For the fiscal first quarter ended April 28, the apparel retailer posted total net revenue of $309.6 million. That compares with $303.7 million in the first quarter of 2022, a 1.9% gain. Net loss was $1.7 million, which compared with a Q1 2022 net loss of $2.4 million.

Lands’ End ecommerce

Ecommerce, which Lands’ End launched in the late 1990s and far ahead of many other apparel and mass merchandise retailers, also remained flat in the U.S. and declined overseas.

For the quarter, global Lands’ End ecommerce net revenue was $203.1 million. That’s a decrease of 7.3% from $219.1 million in the first quarter of fiscal 2022. Compared to the first quarter of fiscal 2022, U.S. ecommerce net revenue increased 1.6% to $177.7 million from $174.9 million.

Lands’ End U.S. ecommerce accounted for 57.4% of all sales compared with 57.6% in the first quarter of 2022.

Our U.S. ecommerce, which represents our largest go-to market segment, saw a sales increase of 2% from the first quarter of 2022, driven by targeted promotions within swim and adjacent product categories, interim chief financial officer Bernie McCracken told analysts on the Lands’ End Q1 earnings call.

“Our Europe ecommerce business in the quarter was down 29%, reflecting the continued lower levels of consumer demand in Europe,” McCracken said.

Lands’ End B2B sales

Lands’ End does not break out its B2B ecommerce numbers, but overall business-to-business sales in Q1 from its Outfitters unit was $74.0 million. That’s a 37.1% increase from $54.0 million in the first quarter of fiscal 2022.

“We continue to roll out our strategic initiatives and expect that the learnings from each successive quarter will enable further refinement,” said CEO Andrew McLean.

In the wake of weak ecommerce sales growth, Lands’ End is bringing in a new senior executive to change up operations. The company in April hired Stuart Hogue as Lands’ End’s senior vice president of U.S. ecommerce. Most recently, Hogue served as a senior advisor for McKinsey & Co. Prior to that, Hogue worked for 15 years at Nike. Most recently, he was vice president and general manager of Foot Locker, according to his LinkedIn profile.

“Stuart is a digitally savvy leader with more than 20 years of industry experience,” McLean told analysts. “He enjoyed a successful career at Nike and joined us from McKinsey, where he advised clients on digital, omnichannel retail, and marketing transformation initiatives.”

Lands’ End is No. 79 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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The service, known as Adaptive Checkout, offers biweekly and monthly payment options for purchases of more than $50 with annual percentage rates starting at zero, according to a June 7 statement. Millions of customers using Amazon.com and the Amazon mobile app already have access to the pay-over-time service, the companies said. Amazon Pay is the retailer’s payment service available to consumers on other ecommerce websites. Shoppers can use their Amazon accounts, with payment and shipping information, to shop on other websites.

More retailers are adding buy-now-pay-later services every year, and as of June 2023, 54.4% of Digital Commerce 360’s ranking of the Top 1000 online retailers offer some version of this payment type. That’s up from 45.8% of Top 1000 retailers in 2022 and 28.2% in 2020. Amazon first added Affirm in 2021. For comparison, BNPL is more common among retailers who also offer Amazon Pay, at 68.2%.

17.3% of retailers in the Top 1000 offer Amazon Pay.

The buy-now-pay-later option can increase sales and customer loyalty, and attract new customers, San Francisco-based Affirm said. The mattress-and-bedding company Casper and water-filter supplier USA Berkey Filters have already integrated Affirm’s offering within their use of Amazon Pay, according to the statement.

“Customers want more choice and flexibility when paying online,” Affirm president Libor Michalek said in the statement.

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

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Someone has to pay. Often, it’s merchants. Within the Digital Commerce 360 Top 1000, 77.2% of retailers offer free shipping in some capacity, such as with a minimum purchase.

The reason for this is simple: Retailers are eager to please shoppers who appreciate “free” shipping.

But during the pandemic and subsequent supply-chain crisis, retailers learned anew just how expensive it can be to offer free shipping. Fuel costs rose, while warehousing space and delivery drivers grew harder to find.

