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Retailers share ways to make shipping more sustainable

April Berthene — Mon, 05 Jun 2023 17:07:59 +0000

Sustainability is part of Coalatree’s mission.   The performance apparel brand works to make its clothing in a sustainable way, such as designing products with sustainable materials like recycled water bottles and manufacturing its garments in factories that adhere to its standards, such as using a waterless dye method.   So when it comes to getting that […]

The post Retailers share ways to make shipping more sustainable  appeared first on Digital Commerce 360.

Lowe’s lower web traffic doesn’t hurt sales in Q1

Gretchen Salois — Thu, 25 May 2023 19:02:38 +0000

First-quarter 2023 earnings results are in. The heyday of do-it-yourself home projects has subsided — for now. A closer look at desktop web traffic that resulted in conversion was also down for heavy-hitters The Home Depot Co. (down 22.8%), Lowe’s Cos. Inc. (down 17%) and Overstock.com Inc. (down 33.6%), according to estimates by Similarweb, which monitors website traffic.

Total U.S. web traffic from Feb.-April 2023 was -5.3% for Home Depot, -8.9% for Lowe’s, and -13.1% for Overstock, according to Similarweb estimates.

Home Depot (ranked No. 4 in the 2023 Digital Commerce 360 Top 1000 database) had the best conversion rate (3.3%) among home improvement merchants, which include Lowe’s (No. 12), Overstock.com (No. 50), Wayfair Inc. (No 10), Ikea, and Ace Hardware Corp. (No. 662). That’s down half a point from 3.8% a year prior and 3.8% in the quarter ended Jan. 31. Ikea ranks No. 3 in the Digital Commerce 360 Europe database.

When compared to earnings results for Q1, only Lowe’s reported an increase in online sales (6%) for the three-month period ended May 5.

Home Depot online sales for fiscal Q1 ended April 30 fell 2.9%. While Overstock.com reported that online sales were down 29% in its fiscal Q1 ended March 31. Wayfair reported revenue decreased 7.3%, active customers decreased 14.6% and orders were down 6.7% for its fiscal Q1 ended March 31.

Home Depot led the pack in web traffic

With more than 521 million visits to its website in Q1 2023, Home Depot outpaced Lowe’s 321 million visits and 303 million visits to Wayfair.com, according to Similarweb estimates of desktop and mobile web visits from Feb.-April 2023.

Ikea has the most web visits that lead to conversion

Ikea’s converted web visits grew 0.3%, the only merchant to grow in this category. Wayfair’s conversion rate decreased 0.1%, followed by Ace Hardware (-0.2%), Lowe’s (-0.3%), Home Depot (-0.5%) and Overstock (-0.6%).

Lowe’s lost the most web traffic share but gained online sales in Q1

It may be quality of time, not quantity of time, when it comes to web traffic visits. Lowe’s web traffic declined in Q1 but online sales increased 6% — an anomaly among competitors whose ecommerce sales declined.

Bounce rates were down for Lowe’s but up for Home Depot, according to Similarweb estimates. Lowe’s bounce rate decreased 2.77% in April 2023 year over year.

“This could reflect a better ecommerce experience for website visitors,” says David Carr, senior insights manager. Over the last few years, Lowe’s has invested in upgrading its 15-year-old legacy software system.

Online sales increased 6%, representing more than a 10% sales penetration. Lowe’s will continue to focus on upgrading its B2B Pro digital experience with new tools and personalization, said Marvin Ellison, chairman, president and CEO, during the retailer’s May 23 earnings call. Ellison attributed online growth to an increase in its pro sales. Lowe’s pro customers are contractors, repair remodelers, tradesmen, as well as property management and facility management professionals, according to the merchant.

“We also continue to enhance our DIY online experience by making home improvement projects easier for consumers to visualize, estimate and shop,” Ellison told investors. “These investments are paying off with higher online convergence and attachment rates.”

Consumers are also spending less time per website visit, according to Similarweb’s estimates. The average minutes per visit, desktop and mobile web, worldwide, is on the decline.

In April 2023, the time spent decreased year over year:

Ace Hardware gains the most web traffic in Q1

Smaller merchant Ace Hardware’s desktop web traffic grew 22.4%, according to Similarweb estimates of desktop and mobile web visits from Feb.-April 2023. That’s in line with Ace Hardware’s Q1 2023 (ended April 1) report of a 22% increase in online visits. The merchant reported that online revenue increased 11% compared with the year prior.

