Assortment Optimization: Why It Is Important For Your eCommerce Business

Assortment Optimization

When it comes to maximizing the potential revenue of your eCommerce business, few things can be more valuable than assortment optimization. The right mix of products can make all the difference in helping control your business costs, while also maintaining your appeal with customers.

Sound assortment planning is especially valuable in today’s environment, when supply chain issues continue to disrupt operations for many products and industries across the globe.

Here’s a closer look at how product assortment optimization can help your eCommerce business or marketplace thrive — and how today’s technology makes assortment planning easier than ever.

What Is Assortment Optimization?

In its most basic sense, product assortment optimization is the process in which an eCommerce business or marketplace decides which products it should offer to shoppers. This mix of goods is strategically selected based on customer preferences to maximize the store’s revenue.

Finding the optimal assortment generally focuses on two main types of products: fast-moving goods that sell at higher quantities but deliver a lower profit margin per item sold (like clothing), and higher-end goods that sell slower but have a higher profit margin (such as electronics). 

Successful eCommerce marketplaces generally build their merchandise assortment strategy with these two broad types of products in mind, as this ensures the most consistent flow of revenue from their customer base.

Why You Should Use Assortment Gap Analysis

While assortment optimization may sound easy, the reality is far different. It is all too easy to develop an inadequate product mix that doesn’t offer enough variety to keep customers engaged. In some cases, a lack of alternative products can result in lost sales if an item goes out of stock due to supply chain issues or other factors. For other products, SKUs that are too similar to each other can ultimately cannibalize sales.

A recent analysis by Pimcy determined that while product failure rates aren’t the staggering 95% reported by some sources, at least 40% of new product launches could be considered a failure. In their analysis, they also noted that “a distinction in failure rates can be made across the various types of innovation: incremental innovation, more innovative development, and radical innovation. […] The failure rate increases the more innovative the solution is. However, on the upside, there also is the potential for a bigger return.”

Whether the product is something completely new or simply an improved version of a product that is already on the market, there is never a guarantee that it will be a success. This is especially true in the competitive world of eCommerce, where new marketplaces often struggle to thrive against more established competition.

Despite these sobering statistics, customers are often interested in trying something new, particularly in product categories like clothing or jewelry. Part of what keeps them coming back to an eCommerce business is the promise that it will have something new for them to try — be it a new T-shirt design, improved backpacking gear, or something else entirely.

Because of this, assortment optimization is an ongoing process. It can’t be a “one and done” activity. Customer preferences, supply chain factors, the introduction of new products and the discontinuation of old products means the product mix may be constantly changing. An assortment gap analysis must be performed regularly to ensure your business is introducing new products that will connect with customers — and removing products that are no longer making a profit.

Why the Time Is Now For Better Assortment Planning

With more competition thanks to the rising popularity of digital shopping, eCommerce businesses and marketplaces must prioritize assortment optimization like never before. Understanding which items are missing from your catalogs can make all the difference — and fortunately, this process no longer needs to be left to guesswork.

Running an assortment gap analysis helps your business determine best-selling products or categories from reputable sellers that should be added to the online store. Data-driven, AI-enabled tools use web scraping and other data retrieval methods to gather information on billions of products across multiple channels. 

eCommerce stores that use these solutions can download information on a relevant product category, retrieve GTINs for best-selling items and obtain product lists by seller. By running this assortment gap analysis, an eCommerce marketplace can ask its current sellers to onboard new items that have a proven record of successful sales on other channels. If this isn’t an option, an eCommerce marketplace could attempt to onboard new sellers who offer the desired products.

With quality information readily available through a data-driven assortment gap analysis, it has never been easier to access and utilize this data. Such information is crucial for staying ahead of your competitors — many of whom are using similar resources for their own assortment optimization efforts.

The Benefits of Assortment Optimization

A sound assortment optimization strategy offers several tangible benefits for eCommerce businesses. An assortment gap analysis can help your business understand the eCommerce landscape as a whole — including customer preferences and competitor behaviors. 

With this data, eCommerce businesses can do more than identify new options that can be added to their marketplace. They will be able to identify which mix of products will create a good blend of high-volume and high-profit sales that appeal to their target audience. They will also be better able to identify product lines that are declining in popularity and potentially reducing their profit margins.

This allows marketplaces to create a collaborative relationship with their sellers that focuses on creating win-win solutions. After all, by utilizing shopper insights and providing data-based product onboarding recommendations, marketplaces and sellers can increase their sales success. This creates an atmosphere of transparency and accountability that sees all parties involved better able to optimize their product lineup and take ownership of their results.

Collecting these insights in real time can also lead to more agile and flexible decision making. Quickly identifying trends can help your business mitigate supply chain concerns by adapting its product line based on seasonal changes or other trends. Rapidly pivoting your product assortment ensures you can always offer relevant items at any time of year.

By providing products that shoppers actually want, your eCommerce business can become the go-to online resource for your target audience. 

