In Digital Commerce 360’s panel of 100 online retailers from the 2023 Digital Commerce 360 Top 1000, where Amazon is No. 1, 82.0% offered promotions of some kind on Oct. 10, the first day of Amazon’s Big Deal Days. That’s up from 72.0% during a control period two weeks prior. That’s also above the 75.0% of retailers running competing promotions on Amazon Prime Day, the summer shopping holiday that’s now nearly a decade old.

This is only the second year for Amazon’s fall holiday event, though Amazon Prime Day was pushed back to this time period in 2020. Last year, during an “Early Access” promotion, the same panel wasn’t so eager to compete with Amazon for a whole new shopping holiday — while 80.0% offered promotions last year, discounts were smaller with the median retailer offering up to 40% off compared to 50% this year.

Amazon is also No. 3 in Digital Commerce 360’s Global Online Marketplaces Database. It ranks the 100 largest such marketplaces by 2023 third-party GMV.

Big competition on Big Deal Days

While retailers were likely to offer site-wide sales to compete with Big Deal Days, few were willing to play into Amazon’s naming scheme. Of those offering promotions, 14.6% nodded to Prime Big Deal Days. Designer Brands (No. 77) promoted “40% off big-deal brands” on the DSW site, while Kohl’s Corp. (No. 23) called its sale the Deal Dash.

DSW.com offered discounts on “big-deal brands” in a playful reference to the manufactured shopping holiday.

Walmart, which sat out both Prime Days and Early Access Days in 2022, returned to compete during Prime Days this year. The mass merchant heavily promoted during Big Deal Days as well. A popup appeared on its homepage promoting the membership program Walmart+, along with plenty of nods to the savings it grants. The difference was that most of Walmart’s deals weren’t locked behind its paid membership, in contrast with Amazon.

Target ran deals during the week prior to Amazon’s shopping holiday. Circle Week matched its Prime Days strategy, but offsetting its sale was a new twist. Walmart attempted a sale before Prime Days last year but didn’t garner any similar sales from other retailers. Similarly, it doesn’t seem many retailers offered off-peak sales and instead hoped to ride in Amazon’s wake to capture consumers in the spending mindset.

The new start of the holiday season?

While Amazon ditched the idea that this shopping holiday is explicitly for early holiday shopping, many retailers used the manufactured holiday to kick off their Christmastime sales. 18.9% of retailers offering promotions tied it to Christmas, Black Friday or the holidays more generally. That’s up from 3.2% two weeks ago mentioning winter events. Despite Halloween right around the corner, just 5.4% of promotional retailers mentioned the spookiest holiday on their homepages.

Percentage off discounts reigned supreme, as they usually do, with 64.9% of promotional retailers offering a discount of a certain percent. 27.0% offered dollar-based discounts, while 14.9% offered free shipping promotions. Nearly half of promotional retailers offered more than one type of promotion on the homepage.

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FedEx revenue declined to $21.7 billion, down from $23.2 billion in the year-ago period. However, operating income grew over the same time period, up to $1.49 billion from $1.19 billion last year. Margins also improved, reaching 6.8%, up from 5.1% last year. Net income reached $1.08 billion, from $875 million in the previous period. 

478 retailers in the Top 1000 use FedEx for at least some of their fulfillment. The Top 1000 is Digital Commerce 360’s ranking of North America’s leading online retailers by web sales.

2023 Ecommerce Fulfillment Report

Analysis of the latest trends in ecommerce fulfillment. Includes over 20 charts, expert analysis on top U.S. shipping carriers and how their finances impact retailers, and breakdowns of shipping, returns, and omnichannel offerings among retailers in the Top 1000

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FedEx revenue by category

FedEx Express operating income grew 18% during the first fiscal quarter, while revenue declined 9%. 

Operating income grew 59% for FedEx Ground because of yield improvements and cost reductions, FedEx said. Cost per package declined 2% due to better productivity in first- and last-mile deliveries, it said.

FedEx Freight had different results, with operating income declining 26% due to lower fuel surcharges. Freight also closed 29 terminal locations in the quarter, FedEx said.

“FedEx Ground had an outstanding quarter which, when combined with improved earnings at FedEx Express and expense controls across the organization, led to our better-than-expected overall financial performance,” Raj Subramaniam, FedEx president and CEO, said in a statement.

In June 2024, FedEx Express, FedEx Ground and FedEx Services will be consolidated into one company, it noted.

