Fulfillment and delivery news for online retailers

Walmart gears up for the holiday shopping season

Peter Lucas — Fri, 10 Nov 2023 14:00:51 +0000

Heading into the holiday shopping season, Walmart Inc. unveiled several initiatives to create better holiday shopping experiences and boost sales. The new initiatives include a modernized supply chain that makes use of data and automation, a multi-day Black Friday promotion, and revamped stores that deliver a more modern shopping experience.

Officially unveiled at its investor meeting in February, Walmart’s re-engineered supply chain makes greater use of technology to improve in-stock rates, inventory accuracy, and flow across stores, pickup services, and delivery.

At the heart of the revamping, which was a multi-year project, is an artificial intelligence-based inventory management system that positions products according to customer demand. For example, the system can recognize a top-selling toy in a particular region, and automatically send more of those items to those stores. Alternatively, if a toy is selling better in the Midwest compared to the East Coast, the inventory management system can reposition inventory to that area of the country.

“This will be the first holiday shopping season where customers will begin feeling the benefits of our next generation supply chain,” the retailer said in an Oct. 31 blog post. “We’re confident [the AI-based inventory management system] has set us up for success heading into the season and will continue to do so as holiday shopping kicks into high gear.”

Walmart leverages faster fulfillment for the holidays

Improved technology within its supply chain enables Walmart to increase its delivery options and expand its next-day and same-day shipping capabilities. Walmart can now provide same-day delivery to more than 80% of consumers in the United States and reach 90% of the country’s population with next- and two-day shipping.

To make same-day delivery available to such a high percentage of consumers, Walmart uses its 4,700 stores as fulfillment hubs. Walmart stores are located within 10 miles of 90% of the U.S. population.

Another improvement to its delivery services is on-demand delivery slots for same-day delivery. Online shoppers can choose a time that fits their schedule or select Express Delivery to receive items in 30 minutes. Shoppers can also select the Late Night Delivery services option, which is available at 4,000 stores, to receive orders up to 10:30 p.m.

70 retailers in the Top 1000 offer same-day delivery, and 353 offer next-day delivery. The Top 1000 is Digital Commerce 360’s ranking of the largest online retailers in North America.

“I think both Target and Walmart have used their existing store footprints to help their fulfillment goals, but Amazon’s owned fulfillment network, which puts a lot of its marketplace products closer to consumers, gives it a huge advantage still,” says James Risley, research data manager and senior analyst at Digital Commerce 360. Amazon ranks No. 1 in the Top 1000, and Walmart ranks No. 2.

Automated distribution centers

In addition, Walmart continues to install what it calls “next generation” technology in its distribution centers that reduces the number of steps in its fulfillment process. Walmart expects more than 15% of its stores will receive merchandise from automated distribution centers that can sort items by department and load them onto a pallet this holiday season. Once the merchandise arrives at the store, Walmart employees move the pallet to the appropriate department, as opposed to manually sorting items.

Shipping merchandise from its automated distribution centers is expected to accelerate how fast products can be delivered to stores and unloaded onto shelves, the retail says in its blog post. Walmart expects to have seven high-tech distribution centers operating by Thanksgiving. The first high-tech distribution center opened in 2022 in Joliet, Illinois.

“We’ve been working on re-engineering our supply chain for a number of years,” says a Walmart spokesperson. “Customer needs and expectations continue to evolve, and as they do, we’re committed to enhancing how we operate to best meet their needs now and in the future.”

Black Friday starts earlier

In response to consumers’ desire to have special holiday shopping events spread out during the holiday shopping season, Walmart is having two Black Friday events during November. The first event began Nov. 8 online and continues Friday, Nov. 10, in stores. The second event begins Nov. 22 online and continues in stores on the day after Thanksgiving — the traditional Black Friday — on Friday, Nov. 24.

The retailer will wrap up its November sales events with a Cyber Monday sale, which takes place Nov. 27. Walmart+ members will be able to access the Black Friday and Cyber Monday events three hours earlier than the scheduled start times. Walmart+ is a membership rewards program launched in 2020 and costs $98 per year.

“Customers have loved our reinvented Black Friday experience since we introduced it a few years ago,” says the Walmart spokesperson. “In fact, 76% of Walmart customers told us they prefer special deals to be spread out over the holiday shopping season as opposed to one moment.”

Pre-Black Friday holiday sales can pull forward some typical holiday spendings, says Neil Saunders, managing director at retail analysis firm Global Data. Some retailers started holiday sales even earlier this year, beginning with Amazon’s Big Deal Days in October. Walmart held a competing Holiday Kickoff sale at the same time.

Walmart updated its website for the holidays

In addition to its Black Friday and Cyber Monday events, Walmart is introducing several enhancements to make it easier for shoppers to find and save their favorite deals this holiday season, as well as shop and receive their purchases.