Wayfair web traffic also increased 3.1%.

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How Chewy used its large customer base to become the largest online pet pharmacy

Mary Meisenzahl — Thu, 25 May 2023 14:53:51 +0000

Chewy has sold pet products online for 11 years, and now it sees pet health care as the future of the industry. The ecommerce pet company launched its pharmacy in 2018 and added a compounding pharmacy, which can mix custom medications needed for patients, in 2020. Chewy has since launched its “Connect with a Vet” telehealth service and pet insurance. It also owns and publishes PetMD, averaging over 5 million unique visits per month, according to analysis from SimilarWeb.

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

Customers requested health care from Chewy

Chewy primarily focuses on food and supplies in the $130 billion pet industry, but about one-third of that market is health spending, president of Chewy Health Mita Malhotra said. In 2022, Chewy had 20.4 million active customers, the retailer said.

Before the pharmacy launch, Chewy heard feedback from customers that they wanted to buy medical supplies from the company.

“We buy everything else from you … why don’t you carry medical? Why don’t you sell pharmaceuticals?” customers asked Chewy, per Malhotra.

Chewy first ventured into health care as a pharmacy because it made sense with the existing ecommerce platform, Malhotra told Digital Commerce 360. The biggest opportunity was in medications for “chronic conditions and preventative care,” she said. They make up about 70% of medications Chewy sells.

Consumers showed a preference for buying those products, with examples like insulin and prescription food, as subscriptions. The strategy was a massive success, and autoship orders made up 73% of sales in the most recent fiscal quarter, accounting for $1.98 billion of revenue.

However, fewer than 5% of Chewy customers buy all their pet health care products from the ecommerce retailer, CNBC reported. The retailer hopes to make health care 30% of its business in the near future.

Building trust

Consumers’ willingness to pay for their pets’ health care has been profitable for Chewy, but it first had to convince them it was a trustworthy provider.

“Trust is rooted in how you really take care of customers. Are you listening to them? Are you taking care of them?” Malhotra said.

For Chewy, that’s an outgrowth of the retailer’s customer service, which has made headlines for how it treats pet owners in difficult times. Some customers told Entrepreneur in 2022 about receiving flowers, sympathy cards, and even portraits when their pets died.

Customer service representatives have leeway to have these interactions with customers, Malhotra said. Currently only about 20% of Chewy customers are buying pharmaceuticals, but she believes the number will grow thanks to the emphasis on customer service. Chewy declined to share specific statistics around its pharmaceutical sales.

Pet health is resilient

The pet category is “resilient,” even in times of economic downturns, Malhotra said, and that’s even more true of pet health care. She cited a 2021 Metlife study of 2,000 dog and cat owners, which found that 58% said they worried more about their pets’ health than their own. 52% of respondents also said they spend more money on their pets’ health care each year than on their own.

Malhotra said this trend is clear in Chewy’s sales.

“Food, pharmacy, wellness regiments: People are not pulling back on spending,” she said. Those categories are “durable,” while consumers might pull back on more discretionary items like toys if they have less to spend.

Better medical care and nutrition are also helping pets live longer. This leads to further spending on pet health care, and increasingly expensive care as they age, according to a report from Bloomberg Intelligence.

“We’re seeing a profound increase in consumer spending on pets and expect to see this continue through 2030,” co-author of the Bloomberg report Diana Rosero-Pena said. “Consumers are willing to pay more for items for their pets, with the pet food market having the potential to grow more than 50% from current levels by the end of the decade.”

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Beauty brand helps consumers find what they need, then automate replenishment

Abbas Haleem — Fri, 12 May 2023 13:45:24 +0000

When ecommerce beauty brand Furtuna Skin launched in 2019, it had just one product: its face and eye serum.

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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Overstock CEO says customers are using BNPL for purchases as low as $10

Mary Meisenzahl — Tue, 11 Apr 2023 12:40:54 +0000

Overstock.com Inc. customers are using buy-now-pay-later (BNPL) services to fund small purchases, according to CEO Jonathan Johnson.

