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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When asked about their experiences with marketplaces over the past year, online shoppers remain passionate about purchasing via Amazon’s marketplace. That was in play for 76% of survey respondents. As there is a lot of clutter on marketplaces from advertising and sponsorship, we wondered if shoppers understood the complexity of marketplaces. As it turns out, close to half (46%) admitted they didn’t know if a product was being offered by Amazon or another marketplace seller.

Who’s selling what? And where?

An array of U.S. marketplaces beyond Amazon, eBay and Walmart, including specialty marketplaces, are also capturing shopper attention. Some 35% purchased from Walmart’s marketplace and 39% ventured out, also buying from marketplaces beyond eBay, Amazon and Walmart. 31% of participants bought from specialty marketplaces. Chinese marketplaces saw 18% penetration, and 6% of respondents purchased from other non-listed marketplaces.

Shoppers are active in the community, leaving product reviews at Amazon and other marketplaces. Amazon was the biggest recipient (46%), while 31% took the time to leave reviews beyond Amazon.

Interest in same-day delivery is seen and will likely grow in the coming year as 20% of those surveyed make those “need it now” purchases. Though marketplace sellers strive for in-stock status, 18% encountered out-of-stocks, which seems somewhat reasonable coming off post-COVID supply chain woes.

A topic we wanted to cover in-depth this year was counterfeit products. Just 9% of respondents felt they received such merchandise.

With assortments on marketplaces perceived to be greater, shoppers may find marketplaces more attractive. Half of marketplace visitors believe they are finding larger assortments with 43% about the same and just 7% less.

Higher prices, longer delivery lead times and out-of-stock products were the biggest marketplace challenges shoppers faced

Marketplaces need to monitor everything from product pricing to shipping fees as customers are savvy and shop around. This is especially true as 39% felt that marketplace prices were higher than they remembered. Additionally, 26% believed shipping fees were higher as well.

Logistics can be challenging for online shoppers with heightened interest in fast delivery. Yet, longer delivery lead times were found among 26% of survey respondents.

Out-of-stocks were sometimes a factor for shoppers (22%) and may have driven them to explore alternative marketplaces. Customer service-wise, just 15% said that limited or longer wait times were seen as problematic.

For 24%, it was difficult to distinguish between going to sellers versus the main marketplace, which was seen as challenging. Marketplaces should assess awareness of where products are made and their authenticity, though. Only 18% discerned if products were made in the USA, and just 17% if products were counterfeit.

Shopper buying frequency: Social marketplaces get increased attention

Social marketplaces like Facebook or Instagram are attractive to online shoppers. Sellers should test them to see if audience fit makes sense. One in four online buyers shops these social marketplaces. It’s also a positive that 19% of survey respondents indicate being more comfortable with the online marketplace model. And 18% are conducting more online purchases via marketplaces.

Sellers must be aware of the clutter factor. Some 20% of survey respondents suggested they dislike it when retailers such as  Target and Walmart add marketplaces because the retailers’ sites become cluttered.

More online behavior changes include shopping directly on sellers’ websites instead of marketplaces (19%), increased purchasing on marketplaces (18%), trying new online marketplaces (17%), and shopping exclusively on marketplaces (6%).

The same number of respondents (20%) find the broader marketplace assortment appealing and believe marketplaces tend to have more inventory.

From a dollars and cents point of view, perceptions from 23% were that prices were often lower than other retailer sites. Meanwhile, 16% felt fees were often less than other retailer sites. Yet 14% found prices including shipping fees in line with other retailer sites.

And when it came to customer service, 13% suggested marketplace customer service is on par with the retail sites they shop (13%).

Marketplace adoption expands

Marketplace purchasing will likely be steady in the coming year as two in three online shoppers plan to purchase about the same from marketplaces. Comfort with the model sees one in four shoppers indicating they will be buying more or exclusively from marketplaces. Positively, only 10% will buy less, and 5% said they don’t buy on marketplaces.

Many shoppers will experiment when smartly tempted by marketplace sellers. The majority of shoppers (52%) are willing to buy from unfamiliar marketplace brands or sellers. The biggest opportunity is convincing those that are on the fence that a site or brand is a viable option and to gain their comfort among the 29% of participants on the fence.

