The OpenAI consortium released its generative AI bot ChatGPT for public use during Q4 2022, and it quickly became the hottest topic around. Months later, everyone in the online retail industry is still buzzing about generative AI, but how many businesses are actually using the technology today? And how many would want to talk to us about it?

Turns out, quite a few.

While many merchants we talked to are still just piloting and exploring how best to use the burgeoning technology, many brands have live generative AI programs up today. This Strategy Insights, “6 ways retailers are using AI right now and how generative AI will change ecommerce,” showcases examples of many large retail brands (and a few smaller ones) and how they are using generative AI right now.

Below is just a sampling of examples you’ll find in the rest of this report. Download the entire Strategy Insights here.

1.) Stitch Fix taps generative AI to write  ad headlines and product descriptions

Apparel retailer Stitch Fix uses generative AI to write headlines for Facebook and Instagram ads. In the past, it would take about two weeks to develop a creative campaign and draft copy. But now, human copywriters can evaluate a headline created by the generative AI system in less than one minute — and they approve the machine-created content 77% of the time, Stitch Fix says.

2.) Babylist uses generative AI to write email subject lines

Baby products marketplace and registry says its marketers are expected to use generative AI to help create ideas, content and copy, says Lee Anne Grant, chief growth officer. Babylist finds that ChatGPT-generated subject lines increased open rates for marketing email 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.

3.) J’evar uses generative AI to create product models

Online-only jewelry merchant J’evar has its product designers use generative AI to speed up how it creates custom jewelry pieces. Instead of going through dozens of product mockups over the course of weeks, genAI can help its designers produce product samples in minutes, says J’evar founder and CEO Amish Shah.

4.) Newegg uses generative AI to summarize customer reviews

Online electronics retailer Newegg built a generative AI tool in house that creates one product summary for a product based on all of the published customer reviews. This review is published at the top of all the reviews. Reviews are an important feature for Newegg, as 20% of Newegg.com shoppers read reviews, and these shoppers spend 40% more money on the site than non-review reading shoppers, says Andrew Choi, director of brand and website experience for Newegg.

5.) UrbanStems creates images with genAI

Online flower merchant UrbanStems is using generative AI in multiple ways, including having it create images of potential products it wants to sell. For example, the brand can tell its generative AI software to create an image of a 10-stem red and white arrangement of peonies in a glass vase and white background — and send that image to its merchandising team to create the product in real life. This helps the brand quickly experiment with new designs, without having to purchase flowers and conduct a photo shoot just for a design mock up, says Katie Hudson, content director for UrbanStems.

6.) EBay enables its marketplace sellers to use genAI to write product descriptions

Marketplace giant eBay built a tool based on Open AI’s ChatGPT that creates a product description based on data sellers provide about a product’s category, condition, color, brand and more. Roughly 20% of sellers shown the generative AI tool use it, and of those, 90% accept at least part of the description, says Xiaodi Zhang, vice president of seller experience at eBay.  

Download the free Digital Commerce 360 October Strategy Insights, “6 ways retailers are using AI right now and how generative AI will change ecommerce” here.

—April Berthene, Editor, Strategy Insights

Additional reporting from Digital Commerce 360 editors Don Davis, Gretchen Salois and Abbas Haleem.

The post 6 ways retailers are using generative AI right now appeared first on Digital Commerce 360.

The tool allows J’evar’s jewelry designers to input information about the product’s materials and specifications, and the generative AI will produce an image of that product. The tool saves the brand weeks of manual design time on products, says Amish Shah, founder and CEO of the direct-to-consumer brand of jewelry featuring lab-grown diamonds.

J’evar began using its jewelry product AI generator last year in 2022. The retailer feeds metrics and images into a knowledge bank — or a database of text, images and metrics for materials that include the weight of gold and silver, among other key details — for the generator to refer to before it produces an image. Shah jokingly refers to it as “JevarGPT 1.0” and “AI for Jewelry 1.0,” the former a reference to OpenAI consortium’s ChatGPT.

For example, Shah says if he wanted to make a bangle, he could input a text prompt to the generative AI, specifying how much the weight of gold should be for that piece, how thin or wide it should be and what design style he would like. He can even ask it to produce 50 iterations from that single prompt. In return, the generative AI will output complete designs, some of which might be ready to turn into tangible products. Other product designs the AI outputs require J’evar designers to modify the design until it can be producible.

Shah says one key reason J’evar can’t produce all the designs is because of the inability to cut diamonds into the shape the AI generates. But even this ability is coming soon with new machinery, he says.

Exploring generative AI for design

“You’re looking at optimization, efficiency, speed — which is of course going to lead to cost reduction in the longer term,” Shah says about using generative AI. “But importantly, from an output perspective, we’re looking at precision and a higher level of creativity.”

In the past few years, developers have trained artificial intelligence to do more than analyze data and tell its users what to make of the data. They’ve trained AI to generate writing, images, videos and sounds. This is called generative AI, and online retailers have already begun to design new products and produce new variations of existing products — and do so quickly. With generative AI, retailers can create and test multiple product ideas in just minutes, much faster than the weeks or months it might take to design now. Online retailers, including J’evar and Auricle Technology, are learning how to use generative AI to assist their product designers, making the process more efficient. But because generative AI is still new, it has limitations on what it can do.

J’evar uses its own generative AI technology to help its human designers speed up the creative process.

Gen AI’s value outshines its current limitations

While generative AI is excellent for learning and processing massive amounts of data, it is not yet at a point that it can understand movement through space, says Brendan Witcher, vice president and principal analyst at research firm Forrester. It doesn’t think about engineering and structural elements or physical viability yet, he says. Although generative AI is not at that point yet, he says, that doesn’t mean it can’t be eventually.

“You want to design a shoe. Great,” Witcher says. “Well, a shoe’s a shoe until you put it on and have to run in it, then it falls apart on you because you didn’t think about the physics of how movement happens.

“The big question is when do we bridge the gap between the work that needs to be put into generative AI to understand the movement through physical space that objects need to go through often, and the commercial viability of doing that.”

