And how stale merchandising can bring them down

By Mark Del Franco

COMMUNICATION: “The best online retailers engage in two-way communication with their customers,” Solomon notes. Blogs, e-mails and bulletin boards/chats allow two-way conversations. Some craft sites demonstrate how customers use their products. Others post customer product reviews.

CREATIVITY: “Product innovation is the heart and soul of merchandising in a differentiated [noncommodity] strategy,” he says. “Develop innovative, proprietary products so you don’t have to compete on price. Build your merchandise mix around a clear lifestyle.”