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

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

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

Walmart leverages faster fulfillment for the holidays

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

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

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

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

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

Automated distribution centers

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

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

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

Black Friday starts earlier

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

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

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

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

Walmart updated its website for the holidays

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

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

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

Wish lists and registries help consumers prepare

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

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

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

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On an earnings call with investors, he announced eBay revenue and gross merchandise value (GMV) grew in the marketplace’s fiscal third quarter, ended Sept. 30. EBay GMV grew to nearly $18 billion in Q3, he said. And much of its GMV in the past year has come just from collectibles.

“We generated over $10 billion in GMV from collectibles over the last 12 months, and more than one in four eBay buyers purchased at least one collectibles item over the past year,” Iannone said. “These buyers carry some of the highest conversion, repurchase, and retention rates on eBay. And they are also among the heaviest cross-category shoppers on our platform, which supports our other categories.”

In the past 12 months, eBay GMV reached about $72.8 billion, according to financials listed in its most recent earnings release. Based on those figures and Iannone’s statement, Digital Commerce 360 estimates eBay collectibles accounted for about 13% of GMV in the past 12 months.

EBay ranks No. 6 in Digital Commerce 360’s Global Online Marketplaces database. The database ranks the 100 largest such marketplaces by 2023 third-party GMV. Digital Commerce 360’s 2023 Global Online Marketplaces Report includes key insights into the biggest players in the database.

eBay capitalizes on collectibles in Q3

Iannone said eBay’s goal is to remain “the world’s most loved destination for passionate collectibles enthusiasts.” Working toward that goal, he said, eBay launched direct submissions to its vault.

“This enables any U.S. resident to send in trading cards valued at $250 or higher from their personal collections to the vault, even if they were not purchased on eBay,” he said.

Additionally, in July, eBay announced what it calls Vault Enhanced Submission. It enables eBay “to gather large amounts” of valuable trading cards in person at events. In one weekend, eBay added “tens of millions of dollars of assets under management to the eBay vault,” Iannone added. That includes a signed Jackie Robinson card valued at about $1 million.

The marketplace describes eBay vault as “a secure, climate-controlled, physical storage facility for graded trading cards available to eBay customers. In addition to best-in-class storage, the eBay vault offers opportunities for seamless buying and hassle-free selling with the confidence that comes with Authenticity Guarantee.”

The eBay collectibles category includes sports trading cards, toys and figures, sports memorabilia, comic books and more. The category accounts for more than 10% of eBay GMV.

eBay revamps condition grading system for trading cards

Iannone said eBay “revamped” its condition grading system for trading cards. It improves transparency for collectibles in the subcategory, he said. New listings now carry more precise details, he added. That includes whether a card has been professionally graded and the numerical grade, or one of several predefined card conditions.

EBay will also migrate existing listings to the new standard “over the coming months,” Iannone said. “Sellers have been asking us for this feature for some time, and we believe it will drive improved trust for buyers, better and more consistent price realization for sellers, as well as more robust data and insights around individual card values for eBay.”

Making the shopping experience more interactive

Although still in beta, eBay launched eBay Live last year in response to its growing community of collectors and enthusiasts, Iannone said. The interactive live-shopping feature is available within the eBay app, and the marketplace continues to expand its availability to more sellers and categories, he said.

Using eBay Live, buyers can interact with sellers and checkout in real time without leaving the livestream, Iannone added.

“Q3 marked an inflection point as we hosted over 1,000 live events, saw our millionth buyer tune in, and grew GMV from eBay Live by 4x quarter-over-quarter,” Iannone said.

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Michaels ranks No. 111 in the Top 1000, Digital Commerce 360’s ranking of the 1000 largest online retailers in North America.

A tiered loyalty program allows better targeting

The crafting retailer created Michaels Rewards, which allows all members to earn 3% back in rewards for all purchases. It’s free to join, and customers who spend $300 or more in a year can earn 6% back in vouchers that can be used at the retailer.  

“Convenience and personalization are the most important elements in any membership program,” Bennett says. “Loyalty programs should not be developed with a one-size-fits-all approach, which is why we offer three tiers in our program.” 