Informed assessments

However, even with its current limitations, Witcher says generative AI’s value comes from the assessments it already has learned to make. He says people do their jobs based on the knowledge they receive in their training, and “AI kind of works like that too.” But generative AI “takes it to the next step” and looks at more data than humans can process, and then make assessments about what the best subsequent steps are. It can also come up with ideas humans couldn’t or wouldn’t think of because the human mind doesn’t process information the way artificial intelligence tools can, he says.

“We can’t absorb that much data and extract from it an idea. It’s just impossible for us,” Witcher says. “It shouldn’t be lost that just developing an image of something that you wouldn’t be able to think of because you weren’t trained to think that way has huge possibilities.”

Witcher says generative AI’s value extends beyond production speed to unique creations.

“A lot of people talk about generating imagery with AI, but what to me is most important is the ability to do it over and over and over again until you get something you like,” Witcher says.

Will generative AI replace human designers?

Generative AI is not here to replace humans in the design phase, Shah says. Especially not in the jewelry industry.

“Human intelligence supersedes artificial intelligence, at least I can say that for jewelry,” Shah says.

Generative AI is more like an assistant to human designer, Shah says. It’s not the technology that’s telling designers when a piece has been finalized. It’s a human making that decision, Shah says. Just like Adobe and Corel are graphics software tools for designers, generative AI is a design tool, not a human replacement, he says.

“Once we get the initial output, it is then modified to be producible,” Shah says.

Forrester’s Witcher agrees that AI should be used as a tool and not a replacement for creative individuals.

“If all the people learn how to do things on generative AI, then no one learns how to do it beyond generative AI,” Witcher says. “Over time, you start weeding out the expertise from the low-level individuals and nobody becomes a high-level individual.”

Witcher adds that the majority of AI use isn’t leaving artificial intelligence “to its own devices.”

“It’s more assisted intelligence — the AI standing for assisted intelligence — where we’re using it to be more productive in our own jobs that we currently do today,” Witcher says.

J’evar uses generative AI to speed up the design process

Traditionally, Shah says, jewelry design is a long process that can take a few weeks or even more than a month. In the case of commissioned designs, J’evar designers would first have to understand what kind of product a customer wants before going into iterations. In the example of designing a bangle, the designers would have to first determine if a customer wanted a wide cuff or something they could stack, something lightweight or heavy, thick or thin, if they wanted diamonds or gemstones, and so on.

Then, the designers would do initial mockups to ensure they understood the customer’s request correctly. This process would typically be one to three weeks of showing designs to the customer and sketching accordingly, Shah says.

In one case, Shah says he and his team had gone through 55 variations before a customer said, “I love it.” After that, his team would then go to computer-aided design (CAD). From there, it would go to rendering.

“By using AI, we are able to take that process down to pretty much hours and in some cases, literally within minutes,” Shah says.

Moreover, when working manually, the designer has to move every single diamond into place, making sure they are in the correct position. AI speeds up that process, Shah says. In milliseconds, the generative AI processor can move diamonds and gemstones, raise or lower gold weight, or change the width or thickness.

“It’s almost like putting a thousand designers and the type of work they would have done into the knowledge bank and then letting the system do a combination from those thousand designs to give you back results,” he says.

J’evar fed years’ worth of jewelry data into its generative AI platform. The platform produces images that human designers then adjust in the design phase.

Developing a custom generative AI processor

Shah says his family’s 90-year history in the jewelry business gives him an advantage over others in developing custom generative AI technology for J’evar.

“It sounds complex, but you have to keep in mind: We’re in the business,” Shah says. “We’re in the jewelry business, so the core bank or the core information that’s required is sitting with us. It’s not something I have to go outside and source.”

J’evar feeds text and imagery into its generative AI to teach it what to output. When inputting prompts, J’evar designers primarily use text to generate an image.

“That knowledge bank is sitting there,” Shah says. “Now, it’s all about organizing it and feeding it into the system in a format that can then be analyzed and the GPUs can run and start combining things and getting them back to you.”

Iterations at scale

Sometimes, what generative AI produces needs less human modification than others. For example, Auricle Technology uses generative AI tools to swap out logos and colors on its different products.

Auricle Technology founder William Cooksey says he created his electronics accessory brand out of necessity. He uses Apple AirPods for long hours most days, and the hard plastic begins to hurt his ears after a while. That led him to create AirPod skins made from silicone that are softer and anchor better into his ears.

When his manufacturer sent back prototypes, it printed Auricle’s logo on them. That led Cooksey to realize the importance of branding and how he can “pivot and get into the licensing game.”

The direct-to-consumer brand launched in 2021 now creates customized merchandise including AirPod skins, AirPod charging case skins, phone cases, wireless chargers and mouse pads. And through licensing agreements, it prints these products with logos for more than 90 teams in Major League Baseball, the National Hockey League and Major League Soccer, as well as about 130 college teams.

Rather than have a designer manually change the colors and logos for each team, the brand has integrated generative AI into its design process, Cooksey says.

Unlike J’evar, however, Auricle does not have the budget nor the in-house capacity to develop an all-new generative AI engine. Its business model is also different, focusing on customization rather than new product development.

New technology, but make it affordable

Cooksey instead works with Goals Media Group to use generative AI into its product iterations. Goals uses technology Microsoft for Startups provides, says Goals founder and CEO Aubrey Flynn. This means it receives access to Microsoft’s resources, including technology and tech experts, among other benefits. Microsoft has announced it would invest $10 billion into OpenAI — the company behind text-based generative AI brand ChatGPT and image-based DALL-E.

Cooksey says his lead designer and Flynn determined generative AI was the way to go from designing products with one team logo to hundreds “in a short period of time without breaking the bank.”

Auricle also uses Goals and its generative AI offerings to develop marketing materials like images for social media that highlight products from different teams at different stadiums. The generative AI creates an image complete with Auricle branding, the team’s branding, and any copy it needs.

“Being a small business, not having a lot of capital, it’s really exciting me that we can still come up with quality images without breaking our budget,” Cooksey says.

“When you deal with those leagues, they want you to be able to launch all the teams at the same time,” Cooksey says. “I just wouldn’t have been able to afford to do that.”

