard? Is the terrain flat or hilly? 40%Do you want to mulch or bag grass clippings? and Gasor electric engine? helps the shopper narrow their choices Retailers have seen up to a 40% increaseand decide which lawn mower is right for their needs. in conversions using interactive tools likeIn the process of helping a shopper learn, you are also product selectors and buying guides.earning their trust, and their loyalty. (Easy2 Technologies, 2011)4 Easy2 Technologies - 1220 Huron Rd East, 7th Floor, Cleveland, Ohio 44115 - P: 216.812.3200 - www.easy2.com March, 2012

5. Why online merchandising is 1,000 times more important than offline merchandising. (And 6 Ways To Make Sure You Do It Right) technologiesSince product selectors and buying guides help shoppers Allowing a customer to touch a product gives them achoose the right product, they reduce costs after the sale sense of ownership and tends to increase the likelihoodby decreasing returns and refunds. An added bonus to of purchase. The same is true of online product content.improving your online merchandising tools. Letting online shoppers interact with a product will increase the odds of purchase!3 Let online shoppers interact with your products Purchase Conversion is 12% higher for customers who viewed a product demo One of the inhibitors to shopping online compared to customers who have not. is you cant touch the products, so the (Internet Retailer) more detail consumers can see, the more likely they are to make purchases online. Online merchandising needs to be improved in order to (Internet Retailer, 2005) satisfy the needs of shoppers. For example, 91% of online shoppers believe 360 degree spin technology is veryRisk is inherent to online transactions because shoppers do useful3, but only 39% of marketers rate it as very effective.4not have the ability to physically handle merchandise and Clearly there is a gap between what online shoppers want,examine it before making a purchase. Modern shoppers and what marketers believe they want. Until that gap isinsist on a rich online experience to simulate actively closed, and retailers and manufacturers give shoppersscanning store shelves to identify potential solutions what they want, online sales will underperform. Make surefor their needs and to interact with products to make you close the gap with interactive merchandising tools. 4 Let in-store shoppers interact withtheir final purchase decision. Interactive merchandisingtechnology allows online shoppers to interact withproducts in order to eliminate any unanswered questions your products, onlineand reduce their hesitation to purchase. Youve seen QR codes; theyre theHint: shoppers want you to be more interactive! postage stamp-sized barcodes that look like a sadistic crossword Interactive content such as image puzzle-maker created them. zoom, 360 degree rotations and Manufacturers are increasingly detailed specifications can simulate putting these codes on their the touchy feely in-store experience, product packaging or in while video demos can show advertising. When scanned with a mobile device, the codes products being used under realistic link to a web page that displays more information about circumstances and simulate an in- the product.store clerks live demonstrations. This interactive contenthelps empower shoppers and removes any obstaclesstanding in the way of a purchase. The most popular mobile applicationsOnline product demos boost the add-to-cart used in-store are scanner apps, with 44% ratio by about 6% among shoppers who of smartphone users using them while in engage in demos over shoppers who dont. a store. (iModerate Research Technologies, (PEW Research , 2010) March 2011) March, 2012 Easy2 Technologies - 1220 Huron Rd East, 7th Floor, Cleveland, Ohio 44115 - P: 216.812.3200 - www.easy2.com 5

6. Why online merchandising is 1,000 times more important than offline merchandising. (And 6 Ways To Make Sure You Do It Right) technologiesRetailers are using QR codes in-store too, by linkingto category buying guides, product selectors, mobile 5 Mirror your shoppers behavior be mobilecoupons, how-to videos, consumer reviews and demos. The statistics are staggering: close to 50% of all shoppersThis mobile content allows manufacturers and retailers to in the US are using their mobile device to research andalways be in the aisle, helping shoppers choose the right browse products; just under 60% use their device whileproduct for their needs. Allowing in-store patrons access to shopping; and of those mobile shoppers, 70% are visitinginteractive online content can help create or preserve the a stores site, while in the store! This is a strong indicationsale, and generate brand loyalty at the same time. that consumers want to interact with products, especially while they shop.More than two-thirds of mobile shoppers(69%) used their phones to visit the stores Using mobile technology to engage with shoppers hasown website, but nearly half (46%) also three major benefits:used their phones to access a competitorswebsite. (Foresee, January 2011) 1) Increase sales. There is a distinct link between relevant information provided in-store and purchase decisions. More information means more sales. 2) Increase loyalty and satisfaction. Shoppers reward brands and retailers that meet their information needs and help them purchase the correct product with loyalty and positive word-of-mouth. 3) Mobile connects physical products and stores to the online world.A shopper in the aisle that is searching for product 25% of US mobile web users only access theinformation is begging you to help them buy the product. web from their mobile phones and mobileDont let them down with the same product image that is predicted to be bigger than internet in 5is on the package! Give them engaging and educational years. (Morgan Stanley, 2010)content to ensure that they complete the purchase,because the only things separating you from yourcompetitor are information and pricing! Much like the growth of the Internet as a shopping channel in the 1990s, mobile is poised to be adopted evenHeres a frightening statistic: 73% of shoppers with more rapidly. Shoppers are accustomed to researchingsmartphones prefer to use their mobile device in-store and buying products online, and doing so with theirrather than ask a sales associate for help!5 It is incredibly mobile devices, whether at home or in-store, is the logicalimportant to provide them with engaging and educational next step. Offering mobile content and tools that helpsinteractive content that will remove any obstacles standing shoppers find what they need and make an educatedin the way of their purchase. Help them feel confident decision makes perfect sense.enough to buy!6 Easy2 Technologies - 1220 Huron Rd East, 7th Floor, Cleveland, Ohio 44115 - P: 216.812.3200 - www.easy2.com March, 2012

