23andMe Inc. (No. 309)

Revenue was down 8% year over year for the fiscal fourth quarter, but it grew 10% to $272 million for the full fiscal year ended March 31, 2023. The biotechnology company grew its customer base 11% in the fiscal year to 14 million genotype users.

It also grew its subscription membership, 23andMe+, CEO Anne Wojcicki told investors. Subscription membership grew 51% year over year to 640,000 members. More customers are also opting in to the subscriber program with their initial purchase, though she did not give a specific figure.

Advance Auto Parts Inc. (No. 101)

Advance Auto Parts reported a “double-digit sales increase” in ecommerce for its first quarter. Over the same period, net sales grew 1.3% year over year and comparable store sales decreased 0.4%. The auto parts retailer also reported that DIY omnichannel sales grew, without sharing specifics.

Bark (No. 173)

Revenue was down 2% year over year in the fiscal fourth quarter to $126 million, coming out ahead of Bark’s guidance. Direct-to-consumer revenue also decreased 1.5% to $116 million. For the full fiscal year, direct-to-consumer revenue increased 5.3% over fiscal 2022.

Bark broke down DTC revenue by product category. Toys, beds, and apparel generated $307 million in revenue in fiscal 2023. Consumables including treats and food generated $165 million.

Best Buy Co. Inc. (No. 7)

Domestic online revenue declined 12.1% for the first quarter to $2.69 billion, Best Buy said. Online sales made up 30.5% of total domestic revenue in the quarter, down slightly from 30.9% last year. About 40% of those sales were buy online, pick up in store (BOPIS) orders, the retailer said.

Online sales have doubled since 2020, CEO Corie Barry told investors.

Big Lots (No. 251)

Net sales were down 18.3% year over year to $1.1 billion the first quarter, Big Lots reported.

“Our lower-income consumer was hurt by inflation, lower tax refunds, and higher interest rates, and their confidence has been shaken by banking failures,” CEO Bruce Thorn said in a statement.

The discount retailer declined to share specific ecommerce data.

“We continue to improve the [online] customer journey through a more curated experience, better site navigation, and eliminating friction,” Thorn told investors.

Deckers Brands (No. 167)

Direct-to-consumer net sales grew 19.5% in the fiscal fourth quarter to $343.1 million, up from $287.2 million the previous year. Much of the growth came from a few specific brands. Sneaker company Hoka net sales, including in stores and ecommerce, grew 40.3% year over year to $397.7 million. Teva sales also grew 14.6%, while Ugg sales were down 16.1%.

“Fiscal year 2023 was an exceptional year for the Deckers organization, delivering 15% revenue growth and increasing earnings per share nearly 20%,” CEO Dave Powers said in a statement. “We continue to deliver record results, including the HOKA brand adding more than half a billion dollars of top-line revenue.

Lululemon Athletica Inc. (No. 27)

Lululemon reported ecommerce sales grew 18% in Q1 over the year-ago period. Online sales contributed $835 million in revenue in the quarter, 42% of total revenue, the retailer said.

Traffic grew 30% year over year both in stores and online, chief financial officer Meghan Frank told investors. 

Macy’s Inc. (No. 17)

Online sales were down 8% year over year in the first quarter. Ecommerce sales made up 33% of total sales in the quarter, CEO Jeff Gennette told investors. Digital penetration remained flat from 2022, down from a high of 40% during the pandemic. 

Nordstrom Inc. (No. 21)

Ecommerce sales were down 17.4% in Q1 due to eliminating digital order fulfillment at Nordstrom Rack stores and closing the Trunk Club in 2022, the retailer said.

Nordstrom reported that digital sales made up 36% of net sales in the quarter, down from 39% of net sales in the year-ago period. Digital sales were approximately $1.1 billion in the quarter.

Sportsman’s Warehouse (No. 361)

Net sales decreased 13.5% year over year to $267.6 million in the quarter. Sportsman’s Warehouse didn’t provide specific information on ecommerce sales. CEO Jeff White told investors that online sales are a “continually growing highlight” of the business even as overall sales were down.

Ulta Beauty (No. 48)

Ulta comparable sales were up 9.3% year over year in the first fiscal quarter. The beauty retailer didn’t specify what percentage of sales were through ecommerce.

Ulta also finished the two-year rollout of its updated website and app in the quarter. 

