“We needed to have a lot more targeted conversations with each consumer throughout their lifetime with Bark. And we needed to do that efficiently,” he says.

Bark started its business in 2012 selling a monthly subscription BarkBox containing two dog toys and two dog treats in each shipment. The dog toy and dog food subscription retailer expanded its product offerings through the years, including offering dental products in 2020.

Ed Walloga, vice president, lifecycle marketing and ecommerce, Bark

To figure out how best to market to consumers to increase upselling and cross selling, Bark turned to Simon Data, a software tool that allowed the retailer to run comparison tests and see how marketing campaigns perform.

Retaining and building up the lifetime value of its customers is important to the subscription retailer.

Data shows 5.6% of retailers in Digital Commerce 360’s Top 1000 retailers used a subscription model in 2022. That’s down from 6.5% in 2021. That percentage differs depending on the category. 36.1% of Top 1000 food and beverage retailers had a subscription model in 2022. That is up from 27.8% a year earlier. 28% of health and beauty retailers had subscriptions in 2022, and 10.1% of specialty retailers like Bark.

During its fiscal fourth quarter 2022, Bark’s average order value increased $2. Upselling and cross selling accounted for the boost, Walloga says.

“And a huge amount of that was the increase in improving [conversion for] dental Bark Bright,” he says. Bark Bright are products like toothpaste and dental chew treats for dog teeth care.

Bark tests marketing emails for Durable Dental Chew products

In January 2023, Bark tested two marketing email campaigns for its Durable Dental Chew product launch, which is part of Bark Bright.

Bark sent the emails to its regular BarkBox subscribers. These subscribers received plush toys with treats as part of their core subscription.

The other type of subscribers are Super Chewers. These subscribers receive more durable toys in addition to treats as part of their core subscription.

The A/B split tests involved “several hundred thousand in each pool, and the A/B test was an even 50/50 split for each pool,” according to the company.

A/B testing, also known as split testing, allows Bark to test a percentage of its subscribers with two email campaigns to see which results in more opens or clicks. Bark can test different images or language and compare which ones consumers responded to more favorably.

The results showed that BarkBox subscribers were more responsive to the standalone announcement. Conversion rate was 16% higher for those BarkBox subscribers.

Meanwhile, Super Chewer subscribers were more responsive to marketing that highlighted the product collection. Conversion rate for these consumers was 30% higher.

“This was a surprising result, but this is why we test these things,” Walloga says.

Bark believes that because Super Chewer is a more specialized product, consumers liked a side-by-side comparison of original and durable products.

Bark subscribers opt in for SMS texts

There are 2 million BarkBox subscribers receiving a box every month, Walloga says. BarkBox sends subscribers products they can add onto each box. That program includes sending push notifications via SMS, he says.

“We’ve got a very aggressive push notification,” Walloga says.

SMS is an opportunity to “have worthwhile conversations with active and engaged customers,” he says. “That’s where you can apply SMS, and it doesn’t feel like a promotional campaign [to the consumer],” he says.

Bark used Simon Data to launch SMS in July 2022. It currently has 175,000 subscribers opted in to receive text messages. The opted-in base is growing by an average of 35% each quarter, according to Bark.

When customers respond to Bark SMS texts, a Bark employee responds, Walloga says.

“Our customer care team can pick up the [SMS] conversation and respond directly,” he says.

SMS subscribers receive a mix of product availability announcements. These include alerts about exclusive treats, toppers and toys they can add to their subscription box before it ships. SMS recipients also receive order status updates like shipment confirmations and account updates. They also receive marketing messages for “seasonal moments” like Cinco de Mayo or celebrating Star Wars on May 4th.

One of the most successful SMS texts reminds subscribers they have 24 hours left to add to the next box, he says.

Also, Bark is working on using its app to engage with consumers.

“We want to test pushing notifications directly to the Bark app,” Walloga says. According to Walloga, “a vast majority of our users are engaging on a mobile phone or the Bark app,” he says.

Bark adjusts email marketing strategy to retain subscribers

Bark subscribers typically commit to six- or 12-month subscription periods, Walloga says. The retailer reviews data to identify which customers are most at risk of leaving, he says.

“We’ve developed [email] outreach to those customers to remind them of the value that they saw as a Bark user,” he says.

This includes noting purchase history and favorites, he says. In addition to a personalized message, the retailer also sometimes includes incentives. This has allowed Bark to keep subscription renewal rates strong, Walloga says.

Email is still at the core of Bark’s digital marketing tools, Walloga says.

“Email is one of the fastest ways to test and iterate, and it gives you a little more real estate to have a conversation with a consumer,” he says. “But by no stretch is it the only channel we use.”

Personalized communications increases loyalty, Walloga says. Some of the tests Bark tried focused on loyalty, reminding customers of the value Bark brings them.

“If you have a very targeted, personalized conversation with the consumer or subscriber, they will respond,” he says.

Bark is No. 174 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American online retailers by web sales.

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Chewy, which exclusively sells products online, reported net sales were up 14.7% year over year to $2.78 billion in the fiscal first quarter ended April 30, 2023. 

Petco Health and Wellness Company Inc., which operates both in stores and online, reported comparable sales grew 5.1% year over year for its fiscal first quarter ended April 29, 2023. Net revenue grew 5.4% over the same period to $1.56 billion.

