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With headwinds like inflation and rising customer acquisition costs, attracting new customers is getting more challenging for brands and retailers. In this environment, growing relationships with existing customers becomes more important.
It’s a time when a great customer experience shines through. That makes ecommerce merchandising a key function, as teams seek to connect shoppers with the right products, and build loyalty so that they return.
If it’s successful, a great experience may appear seamless. But there’s a lot that happens behind the scenes to make it happen. In the center of this are merchandising teams that serve as orchestrators of the types of seemingly small changes that can have a big impact on revenue.
“They are unsung heroes,” said Lauren Lang, senior content marketing manager at Constructor.io, a search and product discovery solution for large retailers. “There’s so much work, planning, creativity and optimization that goes into creating a compelling customer experience online.”
To dig deeper into the role that merchandising teams play, Constructor.io conducted a survey of 100 people doing this work at enterprise companies with more than $100 million in annual revenue.
The findings show that these teams have lots on their plate. The survey showed that 99% of the employees have responsibilities that are outside of merchandising itself, while 48% work at least five hours over their regular schedules each week. Further, the survey showed a disconnect between management views of workload, and employee views. About one in two employees feel they don’t have time to complete tasks each week, while 77% of managers feel their teams have an appropriate workload.
This comes as merchandising's role within an organization is occupying a less clear place. At some firms, it is combined with marketing. At others, it is under the more general role of ecommerce manager. This can put a strain on the potential for proper resources to be allocated toward customer experience.
(image via Constructor)
At the same time, teams are spending a lot of time on routine tasks like fixing typos, creating synonyms and managing redirects. In the survey, 57% of employees reported that merchandising teams spend at least 20 hours per week on manual work. Further, 40% of small teams spend at least 30 hours per week on these kinds of activities. Even so, 58% of respondents say they like this work, while others found them repetitive and even boring. Given that 40% of associate level employees have been in their current position for at least three years, there are also signs that advancement opportunities are more limited.
Yet the most fulfilling work for members of these teams comes from the moments that they can contribute holistically, collaborate with others and be creative in ways that contribute to key metrics like revenue, conversion and customer satisfaction ratings. The survey showed they’re getting room to do this work, as 95% of employees feel they can be creative, while 91% feel they are contributing to business goals.
“They really do enjoy the work that they do,” Lang said. “The question is, how do we help them do the creative and fulfilling parts of their job, and how do we minimize the parts that are burdensome to them?”
It’s a place where technology can potentially play a role, especially given all of the data that is collected by brands and retailers. In particular, AI can automate tasks that free up merchandisers for more creative and strategic work. Rather than believing it is coming for their jobs, the survey indicates that merchandising teams are open to using this technology. Constructor.io reports that 94% of employees have a positive view of AI and its use in ecommerce, while 85% of large teams say that they are already using it to some degree.
To be sure, there’s a balance to strike. Merchandisers still want to have the ability to make changes to the AI where needed, but overall there’s a receptiveness to introducing it.
“What we’re seeing is an evolution perhaps in the way that merchandisers are thinking about technology, and how technology has evolved to not be a black box that you can’t understand and you can’t look into and can’t change if you need to change,” Lang said. “I think we’re seeing this cooperation between the merchandisers and the technology that they use where they can both make each other better.”
The technology doesn’t only have to be for routine tasks, either. It can be applied in service of solving the key challenges facing a business. For instance, companies collect troves of data on customers. But Lang still sees a “disconnect” between that data and how it’s applied to improve the customer experience. With that experience rising in priority, there’s potential that AI could help navigate through the headwinds.
“There’s going to have to be more interest because that’s what is going to be required to stand out in this economy,” Lang said.
Merchandisers are the internal champions of that customer experience. The report indicates that they are open to introducing technology that will help them to improve it, at a time when it is needed most.
Trending in Shopper Experience
Retail media networks must drive sales incrementality, a new report from the Association of National Advertisers states.
Retail media networks are creating a new layer to the relationship between brands and retailers, and a new report indicates that brands in particular are still navigating the growing pains.
The last two years brought fast growth of retail media networks, as retailers recognized the value of providing advertising opportunities through ecommerce marketplaces that grew rapidly during the pandemic, and the value of the first-party data they possessed in a world where third-party cookies and IDFA are becoming less valuable tools. For a historically low-margin business like retail, digital advertising also presents an opportunity for a high-margin business line of 50-70%.
Brands have proven to be eager adopters as they sought new ways to reach customers in this environment, as well. According to eMarketer, ad revenue from retail media networks will reach $52 billion in 2023 and $61 billion in 2024. Over the next two years, retail media will account for one in five digital ad dollars spent by marketers. The spend is only expected to grow. According to a survey from the Association of National Advertisers (ANA), 73% of brands said they expect to be spending somewhat or significantly more on retail media in the future than they do today.
However, this proliferation has also created “more marketing decisionmaking complexity for advertisers,” ANA CEO Bob Liodice said in a new report.
The need to navigate multiple networks and still-developing tools to maximize the opportunity presented by retail media is leading to a multitude of approaches. Layer on top of that the fact that brands are both selling goods and advertising through retailers, and it’s clear the landscape is being reshaped.
A recent report from the Association of National Advertisers uncovered the areas where fault lines may emerge under the surface:
- Reluctant buyers: 88% believe they are somewhat or heavily influenced by retailers to buy advertising on retail media networks.
- A multitude of players: 56% said they are currently working with five or more different retail media networks.
- Differing goals: Two-thirds of respondents see driving conversion as the most important investment. Only 12% indicated the most important objective was “to invest for future brand growth,” and 7% cited “to drive awareness.”
The results underscore key areas where relationships between brands and retailers can be strengthened.
Sales vs. growth. Retail media must be able to drive both conversions of a single sale in the lower funnel, and brand equity growth in the mid- to upper-funnel.
As one respondent put it, "The jury is still out on if the RMNs are truly driving sales incrementality."
This also has implications for how a brand is budgeting retail media. Some brands are shifting dollars from shopper marketing, brand marketing, and trade spending, which could put the emphasis on short-term sales. But as another respondent put it, "There is concern that while attribution shows RMNs are driving brand sales, they are not necessarily driving brand growth. This is especially concerning where incremental RMN spending is being sourced from brand building budgets."
Standard measurement. Brands want to see an improvement in transparency in measurement. They also want results to be measured in the same ways across platforms. Further, brands believe retail media networks are not fully optimized for their KPIs.
This all leaves room for retailers to show they truly understand what brands are seeking from retail media, and show how they are delivering, all while reducing complexity.
As the report put it, “The next phase of growth for RMNs and value creation for brands will be through RMNs assuming shared responsibility with advertisers for driving brand growth, and demonstrating the ability of their platforms to drive incrementality and positive ROAS for brands. In other words, the next stage of growth will be driven by results versus relationships.”