FedEx focused on cutting costs

The delivery company attributed growing profitability to cost-cutting measures across its offerings. 

“Cost reductions and transformation efforts that benefited the quarter included structural flight reductions, the alignment of staffing with volume levels, parking aircraft, and shifting to one delivery wave per day in the U.S.,” FedEx said in a press release. 

The savings are part of a plan to cut costs by $1.8 billion in the fiscal year. FedEx says the savings will be spread evenly across the year, pointing to $130 million in savings in FedEx Ground in Q1.

Demand declined

FedEx executives said demand was down across the board. FedEx Ground and international export volumes increased year over year, the shipping company said, but still reflect a “muted demand environment.”

The volume of domestic parcels will be down about 25% in fiscal 2024, Brie Carere, chief customer officer, estimated.

To combat declining demand, FedEx announced a price increase of 5.9% going into effect in January. The company will also implement demand surcharges over the holiday season, when volume typically increases.

FedEx earnings

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

• Revenue declined 6% to $21.7 billion.
• Net income increased by $205 million to $1.08 billion.
• Net margin increased to 6.8%, up from 5.1%.

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

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Read more ecommerce earnings coverage here.

Here are four key takeaways.

1. Consumers were pickier about spending discretionary income

Consumers across the board are hampered by budget constraints, and multiple executives called out economic challenges. 

Shoppers are reluctant to spend discretionary income on goods, preferring to save or spend on experiences instead. That’s hitting apparel retailers particularly hard. Old Navy in particular is experiencing decreased demand from lower-income consumers, The Gap Inc. said in a press release. The brand is not benefitting from consumers trading down from more expensive retailers, according to Katherine O’Connell, chief financial officer.

“Some of the brands that are really winning with our consumers are T.J. Maxx, Amazon, Shein,” she said.

Designer Brands Inc. noted the same trend.

“The health of the consumer and overall macroeconomic headwinds” led to declining sales and made predictions difficult,” said Jared Poff, chief financial officer.

Another shoe brand, Zumiez Inc., cited similar headwinds facing consumers.

Other types of retailers were also impacted by consumers tightening their belts. Sportsmans Warehouse interim CEO Joseph Schneider attributed declining sales to “challenging macroeconomic conditions [that] continue to pressure consumer discretionary spending.”

2. Spending on home improvement and furniture is down

La-Z-Boy reported total sales declined 20% to $482 million in its fiscal first quarter of 2024. Online sales of furniture brand Joybird declined 17% year over year due to “more cautious online consumer demand,” the retailer said.

“In general, furniture consumers sort of hit that saturation point of who’s going to want to purchase online and who’s going to want to purchase in-store. And the majority of consumers do more in-store,” CEO Melinda Whittington said, according to a Seeking Alpha transcript.

Other online furniture retailers’ reports supported Whittington’s suggestion. Overstock, which has since taken over Bed Bath & Beyond’s website, reported revenue declined 20% in its fiscal Q2 ended June 30. The retailer also said customers were ordering less frequently, and spending less when they did order. Wayfair Inc. also reported declines, though they were less severe. Net revenue declined 3.4% in its second quarter ended June 30.

Lowe’s Cos. Inc. and The Home Depot Inc. in the adjacent home improvement category also noted declines in spending on home products. Lowe’s and Home Depot executives both pointed to a pullback in consumer spending on large DIY projects in the quarter. Meanwhile, consumers remained willing to spend on smaller projects. For example, transactions of $1,000 and up decreased 5.5%, Home Depot said.

3. Discount retailers were the winners in second-quarter earnings results

Discount retailers like Dollar General Corp. and Five Below are reaping the rewards of these pressures on consumers. Dollar General grew average ticket, even as traffic declined slightly. Dollar Tree reported sales of discretionary items grew 3.9% in its fiscal quarter ended July 29, 2023, as consumers traded down to dollar stores for those purchases.

TJX Cos. Inc., which owns T.J. Maxx, Marshall’s, Sierra, Winners, and Homesense, also benefited. Sales were “well above the company’s plan, and entirely driven by customer traffic,” the retailer said. 

ThredUp grew revenue 8% by appealing to customers on a budget who are “feeling the pinch across their discretionary purchasing power” from broader economic trends, CEO James Reinhart told investors. 

Not every discount retailer automatically benefits from consumers trading down, though. Big Lots shows that simply having low prices isn’t enough to win in 2023.