Chewy ranks No. 13 in the Top 1000, and Petco ranks No. 92. The database is Digital Commerce 360’s ranking of the largest online retailers by web sales.

Chewy customers aren’t trading down

Chewy CEO Sumit Singh told investors that pet owners remain willing to spend on premium products. 

“Our customers continue to show durability and product loyalty in these non-discretionary categories with no discernible trade down behavior,” he said, referring to the consumable and health categories. Those two categories made up 84% of net sales in the first quarter. 

While customer acquisition slowed, net sales per active customer grew 15% year over year to $500. This is largely driven by autoship, Chewy’s subscription program, Singh said. Autoship drives nearly 75% of sales, and “recurring and predictable revenue and long-term customer loyalty,” Singh said.

Petco grew online

Petco’s online orders showed “double-digit sales growth,” CEO Ron Coughlin told investors. Petco did not share what percentage of revenue is made up of digital sales.

Growth was driven by returning customers, pharmacy, and same-day delivery. Same-day-delivery orders doubled year over year, “underscoring the significant competitive moat same-day delivery offers relative to our online-only competitors,” Coughlin said.

Both brands emphasize health

Petco has vet clinics in some stores, and it is one of the 10 largest veterinary providers in the U.S., Coughlin said. In Q1 this year, Petco clinics saw 20% more pets than Q1 last year. The pet retailer also operates more than 1,300 mobile pet clinics that serve lower-income customers.

Health care is important for Chewy, too, though it doesn’t operate any clinics. In the quarter, it added Lemonade pet insurance to its offerings of wellness plans. Chewy also operates the largest pet pharmacy in North America, and all pharmacy products are eligible for autoship, Singh said.

Both retailers mentioned flea and tick preventatives as a growing part of business.

“A healthy start to the flea and tick season further supported performance in our health care business,” Singh told investors. Petco marketed flea and tick medications when the weather warmed in the U.S. northwest recently, and sales “performed strongly,” Coughlin said.

For the first quarter ended April 30, 2023, Chewy reported:

• Net sales grew 14.7% year over year to $2.78 billion.
• Net income grew 20% to $22 million.
• Net sales per active customer increased 15% to over $500.

For the first quarter ended April 29, Petco reported:

• Net revenue grew 5.4% to $1.56 billion.
• Net loss was $1.9 billion, a decrease of $26.6 million from the year-ago period with net income of $24.7 million.
• Average basket grew 5% year over year.
• Active customers remained flat at 25 million.

Check back for more earnings reports.

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Chewy’s sales for its fiscal fourth quarter ended Jan. 29 were up 13.4% over the previous year to $2.71 billion. For Petco’s fiscal quarter ended Jan. 28, it reported sales were up 4% to $1.58 billion. 

Chewy ranks No. 14 and Petco ranks No. 96 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American ecommerce retailers.

Autoship, food, and health are key for Chewy

Consumable and health care products were “pillars of strength” for Chewy in the fourth quarter, CEO Sumit Singh told investors. Sales of consumable and health products were up 18.5% over the year-ago period in the fourth quarter, and made up 82% of net sales. Their sales grew enough to offset declines in more discretionary categories, including dog beds and toys.

Food and health products are frequently sold as recurring shipments, which now make up the majority of Chewy’s sales. Autoship sales grew 18% in the fourth quarter, and made up nearly three-quarters (73%) of total sales in the quarter. $1.98 billion of sales in the fourth quarter came from autoship products, chief financial officer Mario Marte said.

Petco leverages its physical presence

Unlike Chewy, Petco has more than 1,500 North America stores in addition to ecommerce, and it is using them to its advantage.

More than 90% of customers who make online purchases through Petco choose same-day delivery or buy online, pick up in store (BOPIS) when given the option, CEO Ron Coughlin told investors. Petco uses its locations as “micro distribution centers” to get those products to customers quickly and with lower fulfillment costs than they’d otherwise require, Coughlin said. Petco did not share what percentage of total sales were digital.

The retailer also attracts customers to its stores with veterinarians and groomers. Petco hired 1,100 additional veterinarians in 2022, with a vet presence in 90% of stores, the company said. This is a valuable investment, the company said, because customers who use vet services are worth 2.3 times the lifetime spending of customers who do not.

Services, including vet and grooming, were up 15% in the quarter.

The pet market keeps growing

The pet care industry in the U.S. is massive, and both Chewy and Petco have plans to keep growing sales as people remain willing to spend money on their pets.

Singh told investors that the U.S. pet industry is valued at $130 billion, and that it continues to grow even during economic downturns. Morgan Stanley predicts the industry will be worth $230 billion by 2030. Pet care retailers in the Top 1000 collectively grew web sales 20.1% in 2021, reaching $12.34 billion.

Chewy earnings summary

For the fiscal fourth quarter ended Jan. 29, Chewy reported:

• Net sales grew 13.4% to $2.71 billion.
• Net income was $6.1 million, up from a $63.6 million loss in the year-ago period.
• Net sales per active customer grew 15% from $430 to “nearly” $500.

For the fiscal year ended Jan. 29, Chewy reported:

• Net sales grew 13.6% to $10.1 billion.
• Net income was $49.2 million, up from a $73,817 loss in 2021.
• Total active customers stayed steady at around 20.4 million.

