And whereas UrbanStems typically sells five times more than a usual week in the week leading up to Valentine’s Day, it sells 10 times more than a usual week leading up to Mother’s Day, she said. Moreover, conversion for UrbanStems Mother’s Day sales increased nearly 50% compared with the retailer’s average conversion, she said, without revealing specific figures.

The UrbanStems homepage, captured Friday, May 12, shows a Mother’s Day promotion of up to 30% off for double bouquets.

UrbanStems Mother’s Day sales

The retailer had its best revenue day ever on May 11, the Thursday leading up to Mother’s Day, Hudson said, without revealing a dollar amount. That coincided with its highest site traffic on the same day. Hudson said the retailer has yet to determine if this was its best Mother’s Day period to date, “but most likely. We are still figuring this out due to refunds and redeliveries.”

UrbanStems site traffic in the week leading up to Mother’s Day increased more than 400% compared with non-holiday weeks. Its average order value also increased more than $10 during the sales period.

“Typically we’ll see a spike,” Hudson said. At least for Mother’s Day, people are more likely to do gift sets, which are more expensive with us, or to do add-ons.”

That led Hudson and her team to do A/B tests to determine whether offering add-ons at checkout boosted AOV. She said the retailer did not see a difference in having add-ons appear during checkout, so going into Mother’s Day, it removed the add-on upsell opportunity to improve site speed.

“What we found was that when the add-ons were being shown in checkout, it would cause the site to load a little slower because it was having to call to see what add-ons were in inventory,” Hudson said. “So we removed that, and even then, some people were choosing add-ons before they got to checkout.”

A/B testing

The overall boost in site traffic made Hudson realize she could squeeze in some last-minute testing to optimize landing pages.

“So many people were coming to the site that we could get a result we knew we were 100% confident in — in half the time we normally would,” Hudson said.

On May 11, just three days before Mother’s Day, UrbanStems tested versions of its landing pages from social media with and without customer reviews. But when the retailer removed reviews, it saw conversions decrease 25%, Hudson said.

From there, Hudson said, UrbanStems better understood how much its customers care about reviews.

“They want to see how the actual product arrives,” she said.

Optimizing social media and digital marketing with APIs

UrbanStems also runs design feature experiments using web design vendor Zmags’ Fastr Frontend interface, which connects to the platform via an application programming interface (API).

About 10% of sales during the period came from Zmags custom pages for podcasters and influencers UrbanStems worked with. Those pages averaged an 8% conversion rate, Hudson said.

Hudson said UrbanStems also tested its paid landing page made using Zmags against the Mother’s Day product landing page, which runs on the retailer’s Shopify-powered ecommerce site.

“With that, we saw a 200% lift in conversion when we drove people to the Zmags experience versus just our normal PLP when they’re coming through paid social. We’re constantly testing,” Hudson said. “The conversion rate numbers that week of Mother’s Day in general were insane and not the norm, but we were able to keep testing and getting it better and better.”

The UrbanStems Mother’s Day product landing page on May 12 shows how soon shoppers can receive bouquets.

The UrbanStems Mother’s Day product landing page on May 12 shows discounts, overnight shipping options and an out-of-stock bouquet.

Countdown timers

UrbanStems also used Zmags to include countdown timers across its site, including on product landing pages, even before Mother’s Day. The retailer worked with Zmags to automate the timers to count down to 2 p.m. Eastern Standard Time in cities where it offers same-day delivery, then automatically update each day to count down again. UrbanStems offers same-day delivery in Washington, D.C., New York City and Los Angeles.

Hudson said UrbanStems had never used the countdown timer on its homepage before Mother’s Day, so it ran an A/B test in which 25% of the site traffic had a timer on the page.

“We just wanted to make sure because our homepage was already converting so well,” Hudson said. “We didn’t want to mess with it too much.”

It increased conversion 2%, which Hudson said “wasn’t huge, but it was enough to say it was a clear winner.” Then, the timer went to 100% of UrbanStems’ audience.

