U.S.-based private equity firm Nexus Capital Management will acquire 65% stake in Dollar Shave Club for an undisclosed price, while Unilever will retain the remaining 35%.

Dollar Shave Club is part of the minority of health and beauty retailers in the Top 1000 primarily targeting men. 

Unilever’s history with Dollar Shave Club

Dollar Shave Club launched in 2012 to immediate attention with a viral online marketing campaign. The retailer’s business was based on selling razors at a lower price than legacy competitors. It eventually expanded to include other shaving products.

At the time of the original acquisition, Unilever targeted Dollar Shave Club for its strong growth in the direct-to-consumer category.

“We plan to leverage the global strength of Unilever to support Dollar Shave Club in achieving its full potential in terms of offering and reach,” Kees Kruythoff, president of Unilever North America, said in 2016.

However, Dollar Shave Club wasn’t necessarily a fit with Unilever, the U.K.-based consumer brand manufacturer that also owns Ben & Jerry’s, Dove, Hellman’s, and a variety of other brands across health and beauty, home, and food. Unilever ranks No. 6 in the Europe Database, Digital Commerce 360’s ranking of the largest online retailers in Europe.

Dollar Shave Club is an example of “unsuccessful attempts to move away from our core,” Unilever CEO Hein Schumacher said in an Oct. 26 call with investors. Schumacher also cited some other acquisitions that were better fits, including skin care brand Paula’s Choice and Liquid I.V. Additionally, the retailer plans to sell off some other acquisitions as it continues to adjust its portfolio. 

“There is more pruning to be done,” Schumacher said. 

Dollar Shave Club going forward

The sale is expected to close by the end of 2023. 

“We are thrilled to acquire Dollar Shave Club, based on its strong brand loyalty, pioneering DTC model, and omnichannel presence. We see growth potential and will invest in cutting-edge marketing, product quality and new innovations,” says Michael Cohen, Partner at Nexus Capital Management. “Dollar Shave Club will also serve as a platform for additional brands with a similar DNA. We are excited to work with Dollar Shave Club employees to drive accelerated growth and welcome Unilever’s continued partnership,” he said. 

Dollar Shave Club has a seven-figure subscriber base, the retailer said in an October press release. 

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“As consumers revert to more conservative and thoughtful spending patterns, the pendulum has swung from 2021’s 13% growth to today’s anemic 2%. After two years of warp-speed growth, consumer spending on goods is easing to near-normal historic rates,” ” says Craig Johnson, CGP president.

CGP’s prediction is lower than the estimate from accounting and consulting firm Deloitte. Deloitte forecasts holiday spending to grow between 3.5% and 4.6% in 2023. 

Online holiday spending will fare better

CGP estimates ecommerce spending will grow 5.1% this year, more than double the growth rate of overall spending. That’s still below Deloitte’s estimate of 10.8% to 12.8% ecommerce growth, but it’s in line with Adobe’s 4.8% growth projection.

Inflation hits consumer spending

“The sharp deceleration in retail growth is due to stubborn inflation in many sectors, spiking interest rates, a year-over-year decline in COVID-era federal stimulus, and the ongoing rotation of consumer spending from goods to services,” Johnson says.

Student loan repayments restarting and a drop in the housing market may also have an impact, he says.

Inflation and rising costs for consumers are most likely to impact sales of discretionary items, according to the report. Big-ticket items like products from home improvements and furnishing retailers will likely feel the pinch, CGP says. That’s consistent with what many retailers said in second-quarter earnings reports, citing consumer reluctance to spend discretionary funds and turning to discount retailers.

What sectors will have the highest holiday spending?

CGP projects the health and personal care category will experience the most significant growth in spending, up 5.2% thanks to growth in the beauty market this year. Adult beverages, both alcoholic and non-alcoholic, will grow 3.1%, while apparel will grow modestly at 2.5%, CGP predicts. General merchandise sales will remain stable, with projected 1% growth.