Online marketplace exposure and purchasing often leads to direct purchasing, which is likely to be more profitable for the merchant. Over half of online shoppers surveyed indicate that they have ultimately purchased directly with that merchant. This added product visibility via marketplaces can serve as a strong customer acquisition vehicle, making it one of the reasons retailers are participating more on marketplaces.

The role of ratings/reviews in helping shoppers make smart selections has bottom-line impact for sellers. 96% of online shoppers read and make purchases based on ratings and reviews. Reviews always influence the majority (55%) when making purchases. Meanwhile, 41% occasionally see such an impact.

Thus, online marketplaces must make sure reviews are robust. Smartly positioning reviews within the shopping experience ensure strong viewership.

Marketplace shopping starts with better prices and free shipping, along with in-stock products that can be delivered fast

Online shoppers seek the fundamentals when choosing to shop at marketplaces over going directly to retail sites. Price is the driving factor, selection appreciated, and convenience a given. Topping the list of influences in driving online shoppers to marketplaces is better prices (52%) and free and discounted shipping (51%).

Delivery speed is also an important influence in selecting marketplaces. 41% of survey respondents refer to it in choosing a marketplace. Shipping efficiencies, at 25%, also were a factor.

34% of survey respondents see marketplaces, at their core, as more convenient ways to shop. For 25%, it may be the broader selection in a category and for 20% the influencing factor in a wider range of categories in one location. Meanwhile, 17% found they were ideal for repeat purchasing (17%). But more interesting to me is that they have a unique opportunity to help online shoppers find very specific items (34%) while also trying unique products (24%) that sways shoppers toward marketplaces.

Past experience is an important indicator of future purchasing. It served as an influence for 20% of those surveyed as well.

From a tactical perspective, ratings and reviews — and more comprehensive product information (14%) — power purchasing. Higher seller feedback and ratings were influencers for 25% of participants.

Shoppers have a preference for in-stock products, and 34% found it influenced their behavior.

Other marketplace tactics that came into play from an influence point of view included loyalty programs (19%) and mobile apps (18%). I’m surprised only 13% cited superior service. It should go without saying.

Top concerns related to online marketplace purchasing are logistics, fees, product authenticity and return limitations

Online shoppers want the products they purchase to be of top quality and as represented on the site. Encountering counterfeit products was top of mind for 35% of participants. At the same time, 30% cited issues around subpar product quality.

Because long shipping times can cause buyers to worry (39%), inventory and delivery transparency are welcome. 22% of these online shoppers expressed concerns that an online order would never ship.

Shoppers expect marketplace goods to come from trusted sellers. Some 30% had trepidation about non-U.S. sellers. Simultaneously, 29% worried about whether the seller was not reputable or certified.

Shoppers like to have flexibility in their return choices. Some 33% of surveyed online shoppers found a lack of return options a challenge. Having customer service and support available is a given. 28% of respondents cited it.

A lack of product or seller reviews concerned 27%. The validity and authenticity of product reviews also was an issue for 29%.

From the money and savings vantage point, 38% found shipping costs too high, while fraudulent business practices including counterfeit goods were on the concern list at 35%. Unexpected additional expenses such as sales tax (22%), finding U.S. products at lower prices (16%) and financing options not available (11%) also were on the minds of these shoppers.

Online marketplaces continue to have an opportunity to grow. Broad assortments and attention to the fundamentals — from price to selection — set the tone for success. I advise vigilance when it comes to them. Sellers must monitor the quality and authenticity of their products. Product reviews and information will continue to drive confidence, along with an uncluttered, search-friendly and efficient experience. Monitoring consumer behavior will ensure marketplaces are on track for success in 2023 and beyond.

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JD.com CEO Xu Lei is departing China’s No. 2 online commerce firm after more than a decade of climbing the ranks. He’s handing the reins to chief financial officer Sandy Xu starting June. While the outgoing CEO only officially took up his role around April 2022, he headed up JD’s core retail division for years. He was once regarded as the heir apparent to billionaire founder and chairman Richard Liu.

The management shuffle was announced after JD on May 11 reported revenue grew 1.4% to of 242.96 billion yuan ($35 billion). That beat projections but was the company’s lowest-ever pace of expansion. It swung from a loss to net income of 6.3 billion yuan in the March quarter, helped by 2.8 billion yuan of investment gains.