UrbanStems also uses Zmags for its landing pages for site visitors coming from social media platforms. Some of those pages touted 11% conversion rates the week of Mother’s Day. Hudson said even though that’s when purchase intent is highest among UrbanStems shoppers, she and her team had not seen an 11% conversion rate for such a page.

Post-Mother’s Day

Hudson said UrbanStems did not run any paid social ads the week after Mother’s Day. Instead, the retailer is using the post-holiday time to reflect on what it has learned.

“We need to have customer reviews,” Hudson said.

Furthermore, UrbanStems must develop a landing page that prioritizes customer reviews higher on the page.

“Taking some of the testing we did and iterating on it after Mother’s Day is going to be really important,” Hudson said.

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The “click to cancel” rule would require companies to offer an easy way to cancel subscriptions and recurring memberships. Cancellation would have to be as easy as signing up. For example, the ruling would ban requiring consumers to call to cancel subscriptions that they’d signed up for online. 

The FTC’s proposed rule would apply to any retailers that sell products or services with subscriptions, automatic renewals, or similar systems. Retailers would also be required to give more information about subscription beginning and end dates and how to cancel. Retailers would also need to send annual reminders to customers for subscriptions that don’t involve physical goods.

“Some businesses too often trick consumers into paying for subscriptions they no longer want or didn’t sign up for in the first place,” FTC chair Lina Khan said in a statement. “The proposal would save consumers time and money, and businesses that continued to use subscription tricks and traps would be subject to stiff penalties.”

Subscriptions are a small but important piece of ecommerce

Subscriptions have long been promising territory for ecommerce retailers hoping to build a returning customer base. The global subscription box market reached $26.9 billion in 2022, according to Expert Market Research. The firm expects the subscription box market to reach $74.2 billion by 2028.

5.6% of retailers in the Top 1000 retailers in North America used a subscription model in 2022, according to Digital Commerce 360 data. That’s down slightly from 6.5% in 2021. 

Subscriptions are more significant in certain sectors. 36.1% of food and beverage retailers in the Top 1000 had a subscription model in 2022. That’s up from 27.8% in the previous year. In the Top 1000, 28% of health and beauty retailers had subscriptions in 2022, and 10.1% of specialty retailers. Pet supply company Chewy, for example, heavily relies on recurring subscription orders. Autoship orders made up 73% of sales in the most recent fiscal quarter, accounting for $1.98 billion of revenue. Chewy ranks No. 13 in the Top 1000.

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The legality surrounding automatic renewals is murky

The legality of automatic subscription renewals can be difficult to navigate, according to lawyer Robert Freund, who focuses on ecommerce.

Subscriptions and cancellations are governed by many laws across the U.S. The 2010 Restore Online Shoppers’ Confidence Act (ROSCA) requires retailers to provide “simple mechanisms for a consumer to stop recurring charges.” In 2021, The Federal Trade Commission issued a statement warning companies about employing “illegal dark patterns” to keep customers from canceling memberships.

Because the federal law is somewhat vague, many states have adopted their own, stricter laws. The combination of federal laws, FTC enforcement, and differing state laws result in a “patchwork of laws across the country” that are sometimes inconsistent, Freund says. “If you want to comply with every law in every state, it’s very difficult if not technically impossible.”

Automatic renewals can lead to “friendly fraud”

Retailers open themselves to friendly fraud when they automatically renew subscriptions or make them difficult to cancel, according to Chargebacks911. Chargebacks911 is a risk management software provider that helps retailers in billing disputes. 

“While no retailer wants to see their customers cancel services, having a tedious cancellation process could push customers to file a chargeback, or file a complaint with entities like the FTC — even if the retailer is fully compliant and following all payment processing guidelines that govern their merchant account,” Chargebacks911 CEO Monica Eaton told Digital Commerce 360.

Customers who forget to cancel a free trial or don’t recognize a recurring subscription charge on their bank statement can file a dispute with their bank. Retailers may then have to pay additional chargeback fees, or pay to fight the charges. Too many chargeback requests can lead to a retailer losing processing capabilities, Eaton says. 