“Our results for Q2 illustrate that we remain in a very challenging environment, in which our core lower-income customer remains under significant pressure and has limited capacity for higher-ticket discretionary purchases,” CEO Bruce Thorn said in a written statement.

4. Omnichannel drove second quarter sales

Omnichannel sales aren’t as buzzy as they were early in the COVID-19 pandemic, but retailers still rely on them to reach customers. Walmart Inc. and Target Corp. both credited omnichannel sales for leading online sales in their second fiscal quarters. Both retailers cited their versions of online order pickup as standouts in the quarter.

Several retailers noted that omnichannel customers tend to be more loyal or make more additional purchases.

Bath & Body Works Inc. reported positive results for BOPIS, which it first implemented in Q1 2023. In its fiscal second quarter, adoption grew 25%, the retailer said. About 30% of BOPIS customers buy something else when they pick up their orders, driving further sales, it said.

Similarly, BOPIS and curbside pickup were responsible for most of the online sales growth BJ’s Wholesale Club reported, the retailer said.

Ulta Beauty announced intentions of growing its omnichannel business. Its omnichannel customers purchase 2.5 to three times more than single-channel customers.

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Thousands of third-party merchants who ship products via Amazon’s Seller Fulfilled Prime program will start paying a 2% fee on each sale in October, according to documents reviewed by Bloomberg. That’s on top of the commission — usually 15% — that merchants already pay Amazon to sell products on the popular web store.

Several merchants interviewed by Bloomberg interpreted the new fee as an attempt to pressure them into using Amazon’s logistics services rather than fulfilling orders themselves. The company didn’t explain to sellers why the levy was required, but told Bloomberg it will help cover the costs of running a separate infrastructure and measuring its effectiveness.

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

The largest, even among ecommerce giants

Amazon has been accused of having too much power over the some 2 million merchants who use its platform. It captures about 37.6% of all online spending in the U.S., according to Insider Intelligence, or about six times more than its closest online competitor Walmart Inc. The Federal Trade Commission is in the final stages of preparing an antitrust case against Amazon. And the timing of the new fee took some merchants and consultants by surprise.

“We’re sitting here waiting for the FTC to take action against Amazon for antitrust issues, and this fee shows Amazon is not scared at all,” said Jason Boyce, whose Avenue7Media helps about 100 businesses sell products online.

In recent years, Amazon has been ratcheting up fees on merchants, who typically pay for advertising and logistics to help maximize their sales. The business has become increasingly important to the company as sales growth in the core online operation slows. Seller services generated $32.3 billion in the second quarter, up 18% from the same period a year earlier and more than the profitable cloud services business. Last year, for the first time, seller fees began gobbling up about half the cost of each sale, making it harder for merchants to make a profit.

Who does the new Amazon fee affect?

The new fee targets merchants who use Seller Fulfilled Prime, a service that lets them handle logistics themselves and still get an Amazon Prime badge. The Prime badge lets customers know they can expect quick delivery. These merchants often sell bulkier items such as furniture that don’t mesh well with Amazon’s highly automated warehouses. Those Amazon warehouses, by design, mostly handle smaller products.

Amazon launched Seller Fulfilled Prime in 2015 as a way to expand inventory without overloading its fulfillment centers. It closed enrollment in the program a few years later, saying merchants had difficulty meeting Amazon’s delivery standards. Amazon in June announced it would again open enrollment for Seller Fulfilled Prime. That was a move the company saw as a way to appease regulators investigating it for antitrust issues, according to people familiar with the matter.

Amazon informed merchants about the new fee last week.

How will the new Amazon fee affect merchants?

One office furniture merchant enrolled in Seller Fulfilled Prime said the fee will cost his company approximately $1 million a year. That forces it to raise prices. He said he will probably continue to use the service because Amazon has so many customers. But he notes that he’s not getting anything extra in return for paying the fee.

Another merchant also expected to raise prices to cover the new fee and said that, for many merchants using the service, the 2% levy will wipe out as much as one-third of already meager profit margins. He also said Amazon only gave sellers a few weeks notice. That makes it difficult for sellers to adjust because they had already ordered inventory for the busy holiday shopping season.

Both sellers requested anonymity for fear of retaliation from Amazon.