Meet the new boss

The incoming CEO is a two-decade auditing veteran who spent time with PriceWaterhouseCoopers. She now takes up the task of reviving one of China’s largest and highest-profile public companies. JD’s results, the first from a major Chinese tech company for the March quarter, suggest the internet sector is making some headway in efforts to eke out top-line growth, but still struggling to regain momentum after years of punishing COVID Zero restrictions.

JD’s performance was a far cry from the double-digit percentage expansions of previous years, before Beijing’s 2021 clampdown on internet spheres from online commerce to ride-hailing chilled a once-booming, free-wheeling tech sector.

JD.com is No. 1 is in the Asia Database. That’s Digital Commerce 360’s rankings of the largest online retailers in Asia by web sales. Rival Alibaba Group Holding Ltd. owns Taobao, No. 1 in the Digital Commerce 360 database of Global Online Marketplaces. It also owns Tmall (No. 2). JD.com is No. 4.

The legacy of the outgoing JD.com CEO

The 48-year-old outgoing CEO Xu, known for devising JD’s signature “6.18” sales bonanza, said in a statement he was quitting to devote more time to family. His successor becomes one of the few women chiefs of a major technology company. She emphasized in the same statement that Xu will remain involved with the company.

Xu leaves behind a legacy that includes introducing the rival to Alibaba’s Nov. 11 Singles’ Day gala, pushing back against internal opposition to roll out the weeks-long equivalent event around the company’s June 18 anniversary. He also stepped up during the company’s low points — including an investigation into Liu over alleged rape in 2018. He trimmed the workforce and cut units that weren’t contributing to growth.

JD’s earnings gave investors a sense of what to expect when Tencent Holdings Ltd., Alibaba and Baidu Inc. report results next week.

The future of JD.com

JD is now spending on incentives to ward off intensifying competition from rival merchants as well as social media platforms such as ByteDance, owner of TikTok. It launched a 10 billion yuan discount campaign to capture new Chinese users in March even as it pulled away from Southeast Asian ecommerce. It closed its Indonesian and Thailand ecommerce sites to try to shave costs elsewhere.

Xu Lei stressed on a call with analysts that he would continue to support the company as chairman of its advisory council. He lauded his successor for working alongside him in 2018 through JD’s “so-called darkest moment.”

On the company’s discount programs, his successor said the strategy sought to offer consumers wider price ranges and product categories, in an adjustment to post-pandemic shopping patterns.

“We are confident in our ability to control the overall costs of this program,” she said. “It has limited impact on our margins.”

JD had avoided the worst of the years-long crackdown that hit Alibaba. In March, Alibaba made the historic decision to split itself into six business units that could seek independent fundraising and listings.

JD.com itself has spun off several units including JD Health International Inc. It is in the process of listing its property and industrials businesses in Hong Kong. It would remain the majority owner of both companies, which haven’t disclosed fundraising plans.

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With Amazon Anywhere, introduced May 9, the company will let people on gaming, mobile, web and augmented-reality applications buy related real-world items without leaving the experience.

The service will debut with Peridot, an AR game featuring virtual pets from Niantic, the developer of Pokemon Go, the company said in a blog post. A video demonstrates a shopper linking their Amazon account to the game and purchasing a T-shirt, which is delivered from an Amazon warehouse.

The service allows consumers to buy physical products in gaming, mobile, web and augmented-reality applications.

The Seattle-based company has long tried to funnel users to its store, including via a longstanding program that offers a cut of each sale to partners that publish links to Amazon listings.

Now, facing increased competition from Shopify Inc. and other sellers of sophisticated ecommerce software, Amazon has sought to extend its reach to other corners of the internet. A program called Buy With Prime, launched in January, lets Prime subscribers use the speedy shipping service when shopping on other websites.

Retailers using Buy with Prime will receive shopper order information, including email addresses for customer orders. Merchants can use the data to provide customer service and build direct relationships with shoppers, Amazon said.

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

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The firm is in the early stages of consideration. The IPO’s size has also yet to be determined, according to people familiar with the matter. The business group is in talks with banks that could potentially help prepare for the IPO next year, said one of the people. The person asked not to be named as the matter is private.