Meanwhile, home-related retailers will likely see losses. CGP predicts sales will decrease 6% in the home furnishings category and 4% in the home improvement category. Toys and hobbies and consumer electronics will likely see more modest losses, at 2.8% and 2.5%, respectively.

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The Europe 500, a ranking of the largest online retailers in the region based on 2022 web sales, collectively sold $350.5 billion online last year, up 2.8% from $340.9 billion in 2021.

Comparatively, the Top 500 online retailers in North America collectively grew 5.1% to $981.8 billion in 2022.

The No. 1 European online retailer is Wildberries

Russia-based Wildberries, founded in 2004 by Tatyana Bakalchuk, is the largest European online retailer. Wildberries sells 37,000 brands of clothing, shoes, cosmetics, household products, children goods, electronics, books, jewelry, food and much more. Since 2022, Wildberries has dropped from serving 15 countries to six: Russia, Belarus, Kazakhstan, Armenia, Uzbekistan, Kyrgyzstan. However, sanctions due to the war in Ukraine have led many Russian shoppers to turn to domestic retailers like Wildberries, boosting its ecommerce sales despite serving a shrinking number of regions.

Top 5 Europe ecommerce retailers

1. Wildberries
2. Ahold Delhaize
3. LVMH
4. Sainsbury
5. Otto Group

Turkey’s Mavi is Europe’s fastest ecommerce grower

Apparel retailer Mavi, which specializes in luxury denim, ranked No. 409, growing 96.5% to a Digital Commerce 360-estimated $62.7 million in 2022. Online shopping, which saw a significant surge during the pandemic, slowed in 2022 but continued its upward trend. Mavi’s own mavi.com ecommerce site, which operates in Turkey, the U.S., Canada, Germany and Russia, as well as sales through marketplaces, accounted for 11% of total sales.

Mass merchants are the fastest-growing online retailers in Europe

The 57 mass merchant e-retailers ranked in the Europe 500 grew 17.1% to $68.9 billion in 2022. This is the fastest-growing category among the 14 merchandise categories Digital Commerce 360 tracks. Health and beauty e-retailers are second, with the 30 merchants in this category growing online sales 10.3% year over year to $28.9 billion in 2022.

Europe 500 ecommerce retailers’ sales reach $350 billion in 2022

193 of the Europe 500 sold their merchandise to U.S. consumers, according to Digital Commerce 360 data. In 2022, these sales to U.S. consumers hit $146.2 billion, up 4.0% from the previous year. The top two merchants which had the largest share of the online revenue from the U.S. are food and beverage e-retailers Naked Wines and Godiva Chocolate.

This data is mined from the recently released 2022 Digital Commerce 360 Europe database, which ranks the largest European retailers by ecommerce sales. Purchase access to the database here.

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Both men and women across all age groups buy in the category. But the majority of products sold are marketed to women.

How big is the grooming market in the U.S.?

Top 1000 retailers in Digital Commerce 360’s Health & Beauty category sell products for:

• Grooming
• Hygiene
• Cosmetics
• Skin care
• Hair care

But just 15.8% of those e-retailers specialize in men’s skin care and grooming products.

“Though a small compilation, these companies’ average growth outpaced our Digital Commerce 360 average for the Top 1000 and Next 1000,” said Digital Commerce 360 market research analyst James Reeves. “This stronger rise in purchasing products designed for men suggests these niche consumers are finding shopping online beneficial in a category traditionally associated with purchases for women.”

Online revenue for men’s grooming products in the Top 1000 grew 5.6%. That compares with 3.0% growth for the e-retailers in the health and beauty category that specialize in grooming and cosmetics. Men’s products online revenue grew 7.7% among the Next 1000. That compares with 6.0% growth for the health and beauty category specializing in grooming products.

The Top 1000 database is Digital Commerce 360’s ranking of the largest North American online retailers. The Next 1000 is a ranking of online small- and medium-sized online retailers by web sales.