Walmart+ members and customers shopping on Walmart.com or the Walmart app will be able to save their favorite deals by clicking on the heart button, which automatically creates a personalized list called “My Saved Deals.” The hearting functionality allows shoppers to track and be notified of deals on those items as they become available. Shoppers can add the entire Saved Deals list to their cart in one click. My Saved Deals lists can also be shared to help take the guessing out of gifting, the retailer says.

“Walmart introduced Hearting so members and customers shopping on Walmart.com or the Walmart app can save their favorite deals,” says the Walmart spokesperson. “This new feature takes the guesswork out of holiday gifting by allowing customers to share their My Saved Deals lists with friends and family for easy wish list inspiration, while helping them track and shop their favorite deals in real time.”

Wish lists and registries help consumers prepare

Another enhancement to its online shopping experience is a holiday wish list and toy registry. The retailer’s holiday wish list page, which is scheduled to launch this month, enables shoppers to create a gift registry that can be saved and shared with others. Shoppers can also create a toy wish list directly from the Top Toy List on Walmart.com.

“With Walmart’s new Holiday Wish List page, customers can create their very own registry to effortlessly save all their holiday needs (and wants!) in one place and/or share with friends and family,” says the Walmart spokesperson. “From gift ideas to holiday décor, and even a new Toy Registry, customers can discover top gifts, like products from Walmart’s Top Toys List, making it even easier for family and friends to gift with confidence and check everything off their list this season.”

“Every change is thoughtful. They all ladder up to a greater goal: to meet our customers wherever they are, leveraging our stores to welcome people to a more modern, highly connected Walmart,” Walmart says in the Oct. 30 blog post. “Whether you’re walking in just to wander, grabbing a quick snack and dashing or using our Pickup & Delivery service, every one of our remodeled stores is ready to improve that experience.”

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Amazon’s software-as-a-service strategy set to drive new growth

Abbas Haleem — Mon, 06 Nov 2023 16:10:06 +0000

“This is the story arc of AWS’ success,” said Brendan Witcher, vice president and principal analyst at research firm Forrester. He was referring to Amazon Web Services and how it contributes to the merchant’s software-as-a-service (SaaS) strategy, which has led to new growth opportunities for the region’s top ecommerce retailer.

It’s 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.

“We already have made these investments, technologies,” Witcher said, speaking from Amazon’s perspective. “How do we create incremental revenue by applying those sunk costs to new opportunities for others to take advantage of those costs where we can benefit in a financial way? This has been part of Amazon’s strategy for quite a while.”

Andy Jassy, Amazon’s CEO, spoke about different SaaS initiatives on a recent earnings call with investors for its fiscal third quarter ended Sept. 30, 2023.

Amazon’s fastest-growing sectors are ads and seller services, said James Risley, research data manager and senior analyst at Digital Commerce 360.

It shows that “while Amazon’s online stores are still growing well, its third-party sellers are the real growth leaders for the company,” Risley said. “Online stores only grew 2.0% in the first half of the year, though, and grew 7.0% in Q3, so the momentum is strong for first-party sales as Amazon potentially shifts its focus ahead of government pressure and a more savvy consumer who prefers direct relationships with sellers.”

Supply Chain by Amazon changes the fulfillment game

Two key Amazon software-as-a-service programs Jassy addressed were Supply Chain by Amazon and a growing generative AI initiative. New Amazon generative AI technology gives merchants the ability to create web pages and product imagery “with nearly endless flexibility,” calling it, along with Supply Chain by Amazon and AWS “the democratization of technology.”

Jassy said the company has seen “very positive early response from sellers to Supply Chain by Amazon.”

Supply Chain by Amazon is a fully automated set of services in which the mass merchant handles:

Inventory pickup
Shipping
Customs clearance
Ground transportation
Inventory storage
Replenishment

Amazon has been making “huge investments” in supply chain for more than a decade, Witcher said. The idea was that Amazon would eventually reach scale and those investments would pay off, he added.

“I think you’re starting to see that now, particularly because they’re starting to outsource delivery as a service,” Witcher said.

Amazon already has the infrastructure in place, so these are sunk costs, he said.

Amazon software as a service (SaaS) can change the game for third-party sellers

“Generative AI developments should be given more weight than Amazon let on,” Witcher said. “Using this innovative technology really gives Amazon the operational efficiencies in inventory planning and route planning that they need to realize the ROI of all these investments they made in supply chain.”

Witcher said AWS was the proof of concept that Amazon can create incremental revenue from its existing services and offerings. He said Fulfilled by Amazon (FBA) “clearly” works for a lot of sellers.

“Now, Amazon’s removing the pain points of being a small-business seller,” Witcher said. “Nobody gets into the retail business saying, ‘I can’t wait to build web pages’ or do photoshoots. That’s not why they get into selling products. They want to sell products. Amazon understands this, and so they’re using this in a way to make it easier for third-party sellers to have that Amazon relationship and make more reasons to say why they should have the Amazon relationship. I think that’s really what this comes right down to.”