Petco earnings summary

For the fiscal fourth quarter ended Jan. 28, Petco reported:

• Net sales grew 4% to $1.58 billion from $1.51 in the year-ago period.
• Net income increased 12.9% to $32.7 million.
• Active customer base grew by 70,000 to 25 million.
• The perks program launched and added 300,000 members.

For the fiscal year ended Jan. 28, Petco reported:

• Net sales grew 4% to $6.04 billion, from $5.81 billion in 2021.
• Net income was down 44.8% to $90.8 million.
• Veterinarians grew by 40% to 1,100.
• 50 vet hospitals added to total 247.

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

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In a complaint filed with the Justice Department this week, United for Respect urged a probe into three directors who sit on the boards of both PetSmart and Chewy even though the two companies split years ago.

PetSmart is No. 132 and Chewy is No. 14 in the 2022 Digital Commerce 360 Top 1000 database ranking North American web merchants by sales.

Pet products are big business

PetSmart is the biggest pet retailer with about 1,660 stores in North America and controls about 29% of the market, according to Statista. BC Partners bought PetSmart for $8.7 billion in March 2015 in what was then the largest leveraged buyout in retail.

Two years later, PetSmart acquired ecommerce pet products company Chewy, which went public in 2019. BC Partners later split PetSmart and Chewy, though it remains among Chewy’s biggest shareholders.

About one-fifth of all household and pet care products in 2020 were sold online, an amount that is expected to grow to about 30% by 2025, according to Statista. The three largest online retailers U.S. consumers use for pet products are Amazon.com Inc., Walmart Inc. and Chewy. Amazon is No. 1 and Walmart is No. 2 in the Digital Commerce 360 Top 1000 database.

Chewy’s ties to PetSmart

Chewy board chair Raymond Svider — the chairman of private equity firm BC Partners — simultaneously serves on the board of PetSmart along with two other Chewy directors, Michael Chang and Fahim Ahmed. Chang and Ahmed are also partners at the UK private equity firm.

BC Partners wholly owns and controls PetSmart, and owns about 80% of Chewy’s common stock representing 98% of the voting control, an attorney for the companies said, pointing to public filings. That makes the two companies affiliates rather than competitors and likely exempts them from the antitrust law’s prohibition on overlapping directors, an attorney for BC Partners and the companies said.

Corporate boards under scrutiny

Nonprofit United for Respect focuses its labor advocacy efforts on companies backed by private equity. The group helped workers at Toys R Us and Art Van Furniture negotiate with private equity owners KKR & Co. and Thomas H. Lee Partners. More recently, it has set its sights on BC Partners and PetSmart, prodding the company’s public investors about worker conditions.

More than a dozen board directors have stepped down since the Justice Department began an initiative last year focused on so-called interlocking directorates. Federal antitrust law forbids individuals or entities from sitting on the board of directors for two companies that directly compete with one another.

The Justice Department’s first foray saw directors associated with private equity firm Thoma Bravo LLC step down from the boards of two public companies. On March 9, the agency said directors associated with Apollo Global Management Inc. resigned from the board of Sun Country Airlines Holdings Inc. after the Justice Department raised concerns about the private equity firm also holding board seats on rival Atlas Air Worldwide Holdings Inc.

Brookfield Asset Management Inc. also agreed to forgo a board seat with insurer American Equity Investment Life Holding Co. after the agency cited a potential antitrust issue since Brookfield also owns American National Insurance Service Co.

At a conference in Brussels last week, Assistant Attorney General Jonathan Kanter said the Justice Department has 17 active investigations into illegal board overlaps.

Brookfield Asset Management didn’t respond to a request for comment. Apollo declined comment on the Sun Country board resignations.

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92% of Poshmark marketplace members are open to receiving secondhand gifts — but only 33% of people would shop secondhand for their gift-giving needs today, according to the 2022 Poshmark Trend Report: Holiday Edition. Research company Morning Consult conducted a survey based on Poshmark’s 80 million members comparing Sept. 11-18, 2022, with the same period in 2021.

Steven Tristan Young, chief marketing officer, Poshmark

“There is a gap between what we think our friends and family are open to receiving versus what they actually want,” Young said. “A great way to overcome that is to talk about secondhand gifting with loved ones.”

Younger shoppers are more open to secondhand gifts, according to the report. 55% of Gen Z consumers said they are likely to buy secondhand gifts for their friends and loved ones this holiday season.

Consumer perception of gifting pre-owned merchandise is changing. Secondhand merchants are working to make it easier to shop for used products online. Poshmark launched a sale for the first time during the Cyber 5 period, and online consignment store ThredUp debuted a secondhand holiday collection for the first time.

Plus, apparel merchant Patagonia reported record web traffic when it promoted its secondhand collection on Cyber Monday. Browser extension Beni continues to add resale merchants to its client roster as demand for an easier way to search grows. And luxury goods reseller Rebag said shopper demand is booming for hard-to-find brands. But, while resale continues to grow as an online category, a lingering reluctance to gift used merchandise continues.