The unit, which competes with rivals such as Amazon.com Inc. in markets outside China, is one of six parts that Alibaba is splitting into. Valuations for the international business units vary: Morgan Stanley in March priced “international retail” units including Lazada and Trendyol at roughly $29 billion. Meanwhile, a CICC analyst report from the same month valued the firm’s international division at about $39 billion. In recent quarters, however, growth has been volatile in the face of global recessionary fears.

If it goes ahead, the Alibaba unit would join a number of high-profile Chinese firms including fast-fashion leader Shein seeking to tap American capital even as tensions rise between the world’s two largest economies. A listing in the U.S. could help the business — formally Alibaba International Digital Commerce Group, or IDCG — attract global investors wary of putting money directly into China.

Alibaba owns Taobao, No. 1 in the Digital Commerce 360 database of Global Online Marketplaces. The database ranks marketplaces by total value, or gross merchandise value of sales. Alibaba also owns Tmall (No. 2).

Amazon is No. 3 in the Global Online Marketplace Database. It’s also No. 1 in the 2022 Digital Commerce 360 Top 1000 database. The Top 1000 ranks North American web merchants by sales.

Shein is No. 36 in the Digital Commerce 360 2022 Asia Database, which ranks Asia-based retailers by their online sales.

Alibaba empire considers IPOs

Alibaba in March unveiled plans to break up its empire into units such as ecommerce, logistics and the cloud, with each business potentially exploring fundraising and an IPO at an appropriate time. The company will consider gradually giving up control of some of the businesses, CEO Daniel Zhang said at the time, but declined to specify a timeline for any Alibaba IPOs.

IDCG includes:

• Southeast Asian online mall Lazada
• AliExpress, popular in Russia, Latin America and parts of Europe
• Trendyol in Turkey
• Daraz in South Asia
• Business-to-business marketplace Alibaba.com

In the final three months of 2022, the combined orders of Lazada, AliExpress, Trendyol and Daraz grew 3% from a year earlier, led by Trendyol. The international unit accounted for roughly $9.5 billion or 7% of Alibaba’s revenue in the last fiscal year and is headed by Jiang Fan, the former president of Alibaba’s domestic online retail businesses Taobao and Tmall.

Other parts of Alibaba’s empire have already begun moving ahead with spinoffs. Cainiao Network Technology Co., the logistics arm of Alibaba, as well as Freshippo, its grocery chain, have started preparations with banks for IPOs in Hong Kong.

Deliberations around an IPO are very preliminary and the situation may change, the people said. IDCG said in response to queries from Bloomberg that currently, there is no IPO plan.

Alibaba has in the past explored splitting off Lazada. The unit, bought in stages from Rocket Internet SE, is considered one of the Chinese firm’s most high-profile international brands. It competes with Amazon and Sea Ltd.’s Shopee in Southeast Asian markets such as Thailand, Malaysia and Singapore.

In 2022, Alibaba discussed raising at least $1 billion for Lazada before calling off negotiations with potential investors when talks bogged down over its valuation. It had aimed to secure the funding as a precursor to a spinoff. Alibaba has since mothballed the fundraising and injected additional funds into the company instead.

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The number of active buyers on the marketplace also fell — dropping 7% to 133 million during the period ending March 31, 2023. That too is the eighth consecutive quarterly drop.

Revenue rose 1% to $2.51 billion from $2.48 billion a year earlier.

EBay ranks No. 6 in the 2023 Digital Commerce 360 Online Marketplaces Database. A drop in eBay sales in recent quarters pushed the San Jose, Calif.-based marketplace from the No. 5 slot it held in the 2022 Database.

CEO Jamie Iannone is trying to reduce expenses to align with declining sales. In February, eBay announced it would cut about 500 employees, or 4% of its workforce.

EBay aims to sell more luxury items like watches to boost revenue while also offering refurbished items to appeal to price-conscious shoppers. In an effort to lure collectors, eBay provides a service to trade and authenticate trading cards, collectible sneakers and other items. It has been building climate-controlled vaults to store them.

In March, it announced a new “verified condition” badge for used heavy construction equipment sold on the site to assure buyers the machinery has been inspected.

eBay sales: Q2 outlook

EBay said it expects sales growth in the second quarter. The marketplace forecast revenue between $2.47 billion and $2.54 billion, an increase from the $2.42 billion reported in the same period a year ago. Analysts had estimated $2.43 billion in revenue in Q2.