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Matt Mullenax, co-founder and CEO, Huron

The result? “It’s probably saved us five-times the time and double the price savings,” he says.

By automating accounting tasks, Mullenax says he was able to “give time back to the team — time is what we’re constantly fighting for.” Huron migrated to bookkeeping software vendor Finaloop for tasks like creating financial reports due at the end of the month, which are essential for the brand’s investors, he says.

How small and medium retailers can leverage AI

Previously, the brand relied on consultants to help it process financial information.

“Even with consultants who knew our brand well and knew what we were spending, there was the inevitable back and forth each month,” he says.

The brand has investors to report to, Mullenax says.

“We’re sending out monthly updates, and it’s important that we send those out as quickly as possible,” he says. “We’re able to communicate with our investors earlier, and that’s important for us.”

Finaloop provides ecommerce bookkeeping integrations for issuing invoices, billing and other administrative tasks. Balance sheets and cash flow, are kept in real time. The software also helps ecommerce brands manage inventory by combining a brand’s accounting system with inventory management, says Finaloop founder and CEO Lioran Pinchevski.

Brands must understand what each sale costs by considering expenses like the cost to produce a product, which can include merchant fees, marketing and shipping expenses, he says.

“When you run [marketing] campaigns, for example, the one thing you want to know is your contribution margin. That will dictate whether the next dollar you spend on advertising is actually making you money, or losing you money, which is very important,” Pinchevski says.

Finaloop allows Huron to keep track of revenue from multiple sales streams, which include its Amazon store. Amazon.com Inc. is an important revenue source for Huron, Mullenax says. Like other small- to medium-sized retailers, Amazon became a reliable place to sell during the height of the pandemic. Consumers continue to shop for Huron products in the retailer’s Amazon store.

Customers buy differently on Amazon versus direct-to-consumer websites

Buying behavior tends to be very different depending on if a consumer is shopping through Amazon.com or through usehuron.com, Mullenax says.

“It’s pretty rare that you get a customer who is a subscriber or multi-time purchaser on usehuron.com that then reverts back to jumping on Amazon to buy [a single item],” he says.

Customers spend differently as well, he says.

“Our average order value is much higher on usehuron.com compared with Amazon,” Mullenax says, without revealing more. “But the conversion rate on Amazon is much stronger than it is on our direct-to-consumer website.”

Huron uses Shopify to run its direct-to-consumer website. The commerce platform provides metrics that indicate Huron’s conversion rate in the beauty category is strong, he says.

Amazon performs differently, he says.

“On Amazon, it is busy [for us] during busy times or peak seasons, where we’ve seen really strong conversions,” Mullenax says.

This includes periods like Amazon Prime Days. In July 2023, the brand did not offer any discounts on its Amazon store, but it still experienced an increase in sales during the two-day event, he says.

“We had a fantastic Prime Day in 2023,” he says. “Our performance basically doubled year over year, and we didn’t participate in Prime Day discounts.”

Mullenax says he attributes much of this success to the brand’s “strong organic rankings mixed with really good customer reviews on Amazon,” he says.

How SMBs can upsell without turning off customers

While sales on Amazon remain steady, online sales on its direct-to-consumer website are growing stronger, he says.

“One of the things we’ve found interesting on our own website is as we’ve continued to release products and build our assortment, our AOV has basically doubled in Q1 2023 compared with the year before on usehuron.com,” Mullenax says.

He attributes part of that boost to launching new products and charging slightly higher price points, he says.

“And we’ve also had a maniacal focus on what happens in the cart,” he adds. This includes strategic upselling.

“How do we introduce new products to the customer that he or she might not otherwise explore?” he says. “And how do we position those accordingly?”

One tool Huron uses is Shopify’s plugin Rebuy. It appears during checkout and suggests related products. Within a 90-day period between April-July 2023, customers purchased suggested related products through Rebuy 25% more compared to the four years the brand has been in business, he says.

