In the year ahead, many retailers and brands will turn away from that strategy and focus instead on adding specific pieces of ecommerce technology that address pressing needs and promise a quick ROI, Forrester Research Inc. says in its recently released “Predictions 2024: Digital Commerce” report.

Emily Pfeiffer, principal analyst, Forrester Research Inc.

Retailers and other types of companies are driven to seek new solutions when existing ecommerce systems that impact customer-facing transactions and internal processes are unable to meet new needs, says report co-author Emily Pfeiffer. For example, many retailers and brands have inventory systems that do a good job of tracking merchandise from suppliers to distribution centers to customers. However, they are not designed to provide online shoppers with real-time information about inventory availability.

Commerce teams move away from replatforming to ‘point solutions’

Those inventory systems and other components of ecommerce operations, Pfeiffer says, “would have a very high cost to rip and replace.” Instead, she says, more companies are leaving those systems in place for now and seeking add-on technology that addresses the pressing needs they currently face.

“And that is the right way to think about it,” Pfeiffer says. “I have a business problem, what capability will solve it, what tech function will give me that capability, let me go add that. Those are the types of moves we see coming in the next year.”

Pfeiffer, a principal analyst at Forrester, isn’t surprised by this development. In last year’s report, she and her colleagues predicted that one-third of organizations that tried to “play software company” by piecing together combinations of function-specific technology would regret they did. She believes that prediction was on the money.

In response, Forrester predicts that fewer companies will attempt big initiatives to refresh their ecommerce technology infrastructure. It also predicts that “smaller, targeted moves will replace half of major replatforming projects.”

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In many cases, those smaller moves will consist of retailers and brands looking for a “point solution,” technology that addresses their specific problem. While that may lead them to new vendors, she says it’s a good idea to determine what a retailer’s current vendor offers, as ecommerce tech providers are constantly acquiring companies with specialized expertise and innovating themselves.

“Start with your trusted vendor, then look at point solutions,” Pfeiffer says. “The last resort should be a major replatforming.”

Other ecommerce technology predictions for 2024

Besides predicting a shift to more targeted tech investments, the Forrester report makes four other predictions for 2024:

1. At least one-quarter of digital tech spending will shift away from maintenance.

Given the need for flexibility today, “businesses will realize they can’t keep throwing good money after bad. They’ll spend less on maintaining legacy systems — and on the partners that support them — as they finally move to eliminate outdated tech instead of paying to keep it on life support.”
With many tech budgets tight, Pfeiffer says she and her colleagues hope companies will “put money into things that will move them forward instead of automatically writing that check” to maintain the systems they have in place.

2. Only one-quarter of businesses will benefit from digital commerce initiatives based on generative AI.

Retailers will be constrained by consumers demanding more control over their personal data and new AI-related regulations, Forrester predicts.
“Trust is everything,” Pfeiffer says. “Make it really clear what data is being used, how it’s being used and give customers control if they want it not to be used.”

3. Social media giants will partner with three retail media networks for commerce.

Forrester doesn’t predict which three retailers’ advertising networks will partner with social networks. But it points to examples such as Meta Platforms Inc., owner of Facebook and Instagram, working with retailer Dollar Tree. It also points to Pinterest working with U.K. retailer Tesco.
Such relationships, Forrester says, will leverage customer data to make purchasing on social networks more appealing. And social commerce is yet to take off among U.S. consumers overall. However, a 2022 Forrester survey found 61% of U.S. online adults under 25 had completed a purchase on a social network.

4. Six percent of businesses will boost employee productivity with computer vision and augmented reality.

Examples include store associates, warehouse workers and B2B salespeople using cameras on mobile devices to capture physical data and get recommendations on the best actions to take. Already, 4% of retail and wholesale workers say they used augmented or mixed reality tools on their jobs weekly. Forrester projects an increase of at least 50%, to 6% or more, in the coming year.
“Digital businesses should initially adopt these tools as tests with clearly defined desired outcomes — and then carefully monitor the impact on those intended results and goals,” the Forrester report advises.

In addition to Pfeiffer, Forrester analysts Lauren Cevallos, Chuck Gahun and Brendan Witcher co-authored the 2024 digital commerce predictions report. They had input from Fiona Swerdlow, Keith Johnston, Kelsey Chickering, Joe Cicman, J. P. Gownder and Delilah Gonzalez.

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Bachir Kassir, founder, MyTradeZone.com

“We know that 40% of B2B marketing budgets are spent on trade shows and that over 95% of marketers use social media content in their campaigns,” he says in his promotional material, adding: “So why is there no social network specifically dedicated to B2B trade?”

That’s where MyTradeZone fills the gap in B2B commerce, he adds.

“On MyTradeZone, each business can both market its products/services and source what it needs, all within the same platform,” he says.

Kassir notes that he founded and launched the site quietly several years ago, building a base of about 50,000 users through word-of-mouth.

A toolset with CRM and email marketing

But he recently publicized MyTradeZone’s official launch in a press release and is considering taking on investment partners to spur growth. He adds that he expects the site to begin generating revenue in the first quarter of next year.

MyTradeZone.com provides built-in features ranging from site search, product listings, and online video chats to email marketing and CRM software applications to help buyers and sellers find and build business relationships with particular types of trading partners.