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Matthew Solusod, CX operations manager, Aviator Nation

“This was a problem for us because it took a lot of time,” Solusod says. “It took one or more employees away [to process returns or exchanges] during a time when we had to focus on our online sales channel.”

Aviator Nation’s return rates were on the rise between 2019 and 2020. The 1970s-inspired leisure wear retailer turned to Loop Returns, a returns services vendor. Aviator Nation processed its first return with Loop Returns in April 2021. By 2022, the retailer’s return rate dropped below 12%. It also offered bonus credits (by percentage) and in-store credit incentives to help encourage sales, according to Loop Returns.

After implementing Loop, Aviator Nation’s retained customer lifetime revenue is 63% for existing customers, Solusod says.

From April 2021-2023, the average upsell per return was $11.99. For every return an Aviator Nation customer submits, Aviator Nation earns $11.99 in new revenue.

From April 2021-November 2022, refunds decreased 11% and Aviator Nation retained 56.6% of revenue from returns. The average upsell per return during this period is $10.51.

“I think that’s about a third or half of what [the refund rate] was before,” Solusod says.

Aviator Nation uses ecommerce platform Shopify to run its website. Loop Returns integrates with Shopify.

“[Employees] can be more proactive rather than reactive. They are not spending time on menial tasks like manually processing returns,” Solusod says.

For example, if an item is out of stock, Aviator Nation employees can proactively reach out to customers to let them know and present other options, he says.

Aviator Nation leverages store inventory for online orders

In late 2022, Aviator Nation launched its omnichannel fulfillment option. Aviator Nation has 17 stores throughout the U.S. in California, Colorado, Hawaii, Texas, and Tennessee.

“Now we’re able to unlock all our retail locations and inventory. It gives a lot more availability for people shopping on the website,” Solusod says. “This also means we’re churning through inventory of stores quicker. We have a lot more inventory available for people shopping on the website.”

The retailer plans to launch buy online, pick up in store (BOPIS) in 2023.

“That way, rather than having to wait for something to ship, you can just pop into a store and pick it up,” he says.

Solusod says each store’s inventory is available to fulfill online orders. Fulfilling online orders in store saves shipping costs, he says.

“If a customer near the Miami [store] location places an order, we can have Miami store fulfill that item. That saves us some cost,” Solusod says. “I think it also makes for a better experience. The customer can oftentimes get their item faster with the BOPIS option we’re rolling in.”

Aviator Nation’s mobile customers

The majority of Aviator Nation shoppers shop using their mobile devices, Solusod says. The retailer launched its own app in 2022.

“The app has been really successful,” he says. He did not share what portion of conversions come through the mobile app, but he says about 70% of online shoppers are converting through their mobile devices.

About 70% of Aviator Nation’s shoppers convert through their mobile devices. The retailer launched its own app for mobile devices in 2022.

Aviator Nation’s production and fulfillment centers are both located in California in the fashion/garment district of Los Angeles. The retailer sources its materials within the U.S.

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The rest of the collection was supposed to launch in March 2020, said Chrissie Jemison, vice president of digital. As with much of the world, the pandemic changed that.

With a full product assortment available, Furtuna Skin had to cover its ecommerce bases and make sure it had a strong enough conversion rate and average order value. It launched a skin care quiz to help with that.

Guiding the shopper

Jemison said Furtuna Skin has a 9% conversion rate among users who complete the skin care quiz and make a purchase. It helps grow AOV, too, she said.

“After taking a number of these myself, it got to the point I would see results and think, ‘well, you’re just trying to sell me on everything,’” Jemison said. “Our goal is to really get the right products in our customers’ hands.”

So the brand uses its quiz to offer a “hyper-curated” assortment that’s typically two or three products, Jemison said.

“We want to guide users to the items that will help them with their skin concerns,” Jemison said.

Moreover, rather than trying to sell a full-size product, Jemison said Furtuna Skin offers shoppers a “custom sample set.” Shoppers can pick any four items, which the product recommendations from the quiz help them select, and buy sample-sized versions of them to test.

