An introduction

to data-driven
AI merchandising
What it is and where it’s headed
 Table of Contents

03 09
Introduction 3 key readiness steps to deploy data-driven
merchandising
04
Why does digital merchandising matter? 10
Data-driven merchandising -
05 rich data and AI make all the difference
From hand-picked to digital data-driven
merchandising 11
Comparing merchandising strategies and goals -
06 yesterday vs. today
Helping overcome critical merchandising challenges
12
The Algolia Merchandising Studio
07
What is data-driven merchandising?
15
Areas of focus as we move into the future
08
The evolution of AI data-driven approaches to
merchandising 16
What customers are saying about Algolia Merchandising
Studio

An introduction to data-driven AI merchandising

 Introduction

Your homepage is the window into your store. But how do Algolia's approach blends the art and science of merchandising
merchandisers maximize the power of their online real estate to with the guiding force of AI to help you deliver a world-class
drive sales, brand experiences, and other critical outcomes? ecommerce shopping journey for the benefit of your customers.

Every customer touch point — whether that's searching for a

product, completing a purchase, or enrolling in a loyalty program
— is an opportunity to build a connection.

If merchandisers know what customers are looking for, they can

deliver that product sooner, and more just like it. it's an art that
comes understanding behavior and a science that harnesses the
power of data and AI.

An introduction to data-driven AI merchandising

 Why does digital merchandising matter?

In today's competitive retail landscape, especially at a time when AI and data are transforming the modern business funnel. The
shoppers are still figuring out their balance with in-store and focus on user experience is all about a seamless customer journey
online the process of structuring, organizing, and curating with human-centric design and easy-to-use interfaces created to
product offerings on your ecommerce website is essential to meet the particular needs of your customers. Not only do
achieving specific business and marketing outcomes and staying customers want what they get in a store but more and across
ahead of other players in the field. multiple channels with the ability to purchase whenever and
wherever they desire.
From managing promotions, curating search results, and driving
inventory to users through their customer journeys, New technology gives business teams
merchandisers have an important role to play in shaping both the and merchandisers the ability
customer experience and the conversion rates that generate ROI to shape these outcomes.
and bottom-line results. It lets them harness the full
power of APIs like Algolia's
With so many options to choose from, customers have high AI Search and Discovery
expectations and high standards. They expect to be wowed by technology making it easier to
meaningful and frictionless shopping experiences both online guide user behavior and drive ROI.
and in-store.

An introduction to data-driven AI merchandising

 From hand-picked to digital data-driven merchandising

In the past, merchandisers relied on manually curating experiences.
Led by intuition and brand guidelines, they replicated the analog
practices in their brick-and-mortar stores.
Merchandisers working to maximize their ecommerce platforms
had to rely on basic strategies. But without the right tools or data,
these strategies were limited in scope and efficacy.
Merchandisers are seamlessly integrating the online and offline
shopping experiences by driving product and placement decisions.
They are using a range of powerful data-driven tools, designing
meaningful shopping experiences that enhance business outcomes
in real-time at every stage of the customer journey.

Older monolithic ecommerce technologies were built around open

loop systems that required a high level of manual intervention. They
also typically relied on limited real-time data or feedback.
Consequently, they had a reputation for generating mediocre
results.

As data and AI automation have become available, integrated, and

an essential part of the process, merchandisers with the right tools
and technology are taking an increasingly critical and prominent
role in driving ecommerce strategy and solutions.

An introduction to data-driven AI merchandising

 Helping overcome critical merchandising challenges

Merchandisers across multiple industries face many of the same problems when it comes to maximizing the
capabilities of their ecommerce retail platforms. Some of the critical issues that non-AI enabled merchandisers face include:

A lack of centralization caused by Blackboxed existing AI systems that have Few tools are available to help automate
fragmented and dispersed analytics, tools issues with explainability manual, repetitive, and labor-intensive
and processes tasks

There is no single window or interface
where merchandisers can see their data
and generate comparative analytics. As a
result, they cannot easily apply or modify
solutions moving forward.
Merchandisers who rely on many of the
first-generation AI-powered tools find
themselves at technology's mercy. In
many instances, they do not have the
freedom of action to adjust
configurations and fine-tune AI
outcomes, let alone the ability to
understand or explain how the AI
algorithm arrives at a specific decision
or end result.
Manual, repetitive labor-intensive
merchandising tasks consume valuable
bandwidth and make it difficult to
prioritize high-value strategic work.
Merchandisers are asking for a better
set of tools to help them do their work
better and more efficiently.