“We are excited to offer Seller Fulfilled Prime to sellers as a way to independently handle fulfillment of their products while also making those products available to Prime customers with fast, free delivery, great customer service and free returns,” Amazon spokesperson Jonathon Hillson said.

Amazon’s seller fees have been a focus of regulators and lawmakers since at least 2019, when a merchant accused Amazon of using its dominance in ecommerce to force sellers to use its logistics services. Multiple sellers have since echoed the allegation. And the allegation has emerged as a focus of the FTC’s antitrust case against Amazon, according to people familiar with the situation.

Juozas Kaziukenas, founder and chief executive officer of Marketplace Pulse, which monitors online sales, says Amazon has been making it harder and harder in recent years for merchants to qualify for Seller Fulfilled Prime. The upshot: “Most sellers use Fulfillment By Amazon instead.”

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So when Leslie heard about an artificial intelligence chatbot that could negotiate prices with its online shoppers, he was immediately interested. Automated negotiation technology is not widely used in North America, and Leslie knew it could help his small online furniture business of about 50 employees.

“It hits at a time when we are all talking about AI and what it means for so many verticals and for so many functionalities,” Leslie says.

In the furniture industry, the margins are often healthy and prices are sometimes negotiated, Leslie says. Consumers may be used to negotiating for a larger furniture purchase at the store, when interacting with a sales associate. Online, however, some shoppers may be more apt to look for discount codes. Others may try to contact customer service for a discount. As an online merchant, Industry West wants shoppers to have some wiggle room on price — if that’s what it takes to convert. But it doesn’t want to continually broadcast a sale, Leslie says.

“At the end of the day, we’re all trying to preserve our brand and not always saying you are on sale, but with ecommerce you have to be constantly on sale,” Leslie says.

Industry West has a pop-up on its site that offers 20% off for first-time customers who share an email address. It also will send a 20% discount code for shoppers via email for abandon carts. But for all other shoppers, or for shoppers who don’t want to give up their email address, Industry West launched an AI chatbot in February called Nibble.

How the Nibble AI chatbot works at Industry West

On product detail pages that are eligible for promotions, which Leslie says is about 70%-80% of its SKUs, Industry West shows a “Negotiate Price — Instant Chatbot” button underneath the Add-To-Cart button.

If shoppers click on it, they can start to negotiate with the bot, named Nibble. Industry West authorized the bot to agree to a certain level of discount that varies by product, Leslie says without revealing the discount. As part of its negotiation tactics, Nibble is trained to offer “proof points” of the value of Industry West’s products, such as its quality materials and its warranty program, Leslie says. If shoppers suggest $20 for a $500 product or even $250 for a $500 product, Nibble can be cheeky with its response. For example, it might say, “Low offers like that won’t make me generous.”

If Nibble and a shopper come to an agreement, the bot generates a unique discount code for that shopper that expires within 48 hours. When the shopper adds the item to her cart, that discount code shows up.

If the shopper and Nibble agree on a price, the AI chatbot will create a unique discount code.

Results of using the AI chatbot

Overall, Leslie is happy with the shopper engagement with the AI chatbot. The best news is that the average aggregated discount that shoppers agree to is lower than the 20% pop-up discount. It’s also lower than the maximum discount that Industry West authorized Nibble to offer. Leslie would not reveal how low Industry West programmed Nibble to go, but for some products, it is a higher discount rate than 20%.

Thousands of shoppers have interacted with the chatbot each month. 28% of shoppers who start a negotiation reach an agreement with the bot, Leslie says. Of that 28%, 11% go on to make a purchase. Put another way: 3% of shoppers who engage with the bot go on to make a purchase.

Industry West’s AI chatbot chats with shoppers in real time to reach a negotiated discount.

Leslie suspects more shoppers will use the bot the more Industry West turns it on. For example, during Memorial Day weekend, Industry West ran a sale with a banner ad on its site. That discount was the highest the retailer was going to offer. So, to avoid confusing shoppers about any potential hidden promotions, it turned off the Nibble bot.

The goal with Nibble is to save on some of its product margins. While the early results are encouraging, Leslie hopes to take it further. Eventually, he wants to lower that first-time customer pop-up discount to 10% and maybe have Nibble offer the maximum discount between 15%-20%. Then, if shoppers and Nibble come to an average agreement of 18%, the chatbot could help save the merchant even more margin, while shoppers are happy because they agreed to the discount.