It offers limited access to these features at no charge under its basic membership plan. Premium plans will provide the same features and higher site search rankings for monthly fees from $20 to $50 based on the volume of activity.

In addition, the top premium plan will let participants earn fees from online ads placed on the social network site. MyTradeZone will take a cut of those ad fees.

MyTradeZone.com does not operate as a conventional ecommerce marketplace hosting product and services sales transactions among participating buyers and sellers, who complete those transactions outside the networking site. But it will let users monetize business communities, such as by setting up industry organizations and charging membership fees through the Stripe online payments system. In that case, MyTradeZone will charge a fee based on a percentage of the membership fees.

Kassir says MyTradeZone has been gaining about 100 members daily — a figure he wants to grow to about 1,000.

To get there, he says he’ll continue to invest in “lots of business tools” available to members and offer premium membership deals to trade shows, business networking groups and trade associations. He adds that while he has mostly self-funded MyTradeZone, he may consider outside investors.

Paul Demery is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. paul@digitalcommerce360.com.

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Babylist, an online marketplace and baby registry aggregator, treats generative AI as a “co-pilot,” and not necessarily a time-saving tool, says Lee Anne Grant, chief growth officer.

Lee Anne Grant, chief growth officer, Babylist

“It’s a tool to help generate ideas, content and copy,” she says. “In some ways, using it is taking us more time.”
This is because Babylist’s creative team uses the technology to inspire rather than outright write complete blog posts or other marketing content. Marketers ask AI questions and then think about how the results can help them create.

“We had an all-hands meeting [in early 2023] with the goal to approach the technology in an educational development way,” Grant says. “You’re not only allowed to use it for your job, but you’re also expected to.”

More retailers are likely to follow suit as the technology continues to advance and retailers learn how to wield it. 56% of U.S. marketing or advertising decision-makers already use generative AI in their marketing efforts, according to consulting firm Forrester Research Inc.’s June 2023 business-to-consumer marketing survey of 154 executives. These large language models, chatbots and image generator vendors include ChatGPT, DALL-E, Stable Diffusion and Midjourney.

Digital marketers are learning that the more they test, the more the technology learns. This affordable tool can help — but not replace — marketers. Babylist uses ChatGPT to test copy for newsletter and marketing email campaigns. Online florist UrbanStems uses generative AI to write blog posts, and it creates images for social media marketing creative. And men’s footwear brand Koio uses AI-generated copy for brainstorming email and ad ideas. The costs are low, and retailers like UrbanStems are mindful that if they aren’t using it, their competition certainly is.

Retailers must consider the potential upsides — and pain points — when using generative AI

Digital marketers are using generative AI to draft ideas and examples for emails, SEO and other marketing materials. While the potential benefits are vast, there are also concerns, says Jay Pattisall, vice president, principal analyst at Forrester.

Marketers must consider how brands, retailers and agencies are using the technology, Pattisall says. Copyright law does not protect AI-generated art, for example.

But the potential for how brands can use AI is exciting, he says. Advertising agencies are building platforms for their clients as part of their own proprietary technology. Retailers are building in-house, too, he adds.

“But at this stage, it’s more practical to buy because there are more options available on the marketplace. That may change in the future,” he says.

Babylist tests ChatGPT-generated email campaigns

Babylist uses ChatGPT to test newsletter marketing email campaigns. In 2023, Bed Bath & Beyond Inc., owner of major baby products retail chain Buy Buy Baby, filed for bankruptcy. Babylist saw this as an opportunity to acquire Buy Buy Baby’s customers.

Babylist ran a test for an email marketing campaign on April 29 with ChatGPT for its two newsletter audiences. It sent out one test to 10% of its “pregnant” newsletter recipients (about 59,000 subscribers out of 589,000 on the total list) and 10% of its “parent” newsletter recipients (222,000 recipients of 2.32 million).  Half of each group received one email written by a Babylist editor and the other written by ChatGPT.

The results? For the pregnant group, the editor’s email won with a 2.9% higher open rate compared with the generative AI’s version.

• The Babylist editor’s subject line: “buybuy BABY Bankruptcy & Your Registry: What to Know.”
• The ChatGPT’s subject line: “What the buybuy BABY Bankruptcy Means for Parents.”

For the parent group, ChatGPT gained a slight edge over the human editor with a 0.37% higher open rate.

• The Babylist editor’s subject line: “buybuy BABY Bankruptcy & More Parent News.”
• The ChatGPT’s subject line: “What the buybuy BABY Bankruptcy Means for Parents.”

Babylist found that ChatGPT-generated subject lines increased open rates in half of their tests. It concluded that ChatGPT is a “great resource for when the team needs subject line inspiration or help writing one,” Grant says.

AI helps retailers brainstorm ideas

ChatGPT-generated content helps Babylist’s creative team create better content, Grant adds. The value is in the brainstorming.

“If a copywriter is feeling stuck on a new concept for TikTok video, they can ask ChatGPT to generate a bunch of ideas,” she says.

Using generative AI allows retailers to scale and personalize marketing based upon the brand’s approach, says Forrester’s Pattisall.

“Let the people be in charge of the creativity and let the machines help scale and volumize the marketing,” Pattisall says.

Retailers must consider copyright and liability issues

Babylist employees are instructed not to share proprietary or confidential information with ChatGPT or any other public generative AI platform, Grant says.