An introduction to data-driven AI merchandising

 What is data-driven merchandising?

Data-driven merchandising uses data sources from your own
business such as clicks, conversions, sales revenue, as well as
market and seasonal trends to shape merchandising strategy
and decisions from the ground up.
AI is applied to better understand and use that data. It
facilitates the heavy lifting by automating processes, fully or
partially, refining merchandising decisions, enabling real-time
optimizations, driving conversions and delivering enterprise
scale, speed, and personalized discovery experiences.
Most importantly, as the technology improves, so does our
ability to generate new and innovative data-driven
merchandising tools and solutions. “AI represents a critical new
and powerful step in helping merchandisers work on and offline
to improve business outcomes and end users’ shopping
experiences.”

Taking a data-driven approach helps merchandisers harness

rich and powerful user data that delivers valuable insights. In
turn, these generate dynamic and personalized ecommerce
experiences for end users in an omnichannel environment.

An introduction to data-driven AI merchandising

 The evolution of AI and data-driven
approaches to merchandising
Digital merchandising has evolved as the industry moves
toward increasingly sophisticated ways to integrate AI with
the data are three distinct readiness steps to deploying an
automated data-driven merchandising strategy.

An introduction to data-driven AI merchandising

 3 key readiness steps to deploy data-driven merchandising

Analytical merchandising Behavioral merchandising Contextual merchandising

Key decisions are based on analytics gathered from AI is blended with human strategies. Lends itself to Real time optimization for business metrics across all
available data and A/B tests. Limited in scope. personalization. Automation enables scale. feeds and touchpoints. Easier to implement cross
channel strategies.

ー Merchandising teams use analytics to ー AI kicks in and enables automation ー The long-term goal is to enable
identify opportunities and measure the at scale businesses to personalize all customer
impact of their actions. With this ー AI runs its magic while humans can touch points, end-to-end and across
approach, data points like margins, intervene as needed. The balance is channels. This involves AI optimizing for
recent sales, etc. start to play a role in determined by specific business and all touchpoints of the shopper’s journey
shaping strategy merchandising needs (Homepage, PLPs, PDPs, etc). Algolia's
ー A/B tests are often used to validate ー Behavioral merchandising is where goal is to deliver those capabilities for
hypotheses Algolia's AI capabilities like our new its customers that were only available
ー Changes to the configuration are merchandising studio can deliver for companies such as Amazon, Google,
implemented manually, and on an considerable value and Facebook
iterative basis, therefore the scope
remains limited
ー This approach to digital merchandising
is becoming obsolete largely due to the
fact that many of the data sources are
not originally built for merchandisers
and do not provide optimal data in real
time

An introduction to data-driven AI merchandising

 Data-driven merchandising - rich data and AI make all the difference

At Algolia, we base our approach to merchandising on four

pillars built around our data-driven merchandising philosophy.
Centralized workflow
solve the problem of process fragmentation to
We believe that our AI technology solutions empower customers
improve workflow efficiencies
to embrace and leverage an innovative approach to
merchandising. It also means that they have a choice — data and
Unified real-time insights
AI automation can work together or separately.
enable a data-driven strategy with centralized access
to performance
With Algolia, merchandisers have the freedom to choose the
sweet spot that works best for them. They can use specific data
Automation
to curate merchandising solutions or blend data with available
reduce manual tasks and harness speed, scalability,
AI-enabled solutions to automate merchandising outcomes.
and reliability

We believe our approach gives merchandisers an enriched

Control over AI
perspective that not only harnesses the power of data and AI, but
democratize AI for business teams and make it simple
also helps them outperform their competitors.
to apply these capabilities