Resale’s lower price point appeals to a budget-conscious consumer

Currently, buying used is not a top choice for consumers. 9% of survey respondents said they shop secondhand for apparel, accessories or shoes online on sites like Poshmark, ThredUp, The RealReal and others, according to a Digital Commerce 360 and Bizrate Insights survey which compared 1,064 online apparel shoppers in Sept. 2022 and 1,049 respondents in May 2021. That’s up 1 percentage point compared with 2021 when 8% said they shopped for secondhand apparel online.

But the reluctance to buy secondhand is changing, says Liza Amlani, principal and founder of The Merchant Life, a retail consultancy. Consumers are spending but want to stretch their dollar and spend less overall, she says.

“Resale is becoming more of a giftable option due to price point accessibility,” Amlani says.

Consumers are also increasingly interested in sustainable products, especially younger consumers who are already shopping and selling on Poshmark or ThredUp, Amlani says.

43% of shoppers noted sustainability as a deciding factor in what they buy, according to luxury goods resale marketplace The RealReal’s 2022 Luxury Resale Report, which measured data from 28 million of its shoppers between January and June this year compared with the same period in 2021.

Resale is growing in popularity both in the U.S. and worldwide, according to the 2022 ThredUp resale report. ThredUp projects total U.S. secondhand sales, which include resale, traditional thrift and donations, will more than double by 2026, reaching $82 billion, according to the report. The report is based on a survey of 2,500 U.S. consumers in January 2022. Resale alone is expected to reach $51 billion by 2026.

In 2021, resale sales grew 58% year over year, the highest in five years, according to the report.

Secondhand Sunday and secondhand fashion lines

Poshmark launched the event Secondhand Sunday on Nov. 27, 2022, to encourage shoppers to buy secondhand products. This was the Sunday of Thanksgiving weekend. Poshmark created a separate landing page on its website. It included a video, resale statistics, Poshmark seller profiles, and links directing shoppers to resources. A Poshmark Instagram post noted holiday promotional dates, the holiday trend report, and an explanation of how the reselling process works.

Poshmark launched the event Secondhand Sunday on Nov. 27, 2022, to encourage shoppers to buy secondhand products.

Poshmark recorded a 29.7% increase in the number of listings sold for vintage items between Nov. 24-27, 2022, compared with Nov. 25-28, 2021. The number of toy listings increased 50.3% during the same timeframe year over year.

According to Morning Consult data, vintage items, books, home items, jewelry/watches, furniture, and luxury items are top categories consumers are open to receiving as secondhand gifts, Young said. Men are more open to receiving resale electronics, while secondhand shoes are popular among younger shoppers, he said.

Resale for the holidays

While Poshmark does not ask shoppers if something is a gift, Young said the merchant does pay attention to categories that are known for being popular gift items, such as handbags, jewelry and toys.

“When we see notable increases in these ‘gift-friendly’ categories, we attribute some of that to holiday gift shopping,” Young said.

In 2022, handbags and vintage item listings increased 12.2% during the Thanksgiving through Sunday holiday weekend. Used book listings also increased 12.8% year over year, Young said.

ThredUp promoted its holiday Zero Waste Daniel Full Circle collection, which is made entirely of secondhand 1990s-inspired clothing. The resale marketplace featured actress Fran Drescher to bring the “trash-to-treasure” collection, promoting gift-giving on a budget. Prices start at $10. Most items fall into a $20-$60 range and as high as $600 for items like coats. ThredUp did not disclose how the sale performed.

An easier way to search resale

Another way to promote online resale shopping is to make it easier for shoppers to find used products, says Beni CEO and cofounder Sarah Pinner. Demand is growing for startup Beni’s browser plugin, which shows shoppers resale products in real time based on the consumer’s web browser search, she says.

Sarah Pinner, cofounder and CEO, Beni

“I think [the concept of resale] is hitting a bit of a tipping point where there’s less stigma around shopping secondhand for the holidays,” Pinner says.

Currently, approximately 4,000 consumers use Beni to shop for secondhand goods online. The web browser extension is available for desktop Safari and Google Chrome. The plugin is also available for Safari on mobile devices.

If a consumer has the Beni plugin on her web browser and she is looking for a black dress on any apparel site, like Macys.com, Beni will display similar secondhand options at the top of the webpage from more than 30 resale sites. If a shopper clicks on one of the items, she is then redirected to that reseller. Beni earns an undisclosed commission on each sale.

“Our goal is to build [Beni] together with the resale marketplaces that have done a lot of the heavy lifting to get all this amazing inventory online,” Pinner says. “Our goal is to make buying resale as easy as buying new.”

By simplifying the resale product search process, Beni hopes to normalize shopping for secondhand merchandise, Pinner says.

Patagonia joins Beni

In December, Patagonia began its pilot test run with Beni. Beni sells used products from the retailer’s online Worn Wear store.

Asha Agrawal, head of corporate development, Patagonia

“We’re going to see if [selling through Beni] is a way to bring awareness to our reused goods,” says Asha Agrawal, head of corporate development at Patagonia.

The outdoor apparel and goods retailer is looking at different ways to market its secondhand products beyond using the Patagonia brand, such as via the Beni platform, Agrawal says.

But it’s also using the power of its well-established Patagonia brand. Patagonia typically refrains from promoting its brand during the holidays. But on Cyber Monday, Patagonia.com redirected shoppers to the retailer’s resale Worn Wear website. Patagonia offered shoppers a 20% discount on anything purchased through its resale online store.

