Let’s say you sell skincare products on your Shopify store.
You have the perfect formulations, wide coverage for different skin issues and conditions, and at reasonable prices. Ideally, you’d assume a great product should do the talking and that should be enough to get more sales.
However, commerce today is more complex than that.
Consumers today have so many options to choose from - both online and offline. And each of these ‘options’ - your competitors - is competing to get the consumer’s attention. It’s noisy and difficult to be heard.
So, how do you stand out and get those sales? That’s where AI product merchandising can help.
Recap: What is Product Merchandising?
Simply put, product merchandising is the process of intentionally displaying, marketing, and selling products to consumers.
Kevin Stirtz, the author of More Loyal Customers once said, “Every contact we have with a customer influences whether or not they’ll come back. We have to be great every time or we’ll lose them”
Product merchandising involves presenting the product that entices consumers to make a purchase.
With effective product merchandising, you can easily enhance the shopping experience for your customers, providing them with a smooth and seamless process. Through creative and user-friendly displays, your customers can easily find products that capture their interests and are more likely to complete a purchase.
Some common challenges stores face in merchandising include:
- Determining the optimal product layout and shelf placement
- Keeping up with changing customer preferences and trends
- Analyzing huge amounts of data to make informed merchandising decisions
- Quickly adjusting merchandising strategies as needed
What is AI merchandising?
AI merchandising is a data-driven, advanced system that analyzes customer data to enhance product recommendations/customizations for individuals.
With an expectation of greater choices and improved experiences from today’s online shoppers, leading sites such as Amazon employ AI to simplify shopping and improve personalization.
Today, AI merchandising has become vital in creating smart rewarding experiences that can increase a site’s average order value (AOV) and overall performance.
Why is AI Merchandising Beneficial?
Let’s take a quick look at what makes AI merchandising worth incorporating into your Shopify store.
1. Personalization
AI assesses the actions of each individual buyer to recommend items that match their interests.
For example, if a shopper frequently buys running shoes, the AI might suggest related items like moisture-wicking socks or energy gels. This personal approach can result in significant improvements in sales and customer satisfaction.
2. Real-time adaptation
AI systems can respond quickly to new trends and world events.
Let’s consider you run a skincare/lifestyle brand and there was a sudden heatwave. Using AI merchandising, your store’s homepage can be filled with sunscreen, hats, and water bottles in no time. In this way, your merchandising stays relevant and up-to-date.
3. Optimized inventory
By predicting future demand, AI helps you stock the right amount of each product. This means you're less likely to run out of popular items or have unsold inventory piling up.
4. Enhanced customer insights
AI has the capacity to find patterns in human behavior that humans may not notice themselves.
For instance, it could be found out that there are customers who buy plant pots who come back within thirty days for fertilizer. With such knowledge, one can plan targeted promotions or bundle these commodities together.
5. Increased efficiency
Product tagging and categorization can be done by artificial intelligence (AI). This allows your team members to concentrate on developing innovative strategies and attending to clients’ needs better.
For example, instead of manually sorting thousands of products your employees can write engaging product descriptions or answer questions from customers. That’s a lot of time invested in quality work to improve your store’s overall UX.
6. Better customer engagement
Through personalization based on AI technology, it is easier for clients to find what they need quickly. That is why this improved experience often leads to greater client loyalty and higher levels of repeat purchase behavior over time.
Just imagine a shopper who only buys size 10 shoes – through AI they will see only available products in their size and thus the whole experience will be smoother and more enjoyable.
How does AI Merchandising Work?
Okay, you now know what AI product merchandising is and why it is important. But how does it actually prove to be so useful for online stores? In this section, we’ll explore this.
1. Data Collection and Analysis
These AI systems gather data from many sources including purchase history, browsing behavior, and search queries which helps them have a comprehensive view of each customer’s preferences and habit
2. Machine Learning Models
It uses this information to create predictive models through machine learning. Hence, these models can predict patterns in buying habits, anticipate client desires, or tell the future trends ahead.
3. Automated Decision-Making
The AI makes decisions in real-time based on this analysis. For instance, it may suggest personalized offers, adjust product placement on a website, or even update prices automatically.
4. Continuous Learning and Improvement
As new data comes in, the AI refines its models. This ongoing process ensures the system becomes more accurate and effective over time, adapting to changing customer behaviors and market trends.
