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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Etsy operates an online marketplace for handmade items. Artisans and merchants sell a variety of clothing, photos, jewelry, toys and more on the site. Based in Brooklyn, New York, Etsy went public in 2015.

Etsy also owns fashion resale marketplace Depop, musical instrument marketplace Reverb, and Brazil-based handmade goods marketplace Elo7.

A key metric at Etsy is what the company calls consolidated gross merchandise sales, which measures the dollar value of items sold in all Etsy marketplaces including Depop, Reverb and Elo7. In the first quarter, consolidated GMS was $3.1 billion, down 4.6% year over year.

At the core Etsy marketplace, GMS in Q1 was $2.7 billion, down 4.7% from a year earlier.

On a more positive note, the Etsy marketplace grew active buyers by 1% year over year to 89.9 million, the first time this metric has grown on a year-over-year basis since the fourth quarter of 2021. The marketplace acquired 7 million new buyers, reactivated 21% more buyers than during the prior year period, and retained active buyers at levels above pre-pandemic rates on a trailing 12-month basis.

“While we remain cautious on the broader macroeconomic climate, we are pleased to see positive trends in our first-quarter 2023 buyer data, particularly the return to year-over-year growth in the Etsy marketplace’s active buyer base,” Rachel Glaser, chief financial officer, said in a written statement.

Etsy is No. 17 in the 2023 Digital Commerce 360 Global Online Marketplaces database. It is No. 6 among U.S.-based marketplaces.

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

• A 13.4% drop in net income to $74.5 million.
• Consolidated revenue of $640.9 million, a 10.6% increase from a year earlier.
• A 3.8% increase in the number of active sellers.

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

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By the end of November, the web-only merchant that specializes in personalized gifts is operating at its peak to create 40,000 personalized ornaments and tens of thousands of other personalized stockings, blankets, mugs, cutting boards, champagne flutes and other gifts per day.

Personalization Mall’s 365,000-square-foot facility in Bolingbrook, Ill.

November and December bring in roughly 35-40% of all Personalization Mall’s annual revenue, says Dan Grebel, vice president of operations at PersonalizationMall.com. The rest of the year, the facility has a 10th of the employees — 400 — who can handle the production volume during the 10-month offseason.

Personalization Mall’s history and business model

Personalization Mall launched in 1998 as an online “mall” where consumers could choose from 20 different items to personalize. Today, the brand offers 2,000 unique “blank items” that shoppers can have personalized with one of 14 different methods, such as laser engraving, embroidery, glass printing, 3D printing, sandblasting and others, plus variations within each method. In total, the merchant now offers 40,000 different product designs, with new designs created each year.

New for this year is an agreement with The Elf on The Shelf. Shoppers can personalize apparel for their elves or purchase personalized items with the The Elf on the Shelf image on it.

Vice president of operations Dan Grebel provides a media tour of Personalization Mall’s production facility.

Bed Bath & Beyond acquired Personalization Mall in 2016 for $190 million. In 2020, the web-only merchant again changed hands and 1-800-Flowers.com (No. 53 in the Digital Commerce 360’s Top 1000 database) bought Personalization Mall for $252 million from Bed Bath & Beyond Inc. (No. 31).

1-800-Flowers.com Inc. owns 17 gifting brands, including Harry & David and Cheryl’s Cookies. The Personalization Mall logo and link to its site is included in the banner of brands that runs across each of these merchants’ websites. The parent company is still working on integrating Personalization Mall’s items into its other brands, such as offering a personalized Easter basket with Harry & David goodies instead.

Personalization Mall’s Bolingbrook, Illinois, facility opened in 2019. It includes a second 100,000-square-foot building for administration and warehousing, giving the online retailer 465,000 square feet of space. This is an 86% increase from its previous facilities that totaled 250,000 square feet.

During a media tour, the merchant showcased its facility as it geared up for Black Friday and the 2022 holiday season, and the process a product goes through from purchase to creation to shipping.

How a blank item becomes personalized at Personalization Mall

After a shopper clicks buy on PersonalizationMall.com, that item is placed in a queue for employees to pick at the warehouse. The warehouse runs four major waves of picks a day, in which employees select all the blank products for the most recent orders. It takes about two hours to pick the roughly 40,000 products in each wave, Grebel says. About 10% of orders during the holiday season have some level of rush shipping, Grebel says. Those orders are picked in smaller waves throughout the day to ensure they are shipping to the customer on time.

Personalization Mall’s warehouse is filled with blank items, which are then picked to be personalized in its attached facility.