The event was a success, Agrawal says. Cyber Monday 2022 was the Worn Wear website’s second most popular web traffic day since the Worn Wear online store launched in 2020. In 2020, Patagonia.com shoppers could click on a button located on Patagonia’s main website landing page that led to the Worn Wear store. 2022’s strategy automatically redirected web traffic to Patagonia.com to www.wornwear.patagonia.com.

This year, 70% of all Worn Wear Cyber Monday online sales were from first-time customers, Agrawal says.

Resale is an opportunity to buy hard-to-find products

Shoppers on the hunt for “unicorn” items — sold out, hard-to-find luxury handbags or accessories — can turn to Rebag, a luxury reseller of handbags and accessories. In this case, resale doesn’t always mean reduced price.

Charles Gorra, founder and CEO, Rebag

The reseller prepared for the holidays earlier this year and launched its 2022 gift suite in late October instead of November, said Charles Gorra, founder and CEO of Rebag.

“Given that each item in Rebag’s inventory is unique, and many styles are limited edition, sold out in the primary market or generally difficult to obtain, we typically see shoppers looking to procure gifts early on,” Gorra said, without revealing more.

Rebag’s holiday Gift Suite gives shoppers options

Rebag’s 2022 holiday Gift Suite gives shoppers a range of categories to choose from. This includes “investment pieces” like the Hermes Constance Bag Epsom 24, a used handbag in “great” condition for $15,170. The retail price for the new product was $11,400 in 2022.

Shoppers also have the option to buy and sell in one transaction through Rebag’s Trade program. Rebag sellers can bank the money from sold items to use toward other Rebag purchases.

Shoppers search Rebag for rare items like Telfar-brand handbags. These can cost $200-$320 when purchased new. Certain styles can cost more than $900 on resale sites for coveted styles like the Telfar Round Circle Bag. These bags have an average value retention of 195% because demand outweighs supply, Gorra said. These items appreciate about twice as much as their original retail price because they are in high demand.

“With limited drops, it can be next to impossible to score a Telfar bag on the primary market in the size and color you want,” Gorra said.

While not currently mainstream, resale growth will continue. As more brands launch into resale, consumers will have more opportunities to shop secondhand. Resale merchants hope that by appealing to consumers’ waning budgets and increased interest in sustainability, the stigma associated with secondhand shopping will dissipate and become commonplace.

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By the end of November, the web-only merchant that specializes in personalized gifts is operating at its peak to create 40,000 personalized ornaments and tens of thousands of other personalized stockings, blankets, mugs, cutting boards, champagne flutes and other gifts per day.

Personalization Mall’s 365,000-square-foot facility in Bolingbrook, Ill.

November and December bring in roughly 35-40% of all Personalization Mall’s annual revenue, says Dan Grebel, vice president of operations at PersonalizationMall.com. The rest of the year, the facility has a 10th of the employees — 400 — who can handle the production volume during the 10-month offseason.

Personalization Mall’s history and business model

Personalization Mall launched in 1998 as an online “mall” where consumers could choose from 20 different items to personalize. Today, the brand offers 2,000 unique “blank items” that shoppers can have personalized with one of 14 different methods, such as laser engraving, embroidery, glass printing, 3D printing, sandblasting and others, plus variations within each method. In total, the merchant now offers 40,000 different product designs, with new designs created each year.

New for this year is an agreement with The Elf on The Shelf. Shoppers can personalize apparel for their elves or purchase personalized items with the The Elf on the Shelf image on it.

Vice president of operations Dan Grebel provides a media tour of Personalization Mall’s production facility.

Bed Bath & Beyond acquired Personalization Mall in 2016 for $190 million. In 2020, the web-only merchant again changed hands and 1-800-Flowers.com (No. 53 in the Digital Commerce 360’s Top 1000 database) bought Personalization Mall for $252 million from Bed Bath & Beyond Inc. (No. 31).

1-800-Flowers.com Inc. owns 17 gifting brands, including Harry & David and Cheryl’s Cookies. The Personalization Mall logo and link to its site is included in the banner of brands that runs across each of these merchants’ websites. The parent company is still working on integrating Personalization Mall’s items into its other brands, such as offering a personalized Easter basket with Harry & David goodies instead.

Personalization Mall’s Bolingbrook, Illinois, facility opened in 2019. It includes a second 100,000-square-foot building for administration and warehousing, giving the online retailer 465,000 square feet of space. This is an 86% increase from its previous facilities that totaled 250,000 square feet.

During a media tour, the merchant showcased its facility as it geared up for Black Friday and the 2022 holiday season, and the process a product goes through from purchase to creation to shipping.

How a blank item becomes personalized at Personalization Mall

After a shopper clicks buy on PersonalizationMall.com, that item is placed in a queue for employees to pick at the warehouse. The warehouse runs four major waves of picks a day, in which employees select all the blank products for the most recent orders. It takes about two hours to pick the roughly 40,000 products in each wave, Grebel says. About 10% of orders during the holiday season have some level of rush shipping, Grebel says. Those orders are picked in smaller waves throughout the day to ensure they are shipping to the customer on time.

Personalization Mall’s warehouse is filled with blank items, which are then picked to be personalized in its attached facility.