Victoria’s Secret & Co. (No. 53)

Net sales decreased 5% year over year $1.4 billion in the fiscal second quarter, Victoria’s Secret reported. Web traffic for the apparel retailer remained flat from 2022, though conversion rates and average unit retail both declined over the period. 

Casual sleep and beauty were the best performing categories both online and in stores, CEO Martin Waters told investors. Sales in China showed “outsized growth in digital,” he said.

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Adobe produced the report based on 100 million SKUs across 18 retail categories including groceries, personal care, and appliances.

The biggest price declines

11 of the 18 categories monitored by Adobe recorded lower prices in April 2023 than in the previous April. The largest year-over-year decline was flowers and gifts, with prices down 27%.

Electronics and computers saw significant declines in April, Adobe found. Electronics decreased 11.6% year over year, and computers decreased 15.4% over the same period. Both saw slight increases month over month of 0.5% and 1.9%, respectively.

The appliance category also drove the price decline, Adobe said, with prices down 7.1% year over. That was the largest annual decline for the category since Adobe started tracking them in 2014. Appliances prices were down 2.1% month over month, marking the seventh month of price drops following 29 consecutive months of price increases beginning in May 2020.

Sporting goods, toys, and home and garden were all also down year over year. Sporting goods marked a 12th consecutive month of year-over-year price declines. Before that, prices increased for 28 months beginning in January 2020. Prices peaked in September 2020 as consumers invested in home exercise equipment during the pandemic.

Grocery price increases slowed

Online grocery prices increased 9.3% year over year in April, more than every category except pet products (11.32%). Though prices were up, the growth rate decreased for seven consecutive months. Online grocery prices increased 10.3% year over year in March, and 11.4% in February. Growth peaked in September 2022 at 14.3% year over year.

Grocery ecommerce sales grew 10.8% in 2022 over 2021, according to a previous Adobe report. With prices steadily increasing, more consumers turned to buy-now-pay-later services to purchase groceries, with usage up 40% in 2022.

“The rise of buy-now-pay-later usage for groceries tells us that consumers are likely making bigger purchases online to take advantage of special promotions and stock up on staples, thus managing living expenses in more flexible ways,” Adobe Digital Insights lead analyst Vivek Pandya said in a March press release.

Ecommerce prices diverge from overall retail

Adobe says it uses the same general methodology that the Bureau of Labor Statistics uses to track prices in the Consumer Price Index (CPI). The agency hasn’t released its April numbers yet, but in recent months the CPI has diverged from Adobe’s Digital Price Index. In March 2023, ecommerce prices decreased 1.7% per Adobe, while the CPI grew 5%. In February, Adobe recorded a 1.4% decrease, and the CPI grew 6%. Both measured year-over-year price changes. 

Ecommerce prices have largely risen more slowly than retail prices as a whole, or even decreased. Online groceries are an exception to this, and generally move in step with the CPI, Adobe says.

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NRF surveyed 8,164 consumers in April 2023 on their plans for the May holiday. The organization predicts consumers will spend $35.7 billion for Mother’s Day 2023, nearly $4 billion more than the previous record of $31.7 billion in 2022. 

Consumers plan to spend $274.02, up from the 2022 record of $245.76 per person, an increase of $28.26. Consumers between ages 35 and 44 are projected to spend the most, at an average of $382.26 per person.

Fewer customers plan to shop online for Mother’s Day 2023

84% of survey respondents told NRF they plan to celebrate Mother’s Day this year. Just over one-third, 34%, said they will shop online for gifts. That’s down slightly from 36% in 2022, and on par with online shopping levels in 2021. It peaked in 2020 with 42% of consumers planning to shop online during the height of the pandemic.

Online shopping is tied for the single most popular venue projected for Mother’s Day shopping in 2023. 34% of consumers also said they plan to shop at department stores, up from 30% in 2022 and 28% in 2021. 

“While most consumers shopped online last year for the perfect Mother’s Day gift, we are seeing just as many people turn to department stores as a shopping destination this year,” said Phil Rist, Prosper Insights executive vice president of strategy.

Another 30% of survey respondents said they will purchase gifts from a specialty store like a greeting card shop, florist, or jewelry store. Respondents also mentioned local small businesses (24%), discount stores (23%), and specialty clothing stores (13%). Just 3% of consumers said they would purchase gifts through catalogs.