Generative AI technology and the Amazon ecosystem

Witcher said Amazon understands that mom-and-pop shops and small companies don’t necessarily have the time or skill set to generate web pages and product imagery.

“The ability to use generative AI just helps those sellers,” Witcher said. “There’s a compounding effect to this, which is: The easier it is for me to build websites, the easier it is for me to upload product pages. Then, it’s easier for me to sell on Amazon. Well, if I’m already selling on Amazon, then it’s easier for me to give Amazon my supply chain, pay for them to do my supply chain, pay for them to have Amazon Pay on my website. It just bakes you deeper into the ecosystem of Amazon as you start to find value in the things Amazon offers.”

He added that this is “certainly a differentiator” for Amazon compared with other marketplaces. However, he said, he expects other retailers to follow suit.

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UPS revenue, profit, mail volume decline in Q3

Mary Meisenzahl — Fri, 27 Oct 2023 16:33:30 +0000

United Parcel Service Inc. reported profits and revenue declined in its fiscal third quarter ended Sept. 30, 2023. UPS consolidated revenue declined 12.8% from the year-ago period to $21.1 billion. Consolidated operating profit declined 48.7% over the same period to $1.3 billion.

Why is UPS volume down?

UPS attributed much of the decline in revenue and profit to lower package volume and impacts of labor negotiations. It reached an agreement with the Teamsters union in July to renew a five year contract and stave off a strike. The agreement was fully ratified in August.

Average daily volume declined 11.5% in the quarter, which was slightly offset by a 2% increase in revenue per piece. August was the most difficult month by volume levels, with some clients waiting until the union contract was ratified to start using UPS again.

In the last week of September, daily volume was down just 7.4% year over year, an improvement from the rest of the quarter, says Carol Tome, CEO, in a press release.

“While unfavorable macro-economic conditions negatively impacted global demand in the quarter, our U.S. labor contract was fully ratified … and volume that diverted during our labor negotiations is starting to return to our network,” Tome told investors in an earnings call.

Ecommerce and Happy Returns acquisition

Ecommerce returns have been a “key area of growth” for UPS over the last several years, Tome said. It has grown 25% since 2020.

That was the impetus behind UPS acquiring reverse logistics company Happy Returns. Happy Returns will “generate profitable B2B volume, and help drive pickup and delivery density,” Tome said in the call.

UPS holiday shipping outlook

UPS is preparing for its busiest part of the year, the fourth quarter holiday season. It plans to hire 100,000 seasonal workers to process and deliver packages during the peak season.

Despite slowing demand, UPS expects to see “healthy” volumes during peak season. But there are headwinds, the retailer warns. Consumers are returning to stores and not doing as much of their shopping online, or spending more on experiences, which is also hurting UPS package volume, Tome said.

UPS adjusted its 2023 outlook to expect consolidated revenue for the year to reach $91.3 billion to $92.3 billion. That’s down slightly from the anticipated $93 billion UPS gave in Q2.

UPS quarterly earnings

For the fiscal third quarter ended Sept. 30, 2023, UPS reported:

Consolidated revenue declined 12.8% to $21.1 billion.

Consolidated operating profit declined 48.7% to $1.3 billion.

UPS average daily package volume declined 11.5%.

For the nine months ended Sept. 30, 2023, UPS reported:

Total revenue declined 9.9% to $66.0 billion.

Total operating profit decreased 29.4% to $7.1 billion.

Percentage changes may not align exactly with dollar figures due to rounding.

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Five strategies for ecommerce retailers this Halloween

Mary Meisenzahl — Fri, 27 Oct 2023 16:20:41 +0000

U.S. consumers will spend more than $12 billion on Halloween celebrations this year, according to The National Retail Federation. About one-third of Halloween spending will be through ecommerce, NRF says. Retailers shared these tips for making the most of the holiday.

1. Build anticipation for new products before they launch.

“We teased the drop of our Halloween collection before it went online, and they create engaging content that gives Halloween fans a behind the scenes look at our collection,” says Lance Allen, senior merchant of decorative Holiday at Home Depot.

2. Introduce new products, but keep classics around.

Home Depot’s 12-foot-tall “Skelly” has been a viral success since 2020. The retailer still sells the skeleton, and it has since introduced other giant decor items to build on its success.

3. Use TikTok and other video platforms to display new merchandise.

“One of the biggest changes we’ve made this year is with short-form video. We are producing and deploying more video than we ever have in the past,” chief marketing officer at Fun.com Mark Bietz says. “It’s been amazing to see how customers have responded to having more rich experiences with our brand.”

4. Experiment with new advertising avenues.

Lingerie brand Adore Me is seeing success with digital out-of-home advertising on subways and billboards, with plans to continue investing, says vice president of strategy Ranjan Roy. Meanwhile, Fun.com says connected TV ads are driving “excellent results.”

