Now that we've overeaten turkey and shared what we're thankful for, it's a good time to ask a vexing question. Why don't online merchants use creative combinations to increase average order value (AOV)? Once upon a time, long ago and far away, I was married to a brilliant offline retailer. This post shares three offline merchandising tips my ex taught me; each tip is sure to help online merchants as well as service related businesses, too.
When M&M/Mars moved us from Buffalo to M&M's headquarters in Hackettstown, New Jersey, Janet McKean, my ex, worked for The Bottom Line. The Bottom Line was a funky card and gift shop in a turn-of-the-century building just off the main street in Stroudsburg, Pennsylvania, where Carroll & Carroll Booksellers is today.
The store has huge windows looking out to the street. So, Janet's first tough job was cleaning years of grime, and creating a window display to tease the store's funky gifts and greeting cards (remember those?). Lack of budget, window depth, and height made Janet's first job challenging.
Janet turned those negatives into positives. She floated cards in the window space with a fishing line purchased from Dunkelberger's Sporting Goods (which is still on the main street all these years later). She used some of the large wooden drawers turned inside facing out to merchandise smaller gifts in front of a triptych of oversized furniture and lamps. That first window Janet created was masterful merchandising, increasing store visitors and buyers five-fold. Whether you're selling products, services, or even yourself, you can capitalize on this kind of creativity to increase sales for whatever it is you're selling.
Janet is an intuitive retail genius, but when pressed, she shared three merchandising tips one night as we ate pizza in a favorite dive along the Delaware river:
Juxtaposition This tip surprised me since my thought was to combine two or more similar items. Janet explained not so much as she shared how she looked for differences to accentuate each product's independence and create the unique value of their combination.
Sum Greater Than Parts While I understood the combination of things whose sum is more significant than their parts seeing such an abstract idea in practice required examples such as the Met's scarf, tea, and mug example below.
Decoy Pricing Janet merchandised expensive things to make more moderately priced options feel like a bargain.
It was cold and windy, and I was tired. So, I thought I’d be clever and take a southerly route from my father’s house in Scottsdale back to my apartment in Durham. You probably sense what I’m about to say. Yep, I got snowed about a two-hour drive from Marfa, Texas. I’d always wanted to visit Marfa to see sculptor Donald Judd’s sculpture “in the wild” at Fort D. A. Russell, the decommissioned military buildings that house the Judd Foundation.
Overestimating my ability to drive in a blinding snowstorm, I didn’t make it to Marfa, but I did discover the magical juxtaposition of Prada Marfa. Prada Marfa is a permanent art installation by artists Elmgreen and Dragset on Route 90, about 26 miles northwest of Marfa. This quiet, locked (sadly) building beams strange juxtaposition through huge windows.
I braved the wind, cold, and snow to stare in awe at such a simultaneously simple and complex juxtaposition. There is nothing, and I mean nothing, in only a windswept Texas plains way, around the “store.” The store’s stony silence was hard to hear, given the howling wind, but I sat in the car after freezing. I was the only human for miles, and a single vehicle passed during my hour-long meditation at Prada Marfa.
I thought of nature versus man, beauty opposed to ugly, and haves versus wanting juxtapositions. What juxtapositions flash into your mind looking at Prada Marfa? Email msmith (at) wte.net or send me a text on LinkedIn.
It's easier to show an example of a sum more significant than the parts merchandising, so here is the Met’s creative combination of silk scarfs, tea, and mugs - something visitors to our Pop Shop Flipboard magazine love.
The Met’s merchandising magic creates a new product whose impact and joy are more significant than what the individual items make. Thinking of the mug, scarf, or tea alone rather than experiencing such a creative combination feels together, feels diminished. So, the sum of this significant 'sum greater than the parts' merchandising is demonstrably greater than adding up the parts.
Here’s Moira McCormick’s Decoy Pricing explanation on BlackCurve.com:
The decoy effect is a compelling psychological pricing trigger to tweak loopholes in our brains. Consumers change preference based on presentation - when offered two options, we tend to prefer the first option even when both options are virtually the same. There are also times when the third option guides buyers towards a specific choice - the online option merchants most want you to purchase. For example, the Economist’s famous pricing page advertising $59 for the online version only, $125 for the print version, and a third option costing $125 for both print and online versions sold a lot of print and online combinations.
The decoy effect is a compelling psychological pricing trigger to tweak loopholes in our brains. Consumers change preference based on presentation - when offered two options, we tend to prefer the first option even when both options are virtually the same.
There are also times when the third option guides buyers towards a specific choice - the online option merchants most want you to purchase. For example, the Economist’s famous pricing page advertising $59 for the online version only, $125 for the print version, and a third option costing $125 for both print and online versions sold a lot of print and online combinations.
My favorite Janet example of decoy pricing happened when she was the Museum of Contemporary Art (MCA) store manager. Janet had two Jeff Koons Balloon dog plates selling for $3,000 each more than twenty years ago, so call it $6,000 each now. I wish we’d bought them both since those plates sell for much more today, but despite our love for Koons, we couldn’t afford such a gesture.
Since most visitors to Janet’s small store couldn’t afford the Koons plates, she put the plate (with a visible high price sticker) above a table of $50 art snow globes. I don’t remember whose art was in the snow globe, but let’s pretend it was Yayoi Kusama.
Eventually, Janet sold both of the expensive Koons plates, but her store made more profits from the hundreds of $50 art snow globes thanks to decoy pricing. At the time, $50 for a snow globe was double their expected price, but sitting below a $3,000 plate meant they were a bargain.