Benefits of the AI chatbot

The benefit of having an AI chatbot is that it can react to scenarios in real time. For example, one shopper told Nibble that she had four bar stools she bought a few years ago, is happy with them and wants a fifth one. But she asked if she could have it at a lower price. The bot, not programmed on this specific scenario, responded with, “Of course, we’re happy to hear you have our product.” The discount was within its allowed range and it generated the code for the shopper. This scenario is exactly how Industry West would want one of its consumer service representatives to handle this scenario, and Leslie was pleased the bot handled this scenario in this way.

Rosie Bailey, CEO and co-founder of Nibble, says the Nibble chatbot is a hybrid of generative and more traditional artificial intelligence.

“We use our own models to create Nibble’s chat and also use generative AI in specific places,” Bailey says. “As a result, Nibble is more secure — and cleverer — than generative AI alone.”

Working with savvy shoppers

Some shoppers are smart and may know that Industry West offers a 20% discount to new shoppers. Those shoppers may try to get a higher discount out of Nibble. That’s fine by Leslie, who wants the chatbot to drive as many sales as possible.

“This person, what they wanted was 20.6%. If that 0.6% was all I needed to gain the sale, that’s amazing. I’m all for that,” Leslie says.

Similarly, Industry West wants the AI chatbot to consider margin rate in the future, which could help drive even more sales. Currently, the AI bot only factors in discount rate. For example, Industry West may be OK with giving a shopper a 35% discount on a certain product if it doesn’t exceed the margin rate it needs to maintain profitability.

Holiday season implications

Industry West has a live chat feature on its website where shoppers can engage with its human customer support team for any questions and issues.

By having this feature for the holiday season, some shoppers may use it to get a discount instead of contacting customer service.

“It will take some pressure off of chat,” Leslie says.

Typically, Industry West will start its Thanksgiving weekend Cyber sales around Nov. 15. But this year with Nibble, it could use different marketing language where shoppers could gain early access to its best discounts via negotiation. For example, Industry West could authorize the chatbot to give the low Cyber discount, but shoppers have to be able to negotiate to it.

“By using Nibble, we can show an early access sale without slapping a banner on our website come November first,” Leslie says.

Bailey says avoiding endless discounting is the main goal of many of its clients.

“Most clients are fed up with the ‘race to the bottom’ and feel discounting is a trap,” she says. “Nibble helps you escape this trap by still offering great value deals one-to-one to valued customers without being stuck in an endless discounting cycle.”

Nibble takes 2% of sales attributed to them, Bailey says. The bot is available as a Shopify app, which only took a day to integrate, Leslie says. Nibble has about 300 clients that are mostly online retailers in discretionary spending categories, Bailey says.

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Amazon, which is the top retailer in the Top 1000, started its member-only summer shopping holiday back in 2015, and many retailers over the years have joined the ecommerce bonanza by offering their own sales — with many returning again this year. Target Corp. (No. 5) has offered similar deals in years past, often touting that subscriptions and memberships weren’t required.

Notably, Walmart Inc. (No. 2) sat out last year, but it has returned to sales this year with Walmart+ Week, offering paid members early access to deals that are then released to the public later.

Walmart’s home page on Prime Day

However, most of the retailers in Digital Commerce 360’s panel that are offering promotions on Prime Day also offered promotions two weeks ago. Of the 100 retailers, 75 ran promotions during Prime Day and 75 were running them during the control period. Seven retailers that previously had no sales added promotions for Prime Days. Similarly, seven turned off sales on Prime Days. Neither set tied promotions to holidays.

Amazon is No. 3 in Digital Commerce 360’s new 2023 Global Online Marketplaces Report, which ranks the 100 largest global marketplaces by 2022 third-party GMV.

Prime time promotions

Of retailers running promotions in our panel, 29.3% offered large site-wide promos to compete with Amazon. Last year, 36.7% of the same panel offered competing promotions. For example, The Gap Inc. (No. 20 in the Top 1000) decided not to offer competing sales this year, unlike last year’s “Gap Days,” but it did offer back-to-school promos. On the other hand, Joann Inc. (No. 307) returned with its “Primo Days” promotion.

Still, Prime Days isn’t as big as other holidays. The control period was the Wednesday of the week prior to the 4th of July holiday (June 28), and 33.8% of retailers with promotions mentioned that holiday.