This is important because retailers must also take care about what materials they use to “train” the AI model, Pattisall says.

“If those inputs are using data points that are copyrighted material, then the model potentially is violating the copyright by using rights-protected materials,” he says.

One example of this is between visual media company Getty Images and Stability AI Inc. Getty Images accused Stability AI of using more than 12 million photos without permission or payment to use those images. The complaint, filed in February 2023, says that Stability AI unlawfully used Getty’s copyrighted images and text, including metadata, to train its AI text-to-image tool Stable Diffusion.

Metadata is the information used to summarize how and when the data was created as well as the source, type and owner of the data. Stable Diffusion is a text-to-image model that uses deep learning to generate high-quality images from written descriptions.

“All of Getty’s images are copyrighted images,” Pattisall says. “So the liability is a concern for marketers.”

UrbanStems jumps onto generative AI to keep up with competitors

Competition prompted online flower retailer UrbanStems to focus on generative AI, says Katie Hudson, content director. In early 2023, the retailer was already using generative AI to create notes to accompany its flowers. Hudson says she noticed competitors doing the same — and she read about it in the media.

Katie Hudson, brand marketing and content, UrbanStems

UrbanStems decided to look into how it could use the technology beyond brand awareness, Hudson says.

Mother’s Day is UrbanStem’s busiest holiday. It accounts for 15% of the retailer’s total annual revenue. For Mother’s Day 2023, the retailer used ChatGPT to write a blog about the 10 best brunch spots for Mother’s Day in Washington, D.C.

UrbanStems marketers wrote the introduction, AI wrote the rest of it, and the article appeared in the retailer’s blog section on its website.

“During May, which includes Mother’s Day, we saw this local post drive 5% of our organic blog traffic. It was in our top 10 performing posts for the month,” Hudson says.

Blogs are not intended to drive conversion, but rather, improve organic search results, she says.

“Our blog had our highest ever non-brand search traffic during Mother’s Day,” Hudson says.

This could be attributed to the brunch blog, among other marketing efforts, she says. Over the two weeks leading up to Mother’s Day, UrbanStems’ organic search’s conversion rate increased 17%, she says.

UrbanStems used AI to write a top 10 best brunch spots for Mother’s Day in Washington D.C. in April 2023. The post increased organic blog traffic 5% in May. It was in the top 10 performing blog posts of the month.

UrbanStems has not drafted enough generated-AI posts on its blog to truly compare performance, Hudson says. Part of the reason is because it typically takes several months for its blogs to gain traffic and views in search engines like Google, she says.

Digital marketers use AI to automate content creation tasks

Not only did this ChatGPT-post drive traffic to its site, but it saved its marketers time as they did not have to manually research brunch places.

The retailer is drafting at least one AI-generated blog post a week to test how the posts perform, Hudson says. UrbanStems marketers use templates to help guide the AI. Marketers can use saved templates and copy and paste information like name insert and word count requirements, she says.

“We don’t have to do everything from scratch,” Hudson says.

What’s left is copyediting.

“I find where it’s saving us time is truly the structure of the blog. It builds it out. We give it all the key questions you might want answered and it will give us some interesting facts. We then go in and tweak as needed,” Hudson says. “Instead of a blog post taking a couple of hours, it will take 20 minutes.”

AI results need human assistance

The AI results aren’t perfect, as sometimes the AI will make up descriptions for products it does not know, or it will not write in the tone UrbanStems’ brand voice, Hudson says.

“We asked ChatGPT to write about a bouquet with a certain kind of flower and the description was way off. It didn’t know our products at all,” Hudson says, without revealing more. “It was kind of guessing. So, we had to go back and do tweaks.”

UrbanStems is feeding ChatGPT its own product descriptions. This will help it better understand the tone of the “brand’s voice” as it learns, Hudson says.

“We’re still working on having AI understand our brand voice. AI tends to create cheesy writing [for descriptions],” she says.

So for now, UrbanStems is still writing its own product descriptions.

“We are using AI to draft all our SEO content, some of our blog content, and all our meta descriptions and title tags for SEO purposes,” she says.

Retailers use AI to generate marketing content

Babylist also uses generative AI for search engine optimization. The online marketplace uses Frase, a generative AI content writing software vendor.

Typically, marketers log into Google Webmaster Tools to search what to use for SEO, Babylist’s Grant says. Now, Frase generates frequently asked questions keywords that Babylist should use to make sure an article they’re writing is SEO-optimized, she says.

“That frees up our editors to take the time to write an article and create better quality content,” Grant says, without revealing more.

Forrester’s Pattisall says generative AI will allow retailers to send more relevant communication. Marketers can uncover new ways to grow and acquire new customers. They can also use the technology to keep existing customers at a cost that does not exponentially increase year after year, he says.

“[Retailers] can maintain their business margins,” he says “They can provide the type of marketing services that they’re good at in a way that doesn’t break the bank. [The technology] allows them to be profitable,” he says.

Generative AI produces images for social media

Another way marketers can use generative AI is to create images. UrbanStems uses AI software program Midjourney that creates images from text prompts. Marketers ask it to create an image of a 10-stem red and white arrangement of peonies, in a glass vase on a white background.

Hudson says the results were encouraging.