“And over the last six months, when pressed with an opportunity [a consumer is presented with alternative products to purchase], 30% of customers are choosing to add a product to an existing order,” he says.

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Lindsay Mikos, senior director, retail omnichannel, Walgreens told Digital Commerce 360 that digital orders drive incremental value for the retailer.

“We’re able to engage with them more often [online] and give them more relevant offers,” she said.

Walgreens Boots Alliance Inc. reported U.S. retail digital sales were up 19% in the second quarter 2023, ended May 31, on top of a 25% gain in 2022.

Walgreens digital sales

When compared with Digital Commerce 360’s Top 1000 retailers in the category, Walgreens 2022 web sales growth reached 35.0% compared with 2022. The only retailer to outpace this was Rite Aid, which increased web sales by 65% in 2022.

Other retail chains in the top five include:

• Ulta Beauty
• Bath & Body Works Inc.
• CVS Caremark Corp.

Key takeaways

• In 2022, Walgreens completed 35 million pickup orders and one-hour deliveries from its stores.
• 21.1%: Walgreens’ 2022 share of 2022 digital sales in the Top 1000.
• Walgreens is in the Top 1000 fastest growers in the health/beauty category.
• 52.7%: Walgreens’ share of 2022 web sales in the Top 1000 health/beauty retail chains

The median average ticket for the 56 ecommerce retailers in the Digital Commerce 360 Top 1000 in the health/beauty category hit $93 in 2022, a rise of more than 12% from the $83 recorded in 2021.

However, much of that rise can be explained by inflation, which stood at 6.5% year-over-year in December 2022.

Walgreens Boots Alliance Inc. ranks No. 19 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American online retailers.

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Amazon Inc. (No. 1)

Amazon reported sales grew 11% to $134.4 billion in the quarter ended June 30. Online stores, which account for 39.4% of sales, grew just 4.2%. Read the full story here. 

Boot Barn Inc. (No. 327)

Boot Barn reported net sales grew 4.9% to $383.7 million in its fiscal first quarter of 2024 ended July 1. Same-store sales decreased 2.9% year over year, and ecommerce same-store sales decreased 10.8% over the same period. Net sales grew due to new stores and higher retail prices, Boot Barn said.

Online sales made up 9.9% of net sales, totaling about $38 million. 

“Despite the slowness in ecommerce sales, we are quite pleased with the many achievements we have seen from an omnichannel perspective,” president and CEO Jim Conroy told investors. Boot Barn predicts ecommerce sales will begin growing again in September or October.

Columbia Sportswear Co. (No. 147)

Columbia reported net sales grew 7% in the second quarter ended June 30, reaching $620.9 million. U.S. online sales were “down mid-single-digit percent,” because “the online environment has become more competitive and promotional as consumers seek out value in the marketplace,” CEO Tim Boyle said in an earnings call. 

Direct-to-consumer (DTC) sales were up slightly to $660 million for the quarter. They include both online and physical store sales.

Ecommerce was the slowest growing part of the business in the quarter, below expectations, the sports retailer said. 

The Container Store Inc. (No. 471)

The Container Store reported consolidated net sales declined 21.1% in its first quarter ended July 1, to $207.1 million. Comparable store sales were down 19.9% over the same period. Online sales fared slightly better, down 15.8% in the first quarter.

Website-generated sales, including curbside pickup, showed a relatively low decline at 10.5% year over year. Those web-generated sales made up a bigger portion of total sales this quarter (24.1%) than in the year-ago period (21.3%).

CVS Health Corp. (No. 95)

CVS reported total revenue grew 10.3% to $88.9 billion in its second quarter ended June 30. The bulk of the growth comes from the health care benefits part of the business, which grew revenue 17.6% to $26.7 billion.

CVS didn’t break out specific information about online sales, but it did note that 5% same-store prescription revenue growth was fueled by growing omnichannel offerings.

Digital Commerce 360 estimates that CVS online sales were about $989,000,000 in 2022, making up about 10% of total sales.

