What E-tailers can learn from Retailers

John Ekman

Tidningen marketThe extremely strong growth in e-commerce in recent years could make us think we’ve come a long way.

In fact, many E-tailers are learning to crawl when compared to traditional Retailers. The retail industry’s knowledge in space management, merchandising and conversion has been completely ignored by many E-tailers. Cooperation between Retailers and E-tailers is the recipe for success.

[graybox]This post originally appeared as an article in the Swedish Retailing magazine – Market
Read the orginal article here (In Swedish).[/graybox]

Traditional retailing puts a huge emphasis on space and category management and the design of such things as “fronts” and “faces”. This understanding seems to have been completely overlooked by many E-tailers. The problem is that the knowledge and practices of Retailers are not directly applicable in the online world. They must be translated, adapted and tested.

The big challenge for E-tailers in the next few years is to

Successfully translate and use Retailing’s practices with the
of modern tools for online testing and optimization.

Some examples:

I learnt about the practices of Sweden’s former state monopoly pharmacy – Apoteket. They move around different drugs within a category (above, below, right, left), change nr of package fronts 1,2,3  and allows categories change places – all to create more sales. Where do you find this understanding of placement and testing within e-commerce?

Most e-commerce sites list their categories in alphabetical order. Why? What would a Wal-mart physical store look like if they put their categories in alphabetical order?

Examples of important issues in “Online Space Management” are:
– How many items can fit on a normal-sized screen?
– How many columns of articles on a category page?
– How many words can fit in a product text?

Most often these decisions are left to the whims and fancies of a single graphics designer. When you do this, it just shows that you don’t know what online sales is all about.

If you’d build a grocery store the way you build e-commerce sites, this is how it would happen: first of all the experts would get in there and get their stuff up – lighting, refrigerators, cash registers and more. Then the store manager would ask his children to get all the products in, and put them where they thought it was the best!

In recent years, a variety of methods and tools to test and measure the outcome of various design concepts and position preferences have evolved. As usual, US E-tailers lead the way. I challenge the Swedish and European E-tailers  to both learn from traditional Retailers AND begin using the new testing tools available to increase conversion rates and sales.

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