7. Why online merchandising is 1,000 times more important than offline merchandising. (And 6 Ways To Make Sure You Do It Right) technologies6 Inspire youryour products them how to use shoppers show Fifty-two percent of shoppers who have had a bad online experience are less likely to buy from that brand in an offline channel .Shoppers want to see your products in-use. A shirt, jacket (DemandWare, 2011)and tie combination look much better on a mannequinthan hanging on separate hangers, right? Sure they do! On the other hand, if the product information you provideWhats more, a fully-assembled ensemble encourages sales a shopper helps them choose the right product, thenbecause shoppers can envision what the pieces look like they will probably buy from you again, and in your otherwhen put together. channels.Showing in-use product images helps shoppers envision 65% of shoppers report that a digital brandhow they would use the product in their life. A set of dishes experience has changed their opinion (eithernicely arranged on a festive holiday table will have much positively or negatively) about a brand ormore of an impact than if the dishes were simply shot on a the products a brand offers.white background. A snazzy leather steering wheel cover (Razorfish , 2009)installed on a sleek sports car will create more interest thanif it were just photographed out of packaging. A golden The online experience is no longer just an extension ofretriever romping in a field and playing with a colorful a brand; it is a fundamental part of the holistic branddog toy will do a better job selling it than a static product experience, so its critical that manufacturers and retailersimage. Sadly, many people lack an imagination so help provide top-notch online content to shoppers becausethem visualize how they could use the product! it affects the entire brand. The fact that todays shoppers rely so heavily on online content and information inManufacturers: Make creation of image assets a priority, their product search means that online merchandisingand make a significant effort to work with your retailers to is (at least) 1,000 times more important than offlineget as much product content on their site as possible. By merchandising.showing shoppers how they can use your product, you willhelp them feel confident in their purchase. Lets continue the conversation!Retailers: Take a lesson from successful catalogs; offerin-use images as well as outlined static product images.Insist that your vendors provide you with as much contentas possible, including videos, specifications, demos, testresults, warrantee information anything that will removeobstacles keeping shoppers from buying. Email us at: info@easy2.com Call us at: 877.299.3366 Visit us at: www.easy2.comConclusionShopping starts online, and todays shoppers are multi- Think the information in this paper is helpful? Share it!channel shoppers - if one channel provides a disappointingexperience, theyll abandon the others. March, 2012 Easy2 Technologies - 1220 Huron Rd East, 7th Floor, Cleveland, Ohio 44115 - P: 216.812.3200 - www.easy2.com 7

8. Why online merchandising is 1,000 times more important than offline merchandising. (And 6 Ways To Make Sure You Do It Right) technologiesAbout Easy2:Easy2 Technologies is a leading interactive merchandising To learn more about how Easy2 helps manufacturers andcontent and technology provider. We connect retailers increase conversions and sales, contact:manufacturers, retailers and shoppers with engagingand educational content that helps remove obstacles George Koenigbetween seller and buyer that stand in the way of making VP, Salesa confident purchase. We make it easy for shoppers to george.koenig@easy2.comchoose our clients products, for retailers to implementinteractive merchandising content and for manufacturers Jerry Spelicto create engaging content and publish it on their retail Director of Marketingpartners websites. jerry.spelic@easy2.comRESOURCES: In addition to those already cited, the following sources were also used in creation of this report:1 Experian, 20092 Forrester Research, 2010 SRI, October 20103 Adobe, January 2010 PEW Research Center, May 20104 Adobe, April 2011 DemandWare, 20115 Accenture, 2010 Easy2 Technologies, 20116 On Device Research, 2010 iModerate Research Technologies, March 20117 Nielsen, 2009 Foresee, January 20118 Bazaarvoice and Keller Fay, 2006 Razorfish, 20099 Rubbermaid Case Study, April 2010 eMarketer, February 201010 Sterling Commerce, 2010 iPerceptions, January 2008 Shop.org, comScore and Social Shopping Labs, 2011 Morgan Stanley, 20108 Easy2 Technologies - 1220 Huron Rd East, 7th Floor, Cleveland, Ohio 44115 - P: 216.812.3200 - www.easy2.com March, 2012

9. For more information: Easy2 Technologies 1220 Huron Rd East, 7th Floor Cleveland, Ohio 44115 1.877.299.3366 w: easy2.com technologiesPMS 3025 PMS 159