Overstock ranks No. 33 on Digital Commerce 360’s ranking of the Top 1000 North American ecommerce retailers.

BNPL purchases can be for low amounts

BNPL purchases account for a small number of total sales, just 2% to 3%, Johnson told Digital Commerce 360. He said there’s been a “slight uptick” recently, though they’re still a small part of the business overall. Overstock uses Swedish payment service Klarna to facilitate those sales.

Customers who do choose to use BNPL services are mostly buying less expensive items from Overstock’s catalog.

Average products purchased with Klarna range between $10 and $400, he said. This is a wide range that encompasses Overstock’s average order value of $215 in the fourth quarter of 2022, and notably includes items priced far lower than that AOV. For example, a small throw pillow priced at $25.19 can be purchased through four payments of $6.30 over six weeks.

Strategic reasons to offer BNPL

Johnson told Digital Commerce 360 that the main reason he sees to offer BNPL as a payment option is to maximize flexibility for consumers. Overstock’s BNPL users tend to be younger than its average customers, and may not have well-established credit yet.

For customers who can’t check out with a credit card, the goal is to make BNPL checkout as seamless as possible, though it’s not yet a “perfectly smooth process.” Using the service still takes “a few more clicks” than paying by credit card, he noted, because Klarna performs a “soft” credit check. That means the check doesn’t hurt a customer’s credit score, and Klarna uses the check to decide how much credit to offer. Still, it’s important to him that “the payment option never becomes a reason to abandon the cart.”

Overstock also has a lease-to-own option, but it serves a different purpose than BNPL, Johnson said. Customers typically use lease-to-own to finance much larger purchases over a 12-month lease period.

Johnson suspects BNPL use will continue growing among Overstock customers, “especially as we head into a recession,” he said.

Overstock and Klarna have history

Overstock first offered Klarna as a payment option in 2015, relatively early compared to other U.S. ecommerce retailers. This was years before Amazon officially partnered with competing BNPL servicer Affirm in 2021.

In 2020, Overstock was among the 28.2% of Digital Commerce 360’s Top 1000 online retailers offering BNPL. In 2021, that was up to 45.7%.

In the eight years since adding Klarna, Overstock has stuck with the service. The best BNPL companies — which Johnson believes Klarna is among — make the purchase process nearly “frictionless” for consumers. Tractor Supply Co. (No. 102), Nike (No. 10), and Petco (No. 96) all offer Klarna to customers, too.

As of April 2023, 54% of Digital Commerce 360’s Top 1000 retailers offer some version of the service. Digital Commerce 360’s Top 1000 database ranks the largest North American online retailers by web sales. 18.4% offer PayPal credit, 14.8% use Affirm, 13.3% use Klarna, and 11.7% use AfterPay, with other services coming in behind.

The trend is bigger than Overstock

Overstock is an example of a larger ecommerce trend. More consumers turned to BNPL services in 2022 than in previous years, according to Adobe’s data. Online purchases made with BNPL were up 14% in 2022 over 2021, and revenue from BNPL purchases grew 27% year over year. Adobe did not share the total portion of online orders that use BNPL.

BNPL trends are shifting in 2023 so far, according to early data. In January and February 2023, BNPL use increased 10% year over year, while revenue decreased 19% over the same period. This shows that shoppers are using payment plans to fund lower-priced purchases, like Overstock reported.

Furniture sales and groceries were the two categories where consumers used BNPL more so far in 2023 than in 2022, Adobe found. BNPL furniture purchases were up 38% in the first two months of the year.

“The strong online growth of home furnishing purchasing is expected to bolster buy-now-pay-later adoption, given the higher ticket prices in this category,” Adobe Digital Insights lead analyst Vivek Pandya said in a press release.

This article was featured in the May 2023 Strategy Insights, “The perfect purchase experience.” Read other articles related to this topic by downloading for free here.

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Chewy and Petco sales were up in 2022 as pet parents spent more

Mary Meisenzahl — Thu, 23 Mar 2023 18:38:32 +0000

Competing pet retailers Chewy and Petco Health and Wellness Company Inc. both reported growing sales for the fourth quarter of 2022.

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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AI powers Asian Beauty Essentials

Abbas Haleem — Wed, 15 Mar 2023 14:57:39 +0000

To drive conversion, skin care brand Asian Beauty Essentials uses artificial intelligence to write copy for shoppable blog posts in both English and Spanish, says founder and CEO Lauren Petrullo.