A tiered reward system allows a retailer to offer the greatest savings to the most loyal customers, who will likely return to make more purchases in the future, Bennett says. That’s why Michaels added a credit card in the latest round of updates to its program, which comes with 9% back in rewards. Members without the credit card can reach a maximum of 6% in rewards. The credit card was something customers asked for when they gave Michaels feedback, she says.  

“This benefit of 9% in rewards is really meaningful for those customers who are stocking up on supplies frequently or run their own creative businesses,” that require craft supplies, Bennett says.   

Loyalty program membership is growing

Bennett says the program has “tens of millions” of members. Membership is growing 9.75% year over year. Plus, more than 50% of Micheals customers are rewards members, she says. She declined to share a specific membership number. 

“Members in the Rewards program are more likely to add more items to their baskets and make purchases more frequently than those not in the program thanks to the benefits of stacking up rewards points,” Bennett says.

For example, customers who reached the 6% reward level spend on average 2.8 times more than members in the 3% tier. Credit card holders in the 9% tier spend an average of four times more than customers without credit cards, she says.   

Retailers can use rewards strategically

Retail chains are good examples of retailers that can effectively use loyalty programs to their advantage, says Neil Saunders, managing director of retail analysis firm Global Data.  

While tiered programs like those employed here aren’t “strictly necessary,” Saunders says, they make a lot of sense.  

“Retailers want to give the best rewards to those who spend more so they can ensure their loyalty. They also use tiers to encourage people to spend more so they can move to a higher tier and get better rewards or benefits,” he says. 

The potential downside is that consumers in lower tiers may not feel as valued. However, personalized rewards like a birthday gift can combat this and keep consumers engaged, he says.  

Loyalty programs in the Top 1000

Fewer than one-third of Top 1000 retailers have a loyalty program. The number of Top 1000 retailers with loyalty programs has grown 16.8% since 2019, according to Digital Commerce 360 data. The majority of the growth took place in 2020, and has remained nearly flat since. 

Though not strictly necessary, “rewards programs can be very useful for retailers both because they enable them to gather information about customers and drive certain behaviors,” Saunders says.

If a retailer does choose to use a rewards program, it must have a clear purpose, he says. 

“Is it to increase loyalty, to stimulate consumers into spending more, to gather data, to improve price perceptions, and so on? Knowing the purpose is vital as it then allows retailers to work out the cost of a scheme versus the potential reward,” Saunders says. 

Retail chains are far more likely than other merchant types to have loyalty programs. 48.1% of retail chains have a free loyalty program. That’s compared to 26.5% of consumer brand manufacturers, the next highest merchant type. Retail chains with loyalty programs generated $164.47 billion in web sales for Top 1000 retailers in 2022, 46.8% of total sales in the category.  

This high penetration of retail chains having loyalty programs could be because they are more likely than other types of merchants to have the resources and finances to implement an effect rewards program, Saunders says.  

“Chains have a very large base of customers, so rewards schemes make sense in terms of allowing them to gather data and use incentives to encourage more buying,” he says. Because these programs are so common among retail chains, consumers are also more likely to expect them, he says. 

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The Beer Bat’s business model is to operate with a lean staff and put its resources behind product development and quality control. As a result, the company has about a dozen employees, which limits their ability to answer sales calls and fill orders.

“What we wanted was a platform that takes the salesmanship out of sales and enables more of an Amazon-like model of point, click, buy, and deliver, as opposed to figuring pricing and placing the order with a sales representative over the phone,” says Sam McGee, president of The Beer Bat.

The Beer Bat needed a platform that could scale up

At the time, The Beer Bat was using the WooCommerce platform, which could not scale to handle the increase in order volume and required a software developer to write code for any of the changes the company wanted to make to the platform, as it does not employ a code writer in-house.

What The Beer Bat sought was a platform that could support B2B and B2C sales and had the features to support the company’s future growth. The Beer Bat settled on BigCommerce as its new platform provider not only for the platform’s scalability and features, but for the BigCommerce support team.

The latter was important to The Beer Bat as it wanted a platform provider experienced in working with small, but rapidly growing businesses.

“We wanted a platform provider that was personal, not transactional,” McGee says. “BigCommerce does not treat us like a transaction, and we are a small business that values the human side.”

