“While overall retail growth has slowed as economic uncertainty looms, shoppers are still increasing online spending,” says James Risley, research data manager and senior analyst at Digital Commerce 360. “Despite just a fifth of retail goods spending taking place online, it accounted for nearly half of the year-over-year growth.”

The Department of Commerce’s estimated total retail sales, both online and in-store, for Q2 2023 were $1,798.2 billion.

Total vs. ecommerce growth

Non-ecommerce sales grew 2.1% over Q2 2022. Retail spending surged in July thanks to the release of the “Barbie” movie and a succession of sold-out Taylor Swift concerts across the country, reported CNN.

Ecommerce penetration increased just 0.9% year over year. That’s the highest growth since the first quarter  of 2021, when penetration grew 4.7%.

Ecommerce grow slows, but pandemic-related boost remains

While ecommerce growth is slow, it’s still above pre-pandemic levels.

“We still haven’t seen ecommerce’s share of spending dip to the levels we would have predicted for this time frame pre-pandemic,” Risley says. “This means that the COVID boost to ecommerce was a permanent change to how people shop, even if other pandemic changes have worn off.”

How do we calculate ecommerce penetration?

Digital Commerce 360 studies non-seasonally adjusted Commerce Department data and excludes spending in segments that don’t typically sell online.

These segments include:

• Restaurants
• Bars
• Automobile dealers
• Gas stations and fuel dealers

U.S. ecommerce penetration reflects the share of dollars consumers could potentially spend online.

The Commerce Department defines ecommerce sales as the sales of goods and services where an order is placed by the buyer or price and terms of sales are negotiated over an internet, extranet, Electronic Data Interchange (EDI) network, electronic mail, or other online system. The customer may or may not make the payment online. The Commerce Department publishes estimates it has adjusted for seasonal variation and holiday and trading-day differences, but not for price changes.

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

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Annual adjusted earnings will be $4 to $4.05 a share, the Deerfield, Illinois-based company said Tuesday in a statement, down from the earlier range of $4.45 to $4.65. Adjusted earnings for the third-quarter were $1 a share, short of analysts’ average estimate of $1.06.

Walgreens is facing a rapidly changing competitive environment. On Nov. 17, 2020, online retail giant Amazon.com Inc. said it would expand its push into US prescription drug sales.

Walgreens Boots is ranked #19 in Digital Commerce 360’s Top 1000, which ranks retailers by annual web sales.

“We have seen changing market trends that have consumers prioritizing value in response to a more uncertain and challenging economic environment,” Chief Executive Officer Roz Brewer said on an earnings call. “There has been a steep drop-off in Covid vaccines and testing, and with the end of the public-health emergency we are also experiencing a slower profit ramp for US health care.”

After the pandemic pulled people into drugstores for vaccines and tests, cracks are starting to reappear in the business model that depends on pharmacy-driven foot traffic to sell higher-margin items like toothpaste and over-the-counter therapies. The end of the pandemic emergency has also seen states drop residents from the rolls of Medicaid, the health program for low-income people.

Savings Target

And while Walgreens is betting on an expansion into the wider health world —adding primary-care centers to US locations, partnering with insurers and moving into clinical trial recruitment — the transition hasn’t been simple.

“The health-care services segment is taking longer to stand up,” Bloomberg Intelligence analyst Jonathan Palmer said in a note, “which isn’t a huge surprise and at the same time, Walgreens’ ability to catalyze the unit by deploying capital is slowly drying up.”

Quarterly revenue in the US health-care business matched analysts’ average estimate of $2 billion.

Walgreens raised the target for savings from a cost-cutting program to $4.1 billion from $3.5 billion, and expects savings of $800 million in fiscal 2024. The company said in May that it would cut 10% of its corporate workforce, or about 504 employees, as it seeks to restructure to align better with a focus on patient care. Those job cuts were completed in about four months, Chief Financial Officer James Kehoe said on the call, saving more than $100 million.