In times like these, wise merchants look to cut the cost of shipping. The question, of course, is how best to do so. Should a retailer outsource shipping to a third party or marketplace? Or does keeping shipping in-house have advantages of its own? Can changing shipping schedules or packaging types make a difference? Is there room to negotiate with carriers?

Logistics expertise

One way to answer those questions is to hire an expert in logistics. That’s what Steeped Coffee did.

Wade Wickus joined the California-based retailer as vice president of operations in July 2022. Steeped sells coffee in “single-serving brew bags” similar to tea bags.

When Wickus came on board, the retailer was doing its own fulfillment out of its manufacturing facility. That had worked well enough during the earlier years when Steeped Coffee was a start-up with a direct-to-consumer site. But by 2022, the merchant was also running a wholesale business with customers including Whole Foods and Target Corp., had launched a business-to-business service for Airbnb hosts and other hospitality providers, operated a store on the Amazon marketplace, and was still running a direct-to-consumer business through Shopify.

That made for a complicated mix of shipping needs. But regardless of complexity or customer mix, the path to cost savings is generally the same, according to Wickus, who offers advice about retail logistics on his Supply Chain Secret Sauce podcast.

The place to start, he says in an interview with Digital Commerce 360, is the basics.

“One thing that I would look at is the box — the shipping box that you’re sending it out in as well as the packaging of the product,” Wickus says. “So if you can trim down DIM, that will help pricing strategy.”

DIM weight is the dimensional weight of a package, which measures the amount of space a package takes up in relation to its weight.

UPS, FedEx and the U.S. Postal Service all compare DIM weight and actual weight of a package and then charge retailers whichever is more expensive. So packing a box as efficiently as possible with lightweight materials and without extra space will generally cut shipping costs.

To cut shipping costs, ask for what you need

But it’s not quite that simple because carrier rates vary across regions.

“Optimizing the box is the first thing, and then once you have that, you have to optimize your rates,” Wickus says. “You have to get with your carrier and make sure your rates are aligned with your weights, because usually rates are set for certain zones and certain services and a certain way of shipping.”

Merchants with significant volume can optimize rates by taking advantage of “zone skipping.”

Zone skipping is when a retailer allows a trucking company to hold its packages until there are enough boxes heading to the same area of the country to fill a truckload. That truck then travels the long distance, for example, from California to Philadelphia, bypassing the regional sorting centers of carriers like UPS. When the truck reaches its destination “zone,” the packages are only then unloaded and sorted for last-mile delivery. The result is a lower cost-per-package to ship.

Wickus declined to say what percentage of his packages are sent through zone skipping or how much his company saves in costs by doing so. But he urges all retailers to talk with carriers about the options that are available.

Talk through pricing

In fact, Wickus says talking with carriers is often the easiest way to lower shipping costs. For example, major carriers including DHL, UPS and FedEx offer discount prices for ecommerce shipments. But not every clerk at every shipper is eager to offer discounts.

“You have to be sure to ask for those ecommerce rates because they don’t often just give them to you,” he says.

Similarly, retail shippers often don’t notice price discounts from USPS.

In May, the postal service opened its USPS Connect eCommerce service to merchants across the U.S. (The service had previously been part of a test that was available only to merchants in Texas.)

“That can reduce expenses for a lot of folks, but if you don’t ask to be part of USPS Connect, you won’t get those discounts,” Wickus says.

The clock is ticking

Another basic area of logistics where savings can be found is in the warehouse itself.

Automakers saved on logistics expenses in the 1970s using just-in-time manufacturing principles that sought to reduce the time supplies were held in a warehouse and thus cut the labor and real-estate costs associated with storage.

Among retailers, a just-in time/lean approach can be a novel way to reduce shipping costs.

For example, 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 shipping dates, founder and CEO Johnny Brown said in an interview with Digital Commerce 360, 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, Brown says.

“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 declined to give a dollar figure for those savings.

Outsourcing and robots

In April, UPS released the results of a survey of 500 ecommerce businesses, and 27% said it was “difficult to manage shipments and ensure a consistent, positive shipping experience across multiple marketplaces and carriers.”