Traditional gifts remain popular

Most of the consumers planning to celebrate Mother’s Day told NRF they will purchase classic gifts for the holiday. Flowers and greeting cards are the most popular gifts. Nearly three-quarters of consumers (74%) said they plan to gift each item.

Mother’s Day remains a major holiday for flower retailers. Online flower retailer UrbanStems previously told Digital Commerce 360 that the week of Mother’s Day has 10 times as many sales as a typical week, and double the sales of Valentine’s Day. Urban Stems ranks No. 900 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American online retailers by web sales. Online flower retailers are popular, with a penetration rate of 87.6% in the category compared to the Top 1000 as a whole, according to Digital Commerce 360 data. The three-year CAGR for flower retailers in the Top 1000 is 22.2%, above the total Top 1000 CAGR of 20.7%.

60% plan to engage in a special outing like dinner or brunch. Gifting is up in all categories NRF tracks over 2022, including flowers, clothing, and gift cards, except for greeting cards.

Consumers will spend the most on jewelry, projected at $7.8 billion. 44% of consumers plan to gift jewelry, spending $59.90 per household. Jewelry also has a higher CAGR than average, at 23.6% according to Digital Commerce 360 data. Daniel’s Jewelers previously told Digital Commerce 360 that Mother’s Day accounts for 25% of its sales.

Outings like meals at restaurants have the next highest spending, projected at $43.29 per household to total $5.6 billion. 

Electronics are the least common gift category for 2023 tracked by NRF, with 25% of consumers planning to gift them. That’s up from 22% in 2022, and 20% in 2021. Electronics are the third-highest spending category, at $30.69 per household for $4 billion total.

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That growth, however, was not evenly distributed, according to research from Commerce Signals, which tracks the spending of 40 million U.S. households through Visa and Mastercard credit cards and debit cards.

For example:

• The biggest gains in early 2023 were in the travel industry, where dollar spending rose 34.5% year over year in January and February.

• Dollar spending climbed 6.3% at apparel retailers in the first two months of this year and rose 6.0% at department stores.

• Electronics stores saw consumer purchases decline 2.6% in dollars in January and February, despite a 10.4% increase in the number of transactions. Commerce Signals attributed the decline in dollars spent to a drop in big-ticket purchases such as computers and a rise in less-expensive areas such as gaming.

• Best Buy, the largest pure retailer in the electronics category, saw purchase dollars fall 19%, while transactions were down only 5.3%. Its online sales fared worse than in-store sales, Commerce Signals said. Best Buy Co. Inc. ranks No. 7 in the Top 1000.

“People are really spending a lot in travel, all aspects of travel — airlines, hotels, rental cars. You see it in the travel agent and online travel agencies. And so we do expect that to continue,” Nick Mangiapane, chief marketing officer and head of partnerships at Commerce Signals, told Digital Commerce 360. “Whereas categories that are specifically home-based are doing less well. Home stores, furniture stores, electronics are all down, and we are expecting that to continue, too.”

Commerce Signals’ data shows overall growth in retail spending at 5.5%-5.6% so far in 2023. That is in line with the National Retail Federation’s predictions of overall retail growth between 4% and 6% this year. Commerce Signals was purchased by TransUnion in April 2022.

Discretionary spending online vs. brick and mortar

Commerce Signals’ data shows a substantial gap between spending levels online and at stores.

Looking at year-to-date figures, Mangiapane said “there’s some variability by category. But we’ve actually got brick and mortar up 6.4% so far and online sales only up 4.4%.”

Dollar spending at department stores year-to-date is up 7.2% versus a year earlier. Meanwhile, dollar spending online at department stores is up just 4.1%.

Among electronics stores, the gap is also substantial. “In-store purchases are up almost 1%, while online purchases are down almost 4%,” Mangiapane said.

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Half of the 18 categories Adobe tracks dropped in prices on an annual basis. On a monthly basis, online prices in January rose 1.7% following December, when strong holiday discounts lingered past Cyber Monday.

Sharp drops in electronics and computers were primary drivers of January’s year-over-year price decline.

• Electronics: down 11.9% year over year, up 2.1% month over month
• Computers: down 15.8% year over year, up 2.1% month over month

Consumers also saw prices fall year over year for home goods. Appliances were down 2.5% year over year (up 1.8% month over month). Meanwhile, home/garden products fell 3.5% year over year (up 1.2% month over month). Online prices in both categories have now fallen year over year for three consecutive months.

