Have you noticed how the exposure of categories can vary on supermarket shelves? I’m not referring to the inclusion or exclusion of products, but to the way they are organized. In some cases categories are exposed by brand. In others, brands are mixed and organized by subcategory.
In summary: category, brand, variant, size and price.
Some studies indicate that the shopper spends about 16 seconds in front of the shelf. But in e-commerce, the story is much more complicated. There are so many external stimuli that can interrupt the buying process.
According to the E-commerce Trends 2018 study, 97.3% of ONLINE consumers have left products in their cart and not returned to finalize a purchase. How many abandoned carts have you seen in a physical supermarket?
Reducing the steps of the decision process and, consequently the friction, is fundamental in online sales.
No wonder niche sites tend to be so successful!
See these examples:
– Category: H20 Purifiers and Pró Spin
– Subcategory / Variant: Home of the Bible Online and Fleurity
– Size: VK Fashion Plus Size
– Price (works with single price): LBA Store and Josy Medeiros Footwear
And why is it smart to organize categories in this way? Because our brains are lazy. Your highest goal is to save the consumer energy.
By doing this, it separates any kind of decisions which are essential to our survival from those which demand energy.
These decision-making systems are called System 1 and System 2. System 1 decides. System 2 evaluates.
System 1 is like an anxious child who’s come across his or her favorite toy from the latest blockbuster movie: “Let’s go! My friends have it! I want it! No, I NEED it! Buy it”! It’s very emotional.
System 2 is more like a responsible mother or father who says, “Hmmm, this toy will be outdated soon, relegated to the bottom of the toy chest and it’s over-priced”. What is the cost/benefit or long-term value of this? This system is far more rational.
The shorter the path, the easier it becomes for our brains to make decisions.
I invite you to do an exercise:
- Go to a mall, supermarket or just open your cupboards;
- Choose any category (food or non-food);
- Does it follow the steps in the decision tree above? (Category, Brand, Subcategory / Variant, Size and Price). Just answer yes or no;
- In which order are the steps in the decision process, (ie), what is the first step, the second, and so on;
- Which of these steps can be “cut” or at least optimized?
If you find that something can be cut or optimized, it’s likely that you have just found a niche.
Cutting is a difficult decision to make, but let me share an experience.
I was product manager for many categories, among them disposable diapers. When I took over, there were 11 brands in the assortment. I cut the assortment to 5 brands.
The result: 40% increase in sales (in comparison with the same period the previous year).
In another case, as a marketing manager at a gaming distributor, we had the equivalent of 33% of annual revenue stalled in inventory.
I’ve never been a gamer. When I got the list of items categorized by genre (adventure, shooter, child, etc.), I almost fell over.
I did not understand anything! I was desperate. After a lot of thought, I did exactly the exercise mentioned above.
I realized that the first step in the consumer decision-making process was the console, not the genre of the game and we merchandised accordingly.
With the new system, we understood the value of organizing by console such as XBox, PlayStation, Wii, etc.
Microsoft then started producing XBox in Brazil, drastically dropping the price of the product. It was going to be a major Christmas gift that year.
This was the insight we needed to launch a major marketing campaign specifically for Xbox games.
It was a success and we reached a $10 million sales goal. And all because we simply came to see the product from the same point of view as the consumer.
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