So when a retailer reaches a volume level where in-house staff is struggling and when the operations team has optimized packaging, negotiated shipping rates, and reduced warehouse carrying time, it’s time to consider adding additional expertise.

In January 2023, Steeped Coffee was at that point.

“We had a warehouse, we had manufacturing on site, but based on our scale and where we wanted to go and how fast we’re growing, we just needed to outsource logistics to a third party because they can do it so much more efficiently than we can,” Wickus says.

Wickus put together a request-for-proposals (RFP) process aimed at finding a third-party logistics provider that had advanced robotics capable of case picking, box packing and more that could maximize savings across Steeped Coffee’s customer base. Similarly, Wickus wanted to know the robotics’ constraints.

“Because the more that we can use their robotics, the better pricing structure we have from them,” he says.

In the end, Steeped Coffee signed a deal with Nimble.ai, a provider of what it calls “fully autonomous fulfillment” services.

Wickus declined to say how much Steeped Coffee will pay for Nimble’s services, but he expects to save roughly 30% in fulfillment costs by making the change.

How does a retailer know if outsourcing is the answer? 

There are many reasons a merchant might decide to outsource fulfillment services. First and foremost is that 3PLs and other logistics vendors promise that such moves bring cost savings. But there are other considerations, particularly for smaller retailers.

For example, using the small staff at a small to mid-sized merchant for fulfillment poses a risk. If just a handful of people are doing it all — selling, packing, shipping, etc. — a single sick day by a single worker can throw deliveries off schedule.

Similarly, using a marketplace or 3PL with a national or regional footprint that can store merchandise in multiple warehouses close to major cities, highways and airports ensures rapid delivery. No small retailer that does fulfillment on its own can hope to match such speed.

Black Wolf Skincare recently opted to outsource its fulfillment operations for these reasons. The skincare brand went with fulfillment services vendor ShipHero.

Black Wolf sends its products to ShipHero’s West Palm Beach, Florida, facility. ShipHero then distributes shipments across its network of warehouses and carriers to ensure the fastest delivery times. As a result, Black Wolf cut its shipping costs and reduced the time it takes to ship orders to customers to less than three days, on average, from five or more days, co-founder Alex Lewkowict said in an interview with Digital Commerce 360.

“By my calculation, even at our volume of 1,000 orders a month, we saved more than $2 in shipping costs [per order] using their ecommerce tool,” he says.

The tool helped Black Wolf Skincare find the cheapest available shipping carrier, he says.

“The plan started around $1,800 a month,” he says.

Eliminate the middleman

But some merchants take a different approach.

Marketplace seller Rohan Thambrahalli told Digital Commerce 360 that one way to reduce fulfillment costs is to not have marketplaces provide fulfillment for you.

Thambrahalli, who sells a line of rechargeable headlamps under the brand Kawach on the Amazon marketplace, says he opted not to use Fulfillment by Amazon, a service in which the marketplace handles shipping and delivery and charges merchants fees for processing and long-term storage.

“First, neither you nor Amazon has to bear the cost to take the product from your facility to their facilities, then to the customer. It’s less costly,” he said.

Cutting a marketplace out of the fulfillment equation also decreases the probability of product being damaged, he says.

“If we ship from my facility directly to the customer, we are 6% to 10% more profitable on that order,” says Thambrahalli, who is also founder and president of DimeTyd, a provider of a service to help merchants recover money lost to Amazon accounting errors.

Of course, not participating in the FBA program comes at a cost too. FBA sellers can distinguish themselves from competitors and increase their chances of winning the Buy Box — the section on the right side of an Amazon product detail page where shoppers can add a product to their cart with a simple click on the bright yellow box that says, “Buy Now.” Participating in FBA also allows a retailer to offer Prime shipping.

Charge for shipping?

The most obvious way for a retailer to cut shipping costs is also the most difficult: Stop offering free shipping.

But by offering free and fast shipping for its paid members, Amazon has conditioned shoppers to expect free shipping everywhere. And many retailers decide they have little choice other than to follow Amazon’s lead.