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Analysis of North America’s leading 1,000 online retailers. Includes over 200 charts, rankings by 2022 web sales, benchmarking data, growth analyses by category and merchant type, and a detailed analysis of post-pandemic ecommerce. 

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JD sales

Retail chief Xin Lijun expects JD’s core ecommerce business to accelerate this quarter after the company posted its lowest-ever pace of overall revenue expansion during the January to March period. JD Retail’s sales should return to growth, he said, after declining 2.4% last quarter. All that reflects a gradual, if uneven, rebound in consumer sentiment following China’s Covid Zero years that should underpin a broader recovery in 2023’s back half.

“You will see an upward curve of growth rate when we release the results for the second quarter,” Xin, who runs the main retail and commerce operations, told Bloomberg Television. “We are relatively optimistic and confident in the second half of the year, overall.”

Regional sales

Chinese retail sales grew 12.7% in May but were down from April and less than projected. Along with disappointing data on unemployment and investment, that suggests the world’s second-largest economy is struggling to regain its footing. Still, Beijing is prioritizing economic growth and once again allowing its giant private sector to expand, after a two-year clampdown that obliterated growth in sectors such as online commerce.

JD is wrestling with internal issues as well. Its chief executive — once the presumptive heir to billionaire founder Richard Liu — is departing just as the company grapples with intensifying competition from traditional rivals Alibaba Group Holding Ltd. and PDD Holdings Inc. as well as upstarts like ByteDance Ltd.

JD.com is No. 1 is in the Asia Database. That’s Digital Commerce 360’s rankings of the largest online retailers in Asia by web sales. Rival Alibaba Group Holding Ltd. owns Taobao, No. 1 in the Digital Commerce 360 database of Global Online Marketplaces. It also owns Tmall (No. 2). JD.com is No. 4 in the marketplaces database.

Heavy discounting

In response, JD kicked off a $1.4 billion discounting program in March — a costly effort to lock in consumers ahead of a broader sales recovery later this year. Consumers gravitate toward value for money products in a downturn, Xin said. That spending spree in turn signaled to investors that JD may be placing a market share grab before profitability, helping wipe 40% off its value since a January 2023 peak.

Xin said JD remains focused on the bottom-line over the longer term but needed to protect its turf now.

“In the long run, I think market share is necessary for the survival of every enterprise. When you don’t have market share, the profits are actually fake,” he said.

A litmus test for JD’s efforts is this month’s “6.18” bargains extravaganza, the summer online sales event often compared with Black Friday and China’s own Nov. 11 gala, when major names from Apple Inc. to Xiaomi Corp. ply shoppers with discounts.

“In the long run, I think market share is necessary for the survival of every enterprise. When you don’t have market share, the profits are actually fake,” he said.

A litmus test for JD’s efforts is this month’s “6.18” bargains extravaganza, the summer online sales event often compared with Black Friday and China’s own Nov. 11 gala, when major names from Apple Inc. to Xiaomi Corp. ply shoppers with discounts.

JD saw demand rebound in select categories such as cosmetics and apparel and its final transactions tally would be “a surprise,” Xin said without elaborating.

What Bloomberg Intelligence says

“Last month’s acceleration of mainland China’s sequential gains in online retail sales from pre-Covid levels raises the likelihood that the gross merchandise value which Alibaba and JD.com derive from the 618 shopping festival, now underway, will rise above year-earlier levels. The lift to online spending from ecommerce firms’ offer of higher perks, including perks from ByteDance’s Douyin, Kuaishou and Little Red Book, could fuel stronger sales gains online than in physical stores this month.”

— Catherine Lim and Trini Tan, analysts

Sale volume

In the first 10 minutes of the event starting late May 31, nearly half of the small and medium-sized merchants that took part tripled volumes from the prior year. The overall turnover of men’s and women’s clothing on the platform more than doubled, JD said. Taobao and Tmall, the marketplaces of JD’s larger rival Alibaba, also shifted the focus of this year’s 6.18 to smaller vendors versus mega-brands.