“We’re giving them two to three recommendations and saying test them out; see for yourself. Buy a discovery set,” Jemison said. “It is a lower-priced item because it’s a sample set, but that’s where we’re seeing greater success rather than just in lifting AOV.”

Learning the basics about loyalty and ecommerce subscriptions

By February 2021, it was time to focus on retention, Jemison said. That’s when Furtuna Skin simultaneously launched its loyalty program and auto-replenishment. Furtuna Skin’s full collection had launched in June 2020, but items had only been available for one-time purchases.

“Skin care is one of those categories that lends itself so beautifully to a subscription program,” Jemison said. “So we knew there was opportunity there.”

Furtuna Skin uses retention marketing platform Yotpo for its loyalty program. But the platform Furtuna Skin used to power its subscriptions wasn’t the best fit, Jemison said.

The subscription provider at the time, Recharge, required Furtuna Skin to duplicate its product catalog to identify which products were selling for one-time purchase and which sold for subscriptions. This was especially a problem for Furtuna Skin, Jemison said, because all its products are produced from ingredients in the retailer’s private estate in Sicily, Italy. The 800-acre estate —with a farm and wild terrain where its employees forage for ingredients it uses in its products — is also where sister brand Bona Fortuna’s products come from.

“That means we do small batches of products,” Jemison said.

She added that from an operations perspective, that means producing a new SKU for every new batch. Swapping out SKUs constantly, and having to create duplicates for each one in the online product catalog, was too much for Jemison’s “very lean” team, she said.

Moreover, shoppers would check out with a subscription product on Furtuna Skin’s website and get “kicked over” into a different checkout experience. Jemison referred to this as “hijacking” the cart in the checkout page.

This was a problem because, for example, when consumers were going through the checkout process while Furtuna Skin offered a promotion of a special gift with purchase, Jemison would have to set up the promotion on two separate platforms for the shopper to redeem it: Shopify (which hosts the brand’s ecommerce website) and Recharge.

Subscription switch

Furtuna Skin replatformed from Recharge to Ordergroove in summer 2022. Since then, its subscription orders more than doubled, to more than 7% of sales now from 3% before making the switch. Jemison said she projects subscriptions to account for 10% of total sales by the end of the year. She said the long-term goal is to get that up to 15% to 20% of total sales.

Furtuna Skin shares examples of how its checkout page looks before and after replatforming to a different subscription vendor.

Moreover, since making the switch, Furtuna Skin boosted its subscriber count 103%, and 50% fewer subscribers abandon their subscriptions. Furtuna Skin retains more than 30% of its customers too, and she said that number is still growing.

“A significant reason for our success with Ordergroove is that they were more flexible with their UX and UI options for us to present on our product detail page to make it very, very clear that you can make a one-time purchase or do auto-replen, and here’s your offer for doing auto-replenishment,” Jemison said.

She said Ordergroove’s platform integrates with Yotpo without issue. It doesn’t “hijack” checkout, and Jemison doesn’t have to duplicate her product catalog.

Ordergroove also allows Furtuna Skin to offer different incentives for one-time and subscription purchases, she said. Furtuna Skin currently offers 10% off the first order of a subscription product. It offers 15% off for every recurring order thereafter. Those recurring orders also build up loyalty points, which consumers can later use toward subscriptions as well.

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This willingness, however, drops quickly the more days a shopper has to wait, with only 45% waiting at least two days, and 15.6% waiting three days or more, according to the survey.

The study finds that overall, consumers say they would do something some of the time to make their online order ship to them in a more eco-friendly way. 69% of consumers said sustainable shipping has influenced their past purchases. And 76% of shoppers say they would pay an extra 5% for more sustainable shipping.

This high share of shoppers taking into account sustainable shipping does not surprise Caleb Nelson, chief growth officer at Sifted.

“Consumers are demanding sustainability improvements across the board, so we didn’t find it surprising that there’s such a demand for it when it comes to shipping,” Nelson says. “Ecommerce saw unprecedented growth during the pandemic, and that shift made a lot more consumers think about the impacts of having products shipped to their doorsteps.”

Still, price is still the main consideration for shoppers to purchase, especially recently.