Sporting goods hit a record year-over-year low, falling 6.4% (up 0.6% month over month), with other notable categories with year-over-year price drops including toys (down 5.5% YoY, up 4.9% MoM), books (down 3% YoY, flat MoM) and jewelry (down 0.9% YoY, up 5.8% MoM).

Falling prices are obviously good news for shoppers. But retailers stand to benefit as well. A Digital Commerce 360 and Bizate Insights survey of 1,060 online shoppers earlier this month showed that lower prices are a major factor in driving conversions.

Online prices for food rose

Not all prices fell, however. Grocery prices were up 12.6% YoY (also up 0.4% MoM), down from December 2022’s 13.5% YoY increase. This marks the fourth consecutive month where YoY price increases for groceries have decelerated from September’s record high, when prices rose 14.3% YoY.

In the tools/home improvement category, prices rose 6.9% YoY (up 0.1% MoM), down from December 2022’s 8.3% YoY increase. Pet product prices rose 10.5% YoY (up 0.8% MoM), down from the 11% YoY increase in December 2022.

“The rising cost of living has made consumers more cautious about discretionary spending, with $72.2 billion spent online in January, a modest increase of 1.7% year-over-year,” Patrick Brown, vice president of growth marketing and insights at Adobe, said in a written statement. “Current demand levels are driving retailers to hold prices down and continue to clear out excess inventory.”

Methodology

Adobe’s Digital Price Index,  powered by Adobe Analytics, analyzes 1 trillion visits to retail sites and over 100 million SKUs across 18 product categories:

• Apparel
• Appliances
• Books
• Computers
• Electronics
• Flowers/related gifts
• Furniture/bedding
• Groceries
• Home/garden
• Jewelry
• Medical equipment/supplies
• Non-prescription drugs
• Office supplies
• Personal care products
• Pet products
• Sporting goods
• Tools/home improvement
• Toys

In January, nine of the DPI’s 18 categories saw YoY price decreases. Flowers/related gifts category fell the most at 21.6% YoY. Personal care, office supplies, furniture/bedding, pet products, groceries, non-prescription drugs, tools/home improvement, medical equipment/supplies and apparel had YoY price increases.

Adobe’s DPI is modeled after the Consumer Price Index (CPI), which the U.S. Bureau of Labor Statistics publishes, and uses the Fisher Price Index to track online prices. The Fisher Price Index uses quantities of matched products purchased in the current and prior month to calculate price changes.

Adobe Analytics is part of Adobe Experience Cloud, which is more than 85% of the retailers in the Digital Commerce 360 Top 1000 use.

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Ecommerce spending topped $3 billion a day on 38 occasions during the 2022 holiday season. Only 25 days topped $3 billion in digital sales during the 2021 season.

Adobe had reported earlier that online shopping during Cyber 5 — the period from Thanksgiving to Cyber Monday — grew 4% year over year to $35.27 billion.

Discounts attracted online shoppers

Across major ecommerce categories, discounts hit record highs this holiday season. Discounts in toys peaked at 34% off listed price (versus 19% in 2021), as well as electronics at 25% (vs. 8%), according to a statement from Adobe Inc. Discounts were also strong across other categories including:

• Computers at 20% (vs. 10%)
• Apparel at 19% (vs. 13%)
• Televisions at 17% (vs. 11%)
• Appliances at 16% (vs. 4%)
• Sporting goods at 10% (vs. 6%)
• Furniture at 8% (vs. 2%)

“At a time when consumers were dealing with elevated prices in areas such as food, gas, and rent, holiday discounts were strong enough to sustain discretionary spending through the entire season,” said Vivek Pandya, lead analyst at Adobe Digital Insights, in a written statement. “The big deals drew in consumers and drove volume, helping retailers who were challenged with oversupply issues, particularly in categories such as apparel, electronics, and toys.”

Inflation’s impact on ecommerce

Strong consumer spending online has been driven by net-new demand, and not simply higher prices. The Adobe Digital Price Index (DPI), which tracks ecommerce prices across 18 categories, shows prices online have been falling year over year since September 2022. Adobe figures are not adjusted for inflation, but if online inflation were factored in, there would still be growth in underlying consumer demand.

Toys drove online holiday sales

Online sales of toys jumped 206% compared to pre-season levels in October 2022. Top-selling toys this holiday season included Legos, Hot Wheels, Paw Patrol, LOL Surprise, Squishmallows, Bluey and Cocomelon.