With the BigCommerce platform, The Beer Bat has implemented a customer portal for buyers to place an order, typically 10,000 to 15,000 units at a time, upload their artwork or logo to be printed on the Beer Bat, and automatically receive an invoice once the order is complete. Buyers can also see pricing specific to their account. On the B2B side, The Beer Bat sells to food and beverage retailers and distributors, and concessions operators.

“Manually processing orders of the size we typically get is a lot of work. Now, the ordering process is a lot more efficient,” McGee says.

Beer Bat’s origins

The idea for The Beer Bat grew out of McGee’s business philosophy that there is a product for every market and a market for every product. At the time, Green Egg Design LLC, a manufacturer of plastic bottles owned by McGee, was producing branded drinkware for the Hard Rock Café’s outdoor casino in Las Vegas. When the Hartford Yard Goats, a minor league baseball team, announced it would begin playing in Hartford, Connecticut, where Green Egg is headquartered, at the start of the 2017 baseball season, McGee saw an opportunity to develop a new drinkware product unique to the team.

“I did some research and I learned that the [Yard Goats] baseball park seats about 8,000 people, and everybody is drinking, 48% drink beer, and the other 42% are drinking non-alcoholic beverages,” McGee says.

The goal was to develop a product that not only fit the fan experience inside the park but enhanced it. McGee pitched several ideas to Yard Goat management, including The Beer Bat. In the end, The Beer Bat won out. The product debuted at the Yard Goats’ stadium in August 2018.

From minor leagues to major leagues

The company continued its focus on signing minor league teams for the next year until Major League Baseball’s Atlanta Braves franchise came calling.

“We initially focused on minor league teams as there were more than 300 of them in towns across the country at the time. That’s a good foundation when it comes to potential markets,” McGee recalls. “When the Braves saw our product in a promotional video that went viral, they called.”

The Braves debuted The Beer Bat when their new stadium opened in 2020. In 2021, MLB’s San Diego Padres signed as a client. The Beer Bat supplies its product to stadium concession operators for five MLB and 27 minor league teams. And the company has established online storefronts in several countries including Canada, Japan, Mexico, South Korea and Taiwan. The company also has licensing agreements with all 30 MLB teams, as well as the Negro League Baseball Museum to sell The Beer Bat featuring their respective logos.

“The multi-storefront functionality of BigCommerce allows us to go global locally with a single back end,” McGee says.

Business is growing fast

In 2023, The Beer Bat expects to deliver about 470,000 units, compared to 235,000 in 2022. Since installing the BigCommerce platform, The Beer Bat has increased orders by 71%, increased revenues by 115% and seen 98% increase in visitors to its B2B and B2C storefronts.

Always looking for the next great product idea, The Beer Bat plans to introduce a cup shaped like a hockey stick later this year. The cup will be based on the same business model as The Beer Bat.

“I think hockey has the potential to be bigger than our baseball business,” McGee says. “It could be our Mona Lisa.”

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CEO Jamie Iannone said in addition to delivering “solid results,” eBay has accelerated its innovation pace. Notably, that refers at least in part to eBay’s generative AI technology.

EBay ranks No. 6 in Digital Commerce 360’s Global Online Marketplaces database. The database ranks the 100 largest such marketplaces by 2023 third-party GMV. Digital Commerce 360’s 2023 Global Online Marketplaces Report includes key insights into the biggest players in the database.

EBay had a rough year in 2022, with GMV falling 15.4% compared to 2021, said James Risley, research data manager and senior analyst at Digital Commerce 360. In 2020, when supply chains “got far out of whack,” he said, eBay and other pure marketplaces saw a “huge surge” as shoppers turned to alternate channels and some people bought up popular products to resell on these giant marketplaces.

“This quarter, it remained flat over last year’s Q3 as GMV returns to the level it likely would have been at without a pandemic,” Risley said. “Stronger supply chains coupled with retailers adding on new marketplaces to their ecommerce operations have forced eBay to find ways to increase revenue without GMV increases, and they seem to have done that.”

eBay revenue and gross merchandise value (GMV)

In its fiscal third quarter, eBay revenue grew 5% year over year. That’s up to $2.5 billion from $2.38 billion in Q3 2022.