E.l.f. Cosmetics Inc. (No. 951)

Beauty brand E.l.f. Cosmetics reported net sales growth of 76% in its fiscal Q1 ended June 30, to $216.3 million. The retailer noted it was the 18th consecutive quarter of net sales growth and market share gains. 

Online sales grew by “triple digits,” the retailer said without revealing more. Digital penetration reached 18%, compared with 14% in 2022. The retailer has “really good strength” in online sales through its own website, Amazon, and other retail beauty websites that carry its products, it said. 

Ethan Allen Global Inc. (No. 525)

Ethan Allen reported consolidated net sales declined 18.4% to $187.4 million in the fiscal fourth quarter ended June 30. Retail and wholesale net sales declined at nearly the same rate, 17.2% and 16.7%, respectively. The home furnishing retailer did not share specifics on digital sales.

Hasbro (No. 556)

Hasbro reported revenue declined 10% in its second quarter ended July 2, 2023 to $1.2 billion. Franchise brands, including Peppa Pig, Transformers, and Play-Doh saw smaller revenue declines at 5% than other brands the retailer sells.

Digital sales were a high point for the retailer, with digital gaming revenue up 33%. That section of the business is performing ahead of expectations, Hasbro said. 

Petmed Express Inc. (No. 351)

Petmed Express reported net sales for the quarter ended June 30 grew 11.5% to $78.2 million.

The retailer said it also grew new customers 25% year over year. 49% of revenue came from auto-ship subscriptions and memberships, CEO Matt Hulett said in a written statement. 

Revolve Group Inc. (No. 87)

Revolve announced net sales declined 6% to $273.7 million in the quarter ended June 30. The apparel retailer also reported that net income declined 55% to $7.3 million due to “the decline in net sales, reduction in gross profit year over year and continued pressure on certain operating expenses.”

The return rate is also higher than expected, Revolve said, leading to higher costs. The retailer did not share specific information on ecommerce sales.

Steve Madden Ltd. (No.260)

Steve Madden reported revenue declined 16.8% to $535 million in the quarter ended June 30. Wholesale revenue declined 20.8%, while DTC revenue was down 5.4% to $128.2 million.

Ecommerce sales outperformed brick and mortar sales, the shoe retailer said in a call with investors. 

Wayfair Inc. (No. 10)

Wayfair reported net revenue declined 3.4% to $3.2 billion in its second quarter ended June 30. Losses came in at $46 million, well below investor expectations of $74 million. Read more here. 

So what does it mean?

• Omnichannel is still alive and well as a retail strategy, despite predictions that fulfillment methods like curbside pickup and buy online, pick up in store (BOPIS) were pandemic-era trends. Executives at Boot Barn, CVS and The Container Store all called out omnichannel offerings as areas of strength.
• Online competition is impacting nearly everyone. Columbia Sportswear specifically cited a more crowded online marketplace making it more difficult to reach consumers. That’s not as much of a problem for retailers like E.l.f., which has a distinct offering to consumers with its budget products, even in the crowded beauty space. 

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The consumer package goods giant best known for its toothpaste has close to 1,000 online product detail pages when factoring in its dozens of SKUs across the 10-plus retailers where it sells its products, including Amazon.com, Walmart.com, Thrivemarket.com, Instacart.com, Albertsons’ brands and more, says Todd Hassenfelt, global digital commerce director, strategy and execution at Colgate-Palmolive.

Ensuring those product detail pages are up to date, and resonating with the target audience on each of those brands’ sites, takes a team of people. That’s why Colgate is piloting a new generative artificial intelligence tool to help optimize those pages.

Colgate already uses digital analytics vendor Profitero Inc.’s digital shelf technology to manage these pages. Starting in July and through September, Profitero is piloting a generative AI tool called “Ask Profitero” with eight of its existing clients, including Colgate.