Other categories with substantial jumps in online sales during the holiday period included video games (up 115%) and apparel/accessories (up 94%).

Subcategories that saw strong demand in online holiday shopping:

• Watches (up 108%)
• Baby toys (up 101%)
• Gift cards (up 98%)
• Cosmetics (up 90%)
• Outdoor grills (up 86%)
• Speakers (up 76%)
• Smart home products (up 67%)

Additional insights: Online holiday shopping

• Mobile shopping: This holiday season, 47% of online sales came through smartphones (up from 43% in 2021). Christmas Day (Dec. 25) set a new mobile record, driving the majority of online sales at 61% (up from 58%).

• Buy now, pay later (BNPL): In the holiday season overall, BNPL orders rose 4% when compared with 2021. However, revenue decreased 2%, indicating shoppers are increasingly using BNPL for smaller shopping carts.

• Curbside pickup: The fulfillment method was used in 21% of online orders this holiday season (for retailers that offer the service), down slightly from 23% in the year prior. From Dec. 22 to Dec. 23 (right before Christmas Eve), curbside pickup peaked at 42% of online orders, with anxious shoppers using the service to get gifts in time.

• Marketing channels: Paid search remained the biggest driver of sales for retailers this holiday season (29% of online sales attributable to that channel). Direct web visits (19%), organic search (17%), affiliates/partners (16%), and email (15%) were also major contributors. Revenue directly attributable to social media remained at less than 3% of total sales this season, but that share has grown 24% YoY.

Methodology

Adobe’s analysis covers more than 1 trillion visits to U.S. retail websites, 100 million SKUs, and 18 product categories. Adobe Analytics is part of Adobe Experience Cloud, which is used by more than 85% of the top 100 internet retailers in the U.S. listed in the Digital Commerce 360 Top 500 Report.

2022 Top 500 Report

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Anna Matthiasson, the vice president of online retail, is leaving her position, said the people, who asked not to be identified because the changes aren’t yet public. Meanwhile, chief information officer Mary Demby is retiring after three decades, they said.

The online store became an increasingly vital sales channel for Apple during the COVID-19 pandemic, and the company has spent the last several years unifying its policies and marketing across both its digital and physical storefronts. Apple redesigned its online store in 2021. The division will now be overseen by Karen Rasmussen, who served as a senior director in charge of digital experience and ecommerce before her current role.

Apple is No. 3 in the 2022 Digital Commerce 360 Top 1000.

The departures mean Apple is losing at least three vice presidents — the highest manager level below CEO Tim Cook’s executive team — in recent weeks. Evans Hankey, Apple’s vice president in charge of industrial design, is also leaving the company, Bloomberg News reported earlier this month. Chief privacy officer Jane Horvath has departed Apple in recent weeks as well, taking a position at a law firm.

A spokesman for Cupertino, California-based Apple declined to comment on the latest departures.

Matthiasson was in her role for relatively short time — just about three years. She previously worked as an operations executive at Apple.

The job running Apple’s online store has been a revolving door for several years. The original head of the business, Jennifer Bailey, left that role in 2014 to launch Apple Pay. She now oversees that feature alongside Apple Wallet, the Apple Card and other consumer financial services. Her replacement, Bob Kupbens, left after two years for eBay Inc. His successor lasted a few years and was replaced by Matthiasson.

Etsy’s new CTO

Etsy Inc., No. 18 in Digital Commerce 360’s ranking of the Top 100 Online Marketplaces, announced the promotion of its engineering leader to chief technology officer last month. Rachana Kumar, currently vice president of engineering, will assume her new role on Jan. 1 when current CTO SPELL OUT Mike Fisher plans to step down.

During her past eight years at Etsy, Kumar helped to grow Etsy’s list of buyers to 88 million from 20 million. She also helped improve app and mobile penetration. She also launched Etsy’s Mexico City office.

Fisher is stepping down from his role to spend more time with his family and focus on other interests, according to an Etsy press release. He will remain with Etsy in an advisory capacity through April 2023.

Bed Bath & Beyond CEO named

Interim CEO Sue Gove is solidifying her role at Bed Bath & Beyond Inc. (No. 31 in the Top 1000). Last month, Gove took the role of CEO and president. She has held that role in an interim capacity since June 2022.

Bed Bath & Beyond has suffered plunging sales, leading to former CEO Mark Tritton’s exit in June. The home goods retailer reported three straight quarters of double-digital digital sales declines this year. The company recently launched a new membership program and Gove oversaw a reduction in the company’s own brands.

