Marketing genius and best-selling author Seth Godin once said, “Don’t find customers for your products, find products for your customers.” It’s all about providing the right products to your customers at the right time through the right channels. Most retailers think that if they offer everything, the customers will come – like the baseball movie, Field of Dreams – if you build it, they will come.
That’s the first step, but through analysis of the buying habits of their customers, retailers find that only a small representation of products are interesting to certain customers. It’s important for retailers to refine and know that what drives customers to their site won’t necessarily get them to the next phase.
Competing solely on price is a losing battle and retailers are looking for alternatives. Assortment intelligence gives them the capability to provide a rich consumer experience by carrying a unique assortment. They need to understand not only what their competitors are offering, but also what consumers want and what they don’t want. Knowing when to carry certain items and when to drop others is the key to assortment success.
Take one of the world’s leading online marketplaces, for example. They have the largest assortment of pre-owned Rolex watches costing more than $1,000, compared to any other retailer in the U.S., and they found this out through assortment intelligence research. With this information, marketplace executives made some smart assortment decisions about how to market this product to their customers and capitalize on their unique assortment.
When this retailer learned that they had the widest assortment in expensive Rolex watches, it helped them make the decision to increase marketing investments around these products and drive relevant promotions around them. Through deeper analysis of the buying habits of their customers, the company was able to infer which deals need to be nudged to the right affiliates to drive traffic. This intelligence was also used to guide the introduction of new products to market.
The traditional approaches to product assortment have historically been limited to analysis of transactional data, anecdotal information from suppliers, and third-party market share data, but this is no longer enough. The enormous growth in consumer demand signals (things like search data, product reviews and social media likes and pins) has created a rich source of additional data, which many retailers appreciate, but are finding difficult to capture and turn into actionable insights in a timely manner.
It is important to leverage these new sources of data and incorporate them into predictive algorithms to guide assortment planning decisions. Assortment intelligence enables retailers to drill down into any category, comparing multiple attributes of their assortments, from products and brands to price ranges.
Strategic assortment planning should be about much more than just looking at historical information or gut-feel decisions. Now retailers can use predictive analysis to create product assortments that capitalize on what’s trending among consumers today and what will be trending tomorrow, not just what was popular yesterday – helping retailers and marketplaces sell the right products at the right time and drop products that are cooling in popularity before they’re stuck with them.
In the case of the leading online marketplace, data and analytics were leveraged to emphasize differentiation opportunities, improve assortment, improve pricing, and improve traffic by better connecting with the consumers using data and analytics. Any online retailer can take a page from this company’s playbook to achieve similar results.