While only a handful of retailers referred to Prime Days, some joined the shopping holiday with a “Black Friday in July” framing. Macy’s has been running with that “holiday” line since last week. It’s among 6.8% of retailers in the panel that mentioned the traditionally November shopping period in their July promotions. Other retailers promoted back-to-school shopping as well.

Biggest competitors

Despite many retailers letting Prime Days pass by, Amazon’s biggest competitors didn’t hold back. Walmart pushed its paid membership program, Walmart+, with a 50% off deal for those signing up for the full year. Deals were exclusively for members from Monday through noon on Tuesday, much like Amazon offers its sales for Prime members during its sale days. Target also offered week-long deals with “Circle Week” and again pushed that its deals don’t require a membership fee.

Of retailers offering promotions, more than 20% touted free shipping among the deals shoppers could score. That’s up from just 11.8% during the control period, but under the 25.3% offering it last year. The most popular discount type was a percentage-based discount, but gifts with a purchase increased during Prime Day compared to the control — 4.1% offered something with a purchase.

The percentage-off promotions weren’t any different from last year or the control period. 50% off was the largest promotion for the median retailer for all three periods. 88% off was the maximum discount among the panel this year. That’s down slightly from 90% last year but above 80% during the control.

Outside of the panel, some manufacturers pushed people to Amazon during the peak shopping holiday, cashing in on the hype Amazon has built for the day. Confectioner Mars sent an email noting “Prime time deals” on M&Ms exclusively available on Amazon. Liquid IV also pushed its 30% discount on Amazon to its email list. Others pushed shoppers to manufacturers’ sites while cashing in on “Prime” power, like Fannie May’s “Prime time to buy chocolate” send.

2023 Global Online Marketplaces Report

Analysis of the 100 leading global online marketplaces. Includes over 30 charts, rankings of the world’s Top 100 online marketplaces by 2022 third-party GMV, tips for marketplace sellers, and findings from a new consumer survey. 

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What goes down … must go up?

The search for good deals on a wide variety of items on the Amazon marketplace is what drives the excitement around the Prime Day sales event. But according to data compiled by Noogata, an artificial-intelligence data analytics platform for Amazon sellers, many prices rise on Prime Day, often by a substantial amount.

Last year, merchants raised prices 3% or more on 13.72% of the top 10,000 selling items on the Amazon marketplace, according to Noogata. By contrast, 39.33% of the top 10,000 selling items were on sale.

Of particular note in 2022 was that the average price items sold by the 56 top sellers from Amazon Renewed, Amazon’s store for refurbished electronics, rose by 2.5% for Prime Day.

Prime Day prices, Prime member shipping

Amazon is No. 3 in Digital Commerce 360’s new 2023 Global Online Marketplaces Report, which ranks the 100 largest global marketplaces by 2022 third-party GMV.

Amazon’s Prime Day event is limited to members of its paid Prime loyalty program. Benefits of the program include free one-day shipping for a variety of items.

Free shipping and low prices are key to Amazon’s popularity with shoppers. That’s no surprise. A January 2023 survey of 1,108 online shoppers by Digital Commerce 360 and Bizrate Insights showed those factors were key to driving conversions. Nearly 7 out of 10 shoppers (69%) cited free shipping, while 66% cited the “right price” as the reasons they made a purchase.

Worries about inflation altered the behavior of 40% of shoppers during last year’s Prime Day event, according to Digital Commerce 360 research.

Invite-only

This year’s Prime Day event includes a new invite-only promotion in which shoppers were asked to register in advance for access to low prices on select items. The idea is to prevent shoppers from having to reload their browsers constantly to get access to high-demand, short-supply, well-priced items.

To get those deals, shoppers needed to request an invite for discounted items they see on the site — 32% off an Acer Swift X laptop, for example — and get an email if the deal is still available. A unique link lets them buy the product during the sale, which kicked off Tuesday at 3 a.m. Eastern time and runs through Wednesday.

The new promotion adds a kind of lottery effect to some Prime Day bargains and saves Amazon shoppers the hassle of constantly monitoring the site and refreshing their browsers, Kristin McGrath, editor of RetailMeNot, which monitors online deals, told Bloomberg News.

“This way you either get the deal or you don’t, and you don’t waste two days searching for it,” she said.

– Bloomberg News contributed to this story.

2023 Global Online Marketplaces Report

Analysis of the 100 leading global online marketplaces. Includes over 30 charts, rankings of the world’s Top 100 online marketplaces by 2022 third-party GMV, tips for marketplace sellers, and findings from a new consumer survey. 