Generative AI’s impact on metrics

Goals has about 650 clients and nearly half are online retailers, Flynn says.

Flynn says that social media marketing creatives that generative AI produced can increase consumer interactions with the ad by more than 35% compared with that brand’s normal creative, according to data from its clients.

This includes creatives entirely generated through AI, visuals that already existed that AI has augmented, and copy that generative AI has helped develop for those types of visuals.

“I’ve seen AI-powered creative outperform to the extent where cost per click on a certain product may have been 30%-40% less expensive based on some of the guidance from AI on the copy and the imagery,” he says.

He adds that brands like Auricle — which lack access to capital, resources, infrastructure and more that large brands have — need to adopt technology like generative AI early on because it’s less expensive than some alternatives like hiring designers or manufacturers from the start.

Early results are insightful, but ‘is this just another buzzword?’

Shah, Cooksey, Witcher and Flynn all expressed the same idea: It may be early, but the application of generative AI in product development is promising.

While some may say generative AI is another buzzword, Witcher says what separates this technology from other tech fads is that companies are already allowing individuals in their organizations to play with, understand and experiment with generative AI.

“They’re almost crowd-sourcing proof of concept,” Witcher says. “It’s a unique characteristic to generative AI that it’s so easy to do and work with that almost anybody can do it.”

Although results are limited in some ways and sometimes imperfect, online retailers are using generative AI imaging to design new products essentially from scratch, customize existing products and develop marketing content. They can develop multiple iterations of these images at once or continue iterating on the same image multiple times until they’re satisfied with how the image looks. They can then take the design that generative AI produces and tweak it manually, saving them the time of doing each iteration manually — and saving them the creative energy it takes just to design a new product iteration.

Do you rank in our databases?

Submit your data and we’ll see where you fit in our next ranking update.

The post Can generative AI help online retailers design better products? appeared first on Digital Commerce 360.

Shah launched J’evar, a direct-to-consumer brand, in February. Before that, he learned from years of experience through ALTR, which he founded in 2016 and sells through retailers like Borsheims and Michaels Jewelers. Shah and his team developed an in-house generative AI tool that mocks up designs for new pieces of jewelry. To teach the tool, his team used data from ALTR and 90 years’ worth of jewelry from his grandfather’s business.

J’evar uses diamonds ALTR grows. ALTR grows those diamonds with energy from a solar farm with a capacity of 10 megawatts. It generates 35 to 40 kilowatts of energy each day.

The megawatt is the standard term of measurement for bulk electricity, according to EcoWatch, an environmental news outlet.

“A megawatt measures power on a large scale,” according to EcoWatch. “So one megawatt can power a lot more than one household.”

“We grow our own diamonds, we cut and polish them, we design jewelry, we manufacture the jewelry, and we bring it to the consumer. We use recycled gold for making our jewelry — recycled metals, so gold and silver,” Shah said.

With generative AI-driven design, J’evar achieves a level of precision that Shah says dramatically reduces material waste and boosts the retailer’s sustainability goals. Shah said he expects a 10% to 20% reduction in energy consumption and wasted materials in the jewelry industry because of generative AI.

“Sustainability is actually core to us,” Shah said. “We’ve made sustainability as a part of our DNA rather than a marketing buzzword.”

It all starts on a (solar) farm

Shah’s brands run on electricity from a solar farm in Surat, a city in Gujarat, India. It currently generates 10 megawatts of solar energy, and Shah says he plans to scale that up to 17 megawatts. To put that into perspective, the Solar Energy Industries Association calculates that on average, 1 megawatt of solar power generates enough electricity to power 173 U.S. homes.

The energy is then transmitted through the power grid into J’evar diamond-growing facilities with help from the local government.

“In order to grow diamonds, the single largest raw material is energy,” Shah said. “They’re very high energy consumption. You are basically using solar energy to power the systems.”

And in terms of carbon neutrality for the diamond growth, Shah said, the facility is audited for climate neutrality based on the United Nations greenhouse gas protocol. The protocol holds corporations, organizations, cities and countries to different standards.

Shah said J’evar offices and facilities are both audited for all its energy consumption, from shipping packages to employees traveling and various other factors.

‘JevarGPT’ and generative AI for jewelry design

J’evar’s generative AI tool allows its human jewelry designers to input information about a product’s materials and specifications, and the generative AI will produce an image of that product. The generative AI tool saves J’evar weeks of manual design time on products, Shah said. 

J’evar began using its jewelry product AI generator last year in 2022. The retailer feed metrics and images into a knowledge bank — or a database of text, images and metrics for materials that include the weight of gold and silver, among other key details — for the generator to refer to before it produces an image. Shah jokingly refers to it as “JevarGPT 1.0” and “AI for Jewelry 1.0.” The former is a reference to OpenAI consortium’s ChatGPT.  

For example, Shah said if he wanted to make a bangle, he could input a text prompt to the generative AI, specifying how much the weight of gold should be for that piece, how thin or wide it should be and what design style he would like. He can even ask it to produce 50 iterations from that single prompt. In return, the generative AI will output complete designs, some of which might be ready to turn into tangible products. Other product designs the AI outputs require J’evar designers to modify the design until it can be producible.

J’evar fed years’ worth of jewelry data into its generative AI platform. The platform produces images that human designers then adjust in the design phase.

Technological advances

Shah said J’evar can’t produce all its AI’s designs yet. A key reason is because of the inability to cut diamonds into the shape the AI generates. But even this ability is coming soon with new machinery, he said.

“You’re looking at optimization, efficiency, speed — which is of course going to lead to cost reduction in the longer term — but importantly, from an output perspective, we’re looking at precision and a higher level of creativity,” Shah said about using generative AI.

J’evar marries generative AI and sustainability

In the case of J’evar, generative AI can determine exact material amounts before creating an item, helping with sustainability by limiting waste.

“If we are able to predict the exact amount of gold we’re going to need, what the design is going to be, how much cubic millimeters of gold, the wastage will go down dramatically because you know exactly what you’re looking to produce. More importantly, the level of precision from a point of engineering will go much higher,” Shah said. “The amount of gold that is used will be very precise. How and what is printed in terms of the level of resolution will go higher, ultimately lowering the amount of wastage.