Once the items are picked, employees bring them to various areas where they are personalized. Some items, like a name on a stocking, can be personalized right away in the embroidery area. On a screen, the employee can see exactly what the customer saw on her computer screen when she approved the order. When the shopper designed the order on her own computer, she was interacting directly with the software that the machines use, Grebel says. This means the employee doesn’t have to reenter any information, as the software already knows the letters it needs.

The associate then lines up the stocking underneath the machine and hits Enter. The machine gives an estimate of how long the embroidery will take, typically four to six minutes for a stocking, and then goes to work.

Each associate is manning three machines at a time — typically two smaller items, like stockings, and a more time-intensive item, such as a skirt for a Christmas tree, which could take 17 minutes. Each employee typically can embroider 12 to 13 items per hour, Grebel says.

Other items are more complex, such as certain ornaments and personalized blankets that require a two-step process with a heat transfer. About 50% of Personalization Mall’s products require a heat transfer, which is when the image the customer selected is first printed and then transferred onto the item using heat.

Personalization Mall has about 40 printers for this process, all housed in a pressurized part of the facility with temperate and humidity control. Those printers continuously spit out images that are applied to the final product within hours.

Quality assurance for each item is paramount at PersonalizationMall.com

Upon creating an item, employees attach a barcode to it and send the product to quality assurance. Employees scan each item, and an employee compares the final product against the proof image the customer approved on its website to ensure it matches.

“When we’re producing items, we understand that peoples’ expectations with gifting in general is usually a little higher than their own standards because they want to wow their recipient,” says Jeff Chun, vice president of marketing at PersonalizationMall.com.

Not only is the employee checking to make sure the personalization is correct, but also that the presentation looks good and the product is suitable to give as a gift. For example, Personalization Mall will remake an item if it is slightly off center or the product is even slightly damaged, Chun says.

“We view it as much healthier as a business to absorb that and just make a new product that will wow them, than to send something that’s subpar to our customers because long-term, we want those customers to come back, and so we want to present them with the best possible option,” he says.

Repeat orders are a key part of its business, representing roughly 50% of sales, Chun says.

Personalization Mall’s 4,000 employees produce 150,000 items per day during the holiday season.

Associates ship completed items within one to two days. In total, it takes about five business days for the product to be created and then landed on the shopper’s door.

If, for some reason, a product is damaged during transit, the merchant will remake the product.

Because each product is unique to each shopper, customer service is an important part of PersonalizationMall.com. The merchant employs 40 agents year-round, and that swells to about 100 agents during the holiday season. During the holiday season, call volume can be about 400% higher than during the summer.

These agents work in the production facility, so they can walk over to where that consumer’s product is if needed to resolve an issue, Chun says. Shoppers call with questions before, during and after placing an order.

Customer service agents require more training compared with seasonal warehouse workers, Chun says. And so Personalization Mall hires agents in the summer to start training for the holiday season, whereas it onboards the bulk of its seasonal workers in November.

Chun says finding labor has not been an issue for the retailer this year, unlike in 2021, when it was harder to attract good-quality candidates, he says.

2022 holiday season goals for Personalization Mall

With surging sales during 2020 and 2021, Personalization Mall is looking to match 2021’s holiday sales figures for the 2022 season, Chun says.

“The last two years have been exceptional for us,” Chun says. “We’ve had record demand and we’re seeing good engagement with the consumer right now. Our expectation is to be on par with last year.”

PersonalizationMall.com’s online sales grew more than 50% in its 2021 fiscal second quarter ended Dec. 27, 2020, which includes holiday sales during the first year of the pandemic. Plus, it grew sales 4% in its 2022 fiscal second quarter ended Dec. 26, 2021.

Chun says even though the 2022 shopper is dealing with inflation and is being more careful with dollars, the retailer still expects a strong holiday season.

“Even when the customer is a little bit more selective with how they are spending their dollar, personalization is a way where you don’t have to spend a lot to say a lot,” Chun says.

Overall, Chun predicts the sales pattern of the holiday season will look more like pre-pandemic 2019, unlike 2020 and 2021, when shoppers started purchasing much earlier in the season to ensure they could find the items they wanted at a time when supply chain issues prevented retailers from getting all the merchandise they ordered.

While some retailers started promoting the holidays before Halloween, and many released promotions and marketing materials during Amazon’s Early Access Sale Oct. 12-13, Personalization Mall did not see any impact or notable pull forward of holiday sales because of this event, Chun says.

How Personalization Mall views Amazon and its competitors

Plus, as a maker of personalized goods, Personalization Mall is one of the few merchants that doesn’t count the web’s largest merchant — Amazon.com Inc. — as a direct competitor, Chun says.

“Fortunately, personalization is a very specialized industry and so a lot of the big retailers can’t do it and they don’t want to, necessarily, and that’s where our expertise is. That’s where our strengths lie and it’s given us an advantage that we’ve been able to stand out among some of these well-known retailers,” Chun says.

Amazon has not done personalization on a major scale that the retailer is aware of, Chun says.

“We’ve been fortunate to be somewhat insulated from that effect,” he says. “It’s a great boon for the consumer to have a lot of choice in digital shopping, but for retailers, it puts pressure on the retailer for how they can differentiate themselves. But being in personalization, we’ve stood out.”