JD needs a solid result to convince investors keen for signs of a Chinese consumption recovery. The company has experienced slowing growth for its signature June event over the past years. Transaction volumes growth declined to 10.3% last year, from 27% in 2019 and 33.6% in 2020 during the pandemic.

“As long as the measures to expand our market share are reasonable, we should take them to serve more consumers and gain recognition,” Xin explained. “If we do, we’d gain long-term market share.”

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Those first-quarter sales figures suggest 2023 could be another record-setting year for ecommerce. In February, Digital Commerce 360 reported that total 2022 ecommerce sales reached $1.03 trillion — the first time ecommerce revenue had topped the $1 trillion level.

Ecommerce penetration was steady at 21.7% in Q1 2023 compared to 21.2% in the year-earlier quarter, according to a Digital Commerce 360 analysis of the Commerce Department data.

While the record online sales spikes of the pandemic have faded, quarterly ecommerce sales have continued to grow, albeit at a slower pace.

In 2021 and 2022, ecommerce had its slowest share of total retail growth on record for two consecutive years. That’s an indication that offline sales are catching up with digital commerce after COVID lockdowns.

How do we calculate ecommerce penetration? 

Digital Commerce 360 studies non-seasonally adjusted Commerce Department data and excludes spending in segments that don’t typically sell online.

These segments include:

• Restaurants
• Bars
• Automobile dealers
• Gas stations and fuel dealers

U.S. ecommerce penetration reflects the share of dollars consumers could potentially spend online.

The Commerce Department defines ecommerce sales as the sales of goods and services where an order is placed by the buyer or price and terms of sales are negotiated over an internet, extranet, Electronic Data Interchange (EDI) network, electronic mail, or other online system. The customer may or may not make the payment online. The Commerce Department publishes estimates it has adjusted for seasonal variation and holiday and trading-day differences, but not for price changes.

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

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While some retailers like Kohl’s Corp. discontinued its curbside pickup service in August 2022, and book retail chain Barnes & Noble removed designated parking spots for curbside, others are ramping up services.

Tractor Supply Co. (No. 102 in the Top 500) is investing more in BOPIS and curbside. The retailer’s conversion rate for these omnichannel services is 60% higher compared with home delivery. Men’s big and tall apparel retailer Destination XL Group Inc., (No. 458 in the Top 500) prefers to use its stores as additional fulfillment locations “as a last resort.” And home improvement merchant The Home Depot Inc. (No. 4 in the Top 500) is investing in its mobile app to give shoppers the flexibility to research products while in store as well as navigate BOPIS and curbside.

Omnichannel report findings

US ecommerce growth falls as shoppers opt for in store

Retail chains are giving Amazon a run for market share. Amazon and its third-party marketplace sellers represented 35.7% of digital spending in the U.S. in 2022. That’s down from 36.9% in 2021. While the web giant accounted for a fifth — 20.7% — of all gains in U.S. ecommerce in 2022, according to Digital Commerce 360, that’s a big drop compared with 34.4% in 2021 and 35.1% during the pandemic-fueled ecommerce boom of 2020. There’s ground to be gained by retailers able to leverage technology and strategy — like omnichannel services — to convert a shopper who wants convenience and dependability online and in store.

Digital Commerce 360 projects U.S. retail sales will grow 4.2% in 2023 to $5.08 trillion. Online retail sales will increase 5.8% to $1.08 trillion — the slowest growth for total retail since 2019 and for e-retail since the banking crisis of 2008-2009.

Ecommerce growth has slowed, but it continues to take market share from brick-and-mortar stores. U.S. ecommerce grew 7.7% in 2022. That’s less than half of 2021’s 17.8% and still lower than pre-pandemic 2019 with 12.5% growth.

BOPIS and curbside availability shifts in the Top 500

Retail chains in the Top 500 in 2023 reflect a consumer more comfortable returning to in-store shopping while leveraging online buying capabilities. BOPIS for retail chains in the Top 500 reached 82.7% penetration in 2023, up from 76.3% in 2022.