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Amazon Prime Early Access runs Oct. 11-12. The sitewide sale spans multiple categories. Digital Commerce 360 reviewed how retailers across the Top 1000 approached this year’s additional Amazon Prime sale. Amazon.com Inc. is the No. 1 in the 2022 Digital Commerce 360 Top 1000, which ranks the largest North American e-retailers by web sales.

Amazon Prime Day vs. Early Access

Of those 80 retailers running promotions, 18.8% of retailers competed directly with Amazon, citing a Prime Day Early Access-like sale. That’s down from the 38.0% of 79 retailers that ran promotions during Amazon’s July 11 and 12 Prime Days. 

17.5% of retailers tied promotions directly to a holiday, such as Christmas, Thanksgiving weekend or Halloween. That’s down from 44.3% of retailers that tied promotions to a holiday (including Prime Days) in July. Retailers that linked promotions to the holidays included mentions of Black Friday (28.6%), Christmas (35.7%), Halloween (21.4%) and Thanksgiving (7.1%).

And 5.0% of retailers used specific Prime-related language and timed promotions on their homepages during the Prime Early Access event or around these days. That’s down from 15.2% of retailers during July’s sale days.

Retailers varied the language used to promote sales. 15.0% of promoting retailers included one of the following keywords: holiday, Prime, early access, gifting and X-day sale. 

In July, 85.7% of retailers with holiday promotions cited Prime Day directly, while also noting Back to School (14.3%), Black Friday (8.6%) and 4th of July (2.9%). 

Fifteen retailers emphasized competition with Amazon’s Prime Early Access Days, including Macys.com, which tied both Prime and holiday language for its two-days-only “Holiday Early Access” sale. Costco Wholesale Corp. highlighted member savings days, while Dick’s Sporting Goods noted three-day-only deals.

Macy’s.com cited “early access” as part of its 2-day holiday promotional strategy on Oct. 11.

Gen Z apparel retailer PacSun took it one step further with a blazing banner displaying up to 40% off and popups of its PacFridayPreview noting two days left.

PacSun promoted its limited-time PacFridayPreview on its home page on Oct. 11.

Consumers are making careful purchases

The decline in retailers’ competing sales in October compared to July might have to do with the current economic environment, fraught with inflation and higher prices for necessities like gas and groceries, says Alexander Winston, consultant at Propeller, a business consulting agency. Today, inflation is reducing buying power. Winston cautions against retailers promoting too early and too often. As holiday selling seasons are landing earlier and earlier, there will be a limit to the “juice to be squeezed” from consumers, he says.

“Consumers are expected to spend an average of 6% more versus last year, with inflation climbing above 8%, indicating softer sales this year,” Winston says.

And because consumers will be more wary of spending this year, there is likely to be more demand around essential purchases than nice-to-haves, said Thomas Kasemir, chief product officer at Productsup, a product-to-consumer software vendor. 

“By running a sales event in October, businesses can get a better understanding of what the essential purchases are this year,” Kasemir said. “Brands can’t afford to lose out on sales this Black Friday and Cyber Monday. So, an early sales event acts as a trial run to work out any kinks in their system.”

Target and Walmart mirror Prime Days and Early Access strategies

Once again, Amazon’s direct competitors held sales, albeit a different approach from Amazon. Target Corp. (No. 5) launched its own deal days to compete with Amazon. The three-day sale occurred before Amazon Prime Early Access, held from Oct. 6 through Oct. 8. Deals ranged to up to 50% off, similar to its July 3-day deals, which ranged from 5% to 60% off. On Oct. 11, Target launched Black Friday deals on its homepage.

Meanwhile, Walmart Inc. (No. 2) displayed a more muted homepage on Oct. 11, highlighting a “flash deal” item at the top. The retailer promoted some Halloween deals rather than Black Friday. It also included the usual promotion of its 30-day free trial for its membership program. 

Gift cards, Amazon photo projects among top sought items

By 9 a.m. ET, Oct. 12, Chicago-based market research firm Numerator captured 13,215 orders with an average order value of $45.50. That totals just over $606,000 in sales. Given that Digital Commerce 360 estimated that Amazon’s sales on the Prime Day event earlier this year exceeded $12 billion, it is important to note that Numerator is only capturing a small subset of Amazon orders.   