AI Merchandising Features On Shopify
Shopify offers several AI-powered merchandising tools to help store owners:
- AI Product Categorization: Quickly classify products with AI-suggested categories, attributes, and values. This improves product discoverability in your store and on marketplaces.
- Smart Collections: Automatically create and update product collections based on rules you set, keeping your store organized without manual effort.
- Personalized Recommendations: Show customers products they're likely to be interested in, based on their browsing and purchase history.
- Dynamic Pricing: Adjust prices automatically based on demand, competitor pricing, and other factors.
- Inventory Forecasting: Predict future stock needs to avoid stockouts and overstocking.
How to Implement AI Merchandising in 10 Steps
Here’s a step-by-step breakdown of how you can easily start leveraging AI merchandising in your Shopify store right away.
1. Evaluate Your Existing Merchandising Strategy.
Examine the existing merchandising policies to identify aspects that require improvement using AI solutions such as product recommendations, pricing, or inventory management. Set clear and quantifiable goals for your AI implementation. For example, you may seek to enhance personalization by 30% or increase sales by 20%.
2. Collect and Sort Out Data
The data should be gathered from all customer touch points including online browsing activity, purchase history, and offline interactions. Make sure that your data is clean, accurate, and well-ordered. Remember that quality data is a basis for useful AI merchandising.
3. Select Appropriate Tools and Platforms for Your Business
Search the market for AI systems that align with your specific needs.
Factors to consider include ease of integration, scalability as well as particular features offered by the solution. In case you have forecasting among your major objectives, then go for a platform with strong predictive analytics capabilities. Also pick a vendor /solution that fits your size of business, budget, and technical capabilities.
4. Build a functional Team
Get an IT expert; a scientist of data, a merchandiser; and maybe even marketers into one group.
This combination is essential in making the most out of the use of insights from AI. Train your team on how to use these selected tools while you make them capable of making informed decisions.
5 . Begin with the Pilot Project
Start somewhere – take on board artificial intelligence just in one area like product recommendations on the homepage of your site. Monitor results closely using relevant metrics such as click-through rate (CTR), conversion rate, or average order value (AOV).
Take note though – this approach will make it possible to learn while scaling up will be much easier later.
6 . Improve and Scale
What did you learn from the trial? Which were the successful parts? Based on these, what changes do you think should be made to your strategy? If there is some positive outcome, try rolling out AI slowly to other parts of your trade.
7. Monitor and Improve Every Time
Make sure that you have tools for tracking your AI-powered strategy's performance in real time. Then make necessary data-backed tweaks.
Update the models with fresh data periodically so that you can take advantage of AI’s ability to learn and improve over time. This ensures that your AI system remains up-to-date and works effectively.
8. Responsible Use and Compliance
Give priority to data security and privacy as far as implementing AI is being undertaken. Be open about the use of customer data. Watch out for possible concerns such as bias in algorithms. Regularly audit your AI systems in order to ensure impartiality and fairness.
9. Inform And Teach
Ensure every member of your team understands how artificial intelligence is revolutionizing merchandising strategies. Explain to them where they stand in relation to this change instead of assuming that their jobs will be taken over by bots.
Understanding it is advisable that even customers learn about this development especially if they are benefiting from more personalized recommendations or smoother shopping experiences through AI.
10 . Evaluate and Revise
Check whether including AI in your merchandising plan had any impact overall, continuously follow new trends in retailing, keep track of the new developments based on artificial intelligence, and apply them practically.
Remember that this type of merchandising does not end at going live but shall proceed through continuous improvement.
Need Help With Product Merchandising For Your Shopify Store?
Setting up a high-converting store design is no easy task. To build and design an impressive store, you need to work with Shopify design experts who understand what you are looking for and have industry knowledge of the changing trends and consumer preferences.
Also read: Why Your Shopify Store Design Is Important to Increase Conversion Rates
We help you bring your ideas to life with Shopify web design, development, marketing, and support services from experts. Our team of Shopify experts works with Shopify merchants like you to design a store that reflects the personality of your brand and caters to the functionalities you require. Whether you want to revamp your existing design or build a new one from scratch, we will help you create a positive shopping experience on your Shopify store design.
Reach out to us at info@xgentech.net and we’ll help you with product merchandising strategies and execution.