For the fiscal first quarter ended March 31, 2023, eBay reported:

• The eighth consecutive quarter in which both GMV and active users fell.
• Revenue of $2.51 billion, an increase of 1% year over year.
• $841 million of operating cash flow and $709 million of free cash flow from continuing operations.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports.

Bloomberg News contributed to this report.

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The EU Court of Justice, the bloc’s top tribunal, dismissed Amazon’s challenge. Amazon cannot appeal the final ruling.

Amazon had objected to a European Commission decision allowing Italy to continue running its own probe into the “buy box.” That’s where Amazon highlights sellers of a particular product. Amazon objected after the EU’s antitrust arm started to examine the same issue.

The mass merchant last year settled the EU probe by offering a number of remedies, including a pledge to address concerns about the way its Buy Box for showcasing specific offers and Prime unduly favored its own retail business, including a promise to display a second Buy Box immediately underneath the first one.

Amazon is No. 1 in the 2022 Digital Commerce 360 Top 1000 database. The Top 1000 ranks North American web merchants by sales. It is No. 3 in the Digital Commerce 360 Online Marketplaces database, which ranks the 100 largest global marketplaces.

Stateside Amazon antitrust probes

The Federal Trade Commission has been looking at Amazon since 2019 over antitrust concerns with its retail business and cloud computing services.

The U.S. Federal Trade Commission revamped in June its Amazon antitrust probe. It shook up the investigative team, re-interviewing potential witnesses and asking questions about the company’s recent acquisition of MGM Studios, three people familiar with the probe said.

Other recent Amazon trouble

In March, an Amazon consultant pleaded guilty in giving sellers a competitive advantage.

Ephraim “Ed” Rosenberg was the final holdout among five U.S.-based defendants accused of paying off Amazon employees in exchange for confidential company data. Among other things, the data helped them steer business to some merchants and shut out their competitors.

Four other people have already pleaded guilty to the Amazon bribery scheme. Two of them have been sentenced to prison. One former Amazon employee who lives in India and allegedly accepted bribes was indicted but never arraigned.

The Amazon bribery scheme which began as early as 2017. It seemed plucked from a Hollywood script, with payments criss-crossing the globe via MoneyGram, PayPal and suitcases stuffed with cash sent via Uber.

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The report is based on surveys of 500 ecommerce businesses and 1,000 online shoppers in the U.S. 

Customers say bad shipping can ruin a good experience

Consumers told UPS that fast and reliable shipping is key for being happy with purchases. 90% of those consumers said shipping quality accounts for at least half of their online shopping experience.

Negative experiences happen periodically, according to the report. 71% of consumers said they had contacted customer service for an online order in the last year for shipping or delivery issues. Late deliveries were the most common reason to contact customer service, with 39% having cited this reason. Close behind, 36% of customer service interactions were due to lost orders that were never delivered. That was followed by damaged products (27%), late shipment (21%), and stolen orders (11%).

Consumers have clear expectations

Customer responses largely showed a desire for fast, inexpensive shipping, and up-to-date communication from retailers. 87% of consumers told UPS that they’d be more likely to buy from a specific retailer if they could personalize shipping, like choosing the arrival day and tracking packages.

UPS also asked consumers what delivery offerings they were most interested in. Respondents could select multiple offerings. Just over half, 52%, wanted the option to choose between standard and expedited shipping. 51% wanted the ability to select a specific date for deliveries; 42% also wanted to be able to select time of day.

Convenience of picking up and dropping off packages was also a consideration for many consumers. 45% wanted the option to return online orders in a variety of ways, including dropping off in stores and pre-printed labels. 29% want the choice of local pickup locations for orders, like a UPS store or retail location. Required signatures (22%) and sustainable shipping (22%) rounded out the list.

Digital Commerce 360’s August 2022 consumer poll found similar results about the importance of shipping quality and communication to customers. 76% of the 1,116 consumers surveyed ranked free shipping as one of the three most important factors in online shopping, more than any other option. Delivery speed was a distant second place at 43%. 33% said quality customer service was also a factor. Returns were also a factor in this survey, with 25% prioritizing free return shipping, though just 3% selected a physical store for returning orders.