Once the items are picked, employees bring them to various areas where they are personalized. Some items, like a name on a stocking, can be personalized right away in the embroidery area. On a screen, the employee can see exactly what the customer saw on her computer screen when she approved the order. When the shopper designed the order on her own computer, she was interacting directly with the software that the machines use, Grebel says. This means the employee doesn’t have to reenter any information, as the software already knows the letters it needs.

The associate then lines up the stocking underneath the machine and hits Enter. The machine gives an estimate of how long the embroidery will take, typically four to six minutes for a stocking, and then goes to work.

Each associate is manning three machines at a time — typically two smaller items, like stockings, and a more time-intensive item, such as a skirt for a Christmas tree, which could take 17 minutes. Each employee typically can embroider 12 to 13 items per hour, Grebel says.

Other items are more complex, such as certain ornaments and personalized blankets that require a two-step process with a heat transfer. About 50% of Personalization Mall’s products require a heat transfer, which is when the image the customer selected is first printed and then transferred onto the item using heat.

Personalization Mall has about 40 printers for this process, all housed in a pressurized part of the facility with temperate and humidity control. Those printers continuously spit out images that are applied to the final product within hours.

Quality assurance for each item is paramount at PersonalizationMall.com

Upon creating an item, employees attach a barcode to it and send the product to quality assurance. Employees scan each item, and an employee compares the final product against the proof image the customer approved on its website to ensure it matches.

“When we’re producing items, we understand that peoples’ expectations with gifting in general is usually a little higher than their own standards because they want to wow their recipient,” says Jeff Chun, vice president of marketing at PersonalizationMall.com.

Not only is the employee checking to make sure the personalization is correct, but also that the presentation looks good and the product is suitable to give as a gift. For example, Personalization Mall will remake an item if it is slightly off center or the product is even slightly damaged, Chun says.

“We view it as much healthier as a business to absorb that and just make a new product that will wow them, than to send something that’s subpar to our customers because long-term, we want those customers to come back, and so we want to present them with the best possible option,” he says.

Repeat orders are a key part of its business, representing roughly 50% of sales, Chun says.

Personalization Mall’s 4,000 employees produce 150,000 items per day during the holiday season.

Associates ship completed items within one to two days. In total, it takes about five business days for the product to be created and then landed on the shopper’s door.

If, for some reason, a product is damaged during transit, the merchant will remake the product.

Because each product is unique to each shopper, customer service is an important part of PersonalizationMall.com. The merchant employs 40 agents year-round, and that swells to about 100 agents during the holiday season. During the holiday season, call volume can be about 400% higher than during the summer.

These agents work in the production facility, so they can walk over to where that consumer’s product is if needed to resolve an issue, Chun says. Shoppers call with questions before, during and after placing an order.

Customer service agents require more training compared with seasonal warehouse workers, Chun says. And so Personalization Mall hires agents in the summer to start training for the holiday season, whereas it onboards the bulk of its seasonal workers in November.

Chun says finding labor has not been an issue for the retailer this year, unlike in 2021, when it was harder to attract good-quality candidates, he says.

2022 holiday season goals for Personalization Mall

With surging sales during 2020 and 2021, Personalization Mall is looking to match 2021’s holiday sales figures for the 2022 season, Chun says.

“The last two years have been exceptional for us,” Chun says. “We’ve had record demand and we’re seeing good engagement with the consumer right now. Our expectation is to be on par with last year.”

PersonalizationMall.com’s online sales grew more than 50% in its 2021 fiscal second quarter ended Dec. 27, 2020, which includes holiday sales during the first year of the pandemic. Plus, it grew sales 4% in its 2022 fiscal second quarter ended Dec. 26, 2021.

Chun says even though the 2022 shopper is dealing with inflation and is being more careful with dollars, the retailer still expects a strong holiday season.

“Even when the customer is a little bit more selective with how they are spending their dollar, personalization is a way where you don’t have to spend a lot to say a lot,” Chun says.

Overall, Chun predicts the sales pattern of the holiday season will look more like pre-pandemic 2019, unlike 2020 and 2021, when shoppers started purchasing much earlier in the season to ensure they could find the items they wanted at a time when supply chain issues prevented retailers from getting all the merchandise they ordered.

While some retailers started promoting the holidays before Halloween, and many released promotions and marketing materials during Amazon’s Early Access Sale Oct. 12-13, Personalization Mall did not see any impact or notable pull forward of holiday sales because of this event, Chun says.