“Gold wastage will go low, but yes, that means the speed will go up, which means the energy requirements will go down. The material wastage from wax to silicon to machine usage, everything will go down. From a sustainability perspective, AI is going to have a direct impact on sustainability or improving the reduction of wastage.”

Do you rank in our database?

Submit your data with this quick survey and we’ll see where you fit in our next ranking update.

Sign up

Stay on top of the latest developments in the ecommerce industry. Sign up for a complimentary subscription to Digital Commerce 360 Retail News. Follow us on LinkedIn, Twitter and Facebook. Be the first to know when Digital Commerce 360 publishes news content.

The post Jewelry retailer J’evar strives for sustainability on different levels appeared first on Digital Commerce 360.

That’s an improvement from being down 3% in Q1, said Stephen Priest, senior vice president and chief financial officer, on a July 26 earnings call with investors.

EBay active buyers dropped by 1 million quarter over quarter, totaling 132 million, Priest said. Buyer count — for both new and returning buyers — has also grown year over year for four straight quarters, he said. The number of “enthusiast” buyers was stable in Q2 at 16 million, he said. Spend per enthusiast grew year over year, averaging roughly $3,000 annually. However, he did not specify how much that spend has grown.

President and CEO Jamie Iannone also said advertising revenue reached 2% penetration of GMV, “a major milestone.”

“Total ads grew 35%, while first-party ad revenue grew roughly 50 points faster than GMV,” Iannone said.

Iannone added that eBay introduced in its fiscal Q2 a new way to rank ads on search that leverages its in-house artificial intelligence (AI) capabilities. The method optimizes cost per acquisition placements for both conversion and ad rate, he said.

EBay ranks No. 6 in Digital Commerce 360’s new 2023 Global Online Marketplaces Report. The Global Online Marketplaces Database ranks the 100 largest such marketplaces by 2023 third-party GMV.

eBay GMV

In the United States, eBay GMV decreased 4% in Q2, Priest said. International eBay GMV grew 1%, he said.

“Enabled by artificial intelligence, we will fine-tune the breadth of inventory and other aspects of the shopping journey to cater to the varying needs of new buyers, infrequent shoppers and eBay enthusiasts,” Iannone said.

He said eBay began rolling out changes on the consumer-facing side in recent months. Those started with “testing a more modern and intuitive view item page, which is the most visited page on eBay,” Iannone said.

The updated eBay item page offers:

• A streamlined appearance.
• Larger and higher resolution images
• An optimized information hierarchy.

“Early tests indicate a measurable uplift in GMV versus our existing design,” Iannone said.

“EBay has five categories that each generate more than $10 billion annually in GMV, making up more than 80% of volume on our marketplace in aggregate.” Iannone said.

Those categories are:

• Motors parts and accessories
• Electronics
• Collectibles
• Home and garden
• Fashion

Iannone said the marketplace is investing in “improved in-house risk modeling to alleviate transactional friction for sellers and buyers on eBay.” That has lifted conversion, he said without disclosing details. It has also led to “hundreds of millions of dollars of incremental GMV during the first half of 2023 alone,” Iannone said.

eBay embraces AI

eBay has been implementing AI in different parts of its business.

Iannone said over the next few quarters and years, eBay expects advancements in artificial intelligence, including generative AI, to impact “nearly every aspect of our organization.” He said the advancements will drive meaningful efficiency and productivity improvements.

He also said eBay’s recent acquisition of Certilogo will expand eBay’s fashion category. Certilogo provides AI-powered authentication for apparel.

Iannone said Certilogo empowers brands and designers to:

• Manage the life cycle of their garments.
• Protect their customers from counterfeits.
• Encourages ecommerce via QR codes that serve as digital product passports.

Using AI for inventory

Moreover, Iannone announced a new feature called Magical Listing. He said it will make it “significantly easier” for sellers to list their inventory.

“One of the biggest challenges to operating a listings-based marketplace is the burden on sellers to fill in descriptions and item aspects for their products,” Iannone said. Magical Listing launched in May, he said. The feature “dramatically reduces this friction for our sellers via AI-generated item descriptions.”

“We integrated Azure’s open AI API into our core listing flow,” Iannone said.

EBay sellers can choose to have generative AI instantly populate detailed product information, he said. It would use the product’s title, category and any item aspects that have been input, he added.

In Q2, eBay enabled more than 50% of iOS and Android users in the U.S. to test this beta feature. Iannone said he expects to reach 100% in the coming weeks. About 30% of users have tried the feature at least once, he said.

“Early signals have been extremely positive,” Iannone said. “We’ve observed acceptance rates of over 90% for AI-generated descriptions, including those with edits.

“Customer satisfaction is over 80% thus far, which is among the highest CSAT for any new feature launched in recent memory. Sellers have told us that this feature will unlock more of the unique inventory in their closets. And on average, we are seeing description lengths double when gen AI is used.”

Furthermore, Iannone said eBay is “just getting started” with Magical Listing.

“The next iteration of our Magical Listing will leverage our improved image recognition capabilities to provide flows with the option of a more seamless camera-based listing,” Iannone said.

Authentic and certified fashion products

EBay launched Authenticity Guarantee for streetwear in the U.S. in June. It is now authenticating new and pre-owned streetwear items from 20 trusted brands, Iannone said. It has since expanded eligible streetwear in July.

Among the eBay-certified brands:

• Adidas
• Jordan
• Nike
• Supreme
• Kith
• Off-White
• Palace

EBay plans to expand coverage to luxury brands later in the year, Iannone said. Those include Gucci, Prada, and Louis Vuitton.

“This marks our entry into authenticated apparel, a category that has strong overlap with our passionate community of sneaker enthusiasts, adding another layer of trust when they shop,” Iannone said.

EBay also launched a Certified by Brand program in April. Iannone said the marketplace expects this to facilitate more ecommerce in the luxury space. There are already more than 20 brands participating in this program, he said. They offer new and certified preowned inventory across the watch, jewelry and handbag categories.