It produces six blogs a week, some of which drive more than 9,000 visits per month, she says.

To achieve this, she uses a technology trio:

Ahrefs, an SEO tool for growing search traffic
Surfer SEO, which helps the retailer grade and rank content
Jasper, an AI content generator to write the posts

Asian Beauty Essentials made its blogs shoppable in October 2022, she says. Petrullo first identifies the blogs that are generating the most traffic, then adds shoppable components to them to see if that will drive conversion. That includes both links back to the ecommerce portion of AsianBeautyEssentials.com as well as products shoppers can add to their cart directly from a blog page.

For example, an Asian Beauty Essentials blog called “The Easiest 5 Step Korean Skin Care Routine for Rookies” suggests products that each have an “Add to Cart Now” button. Clicking on the product images or titles takes shoppers to each product listing page.

Asian Beauty Essentials adds products to its blogs so shoppers can put them in their carts without leaving the page.

Once a blog post on Asian Beauty Essentials starts to convert orders, Petrullo measures how many shoppers add products from that post to their carts and how many shoppers complete the purchase as opposed to abandoning the cart. She also checks the average order value from the blog post to determine if she should create similar blog posts or take a different approach.

After making the brand’s blog posts shoppable, its average order value grew to more than $100. That compares with about $34 prior to making blogs shoppable.

Petrullo says she made the decision to add Spanish-language blog posts in June 2022 after going through her customer list and evaluating where orders were coming from and what customers’ last names were.

“My current focus is making sure the content is authentically correct and therefore a really good user experience,” Petrullo says. “I trust that the conversions will come later, and so far, those hypotheses have been winning out.”

Expanding artificial intelligence to email

Asian Beauty Essentials uses Klaviyo as its email marketing provider.

Klaviyo determines the average order value for different customer segments. Among the biggest insights Klaviyo provides, she says, is how many times a customer has purchased after clicking on an email and what products she purchased together.

But she says she especially values the AI components Klaviyo offers. The vendor sends emails at the times a consumer is most likely to open it and engage on a link. Brands can also send emails based on when customers are likely to finish products that need replenishing. She also used Klaviyo’s “Back in Stock” feature, which adds a “notify me when available” button on the website to products that are out of stock. This helps her determine how much product to reorder.

Klaviyo can also automatically exclude customers from email lists if they have already bought items the email is promoting.

She says all the AI technology was a “huge, huge investment,” and it seems to have paid off.

This is part of Digital Commerce 360’s March 2023 Strategy Insights edition. Our members have access to all the articles in this month’s issue, Data-Driven Retail.

This article is part of a larger piece, “Retailers use data to improve web conversion and improve the customer experience.”

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Retailers use data to improve web conversion and improve the customer experience

Abbas Haleem — Tue, 14 Mar 2023 20:04:58 +0000

Sometimes, shoppers already know what they want to buy — and when they want it. A prime example is buying flowers for Valentine’s Day, says Katie Hudson, content director at online flower retailer UrbanStems. UrbanStems sells about five times its typical volume in the week leading up to Feb. 14, Hudson says. During this week, a […]

The post Retailers use data to improve web conversion and improve the customer experience  appeared first on Digital Commerce 360.

How are digital marketers using AI to boost conversion?

Gretchen Salois — Wed, 08 Mar 2023 13:30:53 +0000

Artificial intelligence has helped decrease digital marketing costs at online pet supplements retailer Finn Wellness LLC. “Over the last six months, our [digital marketing] approach has been test, test, test,” says Randall Stainton, director of growth. Facebook and Instagram ads help Finn reach new customers. But with limited options, he says. With Facebook, Finn could […]

The post How are digital marketers using AI to boost conversion? appeared first on Digital Commerce 360.

Wayfair and Overstock are using different strategies to survive declining sales

Mary Meisenzahl — Wed, 01 Mar 2023 21:58:17 +0000

Wayfair Inc. and Overstock.com Inc. both saw sales decline in 2022. The competing ecommerce furniture chains reported slowing sales and fewer active customers, and they’re adopting different strategies to turn things around.

