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.

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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.”

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Allbirds Inc. (No. 342)

Allbirds reported net revenue declined 9.8% year over year to $70.5 million for the second quarter ended June 30. The decrease can be attributed to a decline in average sales price due to promotional activity, the online shoe retailer said in a statement. Allbirds also reduced inventory 24% as part of a plan to cut costs and get rid of out-of-season styles, it said.

Arhaus Inc. (No. 370)

Arhaus reported net revenue grew 2.2% to $313 million in the second quarter ended June 30. Retail sales from Arhaus showrooms were flat, while online sales were up “double digits,” the home retailer said. However, revenue was lower than expected due to delivery delays from updates to the retailer’s IT and distribution systems, said CEO John Reed.

Beachbody LLC (No. 233)

Beachbody reported total revenue was down 24.7% to $134.9 million in the second quarter ended June 30. Digital revenue declined from $78 million in the year-ago period to $65.2 million. Subscriptions were down 12% to 1.53 million subscriptions, the retailer said. 

Blue Apron Inc. (No. 190)

Blue Apron reported net revenue declined 14.5% to $106.2 million in the second quarter ended June 30. However, average order value grew 12.7% year over year to $75.66, and average revenue per customer grew 21.3% to $397. That’s largely due to a price increase implemented during the quarter, the meal kit company said in a statement.

Blue Apron also lowered its costs when adding new customers. Cost per acquisition declined 30%, and conversion rates improved by 25%, per CEO Linda Findley.

Brilliant Earth LLC (No. 196)

Brilliant Earth net sales grew 1.3% to $110.2 million in the second quarter ended June 30. The jewelry retailer said it reached a record number of orders in the quarter, up 21.2%. Sales grew more slowly due to a 16.4% decline in average order value. 

Brilliant Earth started as an online retailer, and in Q2 it focused on further growing omnichannel capability by opening four showrooms for a total of 32.

Cricut Inc. (No. 473)

Cricut reported revenue declined 3% to $177.8 million in the second quarter ended June 30. Subscription revenue, meanwhile, grew 13% to $76.1 million. Cricut has 2.7 million subscribers, up 15%, the company said. The total user base, including subscribers, amounts to 8.7 million, up 17% over last year.

On July 18, following the end of the quarter, Cricut launched its newest machine exclusively via online channels. 

Fossil Group Inc. (No. 236)

Fossil recorded worldwide net sales declined 13% to $322 million for the second quarter ended July 1. Comparable retail sales grew 3%, offset by a 4% decline in direct-to-consumer sales and 19% decline in wholesale. Traditional watch sales grew, while smartwatch sales declined, the retailer said.

HanesBrands Inc. (No. 276)

Hanes reported net sales declined 4.9% to $1.44 billion in the second quarter ended July 1. Gross profit declined 16% to $483 million, the retailer said. Innerwear sales grew 3%, ahead of expectations, while activewear sales declined 19% due to “soft consumer demand and excess channel inventory,” the retailer said in a statement. Direct-to-consumer sales also declined, though Hanes did not specify by how much. 

SmileDirectClub Inc. (No. 199)

SmileDirectClub reported a 19.1% decline in revenue to $102 million for the second quarter ended June 30. CEO David Katzman cited the “continuing challenging economic backdrop impacting our core customer” in a call with investors. SmileDirectClub raised prices in July, and it says it expects that to help with revenue in the next quarter.

The retailer also began rolling out its mobile scanning app using AI to create dental treatment plans in the U.S.

ThredUp Inc. (No. 580)

ThredUp reported revenue grew 8% to $82.7 million for the second quarter ended June 30. The clothing resale retailer said active buyers declined 0.8%, but total orders grew 5% to 1.8 million in Q2. ThredUp’s target is a budget customer who is “feeling the pinch across their discretionary purchasing power” from broader economic trends, CEO James Reinhart told investors. 

In Q2, ThredUp also added new resale partnerships with 11 retailers including American Eagle and SoulCycle. 

Warby Parker (No. 339)

Warby Parker reported net revenue grew 11% to $166.1 million in the second quarter ended June 30. The eyewear retailer said average revenue per customer grew 9.2% to $277. Active customers also grew slightly, up 1.2% to 2.28 million.

Warby Parker continued to invest in its retail strategy, opening 13 new stores in the quarter and on track to opening 40 for the year. Eye exams offered in these locations are “the gateway to prescription eyewear and contact purchases,” the retailer said. Exams made up 3.4% of revenue in the quarter, up from 2.4% in the year-ago period.

Yeti Holdings Inc. (No. 134)

Yeti reported sales declined 4% in the second quarter ended July 1, to $402.6 million. That’s partially due to a product recall in the quarter costing $24.5 million. DTC sales grew 1%, mostly in drinkware, while wholesale sales declined 10%. DTC accounted for $226.4 million, more than half of total sales.