Listings from this program will show a direct-from-brand or brand-authorized seller badge, which he said brings an enhanced level of trust to these listings similar to visual trust signals for Authenticity Guarantee.

eBay earnings summary

For the fiscal second quarter ended June 30, eBay Inc. reported:

• $2.54 billion in revenue. That’s up 5% from $2.42 billion in the year-ago period.
• eBay GMV decreased to $18.2 billion. That’s down 2% year over year from $18.55 billion.
• eBay active buyers decreased 4% year over year.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports.

Do you rank in our databases?

Submit your data and we’ll see where you fit in our next ranking update.

Sign up

Stay on top of the latest developments in the ecommerce industry. Sign up for a complimentary subscription to Digital Commerce 360 Retail News. Follow us on LinkedIn, Twitter and Facebook. Be the first to know when Digital Commerce 360 publishes news content.

The post Ebay implements new AI capabilities as Q2 revenue increases, GMV drops appeared first on Digital Commerce 360.

The post 29 takeaways from ranking the largest online retailers by category appeared first on Digital Commerce 360.

Academy Sports and Outdoors (No. 136)

Net sales were down 7.3% year over year for the first quarter to $1.38 billion. The decline was due to fewer transactions and smaller ticket size, president Michael Mullican told investors. The retailer did not disclose sales data for ecommerce. 

Academy Sports and Outdoors plans to open 120 to 140 stores in the next five years, with the goal of using them to grow omnichannel sales and use them as distribution centers, Mullican said.

Chico’s FAS Inc. (No. 108)

Ecommerce sales were “up low single digits and outpaced stores on very strong traffic,” at Chico’s for the first quarter, chief financial officer PJ Guido told investors. 

Online sales made up just under half, 41% of revenue over the last 12 months, Guido said. 

Designer Brands (No. 78)

Net sales for the shoe retailer declined 10.7% to $742.1 million. Designer Brands did not share specific information about ecommerce sales in the quarter. The retailer is on track for its goal of doubling owned brands between 2021 and 2026, with the recent addition of Keds.

Five Below Inc. (No. 584)

Five Below grew sales 14% to $726 million in the first quarter, the retailer reported. The company didn’t share specific ecommerce sales, but Five Below’s social media presence is growing and driving traffic, CEO Joel Anderson told investors. Recent influencer campaigns also drove engagement, he said. 

Joann Inc. (No. 307)

Ecommerce sales at Joann declined 1% year over year for the first fiscal quarter. Net sales and comparable sales both declined more quickly, down 4% over the previous year. Online sales made up 11.8% of revenue in the quarter. Sewing and craft online sales grew during the period, while craft technology sales declined, the retailer said. 

App downloads have also grown to 15 million, the retailer said, and BOPIS has been especially popular with customers. Joann didn’t disclose what percentage of sales were made through the app.

Kirkland’s Inc. (No. 510)

Ecommerce sales represented 27% of total sales in Q1, down from 28% in Q1 of the previous year, Kirkland’s reported. Total sales across stores and online were down about 4%, driven by lower traffic in stores and online. Stores performed slightly better than online channels, Kirkland’s told investors. 

Rent the Runway Inc. (No. 258)

Apparel rental company Rent the Runway reported Q1 revenue grew 10% year over year to $74.2 million. The retailer reached 145,220 active subscribers, a 15% increase over Q4. 

Rent the Runway is also implementing new AI technology in search in 2023, the retailer announced. 

Roots Canada LTD (No. 668)

Sales were $41.5 million in Q1, down from $43.1 million in Q1 2022. Net loss was also more than in 2022, at $8 million compared with $5.3 million last year. The first quarter typically represents just 15% of annual sales, the retailer said.

A few categories were bright spots for Roots in the quarter. Apparel categories were particularly strong, with dress and skirt sales up “five fold.” Activewear grew 50% year over year, and represented 10% of sales in the quarter. 

Signet Jewelers Ltd. (No. 61)

Signet Jewelers reported ecommerce sales made up 23% of total sales in the first quarter. Ecommerce revenue is up 70% over 2020, the jewelry retailer said. 

Total sales were down 9.3% year over year to $1.7 billion. Part of the declining sales are due to a drop in engagements from the COVID pandemic disrupting dating in 2020, CEO Gina Drosos told investors. 

Torrid LLC (No. 224)

Online sales made up more than half of total revenue in Q1, Torrid said. Net sales decreased 11.8% year over year to $293.9. Traffic was “volatile and challenging,” both in stores and online, CEO Lisa Harper told investors.

“Once our customer finds us, she extends her shopping with us through our online capabilities, resulting in a strong omnichannel,” Harper said. 

Vince LLC (No. 855)

Net sales decreased 18.3% year over year to $64.1 million in Q1, Vince reported. The decline was driven by a 6.3% decrease in Vince brand products, and a 99.2% decrease in Rebecca Taylor sales as Vince winds down the brand. The retailer didn’t share ecommerce sales figures, but CEO Jack Schwefel said stores outperformed ecommerce sales, in line with broader industry trends.

Do you rank in our database?

Submit your data with this quick survey and we’ll see where you fit in our next ranking update.

Sign up

Stay on top of the latest developments in the ecommerce industry. Sign up for a complimentary subscription to Digital Commerce 360 Retail News.

Follow us on LinkedIn, Twitter and Facebook. Be the first to know when Digital Commerce 360 publishes news content.

The post Earnings recap: What you missed from Joann, Designer Brands, and more appeared first on Digital Commerce 360.

Daniel’s Jewelers, founded in 1948, was almost entirely an in-store retailer in 2019. 0.001% of its sales came from its ecommerce website that year, says Sam Sarullo, head of ecommerce and marketing.   

It launched a new ecommerce website in early 2020, just two weeks before the COVID-19 pandemic hit. And shortly thereafter, it launched curbside pickup.  

“Whether it was divine blessing or a horrible baptism by fire … all that traffic flushed over to the website,” Sarullo says.  

As shopper behavior changed in response to pandemic restrictions, customers who previously only shopped in the retailer’s physical stores then fell into three categories, he says.  

One group embraced the retailer’s new online shopping experience. The retailer processed 200 orders a day in 2020, up from about two orders a day in 2019 he says. 