Wayfair is No. 7 in the 2022 Digital Commerce 360 Top 1000, Overstock is No. 33.

Overstock and Wayfair sales are down

Wayfair and Overstock reported a decline in sales in 2022 across the quarter and year.

Wayfair’s total net revenue for the quarter ended Dec. 31 decreased 4.6% year over year to $151 million. The company also reported a net loss of $351 million, significantly higher than the net loss of $202 million in the fourth quarter of 2021.

Net revenue at Wayfair was also down for the 2022 fiscal year, dropping 10.9% over 2021. The net loss over the year was $1.3 billion.

Overstock’s earnings report was even more grim. Net revenue decreased 34% in the fourth quarter ended Dec. 31 to $405 million, though the net loss was a comparatively small $16 million.

Net revenue for the full year was $1.9 million, a 30% decrease year over year. Overstock reported a net loss of $35 million for 2022, with about half of that loss in the fourth quarter.

Active customers declined

Executives at both furniture retailers said they had fewer active customers making purchases. Wayfair reported 22.1 million active customers in the fourth quarter of 2022, a 19% year-over-year decrease.

Overstock is a relatively smaller operation, with 5.2 million active shoppers in Q4, a 36% decline year over year.

This trend is in line with consumer data Digital Commerce 360 collected in an April 2022 survey of 1,113 online shoppers. Three-quarters of respondents said they planned to buy less than half of home goods online, compared to 59% answering that way in 2021.

Consumers planned to pare down their online home shopping. 42% said they would spend the same amount on home goods as they had the previous year. Another 41% said they would spend less. Respondents also said they would spend less on outdoor furnishings, new furniture and home office setups than in 2021, with appliance repairs the only section seeing a slight increase.

Overstock aims at increasing sales to younger customers

Even as overall sales decreased, mobile orders were a bright spot for Overstock. Overstock’s app adoption is growing “rapidly,” CEO Jonathan Johnson told Digital Commerce 360 in a phone interview. It’s now the company’s fastest growing sales channel, making up 52% of fourth quarter sales. The company expects to see at least the same level of app growth in 2023.

Overstock’s typical customer skews “older and more affluent,” Johnson said. App users show higher loyalty, have higher conversion rates and are also younger than the average customer overall, he said, though he declined to share specifics.

Overstock’s other strategy for reaching younger buyers involves influencers, Johnson said, and Overstock is spending more than ever before on marketing. The website partnered with influencers and brand ambassadors with far reach on social media, including HGTV star Tarek El Moussa.

Wayfair focuses on cutting costs

As Overstock concentrates on drawing in new customers, Wayfair has cut costs as a strategy to get back in the black.

The furniture retailer has taken several measures to cut unnecessary costs, CEO Niraj Shah told investors in a Feb. 23 call. Wayfair laid off 1,750 employees in January, totaling about 10% of its total workforce including 1,200 corporate employees. These cuts were on top of earlier layoffs of 900 corporate workers in August to “reduce redundancies and remove excess management layers,” Shah said at the time.

The company has also had a hiring freeze in place since spring 2022, and has been reducing advertising budgets that had grown beyond the small tests that they were originally intended for, Shah said.

Both companies are hoping 2023 will turn things around for the online furniture industry. 2022 was a “year we will not forget nor repeat,” Overstock’s Johnson told investors.

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The post Wayfair and Overstock are using different strategies to survive declining sales appeared first on Digital Commerce 360.

Online retailers, online retail, e-retail news and e-commerce news

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How Chewy used its large customer base to become the largest online pet pharmacy

Customers requested health care from Chewy

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Pet health is resilient

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Overstock CEO says customers are using BNPL for purchases as low as $10

BNPL purchases can be for low amounts

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Chewy and Petco sales were up in 2022 as pet parents spent more

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The pet market keeps growing

Chewy earnings summary

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

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

Petco earnings summary

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

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

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AI powers Asian Beauty Essentials

To achieve this, she uses a technology trio:

Expanding artificial intelligence to email

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Retailers use data to improve web conversion and improve the customer experience

How are digital marketers using AI to boost conversion?

Wayfair and Overstock are using different strategies to survive declining sales

Overstock and Wayfair sales are down

Active customers declined

Overstock aims at increasing sales to younger customers

Wayfair focuses on cutting costs

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