5. Give consumers as many fulfillment options as possible.

Walmart offers late-night express delivery and pickup options ready in between 30 and 90 minutes. Walgreens has 30-minute pickup, one-hour delivery, and 24-hour delivery, a spokesperson says.

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Amazon sales set company record in Q3

Abbas Haleem — Fri, 27 Oct 2023 14:00:45 +0000

Amazon.com Inc. showed why it’s No. 1 in the Top 1000, bringing in $143.1 billion in its fiscal third quarter ended Sept. 30, 2023.

The Top 1000 is 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 a whole is published within the 2023 Global Online Marketplaces Report.

How much did Amazon make in Q3 sales?

Amazon sales in Q3 grew 13% over $127.1 billion in 2022. In North America, Amazon sales increased 11% year over year to $87.9 billion. And internationally, Amazon sales grew 16% year over year to $32.1 billion. Sales from AWS, or Amazon Web Services, increased 12% year over year to $23.1 billion.

“We saw our highest quarterly worldwide operating income ever,” said chief financial officer Brian Nowak on an Oct. 26 call with investors. It increased $8.7 billion year over year.

Amazon operating income grew at a much larger percentage than total sales compared with Q3 2022 — 343%. That’s nearly quadruple Amazon’s operating income in the year-ago period, growing to $11.2 billion in the third quarter from $2.5 billion. AWS operating income was $7 billion, up from $5.4 billion in Q3 2022.

Fulfillment and supply chain investments pay off

“Our cost to serve and speed of delivery in our stores business took another step forward, our AWS growth continued to stabilize, our advertising revenue grew robustly, and overall operating income and free cash flow rose significantly,” CEO Andy Jassy said in a statement. “The benefits of moving from a single national fulfillment network in the U.S. to eight distinct regions are exceeding our optimistic expectations, and perhaps most importantly, putting us on pace to deliver the fastest delivery speeds for Prime customers in our 29-year history. The AWS team continues to innovate and deliver at a rapid clip, particularly in generative AI.”

In addition to taking a regional approach to its fulfillment network, Amazon has begun offering Supply Chain by Amazon, which Jassy referred to as “a fully automated set of supply chain services.”

Supply Chain by Amazon can:

Pick up inventory from manufacturing facilities around the world
Ship it across borders
Handle customs clearance and ground transportation
Store inventory in bulk
Manage replenishment across Amazon and other sales channels
Deliver directly to customers

And Amazon sellers can do all of that without “having to worry about managing their supply chain,” Jassy said.

Brendan Witcher, vice president and principal analyst at research firm Forrester, said Amazon is one of the best in the business at delivering. Because of that, he said, it will have the challenge of setting customer expectations to always deliver on time. Witcher said it was notable that Amazon is using AI to help with inventory planning and optimizing driver routes.

“The real litmus test for Amazon’s regional supply chain will be the ability to deliver one-day and same-day delivery this holiday season with this level of growth,” Witcher said. “Fortunately, some of the volume should spread out a bit given that holiday really began with Amazon’s customers with the October Deal Days sale.”

Amazon powers up its generative AI technology

Jassy echoed points about generative AI from Amazon’s Q2 call with analysts in August. He broke down Amazon’s generative AI into three layers.

Lowest layer: Compute to train large language models (LLMs).
Middle layer: LLMs as a service.
Top layer: Applications that run the LLMs.

The middle layer, Jassy said, allows customers to customize those models “using their own data but without leaking that data back into the generalized LLM.”

“In these early days of generative AI, companies are still learning which models they want to use, which models they use for what purposes and which model sizes they should use to get the latency and cost characteristics they desire,” Jassy said in the Oct. 26 call with analysts. He said Amazon Bedrock “is the easiest way to build and scale enterprise-ready generative AI applications.”

“It’s pretty exciting what they’re doing for third-party sellers on the capabilities of generating web pages, generating product imagery for third-party sellers,” Forrester’s Witcher said. “They really do understand the small-business seller, to be quite blunt.”

How is Amazon doing financially 2023?

For the fiscal third quarter ended Sept. 30, Amazon.com Inc. reported:

$143.1 billion in Amazon Q3 sales. That’s up 13% from $127.1 billion in the year-ago quarter.
Amazon sales in North America in Q3 grew 11% year over year to $87.9 billion.
International sales increased 16% year over year to $32.1 billion.
AWS sales in Q3 grew 12% year over year to $23.1 billion.

For the nine months ended Sept. 30, Amazon reported:

$404.8 billion in Amazon sales. That’s up from $364.8 billion in the year-ago period.
Year-to-date Amazon operating income reached $381.2 billion. That’s up from $355.7 billion in the comparable period last year.
International sales grew to about $91 billion, up from $83.5 billion.
AWS sales grew to nearly $66.6 billion from $58.7 billion in the comparable period in 2022.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports. Here’s last quarter’s Amazon earnings article.