Sifted cites inflation as the main reason for the increase in priority of price and decrease in priority for sustainable shipping for making an online purchase.

56.8% of consumers in 2023 said sustainable packaging and shipping was important (33.8%) or very important (23%) when purchasing online. That compares with 2021, when 66% said sustainable shipping and packaging was important (32.6%) or very important (33.4%).

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According to the survey, shoppers seem to understand the shipping package makes a difference to sustainability. Overall, 76.6% of consumers say companies use excessive packaging when shipping products. 72% of consumers say the amount of packaging has a moderate to high impact on environmental sustainability and 70.4% say the type of packaging has a moderate to high impact on environmental sustainability.

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Moreover, app users dwelled 50% longer on the Beekman 1802 site. The app also led to a double-digit boost in cart size. Beekman 1802 credits this to My Skin Biome being a “fun and educational tool to help consumers decide on the best skin care products.”

The tool, launched in summer 2022, “assesses skin attributes and then offers a custom skin care routine based on skin’s redness, wrinkles, dark spots, hydration, texture and skin microbiome scores, while teaching users all about the microbiome and why it is important to overall skin health,” Beekman 1802 said.

Consumers can access the My Skin Biome tool, which is a mobile web app, through Beekman1802.com and submit a selfie taken in the app using the mobile phone’s camera. It provides scores based on six different attributes:

• Skin biome
• Texture
• Dark spots
• Wrinkles
• Hydration
• Redness

Users then review their scores on the attributes and select the skin concern they would like to focus on. The app then generates products tailored toward the user’s needs and skin care goals, offering users the ability to add products to their carts.

Beekman 1802 provides a QR code on its desktop website that shoppers can scan to access the My Skin Biome tool on their phones.

My Skin Biome tool empowers Beekman 1802 web traffic, sales

Consumers who use the My Skin Biome tool convert 35% more than those who don’t, Baker said. Furthermore, the average order volume for consumers who use the app is 13% larger than those who don’t. Beekman 1802 saw a 150% increase in pages per session among shoppers who use the My Skin Biome tool, and a 15% reduction in bounce rate.

“We were looking to have a diagnostic tool that would allow our neighbors — that’s what we call our consumers — to more actively take control over what is best for their skin care regimen and for us to provide them with personalized results,” Baker said. “The My Skin Biome app itself allows us to do that because it allows our neighbors to — really quickly with the use of the QR code — scan their face and deliver product recommendations based off of their particular needs.”

The My Skin Biome tool from Beekman 1802 and Perfect Corp. works directly from the website on a user’s mobile phone.

AR/AI in health and beauty

Augmented reality and artificial intelligence are becoming table stakes in the beauty industry, said Wayne Liu, chief growth officer at Perfect Corp., which creates augmented reality and artificial intelligence technology. Perfect Corp. developed the My Skin Biome tool with Beekman 1802.

“Skin care is less AR; it’s more AI because it’s machine learning,” Liu said. “It’s a diagnostics tool. Basically, we have the user scan their face, and then we’ll identify the ‘concern,’ which is the skin care problem from their photo. That’s a machine learning process.”

Extending to makeup, Liu said virtual try-on tools benefit beauty retailers because they save shoppers time and help them make decisions faster. Augmented reality helps shoppers decide what shades and products they like on themselves.

“The more you try, the more you purchase,” Liu said. “Traditionally, you probably can only try one or two colors and it will take probably 20 minutes. Right now, you can try 30 colors within like 30 seconds.”

Beekman 1802 has a physical store with its farm in Sharon Springs, New York, as well as in LaGuardia Airport. It’s also available via Ulta Beauty stores. Ulta is No. 51 in the Digital Commerce 360 Top 1000 database ranking North American online retailers by web sales.

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“The pandemic has been like rocket fuel for us,” Brown said. “I’m not sure if it was people getting stimulus checks, or spending less money out and about each day.”