Another group did not want to go to physical stores because of health concerns but also did not want to purchase jewelry online, he says. The third category still wanted an in-store shopping experience.  

There came a point in the pandemic when retailers could bring staff back into stores, but shoppers still could not enter. 

“So we started to pivot toward a curbside pickup model when we could get staff into the stores at a reasonable time,” Sarullo says. 

This, however, was an operational challenge because Daniel’s physical locations are in large malls and strip malls. Unlike larger retailers with their own parking lots, there was no reserved parking for Daniel’s shoppers, let alone curbside pickup parking spaces. But Daniel’s managed to make this work.  

Daniel’s contacted customers by email when orders were ready, providing that location’s store hours. It would give customers a phone number to call upon arrival. Employees would then get the packages and meet customers at the appropriate door. Some malls had shared curbside drop-off locations, similar to those for ride-sharing services at airports, Sarullo says. Others didn’t have anything designated. 

“And we never had anything specific just for Daniel’s due to the shared mall concept,” Sarullo says. 

Daniel’s informed customers about the process in both order confirmation emails and on the FAQ and shipping pages on its website. It said because all locations vary on curbside processes, a customer would get instructions once they called their local store upon arrival. Daniel’s also encouraged customers to call before setting out to pick up their order if they wanted specific instructions before arriving at the mall.  

Daniel’s Jewelers informs its shoppers about its Store-Assisted Virtual VIP Shopping and curbside pickup at select locations.

“We were bending over backwards to make it work to keep our customers happy,” he says. 

The sharp increase in retail chains offering curbside pickup started in 2020, according to Digital Commerce 360 data based on the 179 retail chains in its Top 1000 database. In 2019, less than 9% of retail chains offered curbside pickup, and 8.4% of those retailers offered the service in 2020, according to Digital Commerce 360 data. This increased to 53.6% of retail chains offering curbside in 2021 and 54.7% in 2022.  

Now that COVID-19 restrictions are gone, and shoppers have largely returned to in-store shopping, retailers must decide whether to commit to offering curbside pickup or whether they should drop it and stick to home delivery and store pickup.  

Some merchants are starting to discontinue the service. Digital Commerce 360 data from March 2023 shows that not even half — 44.1% — of retail chains in the Top 1000 still offer curbside pickup. But many consumers still like curbside pickup and want to continue using it. 

Curbside pickup at national retailers 

Among larger retailers, Target Corp. continues to offer curbside pickup, which it refers to as Drive Up. A Target spokesperson told Digital Commerce 360 in an emailed statement that Drive Up is the retailer’s top-rated fulfillment service. The spokesperson said Target plans to enhance the service.   

“This spring, Target will roll out Returns with Drive Up to our nearly 2,000 stores nationwide,” the spokesperson said. “Our guests asked for this enhancement … and we’re delivering. The service will begin to roll out chainwide this spring and is scheduled to be complete by the end of summer.” 

Walmart Inc. chief financial officer John Rainey said in the retailer’s earnings call for the fiscal fourth quarter ended Jan. 27, 2023, that Sam’s Club ecommerce sales grew 21% year over year. He attributed the growth to curbside pickup as well as ship-to-home sales. 

BJ’s Wholesale Club Holdings, Inc. CEO and president Bob Eddy said on a fiscal Q4 earnings call with investors on March 9 that curbside pickup now accounts for 50% of the retailer’s digital sales. 

Dick’s Sporting Goods plans to continue its one-hour curbside pickup service, according to an emailed statement from a spokesperson.  

Athletics retailer Dick’s Sporting Goods displays instructions on its website for store-pickup options.

In contrast, apparel chain Kohl’s Corp. canceled its curbside operations in August 2022, which it started in 2020. Book retail chain Barnes & Noble Booksellers Inc. no longer has designated curbside pickup spots or outdoor signs about the service. This is “primarily due to declining usage by customers,” a spokesperson says. 

But whether or not retailers continue to offer curbside will come down to more than just adoption, says 

Emily Pfeiffer, principal analyst at Forrester Research. If this is the only factor retailers consider, they might miss the point of maintaining the service, she says.   

“‘How many customers use our curbside pickup?’ may not be the only metric to consider, but rather how is it going? Are we doing a good job? Would more shop with us if we had better curbside?” she says.

Among the retail chains in the Top 1000, conversion rate was highest from 2020 through 2022 for those that offered curbside pickup. That compares with those that offered BOPIS or didn’t offer either service.

There are several factors that could drive consumers to choose curbside pickup over BOPIS, Pfeiffer says. For example, a consumer could be tired or the weather could be bad. The consumer might even have an infant sleeping in the backseat, she says. The consumer might have health concerns, COVID-related or not. Consumers might want to pull up, have their purchase put in their car and “not deal with it,” she says. 

“There are some customers who won’t shop with a retailer that doesn’t provide curbside pickup,” Pfeiffer says.  

Digital Commerce 360 and Bizrate Insights surveyed 1,069 online shoppers in February 2023 to see which activities were part of their shopping behavior in the prior six months. 35% of respondents said they ordered online for curbside pickup. The same survey found that 50% of respondents chose BOPIS for their orders. 

Moreover, a different Digital Commerce 360 and Bizrate Insights survey — of 667 omnichannel shoppers, also conducted in February 2023 — found that about a quarter of respondents used in-store or curbside pickup either three to five times (24%) or six to 10 times (26%) in the prior six months. 17% did so 11 to 19 times, and 18% did so 20 or more times.

When it comes to why, a Digital Commerce 360 and Bizrate Insights survey of 642 omnichannel shoppers in February 2023 found that most respondents chose curbside or BOPIS for their orders to save time (48%) or because they find it more convenient (47%). Moreover, 38% selected curbside because they wanted to avoid going into the store.

Respondents also cited not wanting to pay for shipping (36%) or needing the product sooner than shipping would allow (34%). Similarly, 32% said they wanted the product that same day. Weather accounted for 14% of respondents choosing curbside or BOPIS. And 13% said they chose curbside because they didn’t want to bring children inside the store.

Curbing expectations 

Circumstance and logistics played a large role in Daniel’s offering curbside pickup, Sarullo says. 