So what does this all mean?

• Wholesale sales aren’t faring well for ecommerce retailers, with Fossil and Yeti reporting significant revenue declines. Meanwhile, DTC sales are relatively healthy in comparison.
• Consumers remain hampered by budget constraints, and multiple executives called out economic challenges. That’s to the advantage of retailers like ThredUp, which continued to grow sales by appealing to budget-minded customers.

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“It’s coming here to the U.S. But first, we have to start changing shoppers’ mindsets,” he says.

Jak Benardete, CEO, Orchard Mile

To differentiate itself from other retailers, Benardete says it made sense for the online marketplace to build its own livestreaming capabilities and host it on its website.

Orchard Mile sells over 55,000 SKUs from more than 250 brands, Benardete says.

“We thought we already had the most difficult part of the equation — the product to sell,” he says. “The next step was to build a livestream player on top of that.”

That involved building a social media influencer community that could pick out products they love that Orchard Mile sells, he says.

“They sell what they love to shoppers while being authentic to themselves,” Benardete says.

Livestreaming catches on in the US

Currently, China leads the way with livestreaming shopping events, according to consultant group McKinsey & Company. 57% of live-commerce users in the country have used the shopping format for more than three years, according McKinsey’s Global Live Commerce Study from August 2022 to September 2022. Only 5%-7% of Europe, Latin America and U.S. consumers have used the shopping format for more than three years.

But popularity is shifting as 78% of live-commerce users surveyed in the U.S. used the shopping format for the first time within the last year, according to the survey.

Orchard Mile’s use of influencers taps into consumer desire for an authentic experience, Benardete says. Livestream viewers want transparency from their hosts, according to a survey by Coresight Research conducted on April 11, 2023, of 500 respondents, December 20, 2022 (954 respondents) and September 20, 2022 (1,187 respondents). Over half (53%) of all livestream viewers surveyed in Q2 2023 expect to see “expert” reviews.

Influencers guide shoppers during livestream shopping events

Orchard Mile built its livestream player with livestreaming product vendor Agora in Spring 2022. Agora charges Orchard Mile per minute, which Benardete says is feasible because the cost per minute decreases the more minutes you buy to stream. Agora gave Orchard Mile 10,000 minutes a month to start, he says.

Prices change depending on the quality of the livestreaming as well. It costs more for high-definition 4K resolution, for example.

Since launching its livestreaming capabilities, Orchard Mile has accumulated over 60 videos.

“Live streaming is a different type of hustle [for influencers],” Benardete says. “It’s not they take pictures, or make a video and get paid a flat fee of $1,000. Instead, it’s launch a [livestream video] and then there can be residual sales [from video replays] for months to come.”

Benardete says some influencers had to “wrap their heads around” the different pay scale, but once they did, “it’s beginning to scale really fast,” he says.

“We’re adding new brands every day, and we ask our influencers which brands they love and we reach out to those brands,” Benardete says. “I’m building partnerships. We want to become a golden place for influencers to find products they love to sell.”

Testing what sells

In general, less expensive items tend to sell during the livestreaming events, with the average order value during a live shopping event at $200, Benardete says. Orchard Mile’s typical AOV is about $350-$400, he says.

Benardete says live shopping event shoppers tend to be younger than the overall customer base. As such, the marketplace gears merchandise to appeal to a younger crowd. Live shopping event shopping carts consist of lower-cost items, like $20 hair ties.

“We knew it would be easier to sell impulse products like this,” he says. “It’s easier to see someone wearing it, it’s not too expensive, and they can check out with their Apple Pay on their phone. It’s very easy.”

And consumers want a good deal, according to Coresight’s survey. 45% of shoppers surveyed in April watched livestreaming shopping events, compared with 38% in Q1 2023 and 48% in Q4 2022.

The conversion rate for livestreaming events is slightly higher than the website, he adds, without revealing more. But conversions range between 1%-3% depending on the type of item. Lower-priced items have a higher conversion rate, he says. Digital Commerce 360 estimates OrchardMile.com’s conversion rate at 1.5%, according to Top500Guide.com.

In addition, longer videos drive more sales, Benardete says. Besides Jacqueline Miranne, Orchard Mile plans to have four other influencers host longer-form videos. Eventually, Benardete says he wants to feature a daily influencer live selling video.

The process is still new, but brands Orchard Mile sells on its marketplace have contacted Benardete to be featured in future live shopping videos, he says.

“Brands say they have new products and ask if we can have one of our influencers consider featuring it,” he says.

Retailers can strategize how to sell during livestreaming events

Livestreams are typically three to five minutes long. During the video, the influencer shows one product they love, he says.

