Changing the Game: Category Management E-commerce
The increased use of category management e-commerce and the digitally-enabled shopper have been rocking the retail industry in recent years. These changes have driven the need for more retailer and supplier collaboration. Today, optimising digital marketing for each category is as important as store-centric category management was 20 years ago.
The Shopping Experience
The physical constraints of the store do not limit the online shopping experience. Suppliers and retailers must use new insights regarding how shoppers search and navigate online. This will enable them to rethink categories. Not just online, but also within the store framework. E-commerce includes all sales generated through a connected activity, including websites, mobiles, and retailer applications.
As we think about e-commerce shopping websites, it becomes clear that the definition of a category must expand. The physical constraints of the shelf are no longer limiting. Product adjacencies can change depending on search terms, seasonality, and time of day. Even dynamic factors such as weather and the specific shopper could change product adjacencies. Moreover, shoppers are searching for more than just products. They’re often looking for solutions, and increasingly, services. The rise of online brands like Hellofresh for their home delivery meal-kit is an excellent example of such a solution.
With e-commerce, we are finally able to deliver a true consumer-centric organisation of products. Broader consumer “need states” can define categories. Examples include ‘Breakfast’ or ‘Back to School’. These can span multiple product types, storage needs, and even services. Product usage, like laundry or haircare, can also define categories. A category should create a distinct, manageable grouping of products and services. In short, one that consumers perceive as interrelated to meet their needs.
Taxonomy for a Better Experience Online
Taxonomy describes the classification and organisation of ‘unstructured information’ on e-commerce websites for the benefit of users and the business.
The three main tools of product taxonomy:
1. The category tree (also known as product hierarchy). It helps group products by nature in a set of hierarchised categories.
Example: Home > Frozen Food > Frozen fish & seafood > Frozen fish fingers
2. The attribute list (also known as facets, dimensions or refinements). Additional information attributes used to qualify the products in the same category. When applied to a product, an attribute will need a value.
Example: Milk: level of fat, organic, source etc
3. The value list: for some attributes, the finite, predefined set of possible values.
Example: low fat, cows, ml
Each attribute will apply to several categories and have various values. One attribute links values.
The Importance of Taxonomy
Taxonomy a crucial for the customer experience. It helps users navigate through e-commerce websites in an easier way. It improves their search experience and thus increases the chance of a higher ROI for the business. Instead of sifting through the haystack online, taxonomy helps with search navigation. Furthermore, it leads to a more manageable experience. One that is less time-consuming, more organised and leads to what the shopper needs.
Just as librarians would arrange books according to title, labels and author, this also applies to e-commerce websites. Taxonomy structure also allows the content to be subdivided. Taxonomy sorts information while the metadata describes the category.
To model the listing, should you list products in alphabetical order, or use decision tree insights? The key is to always signpost a category so shoppers feel comfortable and at ease with what they see. To make the shopping experience enjoyable highlight smaller or newer products/brands, just as you would in store.
A website with unstructured content could lead to difficulties when it comes to navigation and searches. Taxonomy directly corresponds with website design in the form of ‘taxonomy view’. Moreover, it helps create a positive user-navigation experience, with the neatly arranged categories.
Decision Tree Insight
The taxonomy of the category/product hierarchies is very important. They should relate to how the consumer shops the category in the store and within their mind. Make it logical and based on consumer data and insight. A decision tree matrix of a product/category can help inform how the taxonomy should be on the retailer site. Apply your category insight into how you would create fixtures and how the consumer would shop.
When thinking about the online world, remember the insight and learnings made through the store-centric approach. The 4P’s of marketing still apply but are executed in different ways online. This is because there are no physical limits. Therefore, the online world enables you to push the boundaries of the solutions you can offer. The challenge is to use tactics that will attract your shopper and enable them to buy your products easily. Align digital strategies with other marketing activity you are engaged in.
The Shopping Journey
Just like an offline store, shoppers have to make there way through the online store to find what they want. For instance, a shopper might walk through a store and want to buy some eggs, bacon and bread. In a physical store, they will need to walk through several aisles to buy the 3 items they want. As they walk the store there is an opportunity to buy other items. Perhaps, those that are featured on the gondola end or within a meal solution.
They might see hanging banners highlighting products/brands, or even be offered food samples.
Let’s contrast that with an online store. Typically, shoppers use either their favourites list or shop via the search facility. The challenge is how to interrupt the shop in a way that does not turn the shopper off. A way that adds value to their experience and potentially encourages them to buy more. And not just more of anything, more of what they need and what will give them a positive shopping experience.
Collaborations on Category Management E-Commerce
There are 4 key ways to collaborate with retailers on the e-commerce and digital journey:
- Product Content: Better digital product content represents the first and most foundational point of collaboration. Brand pack shots and lifestyle images encourage browsing of categories, as does the use of videos, e.g. with recipe ideas.
- Impulse Products: This represents an opportunity to drive unplanned purchases. Most retailer sites and apps still lack a compelling way to drive such purchases. For example, the battery category in-store depends on impulse purchases. This is why they are near the till, a category that is less representative on retailer sites in share. We need to make sure when we do interrupt the shopper it is a positive experience.
- Cross Selling: This is where the virtual world of the internet can maximise the opportunity. It allows products and categories that would not be near in-store to be brought together. For example, frozen, chilled and ambient can all be in the same place to drive full meal solutions.
- Personalisation & Loyalty: A huge opportunity exists for suppliers and retailers to use investments from promotions and create loyalty by personalising the offer to the shopper.
Further Collaboration with Retailers
- Align with online goals: Suppliers and retailers need to align with the overall aims for category management e-commerce.
- Category/solution definition: Suppliers and retailers should work together to create groups of products and services that meet consumers’ needs. In most cases, this would have already been done by the retailer. You could, however, add to this using the latest shopper behaviour insights.
- Vision: What is your vision and does it align with the retailer? – important to have the shopper at the heart of it.
- Role: As in the original category management process, categories will still have different roles for a retailer. They must consider both the shopper and the competitive marketplace.
- Measure: Ensure measure with KPI’s that will be used for success. Both the supplier and the retailer should agree to the KPI’s.
- Execution/Activation: These are plans and programs that reach shoppers and create behaviour change. Promotions form part of this along with recipe development and other personalisation.
- Review, Reflect and Refine: Category management e-commerce allows for much more agility throughout the delivery step. It’s much easier for suppliers and retailers to respond and adjust to any deficiency or opportunities identified by KPI measurement.