“Malls bent the rules around the pandemic because they wanted their stores to have sales. They didn’t want them to go out of business,” he says. “The parking lots were empty because no one was in the mall.” 

But they are not bending the rules anymore. 

In 2023, he says, the fundamental challenge with mall-based retailers offering curbside is having to coordinate where 100 different stores in a mall will tell their customers to park. Furthermore, malls would have to develop an easy, logical curbside pickup system that doesn’t block traffic, he says. 

Daniel’s no longer formally offers curbside pickup, he says. It stopped offering it in January 2022, when pandemic restrictions were lifted in the states where Daniel’s has physical stores.  

“Once the stores opened up, it wasn’t something that was easily kept going forward, not being our own physical location by a street,” he says.

Curbside’s future 

Forrester’s Pfeiffer says curbside pickup is not as vital as it once was, but it’s not going away. 

She says she expects it to become a seasonal behavior. Pfeiffer cites Forrester data showing a quarter of consumers bought online for pickup over the 2022 holiday season. 

“Smaller retailers should continue to pursue how they can offer curbside pickup affordably and effectively,” Pfeiffer says. “If they can’t create a positive experience for customers, they shouldn’t offer it. It’s more detrimental to loyalty to create bad experiences. But they must realize they’re going to lose some sales if they don’t have it at all.” 

She adds consumers are less likely to use curbside pickup if it feels confusing, inconvenient or like it will take a long time. Pfeiffer says there could come another time where curbside pickup is necessary again. If that happens, she hopes retailers won’t have “lost all that muscle memory.” 

“It might be worth just keeping it alive enough so that we know that we can do it, or whatever the next pivot is, and not get as stuck again as we were when this one hit,” Pfeiffer says. 

Do you rank in our database?

Submit your data with this quick survey and we’ll see where you fit in our next ranking update!

The post Committing to curbside pickup — or breaking up with it appeared first on Digital Commerce 360.

NRF surveyed 8,164 consumers in April 2023 on their plans for the May holiday. The organization predicts consumers will spend $35.7 billion for Mother’s Day 2023, nearly $4 billion more than the previous record of $31.7 billion in 2022. 

Consumers plan to spend $274.02, up from the 2022 record of $245.76 per person, an increase of $28.26. Consumers between ages 35 and 44 are projected to spend the most, at an average of $382.26 per person.

Fewer customers plan to shop online for Mother’s Day 2023

84% of survey respondents told NRF they plan to celebrate Mother’s Day this year. Just over one-third, 34%, said they will shop online for gifts. That’s down slightly from 36% in 2022, and on par with online shopping levels in 2021. It peaked in 2020 with 42% of consumers planning to shop online during the height of the pandemic.

Online shopping is tied for the single most popular venue projected for Mother’s Day shopping in 2023. 34% of consumers also said they plan to shop at department stores, up from 30% in 2022 and 28% in 2021. 

“While most consumers shopped online last year for the perfect Mother’s Day gift, we are seeing just as many people turn to department stores as a shopping destination this year,” said Phil Rist, Prosper Insights executive vice president of strategy.

Another 30% of survey respondents said they will purchase gifts from a specialty store like a greeting card shop, florist, or jewelry store. Respondents also mentioned local small businesses (24%), discount stores (23%), and specialty clothing stores (13%). Just 3% of consumers said they would purchase gifts through catalogs.

Traditional gifts remain popular

Most of the consumers planning to celebrate Mother’s Day told NRF they will purchase classic gifts for the holiday. Flowers and greeting cards are the most popular gifts. Nearly three-quarters of consumers (74%) said they plan to gift each item.

Mother’s Day remains a major holiday for flower retailers. Online flower retailer UrbanStems previously told Digital Commerce 360 that the week of Mother’s Day has 10 times as many sales as a typical week, and double the sales of Valentine’s Day. Urban Stems ranks No. 900 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American online retailers by web sales. Online flower retailers are popular, with a penetration rate of 87.6% in the category compared to the Top 1000 as a whole, according to Digital Commerce 360 data. The three-year CAGR for flower retailers in the Top 1000 is 22.2%, above the total Top 1000 CAGR of 20.7%.

60% plan to engage in a special outing like dinner or brunch. Gifting is up in all categories NRF tracks over 2022, including flowers, clothing, and gift cards, except for greeting cards.

Consumers will spend the most on jewelry, projected at $7.8 billion. 44% of consumers plan to gift jewelry, spending $59.90 per household. Jewelry also has a higher CAGR than average, at 23.6% according to Digital Commerce 360 data. Daniel’s Jewelers previously told Digital Commerce 360 that Mother’s Day accounts for 25% of its sales.

Outings like meals at restaurants have the next highest spending, projected at $43.29 per household to total $5.6 billion. 

Electronics are the least common gift category for 2023 tracked by NRF, with 25% of consumers planning to gift them. That’s up from 22% in 2022, and 20% in 2021. Electronics are the third-highest spending category, at $30.69 per household for $4 billion total.

Sign up

Stay on top of the latest developments in the ecommerce industry. Sign up for a complimentary subscription to Digital Commerce 360 Retail News.

Follow us on LinkedIn, Twitter and Facebook. Be the first to know when Digital Commerce 360 publishes news content.

The post Consumers will spend nearly $30 more per person this Mother’s Day appeared first on Digital Commerce 360.

David Kaplan, chief operating officer, WatchBox

It is a small percentage of the retailer’s total $500 million in sales.

“Single digits,” he says, but it is an important option.

The average order value for cryptocurrency-paid orders is $80,000, Kaplan says.

“[AOV] is skewed by several high-dollar transactions,” he adds.

WatchBox’s median cryptocurrency transaction is $20,000. This “is similar to non-cryptocurrency transactions — but the average is way higher,” Kaplan says.

“We have clients that have spent seven figures in cryptocurrency with us. Then we have the normal run-of-the-mill $10,000, $20,000 or $50,000 transactions,” Kaplan says. “I woke up this morning and we had one $40,000 cryptocurrency transaction overnight.”

WatchBox sells its authenticated watches online and in retail stores.