“It’s almost like a product review, but you can buy it right inside the video,” Benardete says. He said sales are starting to come in for those videos but did not specify how many.

The approach to live shopping depends on what’s for sale. Promoting products during a live shopping event is very different if you’re selling a luxury handbag versus cleaning products, says Joe Kwong, head of business development, Agora.

When streaming from their own website, retailers can control the experience by adjusting discounts or cross selling other products during the event, Kwong says. Retailers can see in real time which products are selling and can adjust what is featured during the event to ensure that if a product runs out, they can switch to alternate options.

“In luxury categories, you might not want to publish transactions happening in real time,” Kwong says. “Compare that to a blowout sale of a hair dryers — [retailers] want to show that you have 1,000 left. If the product is [perceived] as acceptable and people are actually buying it, it triggers more buys.”

The type of production is also evolving. User-generated content, versus very polished, highly produced videos, are appealing to consumers that want authenticity, Kwong says.

Orchard Mile is No. 100 in the Digital Commerce 360 ranking of Global Online Marketplaces.

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The rest of the collection was supposed to launch in March 2020, said Chrissie Jemison, vice president of digital. As with much of the world, the pandemic changed that.

With a full product assortment available, Furtuna Skin had to cover its ecommerce bases and make sure it had a strong enough conversion rate and average order value. It launched a skin care quiz to help with that.

Guiding the shopper

Jemison said Furtuna Skin has a 9% conversion rate among users who complete the skin care quiz and make a purchase. It helps grow AOV, too, she said.

“After taking a number of these myself, it got to the point I would see results and think, ‘well, you’re just trying to sell me on everything,’” Jemison said. “Our goal is to really get the right products in our customers’ hands.”

So the brand uses its quiz to offer a “hyper-curated” assortment that’s typically two or three products, Jemison said.

“We want to guide users to the items that will help them with their skin concerns,” Jemison said.

Moreover, rather than trying to sell a full-size product, Jemison said Furtuna Skin offers shoppers a “custom sample set.” Shoppers can pick any four items, which the product recommendations from the quiz help them select, and buy sample-sized versions of them to test.

“We’re giving them two to three recommendations and saying test them out; see for yourself. Buy a discovery set,” Jemison said. “It is a lower-priced item because it’s a sample set, but that’s where we’re seeing greater success rather than just in lifting AOV.”

Learning the basics about loyalty and ecommerce subscriptions

By February 2021, it was time to focus on retention, Jemison said. That’s when Furtuna Skin simultaneously launched its loyalty program and auto-replenishment. Furtuna Skin’s full collection had launched in June 2020, but items had only been available for one-time purchases.

“Skin care is one of those categories that lends itself so beautifully to a subscription program,” Jemison said. “So we knew there was opportunity there.”

Furtuna Skin uses retention marketing platform Yotpo for its loyalty program. But the platform Furtuna Skin used to power its subscriptions wasn’t the best fit, Jemison said.

The subscription provider at the time, Recharge, required Furtuna Skin to duplicate its product catalog to identify which products were selling for one-time purchase and which sold for subscriptions. This was especially a problem for Furtuna Skin, Jemison said, because all its products are produced from ingredients in the retailer’s private estate in Sicily, Italy. The 800-acre estate — with a farm and wild terrain where its employees forage for ingredients it uses in its products — is also where sister brand Bona Fortuna’s products come from.

“That means we do small batches of products,” Jemison said.

She added that from an operations perspective, that means producing a new SKU for every new batch. Swapping out SKUs constantly, and having to create duplicates for each one in the online product catalog, was too much for Jemison’s “very lean” team, she said.

Moreover, shoppers would check out with a subscription product on Furtuna Skin’s website and get “kicked over” into a different checkout experience. Jemison referred to this as “hijacking” the cart in the checkout page.

This was a problem because, for example, when consumers were going through the checkout process while Furtuna Skin offered a promotion of a special gift with purchase, Jemison would have to set up the promotion on two separate platforms for the shopper to redeem it: Shopify (which hosts the brand’s ecommerce website) and Recharge.

Subscription switch

Furtuna Skin replatformed from Recharge to Ordergroove in summer 2022. Since then, its subscription orders more than doubled, to more than 7% of sales now from 3% before making the switch. Jemison said she projects subscriptions to account for 10% of total sales by the end of the year. She said the long-term goal is to get that up to 15% to 20% of total sales.

Furtuna Skin shares examples of how its checkout page looks before and after replatforming to a different subscription vendor.

Moreover, since making the switch, Furtuna Skin boosted its subscriber count 103%, and 50% fewer subscribers abandon their subscriptions. Furtuna Skin retains more than 30% of its customers too, and she said that number is still growing.