Meanwhile, eBay GMV grew 2% year over year. It reached $17.99 billion in Q3. That’s slightly less than eBay GMV in Q2, which was $18.21 billion, but it’s greater than GMV in Q3 2022, which was $17.72 billion. In the United States, eBay GMV declined slightly to $8.64 billion. That’s down 1% from about $8.70 billion in Q3 2022. EBay defines GMV as the total value of all paid transactions between users on its platforms during the applicable period, including shipping fees and taxes.

EBay active buyers decreased 3%, to 132 million in Q3 from 135 million in the comparable period of 2022. The marketplace identifies active buyers as those who paid for a transaction on its platforms within the previous 12-month period.

eBay generative AI technology updates

Iannone said the Magical Listing tool, which uses artificial intelligence to help sellers, rolled out to 100% of mobile app users in the United States, United Kingdom and Germany in eBay’s fiscal Q3. In October, eBay extended generative AI descriptions to 50% of desktop users in the same three countries, he said.

The Magical Listing tool makes it simple and fast to list items, he said. It also helps ensure listing are comprehensive to maximize sales, he said. As part of the Magical Listing experience, eBay has rolled out an improved background removal tool powered by AI, he added.

“Now, generative AI allows us to leverage our treasure trove of images and listing data to quickly create compelling listings,” Iannone said. “Early users have told us these capabilities will unlock more of the inventory in their closets and garages, which could ultimately keep more products out of landfills.”

The first phase of the Magical Listing process “leverages generative AI to instantly populate the item description within the listing flow based on a product’s title, category and other aspects,” he said.

EBay’s camera-based Magical Listing tool has been in employee beta for several months, Iannone added. It is also currently in a limited beta with a number of large sellers.

eBay earnings summary

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

• $2.5 billion in revenue. That’s up 5% from $2.38 billion in the year-ago period.
• eBay GMV increased to $17.99 billion. That’s a 2% year-over-year increase from $17.72 billion. However, eBay GMV in Q3 decreased from Q2’s 418.21 billion.
• eBay active buyers decreased 3% year over year to 132 million.

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

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Michaels ranks No. 111 in the Digital Commerce 360 Top 1000 database.

Michaels MakerPlace competes with Etsy

The retailer launched its marketplace following a successful three-month beta test, the retailer said. 

MakerPlace is positioned as a competitor to Etsy Inc. In addition to handmade products, Michaels MakerPlace sellers can sell places in virtual classes and how-to guides.

Handmade bud vases for sales on Michaels MakerPlace.

“Our research found that nearly three in four makers believe there’s a void in the online marketplace landscape today, and that existing platforms come with pain points like high upfront costs, increasing fees for product listings and competition with an overflow of mass-produced goods,” says Heather Bennett, executive vice president of marketing and ecommerce at Michaels. “MakerPlace by Michaels was designed in direct response to these challenges with the goal of helping handmade artists and makers succeed,” she says.

Michaels MakerPlace doesn’t charge a listing fee to sellers. It charges a 4% referral fee to sellers on its basic subscription plan, along with a 2% referral fee to sellers in the professional tier, which costs $9.98 per month. All sellers pay a transaction fee of 3% plus $0.20 per item.

In comparison, Etsy charges a $0.20 listing fee and a 6.5% transaction fee. Etsy ranks No. 17 in Digital Commerce 360’s ranking of the Top 100 online marketplaces by GMV.

Why add an online marketplace?

Starting an online marketplace puts Michaels in good company. 40 retailers in the Top 1000 operate a consumer marketplace, with 23 those in the Top 100, according to Digital Commerce 360 research. 

“For retailers like Michaels, with specific audiences, adding a marketplace expands selection in a way that consumers appreciate,” says James Risley, research data manager and senior analyst at Digital Commerce 360.

Michaels can lend its name recognition and trust among consumers to marketplace sellers, and consumers might then feel safer buying those items from a known source, he says. It’s also a way to generate revenue beyond selling goods, with the learning component in the marketplace.

“With Michaels’ solution, there’s a little risk in moderation, making sure a woodworking class isn’t turned into a venue for how to make weapons. But I think it’s a good niche for this kind of non-goods marketplace,” Risley says.

MakerPlace will operate alongside the other third-party marketplace Michaels launched in February. That marketplace appears on Michaels.com alongside first-party goods, and expanded Michaels online offerings to more than 1 million SKUs.

