Focused Assortments Online

Online retail is a product of it's history. Other observers have accurately described the development of ecommerce around two fundamental beliefs which have become intertwined. First, the use of the Internet itself as an information resource led to a transactional approach to ecommerce site development. Focus and effort were directed at applying the tools necessary to enable quick, efficient, flexible and powerful methods for navigating through the site. This was a reflection of the basic Internet paradigm driven by vast amounts of information made cheaply available. Similar thinking led to improvements in sign-in, check out, and other transactional aspects of ecommerce sites. And they were important......no question.

Inherent in the need to "transact" efficiently was the other fundamental reality of ecommerce: the "endless aisle". Unlike all other forms of merchandising (including direct catalog commerce) there really were no limitations to the number of products which could be offered economically. While some merchants began to feel uncomfortable as SKU counts reached into the thousands and hundreds of thousands, their "merchant conscience" was salved by all that work which supposedly made it easy to find what the consumer was looking for. In addition, it all made sense from an organizational point of view. IT resources could be leveraged, while adding an entire merchant organization for this channel of trade seemed economically infeasible. Existing multi-channel retailers were already in an almost constant state of flip flop for direct mail catalog divisions, moving back and forth between distinct merchandising and asking brick and mortar merchants to also select and buy for catalog.

Putting aside the history and the very real business factors which have led to the current state of affairs, the fact is that very few large scale ecommerce websites are characterized by focused, intentional and powerful assortments. This is particularly true of multi-channel retailers where online seldom contributes more than 5% of the total corporate volume. The impact of "endless aisle" merchandising as opposed to "focused assortment" merchandising has been to create very little brand differentiation, online identity, or even a unique "voice" which speaks to specific consumer emotional needs.

eCommerce is not only here to stay, it's the only current growth vehicle out there, and likely to meet just about every reasonable expectation for continued volume growth. Retailers who want to perform well in the next 10 years really must get ecommerce right. There are a huge number of challenges to accomplish that goal, including visual and experiential differentiation.....yet my argument is that merchandising could be the most important area upon which focus.

Online is NOT the same as brick and mortar....many retailers already have sufficient data to truly know how this truth manifests for them. However, accepting it as a truth is critical....because it means that online assortments really will differ from brick and mortar assortments. The challenge in developing focused assortments for the online world starts and ends with treating this "channel" as a monolithic whole. Look....we've come to accept as a given that merchandise and assortment planning for brick and mortar requires sophisticated ways to model and segment demand....not just by volume, geography or store size....but by consumer profiles, avatars, psychographic segmentation and other ways of customizing assortments based on demonstrable differences in demand.

eCommerce cannot reach it's potential until it is clearly seen as an enormous aggregation of vast numbers of consumers. If your website is generating 10 million uniques a month, how is there any sanity at all in having a single assortment plan?