How Personalization Mall views Amazon and its competitors

Plus, as a maker of personalized goods, Personalization Mall is one of the few merchants that doesn’t count the web’s largest merchant — Amazon.com Inc. — as a direct competitor, Chun says.

“Fortunately, personalization is a very specialized industry and so a lot of the big retailers can’t do it and they don’t want to, necessarily, and that’s where our expertise is. That’s where our strengths lie and it’s given us an advantage that we’ve been able to stand out among some of these well-known retailers,” Chun says.

Amazon has not done personalization on a major scale that the retailer is aware of, Chun says.

“We’ve been fortunate to be somewhat insulated from that effect,” he says. “It’s a great boon for the consumer to have a lot of choice in digital shopping, but for retailers, it puts pressure on the retailer for how they can differentiate themselves. But being in personalization, we’ve stood out.”

The retailer does, however, have a number of online competitors that also offer personalized products. They include Shutterfly Inc. and Walgreen Co., which offers personalized stationery and home décor products. Chun says Personalization Mall stands out from them with its large assortment and 14 different ways to personalize products.

Within the Digital Commerce 360 rankings of top online retailers, 260 merchants offer product customization in some way, such as engravings on jewelry, a specific color combination on sneakers or tailored specifications on furniture. But, when looking at retailers that specialized in this area, only six Top 1000 retailers are in the custom merchandise subcategory and only five retailers are in the greeting card category that also offer a number personalized products.

These 11 merchants lag behind the larger Top 1000 merchants, with a collective five-year compound annual growth rate of 8.9% compared with 22.4% for the larger Top 1000. But for 2022, Digital Commerce 360 projects this group to grow 11.5% year over year compared with a projected collective growth of the Top 1000 at 4.2% year over year.

The final few weeks of year are paramount for Personalization Mall. Cyber Monday is the merchant’s top day but its facility will continue to operate all day and night until the final few days of the season.

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Josh Brazil, vice president of supply chain insights at project44, a supply chain visibility platform, says last-mile delivery service has dramatically improved since the worst of the pandemic — when 20% or more packages arrived later than promised. But persistent labor shortages have kept delays above pre-pandemic levels during 2022. That’s likely to continue for the rest of the holiday period, Brazil says.

“Labor is an issue across all supply chains,” Brazil says. During the pandemic, numerous workers in all parts of the supply chain left the industry. And those departures — and a generally tight labor market — have put stress on last-mile delivery, he says.

The “last mile” refers to the final leg of a product’s journey. That’s when it moves from a transportation hub to its destination, generally via a common carrier like FedEx Corp., United Parcel Service Inc. (UPS), or the United States Postal Service (USPS).

A good sign for shippers is that average weekly parcel transit times during the second half of 2022 has improved since peaking at 3.01 days at the end of June, according to project44 data. For the week ending Sept. 28, transit time was down to 2.07 days.

Retailer and consumer expectations for parcel delivery

During the 2021 holiday season, consumers found themselves frustrated by out-of-stock inventory. This year, many retailers have too much stock. But merchants expect consumers to take nothing for granted.

According to a Digital Commerce 360 survey of 70 retailers, conducted in July-September 2022, half said they expected shoppers to buy earlier this holiday season to avoid finding inventory out of stock. And 36% of retailers said they expected consumers to demand faster shipping than in years past.

A survey of 1,088 consumers conducted by Digital Commerce 360 and Bizrate Insights in September 2022 confirms that consumers remain worried about inventory levels. 57% of those surveyed said they planned to check product availability before placing an order for delivery.

Delivery speed and in-stock are important

The Digital Commerce 360/Bizrate survey also found that 32% of consumers  ranked speed of delivery among the most important factors when choosing an online retailer. More than a quarter (27%) selected “product in stock and ready to ship” as an important factor.

Having orders arrive late is always a problem, says Calvin Kim, CEO of Coverland, an online retailer of vehicle covers and other automotive, motorcycle and boat accessories. But, when delivery is slow everywhere, customers can be forgiving.

“Having my customers experience delays is indeed a major issue,” Kim says. “However, I don’t find the delay during the holiday season to be a major issue since the reason behind this delay is something justifiable and expected, and all retailers are suffering.”

“Of course we are expecting delays in shipping during the holidays; it is the same case every year, as it is a busy season,” Kim adds. “However, we expect the delay to be within the reasonable period of time and we make sure that our customers are informed about the maximum delay that could occur so we don’t shake their trust in us.”