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The report examined more than 40,000 SKUs between July 2022 and January 2023 to see these trends. Retailers include Dillard’s Inc., No. 103 in Digital Commerce 360’s ranking of the Top 1000 ecommerce retailers in North America, Macy’s Inc. (No. 17), Zappos and Nordstrom Inc. (No. 20). Amazon.com Inc. is No. 1 and owns Zappos.

Retailers and brands adjusted prices

Pricing competitively is especially important in times of high inflation, according to the ecommerce analytics software vendor. Many of the retailers examined in the report reduced prices between June 2022 and January 2023 to attract customers and drive sales.

Per the report, Nordstrom cut prices the most of the brands examined, by 19% in the period. Net-a-Porter, Saks Fifth Avenue, Neiman Marcus (No. 73), and Dillard’s also consistently reduced prices in that timeline by 14%, 8%, 6%, and 6%, respectively.

Lowering prices didn’t drive sales, according to Nordstrom’s annual report for 2022.

“During economic downturns or inflationary periods, including those resulting from the impacts of COVID-19, fewer customers may shop as these purchases may be seen as discretionary, and those who do shop may limit the amount of their purchases. Any reduced demand or changes in customer purchasing behavior may lead to lower sales, higher markdowns and an overly promotional environment or increased marketing and promotional spending,” the retailer said.

Individual brands also offered discounts during the period, according to DataWeave. The majority of brands examined had discounts of more than 15% across retailers that sold them. Joe’s Jeans had an average discount of 25%, Silver Jeans Co. offered 22%, and Mango came in at 19%. Nike (No. 9) came in a bit lower at an average discount of 11%.

Some retailers bucked the trend of reducing prices, per the report. Macy’s increased prices an average of 18% over the seven-month period, and Zappos increased by 6%.

Retailers focused on lower-cost products

An examination of merchandise in stock for different apparel retailers showed that supply chain pressures like delayed shipments could still be impacting businesses. However, some are faring better than others. Nordstrom maintained nearly 100% of merchandise in stock during the entire time frame. Macy’s, Dillards, and Zappos saw stock decline from 98%, 96%, and 85% in July, respectively, to 87%, 93%, and 80% seven months later.

Saks Fifth Avenue and Neiman Marcus seem to be far more impacted by supply chain issues, according to the report, with in-stock levels of 45%-55% and 35%-45%, respectively. Neiman Marcus also said in February 2023 that it would focus on the top 2% of customers that drove 40% of sales, which could impact inventory.

The report also shows retailers are differentiating which products they prioritize keeping in stock. DataWeave broke down the stock availability of premium products at retailers compared to availability of other products. Premium products are defined as in the top 20 percentile by price. In each month examined within the report, retailers had higher stock availability for non-premium products, with a breakdown of 72% of premium items in stock and 78% of other products in stock in January.

“It is clear that there is a greater focus by all retailers on the more affordable range of their assortment,” DataWeave wrote in the report.

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The additional items are a way to woo new consumers to subscribe to the monthly service even as inflation bites.

“The customer is more cost-conscious than she’s ever been before,” Rent the Runway CEO Jennifer Hyman said in an interview with Bloomberg News.

Rent the Runway Inc. is No. 407 in the Top 1000, Digital Commerce 360’s database of the largest North American online retailers by web sales.

Executives at the subscription apparel retailer considered cutting monthly subscription fees in response. They instead decided to give consumers more for the same price, Hyman said, reasoning that it would help with both retention and appealing to potential customers. The more items that subscribers wear, the greater the probability that someone will comment on their dress or sweater, accelerating word-of-mouth marketing.

Rent the Runway strategy for boosting sales

“This business grows by women organically telling other women about Rent the Runway,” Hyman said. “We get a lot more bang for our buck investing into the customer experience than investing into marketing.”

Rent the Runway’s most popular plan offers subscribers eight items a month via two shipments. Under the new plan, those subscribers will receive one more item in each shipment, or two per month.

The move is the latest by the retailer to boost sales. Rent the Runway launched a storefront on Amazon.com in January. It features previously worn styles from designers it already works with, as well as new and unworn designs.

“We can make this investment into the customer with it having minimal impact on our gross margin,” Hyman said. In the past couple of years, the company has boosted its gross margin and reduced the costs to ship out and take back its rental items.