Curbside for retail chains in the Top 500 declined to 47.5% adoption in 2023, down from 61.2% in 2022. The ability to schedule an in-store appointment also dropped, to 16.5% in 2023 from 24.5% in 2022. This suggests that consumers are returning to impromptu shopping as pandemic-related fears subside and people are no longer fearful of gathering in public.

2023 Omnichannel Report

Analysis of omnichannel trends in today’s evolving retail world. Includes over 25 charts, data on the Top U.S. retail chains, consumer survey results on omnichannel shopping habits, and new developments in the race to fulfill online orders.

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This article is based on Digital Commerce 360’s 2023 Omnichannel Report. Digital Commerce 360 Gold and Platinum Members receive a complimentary copy of this report as part of their membership. Non-members can purchase a downloadable PDF of this report for $399. View the table of contents here.

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Evite’s user activity plummeted roughly 95%, says Evite’s current CEO David Yeom, down to consumers sending about 1,000 invites a day. This is compared to normal pre-pandemic activity, with consumers sending 20,000 invites every day to 30-plus people, he says.

When the pandemic began, publicly traded media conglomerate Liberty Media Corp. owned Evite. As 2020 wore on and the COVID-19 pandemic raged, Yeom decided to buy out Evite with business partner George Ruan for an undisclosed sum in September 2020. As the new CEO and without public investors to please on a quarterly basis, Yeom used the lull in events as an opportunity to do a major rehaul of Evite’s customer experience and change its business model.

“What’s there to risk? User activity is down in the dumps,” Yeom says. “When you don’t have much to lose, in many ways, that gave us the opportunity to finally make the changes we’ve always wanted to make and get the business back on the path to greatness that it should be on.”

Evite pivots to revenue from premium upgrades from advertisements

Instead of relying on revenue from ads, Evite’s primary revenue stream now is from users upgrading to a premium invitation, which costs $15.99-$89.99. With premium, users have access to enhanced features, like hiding the guest list for an event, no ads on the invitation and access to premium designs, such as ones with a Disney character, premium fonts, animation, envelopes and a design-your-own feature. About 10% of its users pay for premium invitations and this accounts for roughly half of Evite’s revenue, Yeom says.

A third of its revenue is now from affiliate marketing. Evite showcases products that would be relevant to a party, such as paper plates or balloons for the host, or gift ideas for an attendee, from other retailers including Amazon.com Inc., Target Corp., Walmart Inc. and Etsy Inc.

That leaves the remaining roughly 17% of the revenue from advertising, which is now an automated program. Advertising used to be the primary source of its revenue. But the ads were getting in the way of the user experience, Yeom says. Typically, users saw an advertisement at each step in creating the invitation or RSVPing to an event.

“It was too much and everywhere,” Yeom says. “Basically 90% of all those ads are gone now.”

Evite’s move to generate revenue from premium features instead of ads is smart, says Paula Rosenblum, co-founder and managing partner at retail consulting firm RSR Research.

“Websites that are so filled with ads — mostly re-targeted, to boot — are incredibly annoying,” she says. “I’d gladly pay a little to stop the endless parade so I could take my time and peruse the products and/or services.”

But, Evite has to tread lightly with how it showcases its affiliate products, as those can appear just like an ad to a consumer. For example, in an email about a party, Evite will have a link to buy the host a gift from one of its affiliated retailers.

Or, after an invitee RSVPs to an event, Evite shows a pop-up to send the person a gift from one of its affiliates. Yeom says party-throwers have the option to turn this off and about a quarter of consumers elect to do so, he says.

Evite prompts party-goers to buy a gift from one of its affiliate retailers.

“We want to have good balance, and not fall back in the traps of what we used to be as a business,” Yeom says.

Yeom says the affiliate product links are meant to be helpful to planning or attending an event, whereas a banner ad may not be. RSR’s Rosenblum says many affiliates have successfully provided links to other merchants without annoying users.