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UPS to acquire Happy Returns

Mary Meisenzahl — Thu, 26 Oct 2023 19:20:56 +0000

United Parcel Service (UPS) announced it will acquire reverse logistics company Happy Returns for an undisclosed amount.

Happy Returns manages returns for online retailers through kiosks called Return Bars. Customers use Return Bars to send back purchases from online retailers. UPS will acquire the vendor from PayPal, which purchased it in 2021.

“By combining Happy Returns’ easy digital experience and established drop-off points with UPS’s small package network and footprint of close to 5,200 The UPS Store locations, box-free, label-free returns will soon be available at more than 12,000 convenient locations in the U.S,” says UPS CEO Carol Tomes in a statement.

Happy Returns says it has more than 10,000 locations, many of which are through partnerships with retail chains Ulta, Petco, and Staples. It works with 800 retailers and has grown revenue to 10 times 2020 levels, Happy Returns says.

Happy Returns charges retailers a monthly service fee for handling returns and a per-item fee that varies, depending on the processing work required. Retailers with return kiosks benefit from the increased foot traffic, which can lead to browsing shoppers and potential sales.

“In recent years, the growth of Happy Returns has accelerated, and we’ve built an enterprise-grade solution. This new chapter is a natural next step for Happy Returns and allows us to harness the power of the UPS network to transform the returns industry,” says Happy Returns CEO and co-founder David Sobie.

Returns are a growing part of the retail business

Returns can be costly for retailers. Companies pay an average of $26.50 to process $100 in returned merchandise, The Wall Street Journal reported in May. In 2022, about 16.5% of retail purchases were returned, totaling about $816 billion, according to the National Retail Federation.

In 2022, 45.7% of retailers in the Top 1000 offered online returns processing to consumers. That’s a slight decrease from 47.4% in 2021. The Top 1000 is Digital Commerce 360’s ranking of the largest online retailers in North America.

Consumers have come to expect easy online returns. In a Bizrate Insights and Digital Commerce 360 July survey of 1,017 online shoppers, 52.3% cited free return shipping as one of their top five considerations when making an online purchase. However, relatively few consumers say they’ve used a return kiosk. In the same survey, 5% of respondents said they’d used a Happy Returns kiosk or similar service for a non-Amazon purchase. Another 7.1% said they’d dropped a return off at a retailer like Walgreens, which offers a similar service. 9.7% have returned an online order to a mall-based pickup and return center.

UPS serves more than half the Top 1000

532 online retailers in the Top 1000 use UPS for their fulfillment — either exclusively or in combination with other carriers. 65.6% of Top 1000 sales come from retailers using UPS.

More than half of web sales in the Top 1000 come from merchants using UPS for at least some of their shipments. The cumulative 2022 web sales of Top 1000 retailers using UPS is about $669.98 billion.

However, hundreds of the 532 online retailers using UPS to ship items do not use it exclusively.

75 merchants in the Top 1000 exclusively use UPS for their shipping. Those 75 accounted for $24.97 billion in 2022 web sales.

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How retailers are planning for Halloween

Mary Meisenzahl — Wed, 25 Oct 2023 16:13:15 +0000

Americans are celebrating Halloween at pre-COVID levels this year, and retailers are looking to take advantage. They’re updating merchandise, marketing and fulfillment strategies to meet consumer demand this year.

Retailers unveil new Halloween merchandise

Three retailers told Digital Commerce 360 they’ve grown Halloween merchandise offerings in 2023. The Home Depot Inc. has seen an increase in demand for giant items since the success of the 12-foot-tall giant skeleton, which it launched in 2020, says Lance Allen, senior merchant of decorative holiday at Home Depot. To capitalize on the trend, Home Depot introduced its “Dead Water” collection this year with a $349, 12.5-foot-tall animated predator of the night and a $399, 13-foot-tall animated Jack Skellington. Home Depot ranks no. 4 in The Top 1000, Digital Commerce 360’s ranking of the largest online retailers in North America.

Home Depot’s popular skeleton decoration.

Fun.com, which owns HalloweenCostumes.com, says giant decor items are also selling well this year. 25-foot-tall Michael Myers and Stay Puft inflatables are “flying off the shelves,” says Mark Bietz, chief marketing officer at Fun.com.

Though not necessarily new, alien costumes have been a surprise hit this year, Bietz says. Alien costumes sales are up 75% over the same period in 2022, which he attributes to recent news about investigations into aliens.

Lingerie brand Adore Me is leaning into Halloween merchandise this year in a way it hasn’t done in the past, vice president of strategy Ranjan Roy says. Previously, the retailer had success with products that could work double for Halloween and other occasions, like a sheer bra with black cats, which is also the retailer’s best-selling Halloween product this year. In 2023, Adore Me launched costumes for the first time, including devil and angel body suits.

