«The Paradox of Choice». Online store assortment optimization
How many products should there be in an online shop for it to be consistently profitable? There is hardly a general and unambiguous answer to this question. Intuitively, it may seem that the more products you offer, the faster customers will find what they need. However, research shows that when a customer has a large number of options to choose from, the likelihood of a purchase decreases! This is a problem for large marketplaces and an opportunity for smaller online businesses. Too many choices can make it difficult to make a decision.
Halla Systems Co. Ltd unites the interests of suppliers, sellers and manufacturers in different price segments and helps to optimise the assortment of your online shop. Registration on the site will allow you to enter the global market of goods and services.
Profit VS quantity
In 2000, psychologists Mark Lepper of Stanford University and Sheena Iyengar of Columbia University conducted an experiment in which shoppers were first offered 24 types of jam and then only 6. The results showed that a significantly higher percentage of purchases were made by the group with fewer choices. This effect, known as the 'paradox of choice', suggests that too much choice can lead to analysis paralysis - a condition in which the shopper is unable to make a choice.
Variety often prevents shoppers from making a final choice and purchase. The task of the dropshipper, the shop owner, is to find a balance between an optimal range of goods on the site and simplifying the buying process. It is worth paying attention to easy navigation and filters so that customers can easily find the products they want by category, price, popularity, brand, manufacturer, colour, size and other characteristics. In this way, you will be able to keep their attention and increase conversion rates.
What kind of product will make a profit?
Use web analytics tools from global and South Korean platforms such as Google, Naver, Daum to understand what products consumers are interested in right now. Study customer reviews and comments on your website and third party platforms to understand what your customers like and what they would like to see in your product range.
Profitability is a key metric when selecting a range.
Evaluate each product using the following parameters:
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Cost of sales.
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Retail price.
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Profit margin.
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Logistics costs (particularly important for drop shippers).
ABC Analysis
ABC analysis helps to optimise the product range and identify the most profitable products. The goods in any online shop can be divided into three categories:
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A: The most profitable products (20% of the range generates 80% of the profit).
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B: Products of medium importance (30% of the range generates 15% of the profit).
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C: The least profitable products (50% of the range gives 5% profit).
Collect sales and profit data for each product for a given period (e.g. last year). Work out the total profit made by each product. Sort the products in descending order of profit. Calculate what percentage of profit each product sold made. Divide the goods into three categories (A, B, C) according to their contribution to the total profit.
When you launch a new online shop, you can't do a full ABC analysis because you don't have any historical sales data (it takes 6-12 months to collect data). You can use the principles of ABC analysis to create an initial assortment. Research what your competitors offer. Find out what products are popular and in demand in your niche. Use keyword analysis tools such as Google Trends, Ahrefs or SEMrush to identify popular searches and trends. Run test batches
Assortment selection strategies
When optimising your assortment, it's not just about choosing the right products, it's also about presenting them correctly. Here are a few strategies to help improve assortment perception and increase conversion rates:
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Website. Create a website that is easy to navigate. Classify products by category, brand, price and other parameters. Filters help shoppers quickly find the products they are interested in.
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Personalisation. Use user behaviour data to personalise your assortment. Recommend products based on a customer's browsing and purchase history. This increases the likelihood of purchase and improves the user experience.
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Limited offers. Create a sense of scarcity by offering limited-time promotions and special offers. This encourages quick purchases and increases conversion rates.
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Reviews and ratings. Place reviews and ratings next to products. Opinions from other shoppers will help customers make decisions and reduce doubts.
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Test. Gradually eliminate products that don't generate meaningful revenue or aren't of interest to customers.
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Dropshipping platforms. Optimising your online store assortment is a key success factor in a dropshipping business. Using Halla Systems' innovative South Korean platform, you can not only improve your assortment, but also establish long-term partnerships with reliable and trusted suppliers and manufacturers.