This overhaul in revenue, however, was a tough change, as half of Evite’s employees were either on the sales team or supported the sales team. At the end of 2020, Evite eliminated its sales team and those employees were let go or received a new role.

Many employees had an “if it’s not broke don’t fix it” mentality about the ads, Yeom says. But that attitude had to go, he says.

“There’s a better way, and you don’t have to compromise the experience for guest or host,” Yeom says.

The new Evite launches

The rebranded Evite launched in April 2022, when many U.S. consumers had already resumed their normal pre-pandemic activities. And that includes going to events, celebrating milestones and going to parties. Meaning, Evite has regained its 100,000 annual active users, who send and receive Evites.

A year after this pivot, Evite turned a profit for the first time in a decade, the company says. Plus, in the birthday category specifically, user activity “has never been higher,” with users sending 25,000 birthday invites every hour, Yeom says without sharing more.

User feedback has been “phenomenal,” Yeom says, and Evite plans to continue adding upgrades to its premium service.

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In fact, if there is a single takeaway from all the data that Digital Commerce 360 collected about conversion rates in 2022, it is this: Not much changed.

No matter which merchant type, retailer size or product category we examined, the large swings we saw during the pandemic are no more. When there was change in 2022, it was incremental. And looked at in aggregate, conversion rates have held steady for three years at 2.8%.

The highest conversion rate in 2022, as in the two prior years, was among what we call “direct marketers.” There are 36 such retailers in the Digital Commerce 360 Top 1000. These are mostly retailers with roots in selling via catalogs, along with a handful that market their wares via TV shopping shows.

Looking at conversions by category, we see a similar situation: Rates remained largely unchanged no matter what a retailer sold in 2022.

However, it’s worth noting that the total conversion rate for Top 1000 retailers was higher than that of Top 2000 retailers (2.8% vs. 2.6%), suggesting that the larger players benefit from having the resources to invest in conversion-driving tactics and technologies.

This article is based on Digital Commerce 360’s 2023 Ecommerce Conversion Report. Digital Commerce 360 Gold and Platinum Members receive a complimentary copy of this report as part of their membership. Non-members can purchase a downloadable PDF of this report for $399. View the table of contents here.

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“2022 brought significant challenges for micro, small and medium enterprises (MSMEs), brought on by volatile energy prices and soaring inflation,” says Alibaba vice president Andrew Zheng.

The survey of 1,000 small business owners finds that:

• 70% of small companies surveyed said the impact of COVID-19 drove them to make greater investments in digital technologies.
• B2B online sellers will likely see greater competition in 2023 as businesses continue to adapt to the rising need for digitization.
• Businesses with the smallest number of employees were more negatively affected by last year’s challenging market.
  • 25% of survey respondents with under 10 employees shut down completely.
  • Only 13% of respondents with over 250 employees had the same results.
• Small businesses got creative to keep sales up and survive the post-pandemic pressures.
  • Using ecommerce was the top strategy for survival, with 36% of small businesses attempting ecommerce or digitalization throughout and directly following the pandemic.
  • Many flocked to B2B ecommerce marketplaces and continue to use those resources in today’s market.
  • 54% of small businesses surveyed responded that B2B ecommerce platforms remain critical to their current operations.
• To capture more sales and increase customers, over a third (32%) of small businesses took to expanding sales channels in order to survive the pandemic’s effects. Other tactics used included:
  • Cutting expenses (13%).
  • Seeking support from local governments or institutions (11%).
  • Investing in research and development to upgrade products (8%).

“Digital selling provided an opportunity for these businesses to reach customers locally and globally without stretching operating budgets,” Zheng says. “But B2B sellers must stay ahead of digital export trends in 2023 to find continued success.”

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After three years of COVID-19, consumers continue to shop online with no signs of stopping. For the full year 2022, Digital Commerce 360 projects U.S. online retail sales will top $1 trillion for the first time, reaching $1.03 trillion. That would be a 7.7% increase over $960.44 billion in 2021.