And with good reason. A January 2022 Digital Commerce 360 survey of 1,108 online shoppers found that 76% said free shipping would make them more likely to make an online purchase. It was the most-cited factor.

Furthermore, in an August 2022 survey of 1,116 online shoppers by Digital Commerce 360 and Bizrate Insights, 70% of respondents listed the availability of free shipping as one of the three top reasons for choosing online retailers. Female shoppers were more likely than male shoppers to say that free shipping led to a purchase.

Given shoppers’ affection for free shipping, it’s not a surprise that the percentage of Top 1000 retailers willing to ship orders for free in at least some cases ticked up to 77.2% in 2022 from 73.8% the prior year, according to Digital Commerce 360 research. It was 70.1% in 2019, the last full year before the pandemic.

Put a different way: Less than a quarter of the top retailers charge customers for shipping.

Shipping: Free for consumers, pricy for retailers

Free shipping is most common in categories where products are relatively expensive and lightweight, making them less costly to ship. In the jewelry category, for example, 97.6% of Top 1000 retailers offer free shipping in some form. However, the median minimum purchase of $99 is at the top end of free shipping thresholds. Retailers in this category are also most likely to offer free return shipping, at 59.5%.

In the large apparel/accessories category, 84.7% of retailers offer free shipping and 39.7% free return shipping. The threshold for free shipping is lowest in flowers/gifts at $30, followed by health/beauty at $45.

Some 47.3% of Top 1000 retailers require a minimum purchase to receive free shipping. And that minimum has moved up noticeably in recent years. The median purchase required to get free shipping is now $75, as it was in 2021, whereas it was only $50 in 2019.

The percentage of mid-sized retailers that offer free shipping is only slightly lower, at 73.6%, according to the 2022 Next 1000 report from Digital Commerce 360.

Free shipping is costly for retailers. But many merchants find they have little option other than to give shoppers what they expect. It’s thus crucial for retailers to find ways to lower the expense of meeting those expectations.

That’s what Steeped Coffee tries to do. It offers free shipping for U.S. orders of $49 or more and has no plans to stop doing so.

“We’re going to continue to offer free shipping. We’re growing our brand. It’s important to get it out there, so we’re going to keep it easy and simple,” Wickus says. “But we’re reducing our costs on the fulfillment side. So perhaps it balances out.”

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Joe Cicman, senior analyst, Forrester Research

Buyers want helpful online product content and purchasing features, demands that have many of them preferring manufacturers’ websites, new research from Digital Commerce 360 and Forrester Research Inc. finds.

“Brand manufacturers win buyers with great content,” says Forrester senior analyst Joe Cicman. “Our joint research indicates the top choice for business buying in 2023 is the brand manufacturer’s own site (57%), beating-out Amazon Business at 43%. Why? Both a surprise and a delight: 85% of buyers tell us that the best source for product information is the brand manufacturer’s own site.”

The joint research project also found that 70% of B2B buyers will increase their online purchasing of goods and services in 2023.

Cicman — who will discuss at the EnvisionB2B Conference & Exhibition this month the results of the joint DC360/Forrester suryey and the intersection of online buyer demands and sellers’ ecommerce technology strategies — asserts that sellers must review the functions that address the challenges they face in serving customers, then identify the ecommerce technology platform that covers those w.

McKesson discusses B2B commerce trends

Val DuVernet, senior director of digital strategy and optimization, McKesson

Cicman will speak at EnvisionB2B in a June 21 session to analyze with DC360 the results of the joint research project and discuss digital commerce technology trends with Val DuVernet, senior director of digital strategy and optimization at medical products distributor McKesson.

B2B companies “should examine potential ecommerce solutions to identify which ones cover the specific common functions they most value,” Forrester says in the March 2023 report, “Demystifying the Technical Functions of B2B Commerce Solutions,” written by Cicman with input from other Forrester analysts.

Some of those functions, for example, can include how ecommerce technology manages customer account hierarchies, contract terms and personalized product catalogs for each customer.

Gartner’s Gene Alvarez on technology choices

Gene Alvarez, distinguished vice president and analyst covering digital commerce technology at research and advisory firm Gartner Inc., says B2B companies today have plenty options for deploying ecommerce technology based on their resources and their customers’ demands regarding the online buying experience.