The top items include Amazon photo projects, Amazon gift cards and Amazon essentials women’s apparel. Most items (59%) have sold for under $20, while 4% sold for more than $100. According to Numerator, the top categories consumers say they’ve purchased are household essentials, health & beauty, and apparel and shoes. 14% of shoppers purchased expensive items they waited for a sale in order to buy. 

Discount types 

Fewer retailers, 71.3%, offered percent-off discounts as part of the October promotion, according to Digital Commerce 360’s site checks. That compares with 77.2% of retailers that offered the same discount type for Amazon Prime Days in July. Percentage discounts ranged from 5.0% to 80.0% off, with the median retailers’ maximum percentage off at 40% and median minimum at 10.0%.

In October, more retailers offered dollar-figure discounts (25.0%) and free shipping (28.8%) as promotions. Fewer offered gifts with purchase (6.3%), and fewer retailers offered multiple types of discounts during day one of Amazon Prime Early Access (36.6%). That compares with 40.5% in July.

Other types of discounts included Chewy.com Inc.’s promotion for a $30 e-gift card when spending $100. Overstock.com Inc. flashed a “free shipping on everything” promotion, and Lands’ End promoted its Warm Coat Drive in place through Nov. 20, where a customer receives 50% off a new Lands’ End coat in exchange for gently worn coats given in stores.

No-discount retailers

While the majority of retailers in the Digital Commerce 360 panel offered sales, 20.0% offered no discounts at all. This is similar to July, except the majority not offering deals was more evenly distributed among consumer brand manufacturers and retail chains.

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2022 Top 1000 Report

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For Q2 of Best Buy’s fiscal year 2023, online sales were $2.97 billion, down 14.7% compared to the previous Q2. Overall (online and offline) comparable domestic sales dropped 12.7% year over year. Q2 of fiscal 2023 ended July 30, 2022.

“As we emerge from the pandemic, it is clear that our customer shopping behavior has changed,” Best Buy CEO Corie Barry said today during a conference call with analysts. “Our online sales as a percentage of domestic revenue in Q2 was 31%, nearly twice as high as pre-pandemic.”

Barry added that “stores remain incredibly important for customers to see and touch products and get advice. In addition, they’re crucial to our fulfillment strategy.”

During Q2, she said, customers picked up 42% of Best Buy’s online sales at its stores. She said the retailer shipped another 18% of online sales from stores to customers’ homes.

“These in-store pickup and ship-from-store numbers have remained incredibly consistent for the last several years,” Barry said, “even as shipping speed and options have dramatically increased.”

Best Buy ranks No. 6 in the 2022 Digital Commerce 360 Top 1000.

Performance details

Global revenue for the quarter was $10.33 billion, a 12.8% decrease from $11.85 billion a year earlier. For the six months ended July 30, global revenue was $20.98 billion, down 10.7% from $23.49 billion a year earlier.

Net income for the quarter was $306 million, down 58.3% from $734 million for the year-ago quarter. For the six months ended July 30, net income was $647 million, down 51.3% from $1.33 billion a year earlier.

Best Buy also reported that its domestic gross profit rate was 22.0% versus 23.7% last year. Among other things, the lower gross profit rate was due to lower margins on service sales, including costs associated with the Best Buy Totaltech membership program. Other factors included lower product margin rates due to increased promotions and higher supply chain costs.

Launched last year, Totaltech offers its members benefits — including up to 24 months of product protection on most Best Buy purchases — for a $199.99 annual fee.

During the conference call, Barry said Totaltech’s growth was encouraging in Q2, but did not provide specifics.

“In Q2, nearly half of the new members joining the program were either new or lapsed customers, reinforcing how the value of this program resonates beyond our existing loyal customers,” she said.

A lot of uncertainty

“We are clearly operating in a volatile consumer electronics industry,” Barry said. “We assumed the [consumer electronics] industry would be lower following two years of elevated growth, driven by unusually strong demand for technology products and services and fueled partly by stimulus dollars.”

She said Best Buy also expected to see an impact once consumers shifted their spending back into “experience areas, such as travel and entertainment as pandemic-era lockdowns eased. But some challenges were harder to predict.

What Best Buy did not expect, Barry added was “a changing macro environment where consumers are dealing with sustained and record high levels of inflation in some of the most fundamental parts of their daily lives, like food,” Barry said.

In a note to investors, Michael Lasser, an analyst at UBS Securities, acknowledged that Best Buy faces an uncertain marketplace.