Social media dominates Halloween marketing

Adore Me is using influencers and social media marketing to build off its Halloween campaign from last year, Roy says. In 2022, it ran a campaign about how to turn lingerie into a Halloween costume, before selling actual costumes in 2023. This year, Adore Me hosted an influencer event with content creators making costumes out of Adore Me’s offerings.

Adore Me is also using digital, out-of-home advertising like advertisements on subways and billboards ahead of Halloween, Roy says. This is the second campaign like this the retailer has done, along with Valentine’s Day 2023. The retailer plans to continue investing in this type of advertising.

“It kind of bridges the gap between a digitally native company like us with traditional out-of-home advertising,” he says.

Fun.com and Home Depot both use social media to show off Halloween offerings, the retailers said.

“One of the biggest changes we’ve made this year is with short-form video. We are producing and deploying more video than we ever have in the past,” Fun.com’s Bietz says. “It’s been amazing to see how customers have responded to having more rich experiences with our brand. As we create more, our customers are also giving back with videos of their own that we are pleased to feature and share on our websites and social platforms.”

He pointed to TikTok videos demonstrating the scale of giant decor items.

@halloweencostumes.com Battle of the giants! Michael Myers vs. Stay Puft, who would win? #25ft #codeorange #inflatabledecor #michaelmyers #staypuft #halloweendecor ♬ original sound – Leovincem

Connected TV ads have also driven “excellent results” for HalloweenCostumes.com so far this year after investment last year, Bietz says.

Retailers offer new fulfillment options

Getting purchases to customers ahead of the holiday they’re intended for is key. That’s less of an issue this year, Adore Me’s Roy says.

“This is actually the first year since pre-COVID where [fulfillment] is not glaringly top of mind,” he says.

With fulfillment less of a problem this year, retailers are focused on giving consumers more options and speeding up delivery. Fun.com opened a new fulfillment center in Kentucky to relieve its other facility in Minnesota that was maxing out capacity.

“This has also greatly improved our customer experience, as we can deliver much faster to more of our base,” Bietz says.

Walmart recently expanded its fulfillment services for third-party sellers to include big and bulky items, a spokesperson said. The big-box retailer also has a variety of other fulfillment options, including late-night express delivery and pick-up options ready between 30 and 90 minutes.

Walgreens also has 30-minute pickup, one-hour delivery, and 24-hour delivery, a spokesperson says. Walmart and Walgreens rank No. 2 and No. 19, respectively, in the Top 1000.

Reports of consumer demand are mixed

The National Retail Federation projects U.S. consumers will spend $12.2 billion on Halloween this year, up from $10.6 billion in 2022. Much of the increase in spending can be attributed to higher prices, particularly for candy, Neil Saunders, managing director at retail analysis firm Global Data, previously told Digital Commerce 360.

Fun.com’s Bietz says overall demand is softer this year, but the online retailer is growing sales by offering new products. New merchandise and marketing plans are paying off, he says.

Adore Me is having a bigger Halloween season than in the past, Roy says. In the first half of October, which is the retailer’s peak Halloween buying season, Halloween sales were up 21% over the same period in 2022.

Peter Lucas contributed to this story.

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How one furniture retailer combats fraud during online checkout

Gretchen Salois — Thu, 12 Oct 2023 13:15:20 +0000

After 25 years exclusively as B2B, outdoor furniture merchant Polywood shifted to include B2C to “own our own brand,” says Sean Valencourt, executive vice president of information systems.

As business grew, so did Polywood’s fraud risk, Valencourt says.

“We were actually targeted by a fraud ring,” he says. The retailer received multiple fraudulent orders, to the point where its manual process for flagging suspicious orders could no longer keep up, Valencourt says.

The retailer was in danger of hitting the 1% threshold where financial companies won’t allow a retailer to process its credit cards anymore, he says. For example, Visa has a 0.9% threshold. The financial institution issues an “early warning” when the percentage of fraudulent orders reaches 0.65%.

“We hadn’t gotten to that point, but we were approaching a 1% threshold on fraudulent orders,” Valencourt says.

The retailer turned to online payment and checkout platform Bolt. Instead of relying on employees to manually flag potential fraudulent orders, the retailer automated the process. That freed up employees to serve customer inquiries directly instead, Valencourt says.

It also increased conversion, Valencourt says. Polywood began using Bolt in 2018. The first year after adding Bolt, Polywood’s conversion rate increased 10% in 2019. By the end of 2020, conversion increased 20%, he says. That’s increased to about 50% conversion currently, he says.

Customer checkout rate

A portion of Polywood’s customers order furniture for locations other than their main home. Some are for second homes or other properties, for example. These orders were often flagged as fraudulent because the billing zip code did not match the shipping zip code.