But it was a tough year for online retail. Many retailers struggled to post year-over-year online sales gains, inflation hit record highs, surplus inventory levels soared and supply chain woes persisted.

But despite these challenging macroeconomic factors, online retailers continue to innovate and provide a top online shopping experience. Brands like L’Oreal used artificial intelligence to spot trends. A number of merchants committed to greater representation and continued support of the Black community. And retailers worked to make fulfillment more sustainable.

What’s more, online holiday sales may have been strong enough that merchants can put 2022 down in the win column. Over the Cyber 5 period (Thanksgiving through Cyber Monday) online sales reached $35.27 billion, a 4% year-over-year gain.

Below are more 2022 headlines, both news and in-depth features, that were the most popular on DigitalCommerce360.com.

Thank you for your readership in 2022. We look forward to another exciting year of online retail in 2023.

Most-read news stories in online retail

• Amazon plans Prime Day-like sales event in October
  The ecommerce giant will hold an October sales event similar to its annual Prime Day event, sources tell Digital Commerce 360.
• Lowe’s, Home Depot earnings show ecommerce growth, similar omnichannel paths
  Home Depot reported sales through its digital platforms grew approximately 6% for Q4 and approximately 9% for the year. That’s well below the 11.5% in Q4 and 18.4% for the fiscal year that Lowe’s reported.
• Coronavirus pandemic adds $219 billion to US ecommerce sales in 2020-2021
  The COVID-19 pandemic accelerated ecommerce growth years into the future. Other pandemic-caused shifts also have boosted ecommerce sales, such as inflation. Consumers paid $32 billion more online for the same amount of goods during the past two years, new data from Adobe finds.
• Inside the battle against ecommerce fraud
  Ecommerce fraud has gotten hard to detect and stop. More than half of fraud attempts against ecommerce retailers are now deemed “sophisticated.” That means professional criminals used state-of-the-art methods to circumvent anti-fraud systems.
• Toys R Us is opening shops in all Macy’s stores
  The in-store shops will range from as small as 1,000 square feet to 10,000 square feet for “flagship” locations in several cities. Since buying the Toys R Us brand in early 2021, WHP has worked to re-establish the brand’s physical and online presence.
• Amazon locates its warehouses near big cities
  Amazon has dramatically expanded its distribution network in the past decade, placing many new warehouses near population centers so it can deliver online orders quickly. Such major retail competitors as Walmart, Home Depot and Wayfair also have opened new distribution centers as they seek to match Amazon’s fast delivery options.
• Will Crocs Inc.’s acquisition of Hey Dude Shoes help it reach its $5 billion goal?
  A complementary union, Crocs looks to widen its reach beyond a loyal U.S. base by continuing to grow its ecommerce business worldwide with Hey Dude.

Most-read in-depth stories in 2022

The seven feature-length stories below received the most page views in 2022 on DigitalCommerce360.com. These articles, free to Digital Commerce 360 Strategy members, detail the topics our readers found most relevant this year. They include an in-depth piece on returns, how consumer brand manufactures need to remake their ecommerce playbook, True Religion’s path to profitability, how retailers can improve their marketing strategy on Amazon, how to manage customer data across platforms, the advantages of advertising on connected TV and how online retailers cater to their young, mobile shoppers.