How Colgate plans to use the generative AI bot

The tool allows brands to ask the generative AI bot questions about specific details on any product detail page on a merchant’s site. For example, Colgate could want to improve the conversion rate of its mouthwash on the Walmart.com site. It could ask the bot, “What is the optimal title length to drive sales in this category?” The bot could then answer with the ideal length of characters for the specific category on that merchant’s website.

The bot could even recommend new titles for products and explain why it tweaked the language.

Todd Hassenfelt, global digital commerce director, strategy and execution at Colgate-Palmolive

Profitero derives these insights based on how highly products rank in search results on a retailer’s website when a shopper inputs certain keywords, says Bryan Wiener, CEO at Profitero.

This data is publicly available but takes time to analyze. The vendor also has 4,000 brands globally that use its software (one account can have multiple brands, Profitero says) that also helps improve its data models.

Retrieving insights faster

The AI tool can also just be a quicker way to retrieve insights from Profitero’s software. For example, a Colgate employee could log in and find these insights, or it could just ask the chatbot, “How are my sales on total whitening toothpaste in mint across all brands?” Or retrieve out-of-stock data and find out how often a product is out of stock at a certain retailer and for how many days over the course of 30 days, Hassenfelt says.

Another example of how Colgate plans to use the tool is to easily summarize the sentiment of ratings and reviews. Instead of finding the information and doing a manual analysis, Colgate could ask “what is the sentiment of reviews for this product?” If many of the highest-ranking reviews highlight a certain attribute, such as good flavor, Colgate can then update the product detail page with this information.

Effective product detail pages are not only important for online sales. They’re important for in-store sales as well, Hassenfelt says. Shoppers frequently check their phones while shopping in stores, and they might look up additional details on product detail pages. Plus, retailers may pull information from a product detail page for any in-store signage or product promotions. Ensuring this information is up to date with the information a retailer’s audience cares most about could help influence even more sales, Hassenfelt says.

Goals for the Ask Profitero AI tool

Hassenfelt expects this tool to save its teams weeks or months of time in manual analysis. There is a huge time component to creating content and content variations for one SKU in multiple places, he says. Then, if Colgate wants to change something and then see how that improves the conversion rate, it could take months of waiting to implement and analyze something, he says.

Despite the time savings, Colgate doesn’t anticipate changing any headcount.

“It will allow our teams to make faster decisions,” Hassenfelt says.

Another goal for using the tool is an increase in conversion rate, Hassenfelt says. A one percentage point increase in conversion (for example going to a 3% conversion from a 2% conversion) could equate to $1,000 to $10,000 in dollars for each product, Hassenfelt says. An increase like this would be possible if it received actionable insights out of the tool, he says.

In the short-term, overall the goal is to, “make it simpler and faster for our teams to take the analysis from our products to then actionability, going to act on those insights, specifically for conversion rate and improving sales,” Hassenfelt says.

“Long term, does this give our teams a source really to take information in a more timely way, in a way to consolidate data and find the trends and find the information,” he adds.

Colgate has about 10-20 employees from its U.S. team working on the pilot. Plus, the brand added another seven to 10 employees from various teams across its global digital organization including marketing, branding, customer service and logistics to make a cross-functional team.

Profitero builds AI tool

Profitero built this tool in house based on artificial intelligence consortium Open AI’s language model, Wiener says. After OpenAI became available to companies, Profitero developed its tool in about 60 days, he says.

Bryan Wiener, CEO, Profitero

“We immediately saw the opportunity to make our clients’ lives easier by providing faster and better insights. The question was how to implement it,” Weiner says.

Profitero debuted the tool at a user conference in June and began working with clients on the private beta then. It was looking for the right clients to work with Profitero to train and tweak the tool to ensure it delivers valuable insights, such as, “Yes, I agree with these insights,” or “These answers are not working,” Wiener says.

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“A third of those are pickup orders — and that’s not including photo,” Lindsay Mikos, senior director, retail omnichannel, Walgreens told Digital Commerce 360.