“While it still looked like AI — not quite like a true image — it was a great starting off point,” Hudson says. “I sent that off to the merchandising team and they were able to use that image for vendors to use as a reference. That’s a huge value to us.”

AI-generated images allow UrbanStems to experiment and create new bouquet designs quickly. They do not have to buy the flowers and conduct a photo shoot to mock up new designs, she says.

Hudson says the retailer uses the standard tier of Midjourney, which means it has limits on how many images it can have the AI create in a month. Businesses can also pay more to have the AI generate images in seconds or create images in 10 minutes for cheaper.  A basic plan can cost $10 a month to $120 per month for a mega plan.

UrbanStems uses Midjourney to create images of flower arrangements to use as product mock ups to share with vendors.

Using generative AI to generate social media images

During the summer of 2023, UrbanStems ran a test via social media to see if it could gain consumers insights using AI generated images.
The test used products UrbanStems already sells, but the goal was to see if it could gain insights before actually creating new products.

The retailer launched “This or That” polls using Instagram Stories, where viewers could vote on which bouquet they preferred. The stories were live for 24 hours. UrbanStems paired similar bouquets together that have similar price points and color schemes.

The retailer’s average interaction rate for Instagram stories is 20% of its 233,000 followers view the story.

The poll’s results reflected real-life sales, Hudson says. The winning bouquets had higher
online sales compared with the bouquets with fewer votes, she says. The bouquets Sol vs. Neon Lights polled from July 12-13, 2023, with Neon Lights as the clear favorite with 79% of the vote compared to Sol’s 21%.

In UrbanStem’s Summer 2023 summer poll “This or That,” in its Instagram Stories, The Sol received 21% vs. The Neon Lights (79%).

These results give Hudson confidence that the brand could do a poll like this with AI-generated images so UrbanStems will know what shoppers’ preferences are before going to market with those products.

What’s more, it’s insights like these that Hudson believes will lead to further investment from its management team in Midjourney and generative AI applications in general.

“I feel confident I could get our company on board investing in [higher-cost plans],” Hudson says. “It will take some of the heavy lifting off our junior marketers that no longer have to be in the weeds looking up SEO terms, for example. We want our employees to grow in their role and not be bogged down.”

Marketers test and learn from AI

Another way retailers are using AI is to help alleviate the workload for junior marketers. Some retailers like men’s footwear brand Koio are just getting started using generative AI.

For about six months, Koio has used ChatGPT for email subject lines, says Joe Anhalt, vice president, marketing, growth.

“It’s one of the first places we go for inspiration,” Anhalt says. “It might take a few times and we have to make tweaks on our own, but the prompts are showing us results.”

The shoe retailer uses the AI-generated copy for performance ads on Facebook and Instagram, he says, without revealing more. The brand uses software vendor Zenlytic with generative AI tool Zoe. Zoe answers questions and generates reports about how marketing campaigns and specific promotions are performing.

While Koio hasn’t tracked how AI is performing compared with human marketers, the tool has saved it considerable time, he says.

“The larger win for us has been not needing a full-time employee to produce some of these tasks,” Anhalt says.

AI has helped marketers free up time to do other tasks, Anhalt says. However, there is a learning curve for junior marketers, he says. The retailer typically pairs a junior marketer with a copywriter until they are confident the junior marketers can use ChatGPT or a similar tool to craft emails, banner ads and other site content, he says.

What does it cost to use AI?

Overall, Babylist, UrbanStems and Koio said the cost to use generative AI technology is affordable. For certain applications, ChatGPT is free and services like Midjourney and Frase charge “reasonable” rates, according to UrbanStems and Babylist.

It’s not about the cost, Forrester’s Pattisall says. “Retailers’ knee-jerk reaction tends to be, ‘how much money is this,’ or ‘how much money will this save us?’” Those are the wrong questions, he says. “The better way to think about this is how effective it’s going to be.”

Generative AI continues to evolve at an accelerated rate. As marketers learn how to use it, the technology itself improves. It’s an idea generator if nothing else, Babylist’s Grant says.

“An editor might ask ChatGPT to come up with 40 ideas for an Instagram post,” Grant says. “30 out of 40 of those ideas might be bad — but you end up with a gem of an idea from all the wacky weirdness.”

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The social media app’s Shop option, prominently displayed between the For You and Following feeds where users watch videos, presents a never-ending scroll of “recommended” random products, according to an early version Bloomberg has reviewed. It includes products from a $2.99 Nike sweatshirt that appears counterfeit to a $6.99 statue of a “naughty dwarf” sitting on a toilet. Many of the listings, including a budget planner and a waist-trainer vest, say they’re shipped from China, where TikTok’s parent company ByteDance Ltd. is based. That could reignite U.S. regulatory concerns if it puts user data in the hands of Chinese sellers.

The TikTok Shop marketplace will be competing with Amazon.com Inc. to sell a target of $20 billion in merchandise this year, Bloomberg has reported. The effort has been discussed internally as a “community commerce” effort, according to people familiar with the matter. That means it’s meant to capitalize on the app’s potential to bring people together through their niche interests. But the early version of the experience shows no evidence of the ultra-personalized algorithm TikTok is known for in its video feed, which has been key to its success in capturing users’ attention.

Amazon is No. 1 in the Top 1000, Digital Commerce 360’s ranking of the largest North American online retailers. Amazon is also No. 3 in the Global Online Marketplaces Database. The Digital Commerce 360 database ranks the 100 largest marketplaces by 2023 third-party GMV.