Retailers face shipping challenges

Ecommerce businesses UPS surveyed said they were facing challenges providing these services to customers.

41% of retailers told UPS the reliability of shipping carriers was a top factor negatively impacting their business, and 26% named package theft. 27% said it was “difficult to manage shipments and ensure a consistent, positive shipping experience across multiple marketplaces and carriers.”

81% of the retailers UPS surveyed sell products across at least two marketplaces, with nearly half (42%) selling on four or more. That introduces another level of complexity into shipping. 41% of retailers said shipping requirements, like delivery timelines, were among the most difficult aspects to manage across multiple marketplaces. 38% named processes for lost or stolen deliveries, and 31% said return policies were among the most difficult. Delivery status updates are particularly difficult for 28% of retailers, while 26% named marketing and 20% cited fulfillment requirements.

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Amazon ranks No. 1 in the Top 1000 list of ecommerce retailers in North America, and No. 3 in the Online Marketplaces database. 

Amazon returns at UPS will no longer be free

Customers who drop returns off at UPS locations could be charged $1 per order going forward, The Information first reported. The fee will only apply if there is a Whole Foods, Kohl’s, or Amazon Fresh location closer to the order’s address than the UPS store. 

“We offer convenient, easy returns to Amazon customers, with one or more options for label-free, box-free returns at no cost,” a spokesperson told USA Today. “We always offer a free option for customers to return their item. If a customer would prefer to return their item at a UPS Store when there is a free option closer to their delivery address, a very small amount of customers may incur a $1 fee.”

Amazon will list some products as “frequently returned”

The online retailer also added a badge to some items warning customers that they are “frequently returned.” The Information first noticed the label on a record player and two dresses.

“We’re currently showing return rate information on some product detail pages to help our customers make more informed purchase decisions,” a spokesperson told The Information.

Amazon did not return Digital Commerce 360’s request for comment. 

Returns matter to customers, but they’re not the most important factor

A Digital Commerce 360 survey of over 1,000 consumers in August 2022 found shoppers regularly consider a potential return before they purchase. 54% take free returns into consideration, and 39% also look at the cost of a return. One-quarter of consumers said the timeframe is important.

It’s too soon to tell if Amazon customers will react negatively to the new policy, according to Michael Levin, co-founder and partner at research firm Consumer Intelligence Research Partners. 

“We expect it’s not a huge deal, though, and a very small percentage of marginal customers would react negatively,” he said. “Consumers decide first on cost and convenience of buying something, and think later, if at all, about how easy (or not) it is to return that thing.”

Some customers have already taken to social media to complain about the change, Business Insider reported.

The new policy keeps Amazon on par with the competition, Levin said.

“Many, many retailers charge customers for return shipping, although as far as we know, the major ones (Walmart, Target, etc.) don’t do it aggressively,” he said.

These changes around returns are a more transparent way for Amazon to be upfront about costs with customers, Josh Lowitz, also of Consumer Intelligence Research Partners, said.

“This move is similar to Amazon offering a dollar or two for accepting slightly slower shipping, or combining deliveries into a single delivery day. Amazon is letting shoppers know that they will share the savings, if a customer allows Amazon to operate more efficiently,” he said, by keeping prices lower for less expensive types of returns. Lowitz also pointed to Amazon’s policy of offering returned items for sale at reduced prices.

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Cleancult sells nontoxic cleaning products, such as soap and laundry detergent, in a cardboard carton. Shoppers then transfer the product into a glass bottle, which the brand also sells. Cleancult’s mission is to reduce plastic consumption, and it has 15 patents on the machines it uses to create its cartons.

Cleancult is not the first brand to tackle reducing plastic packaging in the cleaning industry, as other brand manufacturers sell cleaning products in 1-ounce concentrated glass bottles or sell products in powder form. This appeals to eco-conscience shoppers, but many consumers are not ready for this step, Lupberger says. While concentrated products are lighter, require less packaging and are more sustainable to ship than traditional products, it requires effort for customers at home to create the final product, which is a barrier, Lupberger says. Although Cleancult customers need to purchase a glass bottle in addition to its cleaning products, Lupberger says this is not a barrier to purchase.

Cleancult’s products are packaged and shipped without plastic.

