July 17, 2016

Items Within An Ecosystem

Here's another common problem I run across.

If you run a department store (Neiman Marcus, Amazon), you tend to have product diversity that minimizes issues. But if you have maybe a couple hundred styles/skus, there's a danger in not understanding how key winners drive your overall ecosystem.

When you have three hundred items and maybe just fifteen winners, the fifteen winners disproportionately influence the whole business. 

And if just a few of those winning items cause customers to "lock-in" on those items, you have downstream trouble.

What you want is a winning item that causes customers to cross-shop the rest of your assortment ... and a winning item that causes customers to come back repeatedly.

If a winning item causes the customer to only buy the winning item ... and the winning item causes the customer to shop less frequently, then the winning item is actually hurting the long-term health of your business ... it is starving your ecosystem of future success.

This is where a marketing / merchandising partnership is critical. You want to have a marketing team that can explain these dynamics to your merchandising team. Your marketing team needs to be able to craft queries that explain merchandise/customer interactions.