An introduction to data-driven AI merchandising

 Comparing merchandising strategies and goals - Yesterday vs. today
Manual and curated
merchandising strategies take a hands-on approach. Items are
selected individually and picked out from inventory to drive
customer attention and sales.
Automated
merchandising harnesses the power of AI with click and
conversion events to drive and personalize query results
and pages automatically.
An introduction to data-driven AI merchandising
Brand experience
goals focus on improving the user’s interaction with the brand.
The engagement is not only about a sale or conversion but an
interaction that generates a positive impression and delight.
Though improving the brand experience is important it is often
difficult to measure.
Data-driven business goals
like improving conversion rates (CVR) or reducing website bounce
by a specific number like 20% within the next quarter are what
merchandisers typically focus on to optimize their strategy. “Built
around data-based goals, they are easier to benchmark and
measure in quantitative terms.”
 The Algolia Merchandising Studio

Algolia's Merchandising Studio can use data to shape the user

journey and bring products to customers in new and scalable
ways that benefit their business.

Merchandisers can now create the best experiences while

preserving margins from within the Studio. Businesses can can
curate, personalize, and automate product results for AI Search,
AI Browse and AI Recommendations, all from one single location.

Ecommerce store owners and merchandisers can access

powerful, code-free, AI-enhanced tools, create data-driven,
multi-faceted merchandising strategies that improve the
customer experience and accelerate business growth”

An introduction to data-driven AI merchandising

 The Algolia Merchandising Studio
The Algolia Merchandising Studio's powerful capabilities are
available to merchandising teams in one dedicated interface that
empowers them to:
一 Maximize conversion rates
一 Personalize shopping journeys
一 Optimize store layouts
一 Assess historic and seasonal successes
一 Determine marketing and promotional investments
for the best ROI
一 Access consolidated analytics and reporting
The latest set of features include:
一 Revenue analytics
- that offer a number of key related metrics like
revenue per search category, total revenue, and
average order value
An introduction to data-driven AI merchandising
一 Unlimited events retention
- that allows merchandisers to retain analytics
indefinitely, allowing for insights into seasonal
and year-over-year trends
一 Comparison mode
- that enables users to visualize side-by-side
comparisons for any query or category page
一 Image-based recognition
- that provides a new method for product
discovery that more closely resembles an
in-person shopping experience

Areas of focus as we
move into the future
With the Merchandising Studio, Algolia is
committed to continue building features
and capabilities to help merchandisers
make significant progress with their
day-to-day tasks and enable them to make
critical and strategic decisions.
An introduction to data-driven AI merchandising
AI Automation
Minimizing or eliminating the need to be continuously involved with
repetitive, rule-based, or complex mechanical tasks that can be
programmed for automation
Analytics
Aimed at optimizing operations and delivering a more customer-centric
shopping experience through informed decisions that drive sales
Manual controls
Freedom to deploy specific capabilities activated by human expertise
and judgment (your merchandising secret sauce) to maintain a
competitive edge, respond to market trends, and adapt to specific
customer needs and preferences
Workflow efficiencies
Built to improve the effectiveness and productivity of the
merchandising process
 What customers are saying about Algolia Merchandising Studio

The Algolia Merchandising Studio has helped
visualize our data in a more concise and in-depth
manner. In just two clicks, it also enables us to
interpret our analytics and create rules based on
visualizing customer queries. This capability allows
my team to adapt to customer behavior trends
swiftly and strategically.
A stand-out feature for us has been the analytics
section, especially the category pages, where we
have been able to precisely see at a quick glance
how customers shop on our product listing pages
and make commercial changes based on this, to
optimize our customer experience. We are excited
to use The Merchandising Studio further, working
with Algolia to help meet our business goals.
Algolia’s Merchandising Studio gives
merchandisers unparalleled control by surfacing
insights and automating their promotions,
ensuring the right customers see the right
products at the right time.
Not only does this tool help my team create
superior shopping experiences, but the
reimagined view of key metrics provides a
meaningful look at how our campaigns are
performing and alerts us of optimization
opportunities.
Mike Marcoux, eCommerce Manager
Shinesty

Katherine Lee, Online Trading Executive

Fortnum & Mason

An introduction to data-driven AI merchandising

 See how Algolia's Merchandising Studio is transforming
merchandising and making the power of AI and data-driven
ecommerce an accessible and code-free process.

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