“A significant reason for our success with Ordergroove is that they were more flexible with their UX and UI options for us to present on our product detail page to make it very, very clear that you can make a one-time purchase or do auto-replen, and here’s your offer for doing auto-replenishment,” Jemison said.

She said Ordergroove’s platform integrates with Yotpo without issue. It doesn’t “hijack” checkout, and Jemison doesn’t have to duplicate her product catalog.

Ordergroove also allows Furtuna Skin to offer different incentives for one-time and subscription purchases, she said. Furtuna Skin currently offers 10% off the first order of a subscription product. It offers 15% off for every recurring order thereafter. Those recurring orders also build up loyalty points, which consumers can later use toward subscriptions as well.

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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. 

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The number of active buyers on the marketplace also fell — dropping 7% to 133 million during the period ending March 31, 2023. That too is the eighth consecutive quarterly drop.

Revenue rose 1% to $2.51 billion from $2.48 billion a year earlier.

Ebay ranks No. 6 in the 2023 Digital Commerce 360 Online Marketplaces Database. A drop in Ebay sales in recent quarters pushed the San Jose, Calif.-based marketplace from the No. 5 slot it held in the 2022 Database.

CEO Jamie Iannone is trying to reduce expenses to align with declining sales. In February, Ebay announced it would cut about 500 employees, or 4% of its workforce.

Ebay aims to sell more luxury items like watches to boost revenue while also offering refurbished items to appeal to price-conscious shoppers. In an effort to lure collectors, eBay provides a service to trade and authenticate trading cards, collectible sneakers and other items. It has been building climate-controlled vaults to store them.

In March, it announced a new “verified condition” badge for used heavy construction equipment sold on the site to assure buyers the machinery has been inspected.

Ebay sales: Q2 outlook

Ebay said it expects sales growth in the second quarter. The marketplace forecast revenue between $2.47 billion and $2.54 billion, an increase from the $2.42 billion reported in the same period a year ago. Analysts had estimated $2.43 billion in revenue in Q2.

For the fiscal first quarter ended March 31, 2023, Ebay reported:

• The eighth consecutive quarter in which both GMV and active users fell.
• Revenue of $2.51 billion, an increase of 1% year over year.
• $841 million of operating cash flow and $709 million of free cash flow from continuing operations.

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

Bloomberg News contributed to this report.

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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.

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From opaque pricing and obscure terminology to constantly changing business models, the world of ecommerce platforms in 2023 is a complex and confusing place.

In the next year, 27% of ecommerce companies will be looking to switch their ecommerce platform—making trusted research and expert advice imperative in the long and arduous process of selecting new technology.

Digital Commerce 360’s 2023 Ecommerce Platforms Report is the world’s most comprehensive and digestible analysis on the ecommerce platform industry and a necessary tool for businesses looking to change platform providers and platform providers looking to drive new sales. 

This report is packed with details on where companies have invested in platforms, why many of them are looking to switch providers and the latest trends in platform technology. Read about the battle for tech talent, the emerging concept of composable platforms and follow the journey of several major retail and B2B companies that are gearing up to choose a new platform.

Plus, check out our annual lists of the leading platform vendors to the Top 1000 retailers and the ecommerce platforms used by the Top 500 retailers.  

View the table of contents for full details on what’s included in the report.  

Published February 2023

WHAT’S INCLUDED 

Extensive Analysis on the Ecommerce Platform Industry 

Breakout sections on these topics: 

• How B2B companies are vying with rivals and securing the right teams of digital experts 
• A dive into composable platforms—what they are and who needs them
• Why a flexible ecommerce platform matters
• Building customer personas
• Top 4 things to consider when choosing a new ecommerce platform
• Case study on how Konica Minolta is forging a new B2B ecommerce strategy driven by customer needs 

10+ Data-Packed Charts  

Start visualizing the power of strategies and trends in ecommerce platforms and share critical data with your colleagues and clients.     

Leading Platform Vendors to the Top 1000 Retailers  

We’re unveiling our annual list of the leading platform technology providers employed by North America’s Top 1000 online retailers. Here’s a peek at the data:     

WHY YOU SHOULD BUY IT 

Understanding ecommerce platforms can be confusing. The technology is complex, and the terminology can be difficult to keep up with.  

Digital Commerce 360’s 2023 Ecommerce Platforms Report is our most comprehensive—and digestible—analysis on the ecommerce platform world. Get a clear analysis of the biggest trends and key players, and a helpful guide to choosing the right ecommerce platform. 

OTHER REPORTS YOU MAY LIKE 

U.S. Ecommerce Market Report 

Analyzing U.S. online retail data and performance 

U.S. B2B Ecommerce Market Report  

A strategic analysis of the sales, growth and trends shaping the future of B2B ecommerce 

Web Design & Customer Experience Report 

A comprehensive review of U.S. online retail data and performance 

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