New E-Commerce Package Automatically Removes Products

Mercado Software is set to introduce software that will—without human intervention—add and remove products based on inventory and item profit margins.

The company plans to launch the new software package, called Mercado 4, the week of Jan. 15.

While various vendors have offered integration between Web analytics and e-commerce platforms, Mercado's new offering is significant because it allows retailers to instantly make site changes without involving employees, said Forrester Research analyst Tamara Mendelsohn.

"It automatically makes merchandising changes," Mendelsohn said, such as removing a product when the inventory gets low enough or promoting to a more prominent position a product that delivers a better profit margin. But the system can also change the associated products—such as supplies, batteries or special product-specific cleaners—that the site tries to upsell to the customer.

"There are definitely efficiencies that are ripe to be squeezed out of the process," Mendelsohn said. A typical retailer today has the systems, personnel and other resources to focus on perhaps 10 percent of its products. If that retailer is able to extend its focus to the remaining 90 percent of its product line, the potential for increased revenue is vast, Mendelsohn said.

Although Mercado appears to be alone in that space for the moment, that's not likely to last, Mendelsohn said. IBM and CoreMetrics are working on something similar but "the loop is still not closed" between the two companies' products, she said.

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One source familiar with the product introduction details said the reason there are likely to be more packages with such automated capabilities in 2007 is less technological and more emotional.

"Three years ago, this concept would have been too futuristic and simply too uncomfortable. Back then, the metrics people were using were not trusted," said the source, who asked to remain anonymous. "We've reached a point now where we have reached that trust factor."

Given that blind trust is not a tool frequently used by senior IT execs, Mercado's package will include several failsafe features, allowing users to require approvals at various intervals, until the company gets comfortable with the software.

Officials familiar with the rollout plans said Mercado 4 would be priced per-CPU and that "major multichannel retailers" will likely pay somewhere in the $75,000 to $350,000 neighborhood.

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