“We want to go after the 99%,” Lupberger says. “We have to meet them where they are with ready-to-use formulas and ready-to-use bottles.”

“How do we change the category, but not change consumer behavior?” he adds about its goal to make choosing its plastic-free products easy for shoppers.

Cleancult.com launches and then pivots to physical retail

Cleancult launched in 2019 with its direct-to-consumer website Cleancult.com.

“I really hoped D2C would work long term,” Lupberger says.

But things quickly changed. As online sales skyrocketed during the pandemic — especially for cleaning products — so did costs. Digital marketing costs to acquire customers and shipping carriers raising their rates were the largest increases, he says. Digital marketing costs increased roughly 50% from 2019 to 2021, Cleancut says. Plus, what once cost the brand $6-$7 to ship now costs it $17-$18.

Plus, post-pandemic, many consumers resumed their normal shopping habits, including buying their cleaning products in stores. And so, Cleancult shifted priorities to get its products in more physical stores instead of working to acquire digital customers. In 2021, Cleancult debuted in a handful of regional grocers. In 2022, it expanded to Walgreens, CVS, and Bed Bath & Beyond, and this year is Cleancult’s Walmart debut. Cleancult also sells on the Walmart and Amazon.com Inc. marketplaces.

Amazon is No. 1 in the 2022 Digital Commerce 360 Top 1000 database. The Top 1000 ranks North American web merchants by sales. Walmart is No. 2. Amazon is No. 3 in the Digital Commerce 360 Online Marketplaces database, which ranks the 100 largest global marketplaces. Walmart is No. 9.

Ryan Lupberger, co-founder and CEO of Cleancult.

“A lot of categories shouldn’t live online,” Lupberger says. “Fundamentally, the cost of shipping big, bulky, low-price items, doesn’t work very well.”

Subsequently, its sales shifted from 100% via its direct-to-consumer website, to 90% its own website in 2020, 70% in 2021, 65% in 2022 to likely 20% in 2023, Lupberger says. Cleancult includes sales made on the Amazon marketplaces in its direct-to-consumer sales figures.

Even though sales are growing 50% year over year for its total business, sales are flat on Cleancut.com.

This shift in sales is fine with Lupberger, as its ecommerce site and Amazon business do not make money.

“It’s break even at best,” he says.

But its ecommerce site still serves a purpose, including building a community and testing new products and scents, he says.

“If they find us in store and believe in the Cleancult brand, join the website. But if they need a quick shipment, buy on Amazon. And if they are grocery shopping, they can pause their subscription and buy from the grocer,” Lupberger says.

Plastic-free shipping packaging

For shoppers who do buy direct from Cleancult.com, the brand works to ensure the products are shipped in the most sustainable way, such as by offsetting the carbon from the freight and by using paper instead of plastic.

“We can’t use plastic. It can’t ruin our value proposition,” Lupberger says.

Cleancult uses corrugated paper to pad its products, which is typically two to three times more expensive than a plastic polybag filler. It also pads its glass bottles with carboard beds to ensure the products are not touching anything and there is space for crushing.

The brand uses Forest Stewardship Council certified paper for its product cartons and shipping boxes. FSC is a nonprofit organization that ensures the paper is from a forest that is responsibly managed for environmental, economic and social benefits. 

Cleancult has four box sizes, and 99% of its orders arrive in one box. This means an order with multiple products is not split up into multiple shipments.

The last person who packs the box is the last quality control to ensure it is packed correctly, with none of its products touching. While this is important to its plastic-free ethos, it’s often thankless.

“[Shoppers] don’t notice it when it arrives,” Lupberger says.

But shoppers do notice when there is plastic in the shipping box by mistake. This can happen for some of its Amazon.com orders, which is shipped via Fulfilled By Amazon. Cleancult provides Amazon with its own carboard boxes to use to ship directly to shoppers. Sometimes, however, a warehouse employee may put that box inside another box with a polybag in it, or its box is added to another part of a larger order and plastic is added. Then, shoppers contact Cleancult with negative comments, even though this is outside of its control, Lupberger says. 

Cleancult is No. 1963 in the 2022 Digital Commerce 360 Next 1000.

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The post Why not going direct-to-consumer is the best move for Cleancult appeared first on Digital Commerce 360.