“We lead with our website, but buying a watch is a very personal kind of sale,” Kaplan says. “We found that having locations and staff in the biggest watch markets in the world help us catalyze those markets.”

WatchBox ranks No. 264 in the Top 1000. The database is Digital Commerce 360’s ranking of North American online retailers by web sales.

What it costs WatchBox to offer cryptocurrency

Cryptocurrency processing charges are less than credit cards, but more than wire transactions.

“It’s a relatively low transaction cost for us,” Kaplan says. WatchBox uses third-party bitcoin payment services provider BitPay. BitPay allows merchants to accept payments from cryptocurrency users.

Domestic outgoing wire transfer fees range from $0-$35. International outgoing wire transfer fees fall between $35-$50, according to Bankrate.

BitPay fees for monthly transactions:

• Less than $500,000: 2% + $0.25
• $500,000 – $999,999: 1.5% + $0.25
• $1 million or more: 1% + $0.25

Fighting fraud

From a fraud standpoint, cryptocurrency is also a plus, Kaplan says.

“Because as a [retailer], you’re on the hook for fraud,” he says. Whereas, for credit card transactions, WatchBox has spent a “lot of energy” following up with credit card transactions, he says.

“If we get into a dispute with American Express, they almost always side with the client,” Kaplan says. “The transactions are reversible. With cryptocurrency, once you have the money, you have the money.”

BitPay takes on the risk. It accepts the cryptocurrency payment and deposits cash into WatchBox’s account the next day.

Much of the cryptocurrency transactions are in digital currencies like USDC, he adds. Stable coins are a type of cryptocurrency where the value of the digital asset, or, digital coin, is fixed to another form of currency. This includes currency like the U.S. dollar or a precious metal, such as gold. Stable coins are considered more likely to retain their value compared with cryptocurrencies. Other cryptocurrencies can be volatile. Value can rise and fall dramatically within any given day.

Concerns about cryptocurrency instability

The heyday of cryptocurrency in 2021 ended in 2022. A series of selloffs and the collapse and arrest of former FTX CEO Sam Bankman-Fried, as well as the collapse of Silicon Valley Bank, fueled further volatility. In March 2023, the Securities and Exchange Commission told cryptocurrency payments vendor Coinbase that it will file a lawsuit because it believes the largest U.S. cryptocurrency exchange violated investor-protection laws.

Vice president of marketing at BitPay Merrick Theobald says merchants need to do their due diligence. “Look for red flags,” he says. “If a company is based in the Bahamas, you have to ask why there instead of the U.S. or another country that has tough (cryptocurrency) regulations.”

Vendors like BitPay focus on following all laws and regulations of the U.S., “which tend to be stricter than other countries,” Theobald says.

Customers pay at checkout using their cryptocurrency wallet in BitPay. Merchants do not have to hold onto cryptocurrency which can change value unexpectedly.

Outsourcing cryptocurrency processing is necessary for WatchBox, Kaplan says. It ensures the retailer isn’t breaking any laws, including Know Your Customer (KYC). BitPay monitors anti-money-laundering processing. This is especially important because WatchBox sells portable and valuable items, Kaplan says.

“We have a lot of attention on us,” Kaplan says. “All the countries in which we operate [want] to make sure that we’re following proper money laundering [rules] to avoid sanctions.”

Wire transaction sales have not decreased, he says.

“But I’d say the majority of our cryptocurrency transactions are transactions that would have been wire transfers otherwise,” Kaplan says.

Sign up

Stay on top of the latest developments in the ecommerce industry. Sign up for a complimentary subscription to Digital Commerce 360 Retail News.

Follow us on LinkedIn, Twitter and Facebook. Be the first to know when Digital Commerce 360 publishes news content.

The post Watch reseller offers cryptocurrency at checkout to entice international shoppers appeared first on Digital Commerce 360.

Total sales were down 5.2%, $145.1 million, in the fourth quarter to $2.7 billion, Signet Jewelers reported. During that same period, ecommerce sales grew from $556 million in Q4 2021 to $650 million in the fourth quarter of 2022, a 16.9% increase.

For the year ended Jan. 28, 2023, the retailer said total sales were up 0.2%, $16.1 million, to $7.8 billion. Same-store sales were down 6.1% year over year. Ecommerce accounted for 20.4% of those sales, a larger proportion than 19.3% of total sales in 2021.

Signet Jewelers ranks No. 64 in Digital Commerce 360’s Top 1000 ecommerce retailers in North America.

The majority of online sales come from James Allen and Blue Nile, which are both fully digital brands under Signet. Blue Nile ranks No. 144 in the Top 1000. Signet acquired Blue Nile for $360 million in August 2022. Since the acquisition, the digital business has grown, CEO Virginia Drosos told investors. The company had its best-ever Cyber Monday in 2022 with traffic up 18%. Enrollment in Signet’s loyalty program nearly tripled in the fourth quarter compared to the previous quarter.

More ecommerce investments are planned for 2023, Drosos said. About $100 million will go toward ‘”next-gen automation” and other feature to drive digital conversion, she told investors. The retailer is anticipating minor challenges to the bridal industry in 2023, which makes up 49% of Signet’s sales, with the expectation that conditions return to normal the following year.

Signet Jewelers earnings summary

For the quarter ended Jan. 28, Signet Jewelers reported:

• Total sales were down 5.2% to $145.1 million.
• Ecommerce sales grew from $556 million in Q4 2021 to $650 million in the fourth quarter of 2022, an increase of 16.9%.
• Average transaction value was up 3.9% year-over-year.

For the year ended Jan. 28, Signet Jewelers reported:

• Total sales were up 0.2%, $16.1 million, to $7.8 billion for the year
• Store count decreased by 46 locations.
• Ecommerce sales made up 20.4% of sales, compared to 19.3% in 2021.
• Average transaction value was up 11.2% year-over-year.

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

Sign up

Stay on top of the latest developments in the ecommerce industry. Sign up for a complimentary subscription to Digital Commerce 360 Retail News.

The post Signet Jewelers earnings in brief: acquiring digital jewelry sellers jumpstarted ecommerce appeared first on Digital Commerce 360.