“A bank might flag it and it hurts checkout,” he says.

That’s a big deal when the average order value for a Polywood order is around $1,000, he says.

Instead, Bolt automates this process and catches these details.

“Now, our customer service agents can answer customer questions like what product is right for them or sizing and colors about products,” Valencourt says.

Polywood uses Bolt as its default checkout processor. Customers can check out as a guest. They can also use Bolt if they’ve purchased through other retailers that also use Bolt or are saved in the Bolt network. This allows shoppers to check out quicker because their information is already stored with Bolt.

Polywood preventing fraud

Bolt flags fraud and offers Polywood the ability to track deliveries. As Polywood expands its customer base, the shopping process has grown more complex. There are split shipping and multiple manufacturing centers and warehouses to navigate, Valencourt says.

“We actually did start offering split shipping a couple of years ago,” he says. “But we didn’t really let the customer know what was going on. A customer might get half an order and call in saying they were missing part of it. They didn’t realize it was coming in a separate shipment. The customer service team didn’t either. They would send a replacement for the missing items only to find out the rest of the initial shipment arrived later.”

That Bolt network is growing, says Shilpi Narang, chief customer officer. The number of Polywood shoppers who check out using a Bolt account has more than doubled since the merchant went live with the vendor. Shoppers with a Bolt account constitute 30% of Polywood’s total volume of checkout as of September 2023.

Merchants don’t typically want to outsource their entire checkout process, Narang says.

“We work with them so they can keep their branded look while tapping into elements of our technology,” she says.

While merchants want an automated fraud and checkout solution, Narang says they also find value in Bolt’s growing network. The vendor claims that its shopper network includes tens of millions of U.S. shoppers and has grown year over year in 2023 by 44%.

“As we work with more merchants, especially with larger more complex merchants, we heard they wanted to increase conversion and leverage our shopper network,” she says. According to Narang, when a U.S. ecommerce merchants turns “on” Bolt, “immediately about 17% of their site traffic is recognized by Bolt,” she says.

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Ecommerce drives up US port activity

Paul Demery — Thu, 05 Oct 2023 21:29:38 +0000

As ecommerce orders increase shipping activity at U.S. ports, RoadEx America is relying on new web-based technology systems to more quickly fetch containers arriving at the busy ports of Los Angeles and Long Beach.

Nowadays, our customers are expecting more visibility to the point of comparing it to Uber.

Lisa Wan, executive vice president

RoadEx America

RoadEx then delivers them to retailers looking to quickly get trendy furniture and merchandise into showrooms and store shelves or to consumers’ doorsteps. RoadEx is a trucking and logistics services company.

Lisa Wan, executive vice president, RoadEx America

“A lot of ecommerce customers are looking for containers delivered more quickly to their warehouses for a faster turnaround. They need to empty them and have cargoes they ship to their stores or direct to consumers,” says Lisa Wan, executive vice president of operations, RoadEx America.

RoadEx has been expediting its container pick-up and delivery service with new web-based software. The software lets it know when its clients’ incoming containers will be available for pick-up at a port terminal. It also uses complementary drayage-management software to route its container-carrying trucks. The software does so in a way that puts them at that terminal at the scheduled pick-up time, Wan says.

The web-based drayOS drayage management system, from PortPro, also lets RoadEx optimize the routing of its container trucks. In addition, drayOS offers an online portal for customers to check the expected delivery time of their containers and access shipping invoices.

Providing the Uber experience in shipping

“Nowadays, our customers are expecting more visibility to the point of comparing it to Uber,” where they can see who their driver is, what vehicle they’re in, and when they’ll arrive, Wan says.

That expectation is likely to only increase as ecommerce accounts for more container shipping, she and others say.

Ecommerce orders of products ranging from electronics and food to cars and chemicals is driving up business at U.S. ports. It’s sparking demand for “port-to-door” transportation-management systems, according to a new report, 2023 State of Drayage.

The U.S. drayage market — transporting goods from container ships to distribution centers, retailers and end customers — is on course to grow. It’ll go from $6.1 billion last year to $8.3 billion by 2027, according to figures the report cites from market research firm Technavio. Globally, the drayage services market will grow from about $25.2 billion last year to more than $28.2 billion in 2027.

Michael Mecca, CEO, PortPro

Michael Mecca, CEO and founder of PortPro, says that as companies source products through global supply chains and ship them to customers, they face the challenge of getting shipment visibility and status and sharing it with their trading partners.

“This lack of visibility leads to costly headaches like containers and equipment being double-handled, and drivers stuck waiting in line at marine terminals,” the report says. “It also causes a whole host of operational inefficiencies that ripple across the enterprise for drayage carriers.”

A spokeswoman says that PortPro produced the report based on information derived from logistics services companies and research firms. PortPro provides transportation-management software for drayage trucking companies.