Wrist Mafia sells watches online, but almost exclusively through subscriptions. The subscriptions it offers are monthly, every three months, bi-annually or annually. It uses fixed dates, Brown said, meaning that billing and shipping each happen on the 15th of every month for essentially all customers. That helps avoid worrying about keeping inventory in stock and storage fees, he said.

“The product comes in and goes right back out all within a week’s time,” Brown said. “And then we’ll usually have some sort of reserves for people with billing issues, new customers and things like that. But it really just limits our overhead where we’re not just sitting on a warehouse full of watches.”

Brown said Wrist Mafia had about 2,000 subscribers at start of the pandemic. By December 2021, that shot up to 10,000 subscribers, he said. It even reached a peak of 11,000 in early 2022. But the expansion was too fast, Brown said. Acquisition costs were too much for a single quarter, and supply chain issues led to the retailer struggling with the costs of goods, shipping and gasoline, as well as shipping times.

“We pulled the brakes back” to start 2022, Brown said.

Wrist Mafia takes its time growing subscription base

The Tampa, Florida-based retailer now hovers around 6,000 subscribers, Brown said. In the first half of 2022, it slowed its advertising, regrouped and collected cash to prepare for quarters three and four.

“By the end of quarter two, we were pretty much pushing at full steam and we’re back now,” Brown said.

Wrist Mafia has begun advertising again and is now gaining between 1,000 and 2,000 subscribers a month.

However, conversion since the pandemic ended has been slower, Brown said, adding that it has “not necessarily dropped off.” Consumers are back to spending money elsewhere, he said.

Wrist Mafia also noticed shoppers were abandoning their shopping carts. It improved its conversion rate after optimizing its landing pages and improving checkout speed, Brown said.

Wrist Mafia’s previous interface, ReCharge, made shoppers leave the retailer’s Shopify-hosted site to complete the payment process, he said. ReCharge had a separate processor and application built on top of Shopify, rather than an interface that integrates directly into the platform, Brown said. Shoppers couldn’t use Shop Pay or Google Autofill forms during checkout, which decreased conversion, Brown says, without sharing specifics.

“If you have to go through six pages to check out, you’ll lose most of those customers,” he says. “We did.”

Finding a new groove

Wrist Mafia’s customers can now check out in less than 10 seconds, Brown said. That’s down from two to three minutes. And that checkout speed improved after the retailer implemented subscription-management vendor Ordergroove’s interface in September 2022. Ordergroove helped reduce the number of pages shoppers had to navigate to subscribe by three pages, Brown says.

“ReCharge has since offered a V2, but that was also a migration,” Brown said. “When we were weighing our options, it just seemed like Ordergroove made the most sense for us.”

In the first week of implementing Ordergroove’s interface, Wrist Mafia’s subscriber acquisition rate increased 15%. Within three months, Wrist Mafia grew its subscriber base 63%.

“For us, being a singular product, that’s really all we need to focus on is the customer experience while they’re on the site,” Brown said.

Lauren Lowman, vice president of marketing at Ordergroove, said the subscription interface allows consumers to easily pause or opt out of subscriptions at any time. People’s needs change sometimes, she said. Consumers might be overstocked or have subscriber fatigue, she added.

“The whole goal is that we’re a platform you join and grow with and don’t scale out of — not necessarily an entry-level one that you’re going to run into issues with after a year or two,” Lowman said.

Wrist Mafia adds prepaid subscriptions through Ordergroove

Rather than paying monthly for a subscription to Wrist Mafia’s watches, consumers can opt to prepay for a subscription period. The prepaid model accounts for more than 30% of Wrist Mafia’s revenue, Brown said.

“A lot of people from a buyer’s psychology aren’t comfortable committing to subscription,” he said. “I personally don’t really subscribe to anything myself, so I’d like to be in a position where I could be prepaid or I can try it before I buy it.”

And to acquire new subscribers, Wrist Mafia heavily discounts the first watch in the subscription, Brown said. That discount for the first watch is the best available price other than during the Cyber 5. Cyber 5 refers to the period from Black Friday through Cyber Monday.

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Rainbow Shops rank No. 710 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American online retailers by web sales. 