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This morning, Beyond, No. 50 in the Top 1000, announced that CEO Jonathan Johnson has stepped down. Johnson’s departure follows mutual agreement by the Beyond board and Johnson to transition the company to new leadership, Beyond says. The hunt for a new CEO is underway. The Top 1000 database is Digital Commerce 360’s ranking of the largest North American online retailers. Bed Bath & Beyond ranked No. 47 prior to its bankruptcy.

Beyond begins CEO hunt

While the search proceeds, company president David Nielsen will serve as interim CEO. Adrianne Lee, chief financial officer, will expand her responsibilities to oversee legal and human resources functions in addition to the finance organization.

As president, Nielsen oversees the company’s marketing, algorithms, customer, digital, technology, and sourcing and operations organizations. Prior to this role, Nielsen served as Overstock’s chief sourcing and operations officer.

“Following the recent acquisition of the Bed Bath & Beyond brand and our corporate renaming as Beyond, Inc., the board and Jonathan determined that this is the ideal time for a transition in leadership to guide the company forward,” says board chairman Allison H. Abraham.

In 2022, Johnson made total compensation of about $2.95 million, including a base salary of $871,154, according to company filings with the U.S. Securities and Exchange Commission. Nielsen in 2022 earned $1.41 million in compensation that included a base salary of $573,077.

In September, Angela Hsu stepped down as chief marketing officer at Overstock.com, which acquired the intellectual property assets of bankrupt retail chain Bed Bath & Beyond in June for about $21.5 million. As chief marketing officer for Overstock, Hsu made $842,557 in total compensation in 2022 .

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

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

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

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

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

Supply Chain by Amazon changes the fulfillment game

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

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

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

• Inventory pickup
• Shipping
• Customs clearance
• Ground transportation
• Inventory storage
• Replenishment

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

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

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

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

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

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

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

Generative AI technology and the Amazon ecosystem

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

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

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

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Those are some of the conclusions from a recent holiday spending survey of more than 12,000 consumers in a dozen countries by Cisco AppDynamics, a subsidiary of San Jose, Calif.-based Cisco Systems Inc.

“Consumers around the world are planning to do more of their holiday season shopping online than ever before this year,” James Harvey, executive chief technology officer for Cisco AppDynamics’ Europe, Middle East and Africa region, said in a statement. “On average, consumers expect that 59% of their spending on key shopping dates such as Black Friday and Cyber Monday will be online this year versus in-store, compared to 53% last year.”

With high inflation plaguing much of the world, consumers believe they can find good deals online, especially during big shopping events like Black Friday and Cyber Monday, according to Cisco AppDynamics.

“And this year, they are favoring online shopping over in-store as they believe they can make their budgets stretch further (48% of consumers), get more choice (42%), and avoid last-minute panic buying in the shops (31%),” Harvey wrote in a survey summary.

He added that 43% of consumers expect to do more of their holiday shopping online, through applications and digital services, compared to last year, as opposed to only 13% who plan to buy less.

Holiday spending is up for grabs

But online retailers can’t take this favorable environment for granted, according to Harvey. He wrote that the research found “consumer expectations for digital experience continue to rise, and people’s reactions when they encounter poorly performing applications and digital services are getting stronger. 64% of consumers claim that if the applications and digital services they will be using to do their holiday shopping this year fail to perform, it will leave them feeling anxious and angry.”

Shoppers will be quick to act on those feelings, too. “More than half — 58% — of consumers claim that retail brands will have one shot to impress them this holiday season, and if their digital service or application does not perform well, they won’t use it again,” Harvey wrote. In addition, “71% state that if the applications and digital services that they will be using for their holiday shopping fail to perform, they will be more inclined to go back to shopping in-store.”

A key lesson from the survey is that retailers’ IT staffs must be able to closely observe applications and related systems to ensure they are running properly, according to Harvey.

Cisco AppDynamics didn’t release details about the survey methodology, including in which countries it polled consumers and the margin of error. A Cisco EMEA spokesperson did not respond to several inquiries from Digital Commerce 360.

Cisco, which designs and manufactures Internet Protocol-based networking and related products, acquired San Francisco-based AppDynamics Inc.  in 2017 for approximately $3.7 billion. AppDynamics provides application intelligence software and a monitoring platform to help companies improve software and business performance.

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