TikTok Shop marketplace listings

Instead, Shop is plagued by the same problems with a free-for-all marketplace that Amazon has faced. Categories and sub-categories of products are filled with overwhelming choice. The Home & Kitchen section shows a 37-cent-mini-car trash can next to a $16 four-foot computer desk and an $8.43 three-piece polyester satin sheet set. Misspelled brand names and implausible prices on many of the listings raise red flags for potential counterfeit sales.

TikTok said the article is “misleading” and that it doesn’t “represent the TikTok experience.”

The TikTok Shop marketplace highlights prices — which are remarkably low and listed in large font. It highlights coupons and free shipping offers in red and green, respectively. TikTok creates a sense of urgency by listing next to a product how many times it’s been sold. It also lists a countdown clock with the hours, minutes and seconds left of a sale.

The TikTok Shop marketplace does not list brands before users click on a product. The majority of product names seem more tailored to search engines and algorithms than human shoppers. One listing, for instance, touts “Women’s 3 Piece High Waist Workout Shorts Butt Lifting Tummy Control Ruched Butt Smile Yoga Short Pants.”

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Where are the products from? Are they real?

The most prominent section is for “Today’s Deals.” On the feed Bloomberg has seen, the top promoted product was a snail mucin-based face serum. The serum has recently gone viral on the app: a COSRX-brand Advanced Snail 96 Mucin Power Essence. The seller, listed as FIFTHLINYOUNG-4, advertised the serum for for $7.99, down from $39. But neither number aligns with the $25 price the brand COSRX offers on its website. The TikTok seller also says the product is manufactured in China, when COSRX products say on the packaging that they are made in Korea.

“Dear, yes, it is genuine,” the seller said in a message on TikTok. “The new store is offering discounts during events.”

The seller didn’t respond to questions about why the product says it is manufactured in China. CORSX didn’t immediately respond to a request for comment.

The snail mucin is also the only skincare item FIFTHLINYOUNG-4 has listed.

The other items by that shop include:

• A drone marked down from $999 to $88.
• Alisting featuring photos of the internet-favorite tumbler from Stanley without listing the brand name in the title or description.
• An LED tooth-whitening kit with photos that don’t match the brand name in the listing.

“Even in testing, there are over 200,000 verified U.S. merchants on TikTok Shop selling legitimate products — including over 150,000 beauty products that have been validated through our process and represent some of the biggest names in the beauty business,” a TikTok spokesperson said.

Sketchy sellers previously booted from Amazon marketplace

In June, a person familiar with the company’s U.S. Shop strategy said the company was focusing on American sellers. That strategy appears to have changed. A quick search reveals a number of Chinese brands on the TikTok Shop marketplace that Amazon has kicked off its platform for faking customer reviews. Amazon booted Guangdong SACA Precision Manufacturing from its marketplace in June 2021. Products from its brands Taotronics and VAVA are currently available on TikTok. So is the hot-selling headset brand Mpow. Amazon also removed its parent, Shenzhen Qianhai Patozon Network & Technology Co., from its marketplace.

In its terms that a user can click on before checkout, TikTok says “we make no representations, warranties, or guarantees, whether express or implied, that any content on TikTok Shop is accurate, complete, or up to date. We have no visibility or control over the contents on or available through those sites or resources and you acknowledge and agree that we have no liability for any such content.”

When a user checks out from the Shop tab, she can make purchases from multiple sellers at the same time in the same checkout. TikTok is processing payments through its app, Bloomberg has reported.

That means the company will also be collecting additional information about users, including:

• Card details.
• Billing address.
• Shipping address.

TikTok regulatory concerns

That may eventually lead to extra regulatory scrutiny for the company. TikTok has been under pressure from federal, state and local governments for its data privacy practices. The app’s Chinese ownership has sparked national security concerns over whether it can track or influence Americans on the app. The company has said it is working to isolate sensitive data from its American users so that only staff in the U.S. can access it through a separate unit called USDS.

“TikTok US protected user data is stored in the U.S. and managed by USDS,” a company spokesperson said. “And we work with third-party payment platforms to facilitate transactions on TikTok Shop, with all data managed by the payment partner.”

Lawmakers have been particularly sensitive to whether the app collects location data on users. Prior to the launch of Shop, the company said it updated its app so it no longer collects precise or approximate GPS data, only approximate location information.

But the TikTok Shop marketplace appears to open up some user data to its sellers. In TikTok’s Buyer Policy, the company says that “Sellers are independent controllers of the data that they collect about you via TikTok Shop, and TikTok is not responsible for their compliance with applicable law.”

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Klaviyo is a platform that automates ecommerce SMS and email marketing. It has more than 130,000 customers.

Klaviyo revenue

But in 2022, Klaviyo generated $472.7 million in total revenue. That’s up 62.4% from $290.6 million in 2021. Net loss in 2022 was $49.1 million. That compares with a $79.4 million loss in 2021. For the first six months of 2023, revenue grew to $320.7 million. That’s a 54% increase from $208.3 million between January and June 2022.

“Our rapid revenue growth has been driven by increases in our customer count, growth of existing customers, our expansion into international markets, our sales to mid-market businesses, and the cross-selling of our SMS offering alongside our data platform and email offering,” the company says in its IPO papers.”