Gene Alvarez, distinguished vice president and analyst, Gartner Inc.

Companies with limited IT resources can opt for software-as-a-service platforms that support customized customer-facing front ends. But businesses with more substantial resources can move up to even more customizable modular and composable MACH platforms with extensive use of microservices, APIs, cloud and headless infrastructure configurations, Alvarez says.

As competition increases in B2B ecommerce, and companies develop new and innovative ways to interact with buyers and make their customers’ jobs easier, it will be crucial for online sellers to operate commerce technology they can modify to keep up with new standards.

“As new innovation comes along, you need to” be able to bring about that new innovation because it will be table stakes within a year,” Alvarez says. “That’s where MACH brings advantages.”

Alvarez will speak on digital technology trends and strategies at EnvisionB2B. He will lead a June 20 panel and workshop on building customer loyalty.

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Already Asos’s third-largest shareholder, Frasers raised its holding to 8.8% from 7.4%, according to a June 6 filing. The stake has grown from around 5% in October.

Ashley founded Sports Direct four decades ago and built it into Frasers. The billionaire has a track record of taking stakes in failing retailers and growing positions in rivals.

Frasers has purchased stakes in Hugo Boss AG and luxury handbag maker Mulberry as well as buying Savile Row tailor Gieves & Hawkes, video game retailer Game Digital, apparel brand Jack Wills and online brand Missguided.

Asos changing trajectory

Asos has been overhauling its business in a bid to return to profit, reducing inventory and cutting back on excessive discounting.

Last month, it raised £75 million ($93 million) in equity from its two largest shareholders, Danish fashion group Bestseller and U.S. hedge fund Camelot Capital Partners, to support its turnaround plan. The company also refinanced its bank debt with borrowing facilities from specialist lender Bantry Bay Capital, backed by U.S. activist Elliott Investment Management.

Asos received a takeover approach from Turkish online retailer Trendyol in December at a price that would have valued the company’s shares at between £10 and £12 each, according to the Sunday Times. Talks between the companies are no longer active, the newspaper reported.

Asos was for years a stock-market darling amid rising sales and profits. But it has fallen 89% in the past three years and is now one of the United Kingdom’s most-shorted stocks.

ASOS Plc Holdings ranks No. 19 in the 2023 Europe Database. Digital Commerce 360’s database ranks the largest European online retailers by their web sales.

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“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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The company is negotiating with Verizon Communications Inc., T-Mobile US Inc. and Dish Network Corp. to get the lowest possible wholesale prices. That would let it offer Prime members wireless plans for $10 a month or possibly for free and bolster loyalty among its biggest-spending customers, the people said. They requested anonymity to discuss a private matter.

The talks have been going on for six to eight weeks and have also included AT&T Inc. at times, but the plan may take several more months to launch and could be scrapped, one person said.

“We are always exploring adding even more benefits for Prime members, but don’t have plans to add wireless at this time,” Amazon spokesperson Maggie Sivon said in a statement.

T-Mobile, AT&T and Verizon all said they were not currently in discussions with Amazon about wireless service. Dish declined to comment.

Amazon Prime benefits

Amazon’s U.S. Prime subscribers pay $139 a year for privileges like speedy free delivery, video streaming and access to 100 million songs. Analysts say Prime membership has stagnated in the country since Amazon boosted the annual price from $119, a sign that a subscription is less attractive to consumers struggling with a stubbornly high inflation rate. About 167 million Amazon shoppers had Prime memberships as of March. That’s unchanged from a year earlier, according to Consumer Intelligence Research Partners.

“Prime membership continues to grow year over year as the value members receive continues to increase,” said Amazon spokesperson Bradley Mattinger.

Amazon is competing with Walmart Inc., whose $98-a-year Walmart+ membership is emerging as a lower-cost alternative. It offers many of the same perks as Prime and free grocery delivery on orders of at least $35. Amazon in February increased its free grocery delivery threshold to $150 from $35.

