More success with the assortment policy

As an online retailer, you always have to balance the supply and demand of your target group in your online shop. When designing your product range, it is essential that it meets the needs and demands of your customers. In order to decide which products you want to offer or perhaps take off the market again, the assortment policy with its versatile instruments is a central element of your marketing strategy.

But what exactly is assortment policy, why is it so important and how can you use it? This is what we at uptain have dealt with in the following article.

What is the assortment policy?

Anyone who wants to successfully position themselves on the market with an online shop faces the challenge of asserting themselves in the highly competitive market for customers and standing out from numerous competitors. A well thought-out assortment policy can help you in this. This marketing instrument revolves around the goal of adapting your assortment with various measures in such a way that the customer needs of your target group are met and they enjoy shopping with you.

With the assortment policy, you have various possibilities to take appropriate measures. These include changing the breadth or depth of the assortment. These instruments of assortment policy will be discussed in more detail later on. At this point it should be noted that the assortment policy helps you to build up a high-turnover assortment.

Why is the assortment policy so important?

In recent years, it has become clear that customer demand is not static, but dynamic. The demand for products is always changing rapidly and new competitors are entering the market every day. Today, companies must be able to react quickly to such changing conditions with a product range that is adapted to the situation. With the assortment policy you are able to adjust your assortment in such a way that you remain competitive.

Always bear in mind that with your online shop, in contrast to stationary trade, you can theoretically carry an unlimited range of products. You will not come up against a lack of spatial capacities. Only warehouses, personnel or procurement channels limit you. This makes it all the more important to work with an assortment policy so that you position yourself with a clearly structured assortment.

On the one hand, you can focus on a special theme and go into depth instead of breadth. For example, as a supplier of footwear, you specialise in barefoot shoes. On the other hand, you can design your assortment with different product groups that address different needs. Examples of such broad rather than deep suppliers are mail-order fashion houses. However, assume that the more different items a visitor finds in your online shop, the less likely he or she will make a purchase.

“Class instead of mass” is therefore the credo for an efficient assortment policy in most cases.

What are the objectives of the assortment policy?

With the assortment policy you pursue several goals. On the one hand, you aim to achieve a strong market position and improve your competitiveness. On the other hand, your assortment policy is geared to the needs of your customers. Ultimately, all efforts within the scope of the assortment policy should lead to an increase in turnover and profit.

What types of assortment policy are there?

There are different types of assortment policy on which you can focus your measures:

• Qualitative assortment policy: selected goods of the assortment
• Quantitative assortment policy: number of goods in an assortment
• Temporal assortment policy: development of an assortment

As a rule, measures of assortment policy that concern the quantitative area are dominant.

The measures of the assortment policy

Of course, the assortment does not only have an impact on customer behaviour. Many other processes depend on the design of your range, such as your procurement logistics or production. When developing a strategic assortment policy, these should always be included. In case of doubt, you have to weigh up whether you should slim down your assortment in favour of your logistics or look for other ways to increase the size of the assortment. In these considerations, we are already moving in the environment of the assortment policy measures that we present to you below.

Range expansion

You broaden or deepen your range with new types of goods or add similar goods to your existing range. This is particularly useful if you notice a change in interest among your target group. Trends and trend products are a typical example in assortment policy that trigger an expansion of the assortment.

Streamlining of the product range

Based on your sales figures, you should regularly check your assortment for unprofitable products that sell poorly or not at all. Within the framework of the assortment policy, you should now weigh up whether you should eliminate the article or continue to “drag it along”. In this case, it would also be important to look at the reason behind the low sales. If, for example, it is due to the quality, it is worth considering including an alternative product instead (see modification). Especially with trend products that have a short life cycle, you should not wait too long to remove them once the hype has died down. Or do you still know someone with a Tamagotchi around their neck today?

Differentiation

In differentiation as a measure of assortment policy, you include new products that complement existing articles in the same article group. If you stock barefoot shoes for women, include barefoot shoes for women for running and barefoot shoes for women for hiking.

Diversification is further subdivided into three variants:

• Horizontal diversification: This involves similar products that are at the same level of the value chain. Example: You expand your online shop for barefoot shoes with additional brand manufacturers.
• Vertical diversification: In vertical diversification, you expand your product range with products that are upstream or downstream of the previous value chain. Example: You now decide to manufacture barefoot shoes yourself.
• Lateral diversification: You expand your product range with goods that have no connection with your previous range. Example: You open up a new business field and now also offer decorative articles.

Modification

Instead of just removing products from your range, you replace them when you modify your range. In doing so, the number of your previous products remains untouched. This can be a good compromise to avoid alienating your customers or upsetting them.

Specialisation

Restrict yourself to a certain product area, specialise in it. In most cases, specialisation in the course of the assortment policy goes hand in hand with a reduction of the assortment. These measures require a precise analysis of your range to identify which core products you should focus on.

Standardisation

With standardisation, you take product variants off the market that are hardly or not at all demanded by your customers and focus on the remaining models. You begin to optimise these with additional functions and features so that your target group receives even greater added value.

SLO (Selfliquidating Offers)

If you decide on this measure of the assortment policy, you only include new articles temporarily in order to increase the attractiveness of your online shop in the short term. Offer the articles at a reasonable price.

Why should you expand your range and why reduce it?

A product expansion in the assortment policy, whether as diversification or differentiation, can pursue different goals. You may have the plan to open up a new target group and increase your profits or to focus on creating security by offering the widest possible selection. In that case, the elimination of low-selling items would be less of an issue. However, with this measure of assortment policy, you should also reckon with high investment costs, for which you also always bear the risk that the new offers will not be well received. There may also be additional costs for labour and storage capacity. Marketing also needs to be realigned.

Eliminating or removing individual products or entire product groups from your assortment should only be done within the framework of assortment policy on the basis of well-founded figures that show that these products can hardly be sold, that you will incur losses in the future or even that you already have to complain about such losses. Reducing the selection also helps you to focus on an optimised offer for your target group. However, a reduction in selection or stock can also lead to a loss of sales. In addition, some customers may be annoyed by the items that are now missing. A sensible step in the assortment policy would be to see whether a modification is possible in this case.

Align strategically with the assortment policy

The assortment policy is your driving force for a high-turnover assortment. You have a whole range of measures at your disposal to continuously optimise your offers. Important for all decisions on assortment policy: Make them only on the basis of well-founded figures and get to know the needs of your customers, for example with target group analysis or customer surveys. This opens up the potential for you to place your online shop strongly in the market, to stand out from your competitors with a well thought-out assortment and to generate leads. At the same time, you remain flexible with your assortment policy and can react quickly to changes.

Do you still have questions? Then don’t hesitate to contact us.