Detecting fraud requires sophistication

Rainbow Apparel used to flag suspected fraudulent orders manually, Cost says. Ten years ago, the retailer was rejecting about 2% of all orders. Today, Rainbow only rejects about one-half of a percent of orders.

The goal is to only reject legitimately fraudulent orders.

“There’s no other way for us to be able to accomplish that goal,” Cost says. It requires automation and AI on a large scale.

For example, Rainbow has a large customer base in the Caribbean, but it doesn’t ship there. So a customer from Jamaica will make an order with their Jamaican billing address, but the order will ship to someone in Florida or Texas who then bulk ships several orders to the Caribbean, Cost says. That’s exactly the type of situation that can be difficult to determine if it’s fraud or not, he said. 

“AI over time has gotten so good that … we’re able to grab all that business that we can without really any downside of fraud,” Cost said.

For Rainbow, that AI expertise comes from Signifyd’s wide reach. As a vendor to 116 retailers in the Top 1000, Signifyd has access to about 450 million digital wallets, chief business officer Indy Guha said. That means it has access to data about consumer identities based on purchases from other retailers.

“We don’t have to guess if someone’s identity is breached. Once it’s compromised, that’s compromised everywhere in our network,” Guha said. 

Letting through legitimate customers is the biggest challenge

Guha and Cost emphasized the importance of allowing legitimate customers to make purchases despite fraud protections.

Non-fraudulent purchases from lower-income shoppers are more likely to face issues at checkout, Cost said. Rainbow Apparel primarily serves customers “in the lower half of the income spectrum,” he says. “Like a lot of other things in life, they get discriminated against, you know, more than most.” 

For example, sometimes a bank network will tell Rainbow to reject an order for lack of funds, when the customer actually does have money available on their credit limit, Cost said. Signifyd has relationships with those companies, and brought the problem to Cost’s attention. Every rejected order is reviewed by a member of Rainbow’s team, and can be resubmitted to Signifyd for a new check. Rainbow overrides Signifyd’s decisions only “a handful of times a week,” he said.

“Every day, it gets more expensive to acquire customers,” Cost said. “There’s no quicker way to lose a customer or squander marketing efforts than, you know, rejecting somebody’s order that’s legit because you think it’s fraud.”

Fraud more broadly

Retailers are adopting new measures to fight ecommerce fraud, according to the 2023 Global Fraud and Payments Report from the Merchants Risk Council. Just over one-third of 1,072 retailers surveyed reported instances of “friendly fraud,” meaning customers dispute seemingly legitimate purchases through their credit cards. 

Ecommerce retailers spend an average of about 10% of revenue managing payment fraud. The report says that number has been stable for the last three years. It seems to be paying off. The percentage of ecommerce revenue lost to fraud globally is down from 3.6% in 2022 to 2.9% in 2023, per the report. The order rejection rate for potential fraud was also down, from 3.4% to 2.7%. 

Fraud, and the orders rejected as potential fraud, still represent a big problem for the industry. Signifyd’s State of Fraud Report for 2023 found that for every $100 in fraudulent orders, retailers lose $207. That loss comes from the cost of processing, chargeback fees, fighting claims, and other charges. Global retailers turned down $24 billion of good orders for fear of fraud in the 2022 holiday season, according to the report.

Fraud doesn’t impact every industry equally. Signifyd found fraud attempts in 2023 are up in collectibles, luxury goods, and apparel. They were down in beauty, business supplies, and grocery.

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Staytuned, a global software company that acquires and builds ecommerce applications with a core focus on Shopify, recently raised $34 million in funding from a large group of investors.

The investors include:

• TenOneTen
• Rembrandt VC
• Hawke Ventures
• DragonX
• FJ Labs
• Interlace
• Riverpark Ventures
• Comma Capital
• Kotti Capital
• Alumni Ventures Group
• Jason Finger

Angel investors also participated in the new equity round. Tacora Capital led the debt funding. Previous investment rounds included Bowery Capital, WTI, Social Leverage, and others.

Staytuned was co-founded by Serge Kassardjian and Randy Jimenez, a pair of entrepreneurs with previous stints working for Google and other technology companies. To date, it has raised more than $46 million in funding.