Amazon’s influence

For the wireless industry, an Amazon deal could be seen as a welcome boost to wholesale revenue and a way to attract more traffic to newly expanded 5G networks. But Amazon’s entry could be detrimental if Prime wireless becomes popular and starts to chip away at the big carriers’ customer base.

A deeply below-market price from one of the world’s largest retailers could easily undercut the pricing power of the big three national carriers, making it tempting for subscribers to go to Amazon. Unlimited plans start at $60 a month at Verizon and T-Mobile, with AT&T starting at $65.

With Prime wireless, Amazon would become a new national brand, reselling mobile service from one of the big three carriers. The retailer could choose to offer wireless to its Prime members at an attractive price, prompting customers to cancel their current mobile service. Or, Amazon could go wider and offer Prime wireless to anyone who wants to switch service and become a Prime member.

Amazon sends shivers through the industry any time it enters a new market. The Seattle-based retail giant has shown it’s willing to absorb billions of dollars in shipping and movie production costs to fuel Prime membership growth. Wireless service could be just one more item Amazon’s willing to take a hit on if it gives the company a leg up versus Walmart.

Can’t say no

The carriers aren’t really in a position to say no to Amazon. Having poured billions of dollars into super-fast, high-capacity 5G wireless networks, the mobile operators have little to show for the effort. They are eager to find new applications and sales outlets that can generate some return on the investment.

Dish has the most to gain from a deal with Amazon. The company is attempting to transform itself into a cloud-based wireless carrier capable of competing with Verizon and AT&T. But it’s carrying a load of distressed debt and is seeking new avenues of funding to be able to launch its Boost Infinite wireless service. Dish is already working with Amazon, whose AWS division is providing cloud computing to run the core network for its wireless service and is expected to start selling Boost Infinite wireless service on Amazon as soon as next month.

“This is perceived as a lifeline for Dish,” said Peter Supino, an analyst at Wolfe Research.

For the big three carriers, Amazon’s entry is “troublesome,” Supino said. “It’s understood that the fewer competitors, the better.” Europe’s wireless market is a good example of how big carriers saw industry prices fall with the entry of low-price resellers, he said.

Amazon has tried phones before

Amazon has already made several forays into wireless. In 2014, Amazon introduced the Fire Phone in an attempt to compete with devices from Apple Inc. and Samsung Electronics Co. But Amazon killed it a year later. The company also plans to start testing a satellite-internet service called Project Kuiper next year.

By taking the approach of a reseller, otherwise known as a mobile virtual network operator or MVNO, Amazon would avoid the huge costs of having to build out its own mobile network.

MVNOs have had a colorful track record. Brands including ESPN Mobile and Virgin Mobile both failed. Alphabet Inc. has the Google Fi service that runs on T-Mobile’s network and has about 2 million customers.

Companies sometimes bundle wireless as a perk in broader service packages. Cable companies like Charter Communications Inc., which resells service from Verizon, have said they see a time soon when the cable bill includes wireless service. Charter and Comcast Corp. have fueled some of the sector’s fastest subscriber growth by offering cheap to free wireless service as a promotion bundled with broadband.

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

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Scott Dushane, director of IT, Fairmount Tire & Rubber

“One of our biggest differentiations is when we answer the phone, it’s on the first couple of rings, every single time,” says Scott Dushane, director of IT.

But while that helps build personal relationships with customers, it’s not a scalable-enough business strategy to meet Fairmount’s goals. And those goals are ambitious — like providing an Uber Eats level of a transparent order and delivery service.

“Just like you can now go to Uber Eats, order a burrito, then know the driver’s name that’s going to pick up that burrito and then hand it to you in exactly 23 minutes, we want that same experience to happen for wholesale tires,” Dushane says.

“It’s a much less sexy industry, but the genie’s out of the bottle — we need to provide the same level of service and supply chain transparency that Uber is providing.”

Making strides in service and sustainability

Fairmount Tire & Rubber primarily serves the four-state region of Arizona, California, Nevada and Utah. It uses its home-grown self-service ecommerce site integrated with an online delivery management system to improve and expand its business. At the same time, it is drastically cutting out paper documents, increasing its sustainability and operating efficiency, Dushane says.