Strengthen Your Merchandise Assortment Strategy With Cluster

If you’re ready to strengthen your assortment planning processes, Cluster can help. Our Optimal Assortment services are designed to help both marketplaces and brands identify category gaps by assessing product data across channels. With full visibility across the entire eCommerce landscape, you can gain the insights you need to boost sales by presenting relevant, high-demand items to your customers. 

As you use assortment optimization to continually present shoppers with trending, best-selling products from trusted sellers, you will be able to accelerate sustainable growth that builds your reputation and keeps customers coming back time and time again.
With Cluster on your side, lasting marketplace success is closer than you think!

5 Ways Power Sellers Can Make Or Break Your eCommerce Marketplace

Ways How Power Sellers Can Make Or Break Your eCommerce Marketplace

eCommerce sales account for nearly $5 trillion in revenue today. Regardless of what industry you specialize in, it’s clear that this is the landscape of business that we all need to capitalize on. 

When building your own eCommerce marketplace, it lives and dies by your ability to attract the best sellers. These top performers, known as power sellers, are essential to the growth and success of your platform. 

Keep reading to learn more about the benefits of improving the marketplace seller and buyer experience by encouraging power sellers. 

1. Quality Sellers Bring More Shoppers

If you don’t have sellers, you don’t have shoppers. A marketplace power seller has the most volume and a vast inventory of products that people can choose between. 

Not only does this attract new buyers, but customers will begin shopping exclusively with these sellers, offering them repeat business. These marketplace power sellers bring you the most revenue when you collect your fees. 

Seller intelligence is a solution that can help identify power sellers providing you with the contact information that you need to build a rapport. This relationship can help you grow their conversions and improve your market share. 

2. You’ll Increase Brand Awareness and Trust

When you have power sellers, they legitimize your marketplace on a larger level and build trust with consumers. 

It typically takes at least 5 impressions for buyers to make a decision to purchase. Your marketplace vendors have a vested interest in getting more attention to their personal stores, which ultimately brings more awareness to your platform. 

This is why encouraging power sellers ranks highly among the most important eCommerce tips you can follow. Buyers are more hesitant to shop with vendors that only have a few confirmed sales or reviews. Having more trusted sellers will give you a larger inflow of traffic and revenue for the long haul. 

These sellers serve as your foundation, which you can build on the more you attract these power sellers. 

3. Shoppers Will Have a Better Experience

Power sellers are full-timers with their online stores that are constantly making improvements. The customer wins most because these improvements reward them with a better shopping experience as a whole. 

Power sellers also deal with greater sales volume, are more responsive to customers, offer more payment options, and tend to ship orders faster. They often run full-time businesses offline, such as a brick-and-mortar retail store that sells similar products. 

Because of this, these professionals are more likely to stay up-to-date with new eCommerce ideas and trends to consistently accommodate their customer base. They often run blogs and post videos so that their customers are informed. 

You’ll build shopper intelligence and attract your ideal customers when you’re always investing in improving their experience. 

4. Your Platform Will Attract Different Segments of Business

Power sellers will consistently bring you more eCommerce leads. This is one of the best things to learn when figuring out how to attract sellers to your marketplace. 

These power sellers will network with each other and always find new and different ways to improve what they do best. For instance, a power seller that is successfully selling products to consumers might choose to take the private label approach or look into things like dropshipping. 

This ultimately expands the reach of your outlet and the type of service that you provide to consumers. When your shoppers have more options for the types of products that they can get on your platform, it’s a net positive for everyone involved.  

5. Power Sellers Provide Constant Marketing

You can also count on power sellers to continuously market themselves and their brands. They have a vested interest in building their brand awareness, which will also raise more awareness to your platform. 

When you have a relationship with these power sellers, you can use eCommerce marketplace data to study the demographics of their customers and how they get their conversions. This can help you with ad placements and figuring out which customers you’d most likely to target. 

Having data at your disposal is best when you’re trying to figure out where to find eCommerce business leads because your goals will be more accurate and measurable. 

You’ll be able to scale your platform to achieve the type of growth that you expect, and can collaborate with your power sellers on ideas. 

For example, with Seller Intelligence, you’ll have the benefit of:

  • Taxonomy mapping
  • Analytics and price benchmarking
  • Access to seller store analytical tools
  • Product matching for more accurate categories
  • Real-time data to help get more sales and traction from seller channels
  • Product data enhancement
  • Catalog enhancement tools

It’s best to work deliberately with power sellers so that you can get on the same page with your marketing goals and steer them in the same direction. 

The Ultimate Marketplace Seller Experience

The marketplace seller experience that you create means everything when you’re trying to grow your platform. Power sellers are your bread and butter, and will help you get the results that you’re looking for. 

If you’re intent to get sellers to your eCommerce marketplace website, you need a helping hand. At Cluster, we have a team of professionals that are skilled and equipped to make all of your goals a reality. 

With Seller Intelligence by Cluster, you’ll have the data needed to put it all together.  

To book a meeting with us, use our contact form or send us an email at info@datacluster.com.