The retailer does, however, have a number of online competitors that also offer personalized products. They include Shutterfly Inc. and Walgreen Co., which offers personalized stationery and home décor products. Chun says Personalization Mall stands out from them with its large assortment and 14 different ways to personalize products.

Within the Digital Commerce 360 rankings of top online retailers, 260 merchants offer product customization in some way, such as engravings on jewelry, a specific color combination on sneakers or tailored specifications on furniture. But, when looking at retailers that specialized in this area, only six Top 1000 retailers are in the custom merchandise subcategory and only five retailers are in the greeting card category that also offer a number personalized products.

These 11 merchants lag behind the larger Top 1000 merchants, with a collective five-year compound annual growth rate of 8.9% compared with 22.4% for the larger Top 1000. But for 2022, Digital Commerce 360 projects this group to grow 11.5% year over year compared with a projected collective growth of the Top 1000 at 4.2% year over year.

The final few weeks of year are paramount for Personalization Mall. Cyber Monday is the merchant’s top day but its facility will continue to operate all day and night until the final few days of the season.

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Something Borrowed Blooms’ ecommerce business sells rental silk floral bouquets for the occasion. Customers use the flowers and mail them back. And the company is busier than ever, says Lauren Bercier, co-founder and CEO.

Costs are on the rise no matter what industry. The wedding sector is no different. The average wedding cost $27,063 in 2021 and is on track to reach $27,805 in 2022, according to trade group the Wedding Report.

According to Digital Commerce 360 research, the Top 2000 retailers grew overall web sales 15.7% in 2021. Comparatively, retailers that sell only or mostly wedding goods grew 32.9%.

Something Borrowed Blooms has more than 20,000 unique items in its inventory ready to rent. That includes bouquets, garlands, lanterns, candle sticks, boutonnieres, corsages and other products, Bercier says. Flowers are made from silk produced overseas with other raw materials sourced from U.S.-based wholesalers, Bercier says. Most of the products are manufactured overseas.

Something Borrowed Blooms grew 90% in 2021 year over year.

“This year, we’re on track to grow 120% year over year,” Bercier says.

Something Borrowed Blooms expands online business

After six and a half years, Bercier says the company has managed to grow, even during the pandemic.

“During the height of the pandemic, we were able to grow our overall business 35%, which is not our normal growth rate,” she says. “The majority of our business is online.”

Bercier did not specify how much of its business is online but noted that the company provides wedding retailers with sample bouquets to carry at stores.

“It’s used as a closing tool once a bride has chosen a dress,” Bercier says. Each bouquet has a QR code that leads the shopper to the website.

“All of our transactions are online,” she says. “But sometimes a bride finds us through a physical retailer.”

Blended and unblended average order values (AOV) are different. Blended includes preview packs. Brides can order a sample bouquet, and samples with delivery are $40. The website offers photos of each design. Currently, AOV for blended orders is about $350. Orders without a preview pack included are about $600, Bercier says.

“But we’ve seen that $600 amount increase in the last 18 months,” Bercier says. “Our AOV has increased about 20% compared to 2021.”

Something Borrowed Blooms’ conversion rate is about 1%. Its $600 AOV is lower than the average cost of wedding flowers in the U.S., which is approximately $1,500, according to WeddingWire.com. WeddingWire is a marketplace that offers couples options for local wedding professionals and vendors.

Technology helps improve the customer experience

As the company’s popularity grew, Bercier says it became a priority to invest in an easy customer portal with a login and access to orders. Something Borrowed Blooms upgraded its website in the summer of 2021. Since then, customers can sign in into the website to view their orders. Over several months, Something Borrowed Blooms’ IT department developed customer-friendly website capabilities and ongoing bug fixes and upgrades.

“We don’t have an IT development budget of $15,000 to $20,000 a month,” Bercier says. “We combined our efforts with other website upgrades and bug fixes.”

The retailer recommends that couples dedicate 8% to 10% of their budgets to florals. Something Borrowed Blooms charges a 50% deposit to hold a customer’s orders. Customers can also adjust their order and edit as plans change, which is particularly useful as COVID-19 lingers on and plans change.

“We know brides tend to change their minds and we want to give them that flexibility to do so online,” she says. “When you compare to traditional vendors where you have to call or email or there might be a fee, it is convenient.”

There are no blackout dates or other restrictions to changing an existing order, she says. On average, customers place orders three to four months in advance.

“Some might go as far ahead as 12 to 18 months,” Bercier says.

Flowers with sustainability in mind

Sustainability is appealing to shoppers, Bercier says. Plus, data from The Knot shows that one in five couples throwing a personalized affair includes sustainable elements. 70% of couples say they did/will put some or significant effort into incorporating sustainable or eco-friendly options into their wedding. Using secondhand décor/upcycled items, minimizing food waste, and avoiding one-time use products are the most popular decisions, according to the survey, which included more than 15,000 couples who got married in 2021.

“Fresh flowers used once end up in a landfill. Our bouquets are used on average about 26 times per year,” Bercier says. “But we have some products on the shelf that have been in rotation for several years.

“When you compare it to fresh flowers sourced from all over the world and shipped via refrigerated containers, it’s an energy-intensive shipping method,” Bercier continues.