The retailer, Lasser wrote, “is focused on what it can control in the near-term while keeping sight of its strategic initiatives such as its operating model and managing profitability.”

Outlook is unchanged

Best Buy reiterated its recently lowered profit and sales forecast for the year while noting that comparable sales will be down “slightly more” in the third quarter than in the second quarter. The decline in adjusted operating income rate this quarter “will be very similar to, or slightly more than” what the company saw in the second quarter.

“Best Buy’s steady outlook suggests demand isn’t worsening,” Bloomberg Intelligence analyst Lindsay Dutch said in a report. That’s “a positive signal ahead of the key holiday selling season.”

Best Buy also withdrew its forecast for fiscal 2025, unveiled less than six months ago.

“The current macro backdrop has changed in ways that we and many others were not expecting,” Barry said during the conference call. Best Buy will provide more detail on its longer-term expectations “once we begin to experience a more stable operating environment,” she said.

For the quarter ended July 30, Best Buy reported:

• Global revenue of $10.33 billion, a decrease of 12.8% from $11.85 billion a year earlier.
• Net income for the quarter of $306 million, down 58.3% from $734 million for the year-ago quarter.
• Comparable sales declined 12.1% compared to 19.6% growth in Q2 FY22.
• Domestic revenue of $9.57 billion, a decrease of 13.1% from $11.o1 billion last year, primarily driven by a comparable sales decline of 12.7%.

For the quarter ended July 30, Best Buy reported:

• Global revenue of $20.98 billion, down 10.7% from $23.49 billion a year earlier.
• Net income of $647 million, down 51.3% from $1.33 billion a year earlier.
• Domestic revenue of $19.46 billion, down 10.9% from $21.85 billion a year earlier

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

Bloomberg News contributed to this report.

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Amazon will pay $61 a share in cash for the Bedford, Massachusetts-based company, according to a statement on Friday. The offer, valued at $1.7 billion including debt, represents a premium of 22% based on iRobot’s last closing price before the announcement. Colin Angle will remain as chief executive officer of IRobot.

The Amazon deal arrives just two weeks after Amazon said it was buying up a chain of doctor’s offices and suggests Amazon is forging ahead with acquisitions despite growing scrutiny of Amazon’s market power from antitrust regulators in the U.S. and Europe.

Seattle-based Amazon has come a long way as a hardware player since a failed foray into smartphones a few years ago, working diligently to place the Alexa voice software and Echo smart speakers at the center of the burgeoning market for smart-home gadgets. Spoken Alexa commands can already control many other devices, from smart ovens to light bulbs and Roomba vacuums. The partnership between Amazon and IRobot extended beyond devices, too: IRobot runs some of its software on Amazon Web Services servers.

IRobot gives Amazon a household name in home cleaning gadgets that may give it a leg up over its own designs. Last fall, Amazon debuted a household robot that was supposed to usher in — or at least point to — a Jetsons-like future. Called the Astro, the three-wheeled device would eventually sell for about $1,450. But Astro, still in a limited rollout, hasn’t made a splash with consumers.

IRobot sales increased over the pandemic, as housebound families sought shortcuts to keep their homes clean. But like many pandemic-era darlings, iRobot has seen demand wane. It reported second-quarter revenue of $255.4 million on Friday, short of analysts’ expectations for $301 million. The company has also been battling JS Global Lifestyle Co. in a patent infringement case against its SharkNinja vacuums and hybrid vacuum-moppers. IRobot portrays itself as an American success story with a “passion for innovation” that’s been undercut by SharkNinja incorporating those inventions into its Chinese-made knockoffs.

IRobot says its Roomba vacuum and Braava floor mops “can map the floor of a home, sense changes in the floor type being cleaned, spot clean, avoid objects and cliffs (such as stairs), and intelligently approach a base station to recharge, among other innovative features.”

Amazon prefers to develop new technology internally, but its devices unit has been quick in recent years to pull the trigger on acquisitions that give the company a stake in a hot or adjacent market. Amazon grabbed a leading position in video doorbells with its 2018 deal to buy Ring, and acquired WiFi hub maker Eero the next year.

“I’m excited to work with the iRobot team to invent in ways that make customers’ lives easier and more enjoyable,” said Dave Limp, senior vice president of Amazon Devices.

Amazon deal with iRobot faces tough FTC antitrust review

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