Achieving business growth can be done in various ways. One effective approach is expanding the product assortment, allowing you to offer more different products to customers. However, this involves additional costs like warehouse and logistics. In e-commerce, the assortment can also be expanded without physically stocking products, by integrating product information directly from external warehouses.
The classic approach and competitive advantage involve keeping only stocked products visible in the online store and communicating this through marketing. However, with more efficient supply chains, this advantage is becoming outdated. Additionally, many customers are willing to wait longer if it means getting a better price or product.
Below, we will discuss the benefits and challenges of utilizing external assortment and aspects to consider when building an online store. We will also cover options for enriching and automating product information.
External Assortment
In B2B sales, the principle of external assortment is already commonly used — if a product is not sufficiently available in stock, a few phone calls are made to get the rest from importers or even competitors. However a customer purchasing from an online store is less likely to make an extra effort if stock is insufficient, opting instead to buy from another seller. For B2B sales, a lost transaction could mean thousands of euros lost from a single sale, especially when the buyer prefers to purchase everything from one supplier.
The introduction of external assortment in an online store offers several significant advantages:
- No need to stock additional products: This is particularly beneficial for large, special storage conditions, or expensive products.
- Better liquidity: Sales are made on a realization basis, and money is received from the customer before payment is due to the supplier.
- Testing new products/groups: Without inventory risk, you can test which products attract interest and later stock popular items.
- Faster time to market for new products: Simply adding product information to the online store is sufficient. New trendy products reach the market faster than competitors.
- Better SEO: More products mean better visibility in search engines. If new product information is properly enriched, you expand the reach of people visiting your website.
Implementing external assortment display solutions in your online store and automating related processes can be one of the most foolproof investments you can make.
Questions to Consider
Of course, it’s not all black and white, and several questions must be addressed for a successful solution:
- How to properly communicate expectations to customers regarding delivery times, product returns, and support. Supplier delivery efficiency and priority.
- What happens to delivery times when a cart contains both regular products and external assortment items? Are two separate orders created (each with delivery) or is everything sent on a later date?
- When is a product created in the warehouse software? It is assumed that external assortment products are purchased significantly less frequently and that inquiries are paid.
- How is product information enrichment carried out and its quality ensured? For example, if 5000 products are imported, you’ll need to enrich them as you’ll do with the products currently in stock. Lumav offers a solution for automating product enrichment and we have some additional tips that we are happy to discuss face-to-face.
- Pricing. If you know the wholesaler also connects with other merchants via the same database or there’s more competition, it is advisable to establish business intelligence/price monitoring processes to stay competitive.
To avoid disappointment, if the brand allows it, it’s advisable to start integrating assortment step-by-step and initially perform the most value-adding task (adding product information to the online store so customers can see and buy). Handle the warehouse manually at first and only automate once the business model has proven successful.
Technical Solution
The biggest mistakes in software development often occur during the analysis phase — developing an unsuitable solution, and the same applies to integrating external assortment. Larger online stores must have an internal person responsible for leading the project from the client side, making decisions, and responding promptly to questions.
Generally, the process is as follows:
- The merchant must inquire from the supplier about their product information is structured:
- Files: XLS, CSV, etc.
- Automatic interface: API
- Product information management system
- How additional materials are delivered: images, PDF guides, videos, product drawings, etc.
- Conduct an analysis process to decide how the process will function within the company and what information flows should be automated. It is often necessary to integrate with various software systems (ERP, PIM, e-commerce, CRM, etc.).
- Pay special attention to stock levels, delivery, and pricing policies.
- Once the requirements are finalized, map the information fields, create and test the integration.
- After completion, maintenance begins.
For inspiration, you can check how we solved the situation for Decora and eHomer.
Smaller Budget Solution
For smaller or more experimental merchants, a more affordable option is also available:
- Start by manually importing product information into the online store. As a rule of thumb, always begin with the development server and create a specific attribute for the product to quickly deactivate products from the store.
- Create a visible attribute for external assortment products describing longer delivery times. If there is no time for cart automation, repeatedly describe the longer delivery time at different stages (product page, checkout, order email, etc.).
- Magento’s “Notify me when the product is in stock” feature is an underutilized functionality that can be used to register customer interest. For example, you can post a product at a good price, and if enough people show interest, you can order a batch.
- If you are worried about poor brand experience, create a separate store view in Magento showing only external assortment products and ensure carts do not mix.
With a more affordable but more manual solution, you can sail ahead and, if successful, proceed to full automation.
How Lumav can help
Lumav’s goal is to ensure our clients’ e-businesses outperform their competitors. We understand that not all business projects succeed, and while revenue forecasts are unpredictable, costs are as certain as death and taxes. IT is just one piece of the puzzle, but when it comes to external assortment, it’s the biggest piece.
For product information enrichment automation, we have developed a separate solution that enables:
- Getting product information from various suppliers
- In any format (files, APIs, scrape etc.)
- Structuring the data to suit the online store
- Processing the information using AI and extracting data from public sources
- Sending the information to a product enrichment platform for verification or directly to the online store
Combining various AI service providers, using dictionaries, and fine-tuning, we also create custom solutions for product information management.