Using artificial intelligence and advanced analytics to accumulate customer information and insights for marketing campaigns and delivered on a subscription as a service (SaaS) platform is how the company builds and retains business, Klaviyo says.

“We assembled over 6.9 billion consumer profiles across our customer base,” the company says in its IPO papers. “In the 12-month period ended June 30, 2023, we processed over 695 billion events, which are data on how consumers engage across channels, such as opening an email, browsing a website, or placing an order. As we add more customers and more anonymized data on our platform, we can better refine our predictive models of consumer behavior. These network effects also enable us to continually refine our guided software recommendations to drive more impactful campaigns and specific actions.”

Klaviyo’s business is tied in great measure to ecommerce platform provider Shopify. In July, the two companies signed a strategic business agreement. Shopify became one of the biggest financial backers of Klaviyo with a $100 million investment, according to the company filing.

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The company runs a social media site for being inspired by images.

Pinterest sales

Pinterest said sales rose 6% to $708 million in the period ended June 30. That exceeded the $699 million that analysts projected, according to the average of estimates Bloomberg compiled. Revenue in the current quarter will grow in the high single digits year over year, the company said in an Aug. 1 statement.

One year into the position, chief executive officer Bill Ready wants to expand Pinterest’s business model beyond advertising and into shopping, increasing the amount of time users spend on the platform. In May, Pinterest announced an advertising partnership with Amazon.com Inc., aiming to make shopping easier on the site.

Amazon is No. 1 in the Top 1000, Digital Commerce 360’s ranking of the largest North American online retailers. Amazon is also No. 3 in Digital Commerce 360’s Global Online Marketplaces Database, which ranks the 100 largest such marketplaces by 2023 third-party GMV. The latest analysis of the industry as whole is published within the 2023 Global Online Marketplaces Report.

Pinterest’s push for shoppable content follows similar efforts from other social media platforms, including Meta Platforms Inc.’s Instagram and ByteDance Ltd.’s TikTok.

“Shopping is working on Pinterest and we’ve had some great partnerships that are aiding with that,” Ready said in an Aug. 1 interview. “There’ll be more of those to go.”

The pinboard-style digital-search company said monthly users increased 8%, to 465 million, from a year earlier.

Whether people would shop on Pinterest “was a big question a year ago,” Ready said. “We have answered that question definitively.”

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Jacqui Segura, director of marketing at Mexicali Blues, knows firsthand that what type of marketing works for one demographic may not work for another. The medium and message must be tailored to the target audience if the marketing is going to attract and convert shoppers.   

And the same medium of marketing, such as the influencer marketing tactic that’s hot right now, is not always a slam dunk for every brand. Brands have to find the right influencers that fit for their brands and adjust the platforms their influencers use, such as a live-streaming event or with social media posts, to strike a chord with shoppers.   

2023 digital marketing survey

Results from Digital Commerce 360’s 9th annual digital marketing survey of online retail marketers reveal this as well. Marketers use a range of digital marketing tactics that vary in effectiveness. While marketers rank the staple digital marketing tactics — paid search and email marketing — as top revenue drivers, the other channels can be hit or miss with marketers.  

For example, SMS marketing really works for some merchants. 29% of retailers rank SMS marketing as highly effective, among the top “highly effective” marketing channels. However, significantly fewer marketers (26%) ranked it as somewhat effective. This means that of the marketers that use SMS marketing, only 55% say it is effective. This makes it the eight overall effective channel, with content marketing, affiliate marketing and marketplace ads beating it out for effectiveness.   

Digital Commerce 360’s July Strategy Insights dives into digital marketing tactics from large and small brands and uncovers ways marketers have leaned into practices that are working, such as with social media marketing. Plus, a look into retail media networks, including why they are growing in popularity and what types of brands they are a fit for. What’s more, the 9th annual marketing survey shows insights into what is happening with digital marketing budgets, what approaches are effective, and the adoption of growing tactics, such as using artificial intelligence and values-based marketing.   

Download the free 9th Annual Marketing Survey & Digital Marketing Strategies July Strategy Insights here.

—April Berthene, Editor, Strategy Insights 

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So what are online shoppers thinking about apparel buying online and across channels? Digital Commerce 360 in conjunction with Bizrate Insights surveyed 1,003 online shoppers in June 2023 to see where online shoppers stand.

Seven in 10 online shoppers are buying at least the same or more apparel online

One can’t help but conclude that with one in three online shoppers spending less on apparel in stores year over year that digital is the beneficiary and may be for some time to come.

Shoppers frequent store favorites

Retailers must understand that customer retention has important implications for purchasing apparel, with half of shoppers asserting they have their favorite stores and frequent them. Companies will need to be aggressive to become part of any apparel shopper’s routine, but the good news is that it will be worth the effort.

An understanding of fit and sizing also supports such a notion as 38% will go to retailers where purchases have been made in the past when looking for specific products.

Shoppers acknowledge that they like to get something new (31%) and update their wardrobes seasonally (30%). The web provides an opportunity for 20% to browse trends online and for 19% to look for new brands. When it comes to specifics, 18% shop mostly for special occasions and make purchases for social activities. Just 11% say their purchases are work-related, and work-from-home models may be a factor as wardrobe demands have changed.