RoadEx uses PortPro technology to fill a void

Mecca says web-based digital drayage management systems, such as PortPro’s drayOS, help fill a void of shipment visibility between ports and final destinations.

Mecca notes that PortPro is on course to double its revenue this year after tripling last year. He founded it in 2019. PortPro raised $12 million in funding late last year from Avenue Growth Partners. And it’s using the funds to continue developing its software for managing drayage operations.

At RoadEx, Wan says she expects to rely on drayage-management systems even more in the years ahead. She notes that the systems will be crucial to deal with market disruptions. For example, the COVID-19 pandemic caused severe back-ups at port facilities. And with systems that help container carriers expedite deliveries and provide arrival times, retailers and other shippers may forego air freight for less costly if far slower ocean container routes, she adds.

PortPro primarily works with trucking companies in the United States and Canada. But recently, it expanded into Europe, offering its software to drayage firms serving Rotterdam, Netherlands.

“Rotterdam to New Jersey is a really common shipping lane now,” Mecca says. He adds, “We’re working on moving into more continents, more countries.”

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

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Nike Digital sales grow modestly in fiscal first quarter

Abbas Haleem — Fri, 29 Sep 2023 13:00:14 +0000

Nike Inc. started its fiscal 2024 with digital sales growing in its first quarter ended Aug. 31, 2023. The athletic apparel and footwear retailer did not share a dollar amount for digital sales but reported $12.9 billion in revenue for the quarter. That’s up 2% versus Q1 of its fiscal 2023.

Nike ranks No. 9 in the Top 1000, Digital Commerce 360’s database of the largest North American e-retailers.

Nike’s digital retail strategy

Chief financial officer Matt Friend said Nike consumers spent more time in brick-and-mortar locations in the quarter.

“But 90% of their shopping journeys are starting with digital,” Friend said. “And so we continue to believe that our digital and physical strategies of serving consumers are the right strategy to serve demand as we look forward.”

In North America, Nike Digital sales grew 4% in the retailer’s first quarter. Nike Digital refers to sales made through the retailer’s websites and apps.

At the same time, Nike Digital sales in Europe, the Middle East and Africa decreased 2%. And they decreased 3% in Asia Pacific and Latin America. In Mexico specifically, though, Nike’s “digital business delivered double-digit growth,” Friend said, without revealing more.

“We’ve increased the size of our supply chain in the last few years to be able to address the growth that we’ve seen in our business, both overall and in digital,” Friend said.

To improve that efficiency, he said, Nike has reduced digital split shipments so consumers don’t get two deliveries for the same order. It has also invested in “regional service centers that are closer to where consumer demand is.” In other words, it has improved its fulfillment by opening distribution centers in strategic areas.

Nike Digital sales in China

In the Greater China region, Nike Digital sales grew 6% in Q1. The footwear brand held a three-day sports festival called Sportchella in China.

“The team amplified the impact of the festival by partnering with Tmall to create the first Nike Super Brand Week, which drove more than 2 billion impressions,” Friend said. “And this partnership seamlessly integrated the events with a digital shopping journey that generated very strong consumer response and engagement.”

Tmall is an Alibaba-owned marketplace, along with Taobao. Taobao ranks No. 1 in the Global Online Marketplaces Database, Digital Commerce 360’s ranking of the largest such marketplaces by gross merchandise value. Tmall ranks No. 2.

Nike App increases Nike sales

The Nike mobile app had “strong growth,” Friend said. Nike mobile app traffic had high single-digit growth in the quarter, he said.

“We saw member activity continue to increase both in terms of engagement and buying behavior and a higher basket size, a higher AOV,” Friend said.

That drove “sustained momentum on the Nike mobile app” as loyalty members increased their buying frequency in the quarter, he said.

“We continue to see a growing structural advantage as more consumers start their shopping journeys with us on mobile,” Friend said.

Nike Direct revenue

Friend said member engagement through Nike Direct grew double digits in its Q1 compared with the year-ago period. Average order value through Nike Direct sales increased, but he did not specify how much.

Nike Direct refers to the retailer’s direct-to-consumer sales (online and offline). It grew 6% year over year in the first quarter.

In North America, Nike Direct grew 7%, led by 11% growth in physical store sales. Nike Direct sales grew 10% in China. They grew 6% in Europe, the Middle East and Africa, and 3% in Asia Pacific and Latin America.

How much does Nike make in a year?

For the fiscal first quarter ended Aug. 31, 2023, Nike reported:

Revenue grew 2% to $12.94 billion, from $12.69 billion in the year-ago period.
Profit also grew 2%, to $5.72 billion from $5.62 billion the year before.
Similarly, Nike Digital sales grew 2% year over year in the quarter.
Nike Direct, or the retailer’s direct-to-consumer sales (online and offline), grew to $5.4 billion. That’s a 6% year-over-year increase.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports. Here’s last quarter’s Nike report.

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