Demystifying Smart Merchandising on Shopify Stores

Smart merchandising uses AI to help your customers find the right products at the right time on Shopify stores, boosting conversion rates from product discovery.

Introduction

With the rise of AI technologies, smart merchandising has become a crucial element of product discovery on Shopify stores. Early technologies focused heavily on providing relevant search results and product recommendations, but the next generation of apps are fully embracing AI and machine learning to deliver a highly personalized shopping experience to each visitor.

Smart merchandising involves showing the right products to the right users at the right time. Given the high volume of user traffic that popular ecommerce websites receive, it’s no surprise that retailers are turning to AI to offset human merchandising efforts. With smart merchandising tools in place, product listing pages (PLPs) can be organized automatically, allowing staff to focus on higher-value work.

Effective smart merchandising requires a high volume of data inputs to be effective. You must successfully ingest page analytics, from add-to-cart clicks, to conversions, and everything in between. When done correctly, the best Shopify stores can deliver exceptional customer experiences and stand out from the competition by providing highly personalized storefronts.

Summary of Key Concepts

This article will discuss the following smart merchandising concepts and help you understand why each concept is important to consider when implementing a smart merchandising solution on your Shopify store:

Concept

Description

Training AI Models

Smart merchandising is powered by AI models trained with catalog and user data from your website. Sufficient data and time is required for best results.

Personalized Recommendations

Every person is different, so every merchandising opportunity should be, too. This primarily relates to showing different products, rearranging the products, and combining them in the best ways to drive conversions.

Shopify Search Results

Delivering highly-personalized search results to each user that ranks results based on query relevance, intent, and popularity is a core component of smart merchandising.

Shopify Collection Pages

Adding smart merchandising to product listing pages, also known as collection or category pages, is one of the quickest ways to benefit from it.

Email Merchandising

Sending tailored emails to large lists that include AI-powered recommendations are more likely to drive opens, clicks, and conversions.

Training AI Models

Imagine attempting to teach a friend a new language with just a handful of common phrases. They may understand the basics, but complex sentences would be a struggle. Smart merchandising works similarly, needing a vast number of end-to-end customer shopping examples to grasp your store’s complexities. More data means the models can see subtle patterns and relationships, leading to accurate product recommendations, even for situations it hasn't encountered before.

Each Shopify app will have different data volume requirements. For example, the “Recommended for You” AI model in Google Cloud Vertex AI Recommendations (formerly Discovery AI) requires a combination of page views and catalog items to train a model that optimizes for click-through rate.

For best results, we recommend that your store has at least 1,000 SKUs (this can include variants) and 20,000 monthly visitors to benefit from most AI-powered merchandising solutions, including Google Cloud’s Retail API products. Similarly, ensure that your analytics data is joined correctly with your product catalog data. Many merchants begin smart merchandising by narrowly focusing on returning products on search results or collection pages, but without ingesting user events, the results will never adjust based on real user behavior.

If you’re using Nimstrata Search & Discovery to activate smart merchandising on your Shopify store, make sure that you enable user events so that your store’s AI models can begin training, even if you don’t return results right away.

Personalized Recommendations

Adding personalized recommendations to your Shopify store is like hiring hundreds of friendly retail associates who remember your customers’ preferences and suggest things they’ll love. Smart merchandising apps behave like these retail associates, deciding which products to show, which order to show them in, and suggesting new combinations of products to each user. For best results, the underlying product data must be accurately represented throughout Shopify metafields. For example, if a merchant sells clothes to several age groups and genders, the items should be correctly categorized.

These personalized recommendations should be using your own store’s data to curate product suggestions that are relevant to each shopper's interests and past behavior. If done correctly, this makes browsing more enjoyable and efficient, reducing frustration and leading to happier customers.

Shopify Search Results

Smart merchandising is a powerful addition to search results pages that leverages AI to personalize search outcomes. The best Shopify search and discovery apps understand and anticipate customer needs and can “read between the lines,” leading to more effective product discovery. By analyzing troves of user behavior, smart merchandising ensures that search results become tailored to individual shoppers, increasing engagement and conversion potential.

Google Cloud’s Vertex AI Search for Retail has different tiers of search performance that can be unlocked with additional data. When you first adopt the product, search results will be returned in Relevance mode, primarily using product attributes to suggest results. However, as more customers shop and user events are ingested, it will return results by Relevance & Popularity. Following popularity, you will then move into Revenue Optimized to maximize revenue from search, and finally, Personalized Revenue Optimized to provide specific results to each user.

Smart merchandising should also dynamically return facets and filters. Not all search results will need to be filtered the same way, so it’s important that users are only presented with the UI components that are relevant to the products on the page. Additionally, the most relevant facets should be returned at the top of the page for easier filtering. A honed search filtering strategy makes search result pages more intuitive and aligned with your customers’ interests.

Shopify Collection Pages

Many existing Shopify apps focus on returning the best search results to customers. However, customers who browse ecommerce sites using navigation links are technically searching for products as well, just not with keywords or written queries.

Personalization is a powerful tool for Shopify collection pages to enhance user experiences and boost sales. By leveraging smart merchandising, Shopify merchants can curate product displays that resonate with individual customer preferences and shopping habits. Smart merchandising techniques involve analyzing customer data such as past purchases, search history, and browsing behavior of all users. The result is a dynamic collection page that presents products in a way that is more likely to appeal to specific visitors, similar to how social media feeds are different for everyone.

For instance, if a customer frequently browses outdoor gear collections, the collection page could display the camping equipment or hiking apparel at the top of the page that is most likely to convert. This personalized approach not only makes the shopping experience more relevant and enjoyable for customers, but also increases the likelihood of purchase by showcasing specific items that align with their interests. Implementing a tailored experience on Shopify collection pages creates a sense of individual attention, which is a key factor in conversion rate optimization efforts.

Email Merchandising

Leveraging smart merchandising in your Shopify store's email campaigns can significantly elevate their impact. By syncing online visitor identifiers with email addresses, you can extend personalized shopping experiences into your email marketing. This goes beyond the standard practice of sending “Buy it Again” reminders. With smart merchandising solutions, you can import purchase histories and utilize predictive analytics from your entire user base to offer highly tailored product recommendations, greatly increasing the likelihood of conversion.

Predictive recommendations in emails represent an advanced step in personalized marketing. They harness sophisticated algorithms, such as Google Cloud’s Vertex AI Recommendations, to suggest products that a customer is most likely to purchase, drawing upon all of the analytics data from your Shopify store.

Personalized emails crafted with these insights are more than just marketing messages; they're tailored experiences that resonate with individual customers. This level of personalization significantly enhances the chances of not only getting your emails opened, but also of driving click-throughs to the recommended products and completed purchases.

Conclusion

Smart merchandising on Shopify stores leverages AI technologies for personalized product discovery. It requires extensive data, including user behavior and purchase history, to effectively train AI models. Personalized recommendations in search results and dynamic Shopify collection pages are key aspects, enhancing user experiences and conversion potential. Smart merchandising can also extend to email campaigns, where predictive recommendations algorithms suggest highly relevant products to each customer.

If you are interested in trying Google Cloud’s Vertex AI Search and Recommendations algorithms to enable smart merchandising on your Shopify store, begin a free trial of Nimstrata Search & Discovery.

© 2024 Nimstrata LLC