• Retailers look for answers as returns grow more complex and costly
  Returns have become a major headache in ecommerce, cutting into profit and straining resources. The sheer volume of returns also puts additional pressure on an already overloaded supply chain pushing prices higher for shipping, warehousing and labor. Retailers are working hard to reduce the number of returns they receive. And they’re taking multiple approaches to doing so.
• What’s the state of the ecommerce market for consumer brand manufacturers?
  Brands were the fastest-growing merchant type in the Top 1000 last year. But the old playbook for digital natives isn’t producing the same explosive results as it has previously. With funding drying up as profitability takes center stage, digital natives will have to reassess their roadmap to compete.
• A peek inside True Religion’s plan to reach $250 million in ecommerce sales by 2025
  The iconic denim brand’s CEO and executive vice president of digital sit down with Digital Commerce 360 to discuss how it cut technology costs and overhauled its supply chain to get on the path to profitability. Now, it’s investing in digital tools to attract younger shoppers, such as a mobile app and buy now, pay later.
• Marketing on Amazon is all about keywords and presentation
  Retailers find different ways to stand out among competitors when selling on marketplaces.
• There is more than one way to manage customer data
  In an increasingly competitive ecommerce landscape, DTC retailers are figuring out how to reach new customers by linking up with larger merchants like Walmart or selling on marketplaces like Amazon — without losing too much control. The key is to take a step back and assess before diving into new ventures or technologies.
• The cord cutters: Retailers move to appeal to consumers on streaming devices
  As consumers cut the cord and stream entertainment, retailers are taking advantage of lower costs to reach an ever-expanding audience through CTV.
• How online retailers cater to their young, mobile shoppers
  Younger shoppers are on their phones and want to check out fast, with their preferred payment provider on-site or an app designed for their small screens. MVMT, Azazie and True Religion share how they fine tune their mobile shopping experience for young shoppers.

The post The most popular online retail stories of 2022 appeared first on Digital Commerce 360.

“The raw [metal] materials needed to weld have gone up. One reason we’re not selling as many bigger ticket machinery items is because people are trying to fix what they have because they have to spend more on consumables,” says Robert Goodliffe, president and CEO.

Customers are buying lower-cost items, Goodliffe says. “They’re buying safety gear and some replacement parts but overall, fewer machines,” he says.

During the pandemic in 2020, Cyberweld customers purchased more consumables to keep their existing equipment running instead of buying expensive products like welding machines, Goodliffe says. Consumables include flux (welding wire) and filler metals (including aluminum, stainless steel, copper and silver). To offset this shift, Cyberweld found a new batch of shoppers in 2020 for vented masks and other respiratory safety gear to guard against COVID-19. The retailer pivoted its selling strategy to sell personal protective equipment (PPE) and, as a result, received an influx of industrial customers in 2020.

In 2021, the demand for PPE subsided and Cyberweld found selling welding equipment and consumables presented new challenges. In 2021, Cyberweld (No. 1048 in the Next 1000) ranked No. 714 in the Top 1000 after a banner 2020 year. 2021 and 2022 have proved to be more challenging.

Inflation affects equipment prices

While supply shortages weren’t problematic for Cyberweld in 2021, inflation was and continues to impact the retailer in 2022. The merchant’s top-selling piece of equipment is a good example of this — the price for this one product jumped by 28% from 2020 to 2022, Goodliffe says.

The Millermatic 211 is historically the merchant’s bestselling welder machine. In July 2020, Cyberweld paid a distributor $1,219 for each welder. Cyberweld than sold the machine to its customers for the retail price of $1,717. By July 2022, that same welder cost Cyberweld $1,689, which the merchant sold to customers for a retail price of $2,380. Overall, this piece of equipment increased its price five times between July 2021 and 2022 and 18 times since COVID-19 began in March 2020, Goodliffe says.

That cost increase has impacted demand, Goodliffe says. In 2021, Cyberweld sold 866 units, compared with 1,262 units in 2020. Through June 2022, Cyberweld had sold 245 units, which is less than the norm, he says.

Shoppers buy fewer welding machines

The types of products shoppers buy also changed in 2021. Historically, Goodliffe says the retailer’s average order value (AOV) was about $440. But in 2022, that has decreased about 25%. Customer buying behavior has shifted, and that’s reflected in what Cyberweld sells, Goodliffe says.

Web sales decreased around 10% in 2021 compared with 2020, Goodliffe says.

“2022 is on par with 2021,” he says. “And inflation makes the impact worse.”

This is an excerpt from the 2022 Next 1000 Report. The report can be downloaded now as a PDF for $499. Digital Commerce 360 Gold and Platinum Members receive a complimentary copy of this report as a part of their membership.

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