He says Fairmount is making significant strides in upgrading how it engages B2B customers online, matching buyers with the particular tire SKUs they need from a long list of options — such as the many tire brands, sizes, and applications like tread patterns for different types of weather — and providing transparency in deliveries, including same-day service.

Fairmount uses an online delivery management system that has streamlined and expedited the distributor’s delivery system and lets customers know through a GPS-based mobile app what tires are coming and when.

The delivery management system, from Descartes Systems Group, integrates through Google Cloud with Fairmount’s digital commerce platform and other technology systems and applications, including enterprise resource planning, product information management, customer relationship management and warehouse management.

Dushane says that, until recently, the most common call Fairmount’s agents received was “Where’s my tires?” But with the new system, Fairmount can replace those inbound customer service calls with outbound sales “rainmaker” calls often made by the same agent.

“This is real money,” he says.

No more shuffling paper for invoices

The old system had relied heavily on paper documents about customer orders and available delivery trucks, resulting in a difficult process for planning order fulfillment and delivery.

“For many years, it was a stack of papers on someone’s desk. And you would do the old shuffle and figure out how to route and how to build trucks,” Dushane says.

Fairmount now uses its integrated ERP, order management and delivery management systems to automatically coordinate how orders are delivered with the most efficient use of trucks and routes, he adds.

“It is an unbelievably difficult problem to route trucks throughout a city, like mathematically,” he says, adding, “Descartes comes up with sort of magical solutions that [we] never came up with for the last 30 years of running the same routes.”

As customer orders come into Fairmount’s B2B ecommerce login customer portal, at b2b.fairmounttire.com, the tire distributor’s financial software generates electronic invoices that the delivery management system allocates to delivery trucks based on their availability and capacity.

One advantage of the new system is replacing a system that used to require three sheets of paper for each invoice. When drivers make deliveries, they use mobile devices stored with order details and e-invoices to receive customers’ digital signatures and generate delivery confirmation notes.

“We totally eliminated paper,” Dushane says.

Reworking delivery routes for more service and sales

In addition, Fairmount speeds up deliveries by using its software to arrange multiple orders on the same truck in a way that makes them faster to unload at each customer’s destination.

And that has opened the door to more sales opportunities as well as greater efficiency, Dushane says.

“We have been able to start to run second and third routes because of Descartes … because we know when the drivers will be coming back and what the trucks can be filled up to — there’s no obfuscation,” he says.

“We have fixed costs,” he adds. “So let’s use those fixed costs to the best of our ability.”

This article is included in a special report covering B2B digital technology trends and a preview of the 2023 EnvisionB2B Conference & Exhibition.

Scott Dushane will speak during a panel and workshop on order management, fulfillment and delivery operations at the 2023 EnvisionB2B Conference & Exhibition.

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The $140 million raised by Austin-based 8fig will be used by the company to make upgrades to its supply chain management software platform for online sellers and for offering B2B and B2C sellers new ways to finance operations and expansion.

“8fig is providing these online sellers with the financial support and tools necessary to thrive in any economic climate,” says CEO Yaron Shapira. “The latest funding round has proven that the market has great confidence in 8fig and the important role 8fig continues to play in the ongoing growth of ecommerce.”

The latest round of investment is from Koch Disruptive Technologies with participation from existing investors Battery Ventures and others. Since 8fig’s founding in 2020, it has raised more than $195.6 million in financing. It has provided more than $500 million in financing to online sellers, the company says.

“The global macroeconomic challenges we are experiencing make it difficult for ecommerce business owners to access the resources they need to succeed,” Shapira says.

The company provides growth plans for small and medium-sized ecommerce businesses that have some sales history. The plan includes funding and financial tools for supply chain management, financial planning, and freight and logistics coordination, according to Crunchbase.com.

With the new funding, 8fig plans to implement enhanced financial management capabilities for sellers, including more banking alternatives and cash flow prediction models that will include alerts and insights based on business performance. 8fig also says it is collaborating with ecommerce marketing agencies on a financial tool to evaluate their clients’ cash flow requirements and mitigate risks by providing alerts and actionable insights.

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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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