The company can offer additional items at no extra expense to subscribers in part because of cost savings from the recent restructuring plan. Last year, Rent the Runway dismissed about a quarter of its nonhourly employees. That has generated cost savings of between $25 million to $27 million, Hyman said. Also, the New York-based company restructured its debt. It’s pushing out the maturity to October 2026 from October 2024. That reduces its cash interest payments to 2% from 7%, she added.

“Our goal,” Hyman said, “is to drive Rent the Runway to free-cash-flow profitability.”

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Macy’s said digital sales were down 9% for the fourth quarter ended Jan. 28, 2022, though they were 24% higher than the comparable period in 2019. Brick-and-mortar store sales fared better, decreasing just 2% year over year. Macy’s is No. 16 in the 2022 Digital Commerce 360 Top 1000.

Nordstrom’s ecommerce business felt similar pressures over the period. Digital sales for the fourth quarter ended Jan. 28 were down 13% year over year, and made up 40% of total sales for the quarter. Nordstrom is No. 20 in the 2022 Digital Commerce 360 Top 1000.

Macy’s said promotions hurt margins

Macy’s gross margin in the fourth quarter was 34.1%, down from 36.5% a year earlier. The company attributed the decline to markdowns and promotions that were larger than in 2021, a reflection of “the company’s commitment to end 2022 with inventories at the right level and composition.”

“We were competitive but measured in our promotions, took strategic markdowns and intentionally did not chase unprofitable sales,” CEO Jeff Gennette said in the statement. The retailer is focused on areas of growth that include private brands, off-mall expansion and luxury goods, he added.

Total same-store sales, a key performance metric for retailers, fell 2.7% in the fourth quarter. That figure was supported primarily by strong growth at Bloomingdale’s and Bluemercury, the New York-based company’s higher-end brands. At Macy’s namesake brand, meanwhile, they fell 3.3%.

“We believe discretionary spend will be under pressure across income tiers and spending will move toward services and essential goods,” Gennette said on a call with analysts, noting that he expects demand for gift-giving and occasion-based products to remain strong.

Nordstrom Rack couldn’t find customers

Like Macy’s, Nordstrom struggled with selling discounted merchandise.

While discount rivals such as TJX Companies Inc.’s T.J. Maxx and Ross Stores Inc. (No. 70 in the 2022 Digital Commerce 360 Top 1000) have attracted more shoppers as inflation bites, Nordstrom’s off-price Rack business has floundered. Sales remain below pre-pandemic levels, a sign that Rack’s market share has been shrinking.

Sales at Rack fell 8.1% in the quarter versus a 2.4% drop at the Nordstrom-banner stores. Still, executives told analysts on an earnings call that they plan to open 20 Rack stores starting in the spring because off-price consumers tend to prefer in-store shopping. Rack locations are less expensive to build than a full-fledged department store, executives added. 

Sales at U.S. department stores have been uneven in recent months, signaling a pullback by some shoppers amid stubbornly high inflation. Companies’ decisions to build up merchandise during the pandemic consumption boom have now left some store operators stuck with too much inventory, leading to profit-busting markdowns.

Nordstrom says a reduction of merchandise and the winding down of its Canada operations will improve performance in 2023.

Macy’s earnings summary

For the quarter ended Jan. 28, Macy’s reported:

• Net sales were down 4.6% year over year to $8.3 billion.
• Digital sales were down 9% over 2021, and sales in stores were down 2%.
• Net income was $508 million, down from $742 million in 2021.

For the year ended Jan. 28, Macy’s reported:

• Net sales were $24.4 billion, down 0.1% over 2021.
• Digital sales decreased 6% over 2021, while sales in stores grew by 3%.
• There were 42.7 million active customers, a 4% decrease.
• Net income was $1.1 billion, down from $1.4 billion in 2021.

Nordstrom earnings summary

For the quarter ended Jan. 28, Nordstrom reported:

• Revenue was $4.3 billion, up 5% year over year.
• Net sales were down 4.1% to $4.2 billion. 
• Digital sales made up 40% of total sales, and were down 13.1%.

For the year ended Jan. 28, Nordstrom reported:

• Net sales were $15.1 billion, up from $14.4 billion in 2021.
• Revenue was $15.5 billion, up from $14.8 billion the previous year.
• Digital sales made up 38% of total sales, down from 42% in 2021. 
• Nordstrom opened three stores in 2022.

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