Staytuned focuses on tools for Shopify stores

New York-based Staytuned provides a suite of software tools for managing online stores. The startup focuses on websites that run on Shopify Inc.’s namesake ecommerce platform. Shopify’s platform processed $61 billion worth of purchases last quarter, according to Silicon Angle. Millions of merchants worldwide use Shopify’s platform.

Staytuned has assembled its software suite through a combination of in-house product development and acquisitions. The eight tools in the suite cover a variety of use cases. Some focus on automating general store management tasks, while others cater to companies in specific markets such as the events industry, according to Silicon Angle.

Four of the eight tools focus on helping online retailers issue discounts to customers. One application, Moonship, uses machine learning to target website visitors with personalized discount offers. Another tool called ADG enables retailers to mark down the price of products when a customer is about to complete a purchase, says Silicon Angel.

“We hope to become the Salesforce suite for ecommerce stores — an end-to-end suite to scale a fast-growing brand seamlessly within the Shopify ecosystem and beyond, where brands want to grow their presence and revenue,” Kassardjian says.

Staytuned will use the latest round of funding to make more acquisitions and for product development. To date, the company has made seven acquisitions. In November, the company acquired Tabarnapp, a developer of Shopify apps for product discounts, upselling, and cross-selling.

To date, Staytuned also says it has more than 20,000 merchants using its various apps.

“This new funding enables us to acquire bigger apps, hire amazing talent, and scale faster than ever to become the foremost tech stack in the Shopify ecosystem,” says Jimenez.

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The payments company was valued at $50 billion in a fundraising round just last month. It said volume climbed 26% to $817 billion in 2022, according to the firm’s annual user letter published on April 5. That compares with 60% in 2021, when Stripe and many of its rivals saw rapid growth as consumers did more shopping online during the pandemic.

“We feel like, given the climate that it was, we’re very happy,” John Collison, who along with his brother Patrick founded the company, said in an interview. “2020 and 2021 were such fun years with ecommerce in particular. You had such a maelstrom of activity, and there was no way that would continue.”

The letter confirms parts of earlier reporting in the run-up to Stripe’s moves last month to raise $6.5 billion to cover a looming tax bill for veteran employees with expiring stock options.

The $50 billion valuation it received was well below the $95 billion it was last valued at when it raised $600 million from investors in 2021. The company’s results — and its accompanying drop in valuation — mirror many of its peers in online payments, including PayPal Holdings Inc. and Adyen NV.

Stripe focuses on enterprises

While Stripe helped startups take payments over the internet during its earliest days, it’s been targeting larger firms in recent years and now counts Amazon.com Inc. and Zoom Video Communications Inc. as customers.

Amazon is No. 1 in the Top 1000 database. The Top 1000 is Digital Commerce 360’s ranking of North American web merchants by sales. Amazon is also No. 3 in the Online Marketplaces database, which ranks the 100 largest global marketplaces.

More than 100 companies now handle more than $1 billion in payments with Stripe every year and that set of customers has grown by 50% annually since 2018, Stripe said in the letter.

For years, large retailers have viewed the technology they need to take payments as a cost. Now, Collison said, they are considering how that technology can boost revenue.

That’s because ecommerce players increasingly struggle with conversion rates, which measure the percentage of visitors to a website that actually make a purchase. On average, that rate hovers around 3% for most ecommerce sites, according to McKinsey.

“Checkout pages across the internet are riddled with needless friction. 10% of payments still fail for no good reason when transacting online,” the brothers said in their letter. “At Stripe, we obsess over fixing this.”

In its letter, Stripe analyzed what it called “breakout startups” or new companies with unusually high revenue growth.

The company’s data show Silicon Valley may be losing its allure for startups: In the three years leading up to the pandemic, more than 60% of these so-called new breakout startups were based in San Francisco. Since 2020, just 46% were.

“San Francisco remains the clear leader,” John Collison said in the interview. “But what we’re seeing is that there is a less San Francisco or Bay Area centrality in tech.”

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