About 85% of the world’s source of fresh-cut flowers come from The Netherlands, Ecuador, Kenya, Ethiopia and Colombia, according to Worlds Top Exports research. In the U.S., 75% of flowers are imported. Flowers can be transported up to 6,000 miles in refrigerated airplane holds. Emissions are problematic, but so are the use of pesticides, herbicides and fertilizers that can pollute groundwater and poison pollinators.

Consider packaging

Something Borrowed Blooms also stores its silk flowers in Sustainable Forestry Initiative (SFI) packaging. Retailers must adhere to certification standards and be able to track the source of raw materials, including inventory control, employee training, reporting, and invoicing, according to SFI. Foam cushions the flowers during shipping. The company reuses the foam, “forever, unless they get really damaged,” she says. “We never throw the foam inserts away.”

“It is important to us to continue to look at how to expand ways we can be more sustainable,” she says. “We understand that we need to be sincere. We make sure our customers can see the SFI stamp on our boxes so that people know and can feel good about making that choice.”

That choice is more expensive, Bercier says.

“It’s about 30% more expensive than a regular non-certified box,” she says. “The SFI-certified box is beautifully designed. That adds to the customer experience when they open it at home.”

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Digital Commerce 360 already covered Fanatics Inc.’s (No. 36) acquisition of Topps, but since then, retailers have made deals to expand into new territories, add experiential services and join larger supply chains.

Details about the other five retail acquisitions are below:

• Floral retailer 1-800-Flowers.com Inc. (No. 67) acquired Alice’s Table on Jan. 11. Alice’s Table provides floral arranging events to the public or to private audiences. Prior to the COVID-19 pandemic, Alice’s Table offered in-person events, but it has since shifted to be completely digital. For example, it now live streams its workshops daily. Alice’s Table first partnered with 1-800-Flowers.com and its subsidiary Harry & David in 2020, letting customers order everything needed for a workshop from the company’s stores. The acquisition will allow 1-800-Flowers.com to tie more of its products and brands into the live streaming workshops provided by Alice’s Table. Terms of the deal were not disclosed.
• Also on Jan. 11, outdoor equipment retailer Evo (No. 462) announced the acquisition of ski and snowboard retailer Rhythm Japan and winter wear brand Oyuki in a bid to increase penetration into Asia. Rhythm adds to Evo’s recent move into the equipment rental business, which Rhythm has long offered. Rhythm’s ecommerce team will also build up sites for expansion into other areas of Asia. Both Rhythm and Oyuki will continue to operate as standalone brands with their existing management teams. Terms of the deal were not disclosed.
• Golf club fitter Club Champion acquired Canadian fitter and golf equipment seller Tour Experience Golf (No. 1623), also known as TXG, in another deal announced Jan. 11. The acquisition gives Club Champion access to the Canadian market. Club Champion’s business is built mainly around its custom-crafted clubs, but TXG brings some ecommerce options to the table with an online storefront for golfing accessories. Both brands also operate on various social channels, particularly focused on video content to promote and educate clients. Terms of the deal were not disclosed.
• Pet product supplier Worldwise acquired Furhaven Pet Products (No. 1821), again announced on Jan. 11. Furhaven sells bedding, travel supplies, apparel and other pet goods directly on its ecommerce site. Worldwise owns brands sold wholesale to retailers, including SmartyKat, TrustyPup and Petlinks. Furhaven sells its own designs, so Worldwise won’t be adding any outside brands to its lineup, but this is its first foray into direct ecommerce. Worldwise is owned by private equity investment fund A&M Capital Partners. Terms of the deal were not disclosed.
• On Jan. 14, Amazon-focused brand aggregator Thrasio announced its acquisition of India’s Livelong Online. This is the first move into India for Thrasio, which owns more than 200 brands with a focus on Amazon-based businesses. Livelong owns a variety of Indian brands selling on Flipkart, Walmart and Amazon, but it does not disclose the number of brands it operates. As part of the deal, Thrasio plans to spend $500 million to acquire new Indian brands. Thrasio has raised more than $3.4 billion to date. The exact terms of the deal were not disclosed.

In vendor acquisition news:

• Ecommerce technology vendor OSF Digital acquired commerce consultant FitForCommerce on Jan. 12. The acquisition positions FitForCommerce as the commerce strategy consulting arm of OSF Digital, helping clients use OSF’s various ecommerce tools. Terms of the deal were not disclosed.
• Virtual shopping vendor Salesfloor acquired personalization vendor Automat on Jan. 13. Salesfloor, which connects shoppers with in-store employees via text, live video chats and email, will integrate Automat’s artificially intelligent personalization offerings into its platform. Automat’s recommendations, conversational AI and post-purchase personalization will augment the real people using Salesfloor in stores to help retailers scale virtual visits while minimizing strain on their existing in-store employee base. Terms of the deal were not disclosed.
• Enterprise resource management firm Nextworld acquired inventory management vendor Cloud Inventory on Jan. 13. Nextworld will add Cloud Inventory’s tools to its suite of enterprise applications, natively integrating inventory visibility into other tools for more visibility into spending, revenue estimates and long-term planning. Terms of the deal were not disclosed.
• Ecommerce fraud protection vendor ClearSale acquired software consultancy Beta Learning for $7 million on Jan. 19. More than 100 employees at Beta Learning will join the ClearSale team, helping the fraud preventer continue to scale its business after its 2021 IPO. ClearSale has been a Beta Learning customer since 2019.

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