The other day, I came across this viral post on X, and found myself shouting at my screen:
If you’re not familiar with Davie’s work, he is the founder of The Oodie, a $400M brand selling oversized hoodies.
He’s also 100% spot-on here.
Merchandising, or in simpler terms, what you sell, is a critical part of ecommerce marketing.
If your goal is to increase lifetime value, expanding your product assortment becomes the foundation — without new things to sell, customers have nothing to come back for.
Allow me to demonstrate.
Below is what a typical ecommerce customer journey looks like.
Let’s take Ralph Lauren as an example:
The customer buys the bestseller (polo).
They then buy that same product in a slightly different variation.
They then buy a new product, in the same category.
Once trust has been established, the customer switches to a new category (shoes).
None of this would be possible without a strong merchandising strategy.
But here’s the thing:
Launching new products in industries like fashion or beauty is straightforward.
It’s much harder when you sell something that only needs to be purchased once.
What if you sell an electric gadget? Or a mattress?
You either need to get really creative, or create a bundle where you throw in multiple products and frontload the first-purchase AOV.
Below are some merchandising tactics to consider, with examples:
5 eCommerce Merchandising Strategies To Launch New Products And Increase LTV
Merchandising Strategy #1: Bestseller Variation
This is the lowest risk assortment tactic for most brands. Since customers tend to shop in the same category, the easiest path to retention is offering them a variation of your bestselling product, in a different color, material, or flavor.
Examples:
- David’s protein bars come in 12 different flavors.
- Ralph Lauren sells its polo in several different materials + colors
- Coca Cola has a zero calorie + zero caffeine version
Merchandising Strategy #2: Car + Fuel
The car + fuel tactic is popular among brands that sell gadgets or devices. For these brands, LTV will be naturally lower, so it makes sense to offer bundles that maximize first-purchase AOV.
The idea here is that you sell the car (e.g. toothbrush), but in order to use it, the customer also needs to buy fuel (toothpaste). To increase LTV, you want to ideally convert the customer to a subscription for the fuel product.
Examples:
- Nespresso coffee machines (car) + capsules (fuel)
- Autobrush toothbrush (car) + toothpaste (fuel)
- MANSCAPED shavers (car) + creams (fuel)
Merchandising Strategy #3: Limited-Edition Drops
Limited-edition drops can work well if you want to attract new customer segments. You can tie the launch to a seasonal moment, collaborate with a celebrity, or partner with another brand. What makes this tactic low risk is that you produce the item in limited quantities, so if it doesn’t sell out, the burn isn’t as big.
Examples:
- Liquid Death’s Psycho Cider sparkling water
- Ridge’s NFL-themed wallets
- The Oodie’s Rick & Morty collection
Merchandising Strategy #4: Complimentary Products
These are low-priced items that complement your hero product. A customer probably wouldn’t buy these products on their own, but they work well as one-click post purchase upsells with AfterSell.
Examples:
- PetLibro’s water filters
- Away luggage tags or toiletry bags
- Warby Parker glasses case
Merchandising Strategy #5: Category Expansion
Out of all the merchandising tactics mentioned, category expansion is the highest risk (and highest reward). You have to set up a new supply chain and educate yourself on selling a totally new product.
Before you launch a new category item, you should do extensive market research to confirm your target audience’s interest in the product. You want to understand what was appealing about your hero product, and create something that’s related to it.
Examples:
- Neutonic started selling productivity drinks, now also sells creatine sachets
- Ridge started selling wallets, now also sells wedding bands
- MVMT started selling watches, now also sells sunglasses
3 Things You Need To Know About Building Customer Loyalty
1) You need to consistently launch new products
A lot of retention marketing success boils down to having something else to sell. If you’re not consistently giving customers new reasons to come back, they won’t. They’ll either get tired of the same flavor protein bar, wearing the same color shirt, or they simply “won’t need another car.”
2) People tend to buy stuff they already bought
If you sell beauty, fashion, or supplements, your lowest risk LTV move is to launch a variation of your hero product. That could be a different color, flavor, or material. Limited-edition launches can also work well.
Assuming neither of these tactics are available to you, then you’re better off creating a high AOV acquisition bundle, and then try to increase CLV with low-ticket, replenishable items. A brand that comes to mind here is autobrush.
3) Don’t jump straight into cross-category selling
I see brands make this mistake all the time.
When you build your post-purchase flow in Klaviyo, you should optimize it to build loyalty within one category first, before trying to own two. Asking a first-time customer to buy a backpack after they just bought a wallet is too big of an ask in most cases.
How To Identify Cross-Selling Opportunities In Shopify
Shopify has a report called “Items Bought Together.” I like to use it to find cross-selling opportunities for my clients. Simply head over to Analytics → Reports and type in “bought together.”
What this does is it will give you a list of items that your customers typically buy together. Great data for building out post-purchase flows or coming up with new bundles.
That’s it for this week!
Thanks for reading,
Siim
P.S. If you need help building out your post-purchase sequence with relevant cross-sells, or your email automation system needs a refresh, hit me up here.