COVID-19 accelerated the need for safe and secure shopping solutions as people weren’t going into Walgreens stores, she said. While that urgency has subsided, consumers still want the ability to order online without having to go into a physical store or want the ability to order what they need online and pick it up quickly and go, or place an order for delivery, she said. In 2022, Walgreens completed 35 million pickup orders and one-hour deliveries from its stores.

Lindsay Mikos, senior director, retail omnichannel, Walgreens.

Mikos sat down with Digital Commerce 360 at the Retail Innovation Conference & Expo to delve deeper into how consumer behavior has carried over from the pandemic, prompting the beauty and health retail chain to continue offering different ways to serve customers. That includes delivering orders to customers within a certain distance from a Walgreens store. Nearly 80% of its U.S. consumers live within five miles of a Walgreens store, according to the retailer.

Walgreens offers 30-minute pickups, as well as drive-thru and curbside pickup options. The retailer launched its “one-hour delivery or it’s free” guarantee in May 2023.

More online shoppers — 68% in 2023 versus 51% in 2022 and 58% in 2021 — said they want the ability to check online for product availability at a nearby store and for buy online, pickup in store (BOPIS), according to Digital Commerce 360 and Bizrate Insights omnichannel survey of 1,069 online shoppers in February 2023. Half of respondents ordered online and picked up a product in store in 2023, compared with 37% in 2022 and 43% in 2021.

Omnichannel is a key driver of overall digital growth

“It really goes back to having a variety of options to meet the customer where they are at that point in their lives,” Mikos said of the retailer’s Walgreens pickups strategy.

Demand for convenience is ongoing.

“We’re continuing to see it; it’s double digit growth,” Mikos said. “It’s a key driver of our overall digital growth.”

Originally, the retail chain was concerned that digital orders might “cannibalize the store,” she said. “That’s always been the biggest fear, but it doesn’t. It actually drives incremental value. They spend more money with us. We’re able to engage with them more often and give them more relevant offers.”

Walgreens customers can sign up for the retailer’s loyalty program. When they check out using their loyalty rewards either in-store or online, Walgreens tracks order history. As a result, the retailer can send later offers and discounts for items that tie into a customer’s buying history.

“And we can say we’ll have it ready for you to pick up in 30 minutes — it’s that type of replenishment we can tap into,” Mikos said.

Tracking inventory in real time

Walgreens’ fill rate is over 90%, Mikos said.

“It’s not 100%, so we’re thinking about how to have the right inventory to meet demand,” she said.

The retail chain is working to improve speed. A good example is when COVID-19 test kits were in high demand, she said.

“We couldn’t keep them on the shelves, and it was critical to have the right technology systems to keep an accurate view of inventory,” Mikos said. “We’ve made technology investments over the last year to have that near-real-time inventory.”

It’s a tricky process as in-store employees fulfill online orders by picking items from the store, Mikos said. To do this, they refer to handheld devices with software that shows employees what should be on the shelves. The retailer uses communications software vendor Theatro.

“The item might not be on the [main] shelf, but there might be a secondary spot in the store where the item is,” Mikos said. “It might be on an end stand or in the back room. But the software tells them to check other spots before saying we don’t have something.”

Walgreens’ delivery strategy

Walgreens partnered with third-party couriers such as DoorDash and Uber to offer real-time tracking and SMS notifications.

“It’s like when you order food from DoorDash or see which step of the process your pizza order is in a pizza tracker,” Mikos said. “If you have cold items like ice cream, you want to make sure it doesn’t melt on the front porch.”

Walgreens also offers customers the ability to schedule when deliveries are made, like from grocers such as Whole Foods and Kroger.

Currently, Walgreens does not charge customers service fees but does require a minimum order of $10.

“The reason for the [order minimum] is to maintain profitability. A team member is going to need to stop doing other tasks to go and pick that order,” Mikos said.

Walgreens Boots Alliance Inc. ranks No. 19 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American online retailers.

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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.

2023 Top 1000 Report

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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