Money still matters for 20% as they track retailer markdown strategies and only buy on sale.

I’m surprised to see that a lack of sales associates in stores pushes only 10% of those surveyed to buy online, as it is certainly challenging to hire in today’s employment climate. Additionally, it’s interesting that a lack of in-store inventory drives online buying more by 25%. Just 14% prefer to take advantage of store pickup options. There are many dynamics to monitor as shopper sentiments often shift over time.

Online shoppers use a multitude of features when shopping for apparel/accessories online focusing on targeted information that aids selection

Shoppers like to zero in on products, and it’s efficient to use search filters such as sizing, color or type, as 56% noted. It’s also significant that 46% appreciate the ability to compare products. Fit tools are also valuable, as sizing can be one of the biggest challenges when buying apparel. The fact that 13% find the ability to customize products also important may be a response to that as well.

First and foremost, 66% call out ratings and reviews as being most important. In the same vein, 34% enjoy seeing photos from other shoppers. Zoom is also a standard among apparel shoppers at 54%.

Online shoppers are accustomed to knowing products will be delivered. Additionally, a majority cited accurate delivery windows as high on the list of important website features.

Merchandising was more limited in its value but still had a role to play with new products (34%), product recommendations (29%), top sellers (25%) and trending products (19%) delivering the following importance results. Content was least significant and saw the following lower penetrations with videos (13%), how-to guides (12%), and livestreaming (6%) lower on the importance scale.

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Apparel and accessory shoppers visit stores to see and try on products, save money and get products quickly

While the physical store is seeing sales decline, it still has a role to play for 63% of participants who enjoy trying on products while 59% appreciate seeing the merchandise in person. For 56%, it’s a timing issue when they need items quickly. Store shoppers are also likely to return products to the store (31%) as they prefer seeing a quick credit to their accounts.

Some shoppers want to have guaranteed inventory availability while the same number prefer to pick up in store (19%).

Money-savings always comes up strong. 45% cited their interest around in-store sales or promotions. Along the same lines, 43% don’t want to pay for shipping.

It’s nice to see that 28% of online shoppers want to support local/small businesses. There also appears to be a trust issue as 28% feel more confident about store purchases.

Online shoppers buy from a variety of retailers with Amazon attracting the most apparel, accessory and shoe shoppers

The ecosystem of players in this category is complex. Like many categories, Amazon manages to find itself dominating. 74% of our survey participants shopped for apparel on it.

Amazon is No. 1 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American online retailers. Amazon is also No. 3 in the Online Marketplaces database, which ranks the 100 largest global marketplaces.

Department stores play a strong role in this category as well at 47%. Brands are also an integral online destination for 37%, along with specialty retailers at 36%. Mass merchants Walmart (at 46%) and Target (32%) are also entrenched sellers.

Marketplaces are also significant; 30% providing selling opportunities for large and small sellers alike. Price-sensitive sellers like warehouse clubs and off-price retailers are neck and neck at 23%. Resellers only saw 20% penetration, though gains are likely to come in the next couple years.

To bring Amazon’s impact further into focus, four in 10 apparel buyers purchased 26% or more of their online apparel purchases in the past year on Amazon. It certainly feels like this dominance just might continue into the foreseeable future.

Each year, we gauge how aggressive shoppers are in adopting online apparel services. In all honesty, I’m surprised at the low penetration of some of these other services given their longevity in the market.

One in four ordered apparel from a company outside of the U.S. Beyond that, 18% say they have purchased custom products online that were designed to their specifications, while 17% have purchased a used/previously owned product from an online consignment seller. Sustainability is seeing inroads, as 15% have purchased apparel from an online retailer based on their sustainability stance.

Two in three apparel buyers find the overall look and feel most important to their online buying

Tastes in online branding have evolved, especially in the past few years. This is powerful. 36% enjoy seeing a presentation of diverse models that mirror the population. The brand’s story and history has always had a role to play, and 34% of respondents find it important. It’s positive to see that in a category like apparel, 25% find a brand’s sustainability practices important. Beyond that, it’s charitable giving (17%), social and political views (17%), and diversity stance (16%). Fair trade views are of lesser importance.

Seven in 10 online shoppers care about sustainability, though their buying strategies vary

Looking further into sustainability, just 21% say they seek sustainably minded retailers, with 9% already buying and only 12% willing to pay extra. Half of the respondents care about sustainability, but they simply are not willing to pay the price. Of those, 17% won’t pay more and 33% do not seek it. The 29% who have no interest in sustainability may be hardest to move into a more positive camp. Hopefully, these shifts will begin to take place in the near term.

Four in 10 online shoppers avoid retailer customer service departments

Email and in-store interactions topped the list of those touchpoints most likely to drive conversion at 22%, with a phone call to customer service (at 19%) and live chat with a human being close behind (at 17%). Interesting to note that people were a factor, so I will be watching to see if more recent tactics like social media and bots become conversion drivers in greater numbers as one might expect.

Social media is not part of the shopping process for three in 10 online shoppers. It does, however, prompt advertising clicks, get shoppers inspired and allows them to learn from others and follow products.

40% of online shoppers purchase apparel and accessories on social media platforms. This, too, suggests that time will be required for revenue growth via social media platforms.

Getting on the customer’s “favorite” list

Online apparel and accessory buying is still poised for growth, though we shouldn’t count out physical stores just yet. These categories are served by a broad ecosystem of traditional retailers and brands, though Amazon once again manages to dominate. Branding along with the features and tools retailers make available are powering positive shopping experiences, though finding the right size remains an issue. There are certainly stories still to be written from sustainability to social media. Positive customer service is always in fashion and will serve all retailers — apparel/accessories and otherwise — well.

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Retailers surveyed were from multiple merchandising categories, including apparel/accessories, health/beauty, hardware and more. Retailers ranged from small businesses with annual revenue less than $1 million to companies with annual revenue more than $100 million.

This article is featured in the Digital Commerce 360 July 2023 Strategy Insights. For more stories related marketing, download the report.

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That’s the case with Khadijah Oliver. In March 2023, she posted a video on TikTok trying on plus-sized clothing in a Target fitting room, and the video went viral. She now has 53,000 followers viewing her content regularly.

Now, brands including Old Navy (owned by Gap Inc.), American Eagle Outfitters Inc., Abercrombie & Fitch Trading Co., Kohl’s Corp. and Amazon.com Inc. pay Oliver to promote their merchandise to her more than 50,000 followers.

Social media influencers like Oliver are everyday people who have accounts on social media platforms like Instagram, TikTok or YouTube.

Unlike a professional athlete or artist, these influencers amass followers with just the content they post. Consumers follow a person they don’t know for various reasons, such as finding them entertaining or informative, liking the individual or trusting their judgement.

Micro-influencers gain traction with retailers and consumers

Some influencers have millions of followers. But increasingly, it’s micro-influencers, these non-celebrity influencers who have a few thousand followers, who are gaining traction with retailers and consumers.

Influencer agency Mavely, which connects brands with influencers to promote merchandise for a fee, reached out to Oliver. After joining, Oliver earned $1,200 in her first week by sharing plus-size clothing hauls with her followers. Since then, she earns about $6,500-$7,500 or more in commissions per month.

Retailers sometimes send merchandise for influencers to try. Jen White has been an influencer for nearly seven years. She’s on YouTube and TikTok, and she has about 98,000 followers on TikTok.

White has worked with brands directly as well as through influencer agencies like Awin, which connected her with sporting goods and apparel brand Under Armour Inc. White also works with online bedding brand Brooklinen and Dick’s Sporting Goods Inc.

Brooklinen pays White a flat fee. She earns commissions from brands like Under Armour from referral links posted to her TikToks.

“The more engagement you get, the more commission dollars I can make off of it versus other deals I’ve done. With Dick’s Sporting Goods, it’s a fixed payment with no commission attached,” she says.

The importance of authenticity for influencers

White spends her own money on merchandise she likes, but she also accepts credits from retailers to spend on their websites or in store. She also receives free items to try before posting an honest review.

“I like the blend of it,” she says. “Some brands send me products. But I don’t want to work with brands that don’t really fit, or I don’t like the product. I’d feel guilty posting about it.”

Under Armour sent athletic shoes to White, which she says was a good fit.

“I try to do what relates to me — and I think my audience appreciates [the honesty],” she says.

Oliver provides her followers with affiliate links to items she tries on in her videos.

Compensation differs depending on the brand, Oliver says. She earns a percentage of sales she generates from posts linked to Old Navy and American Eagle — and it’s not always about the highest bidder. She doesn’t pick one brand over another because of how much commission she might make, she says.

“American Eagle didn’t offer the highest percentage commission, but I still link my picks because I like their jeans,” Oliver says.

If Oliver likes a brand, she posts about it, regardless of compensation, she says.

“I’m spending my own money on what I buy,” Oliver says.

And like White, she sometimes also receives store credit to spend.

“Old Navy has offered me [credits] to buy from them,” Oliver says. “But they don’t tell me what specific items to buy.”

“The videos that have done really well are because I enjoyed buying those items,” Oliver adds.

How influencers and retailers connect

Agencies like Mavely and Awin offer a link between influencer and retailer.

“It depends on what the brand is looking for, and we customize our research based on what the brands ask for — and recently there’s been a big shift to micro-creators [micro-influencers],” says Piper Donnelly, account director, Awin Global.

It’s a growing area for analytics and marketing agency Kroger Precision Marketing/84.51, which is owned by grocer The Kroger Co.

“Kroger shoppers make up half the U.S. household population,” says Brian Spencer, marketing director at Kroger Precision Marketing. “We want brands to be able to engage our shoppers … and we’re focusing on smaller influencers.

“We want to really curate our influencers,” he says.

Kroger Precision Marketing has different tiers of content creators it vets “to ensure it’s a safe environment,” he says. They typically have a minimum of 10,000 followers and go as high as 30,000 to 50,000 followers, which the agency considers a “macro-influencer,” he says.

It’s one way online baby registry Babylist is reaching out to new consumers. Babylist devotes 20% to 30% of its digital marketing budget to social media, says Ashley Malone, vice president performance marketing. It works with Mavely to connect with influencers.

From April 2023 to June, Babylist launched campaigns with various influencers, without specifying how many, to drive registration sign ups, Malone says. After working with Mavely, the online registry experienced a 15% increase in registry sign ups.

Going forward, Babylist will continue to use “a steady stream of influencers or creatives not only on our affiliate platform, but also in our social apps,” Malone says.

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