But this year, consumers are confident and don’t expect retailers to suffer from slow shipping by parcel carriers, according to a project44 survey of 1,603 consumers in the United States, United Kingdom, France and Germany.

The project44 survey, conducted in August 2022, found 71% of consumers expect holiday gifts to arrive on time in 2022. Also, 64% of consumers polled said they still wouldn’t pay higher prices to guarantee their purchases arrive in time for the holidays.

Upgrading and diversifying parcel delivery

During the 2021 holiday season and the period before Valentine’s Day in 2022, Moriarty’s Gem Art received “a ton” of customer complaints about late parcel deliveries, said Jeff Moriarty, marketing manager of the family-run jewelry merchant. The retailer, which had always used USPS as its primary domestic carrier, decided to switch to offering free USPS express delivery on all orders, which solved the problem.

Moriarty said the switch raised the price of shipping orders to about $30 per parcel from about $10. But, because Moriarty Gem Art has an average order value of about $2,500, it was easy to cover the extra shipping costs by slightly raising prices.

“The good news is that it hasn’t affected sales, and customers are thrilled to get their packages so quickly. Almost every shipment arrives in one to two days (guaranteed) instead of five to seven. We don’t expect to see any issues this holiday season,” Moriarty said.

The retailer offers FedEx service to domestic customers who want to pay extra for it, Moriarty said. For non-U.S. orders, it uses FedEx exclusively.

Moriarty’s Gem Art sells online at MoreGems.com and operates a physical retail store in Crown Point, Indiana.

But not all retailers can upgrade their shipping services and simply work that extra cost into product prices. On average, companies that ship parcels — including e-retailers — are working with more last-mile carriers than in the past.

According to project44, the average shipper worked with four carriers in September 2019. That number grew to 5.7 in September 2022, a 42.5% increase. From August to September 2022 alone, carrier diversity grew 9.6%, up from an average of 5.2.

“This could be a sign that retailers are bulking up their carrier networks proactively in preparation for peak season starting in November,” according to a project44 report.

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“We had zero revenue the first three months,” says Nick Phillips. Then, in March 2020, COVID-19 forced the world into shutdown. Businesses, schools — all potential virus-spreading communal activity ended. Kids Art Box turned out to be just the distraction for some home-bound children. 

From March 2020 through February 2021, Kids Art Box went from selling a couple of art activity boxes a week to 2,000 to 3,000 each week. Throughout that yearlong period, the art subscription service was able to maintain about 75% of its new customers, Nick Phillips says. 

As vaccines rolled out in 2021 and some schools resumed hybrid-model in-person classes, the demand for the home art subscription service plummeted. From 2020 to 2021, Nick Phillips says Kids Art Box sales grew by 300% year over year. Sales growth has since lulled and in 2022 is “effectively flat,” year over year, he says.

Facebook ad revenue ‘dropped off a cliff’

The situation was further complicated by Apple’s iOS 14 privacy changes in April 2021, which allowed people to opt out of third-party cookie tracking. Kids Art Box spent the majority of its advertising budget between email and Facebook ads. After Apple’s privacy changes, Kids Art Box ad revenue from Facebook declined dramatically, says Melanie Phillips.

Kids Art Box is an art subscription box for children. Each box contains curated arts and crafts projects for children ages three through 12.

“We dropped off a cliff,” Nick Phillips says. “And new sales went from what they were to zero the day after Facebook made changes related to Apple’s privacy settings.” 

As a result, the return on Kids Art Box’s Facebook ads have never recovered, Melanie Phillips says. The retailer rushed to reassess its marketing strategy. And it had to raise prices 8% across the board, Melanie Phillips says. 

Despite the slowdown in 2021, Kids Art Box is optimistic going into the 2022 holiday period. After an expected summer lull in 2022 — historically, Kids Art Box’s subscriptions decline during the summer — the merchant expects the holidays to get busy again, Nick Phillips says. 

“Our holiday boxes tend to do well in terms of volume,” he says, without divulging by how much. 

During the holidays, the subscription retailer offers limited-quantity boxes with a 20% or more discount for active subscribers, he says. Kids Art Boxes also releases one-off bonus boxes that have helped boost its customer lifetime value (LTV). 

Inactive subscribers usually return during the gift-giving season, Nick Phillips says. Customers also sign up to take advantage of a discount on the bonus box. It typically increases Kids Art Box’s AOV. He declined to share how much AOV increases due to bonus box sales. 

Subscription retailer services demand is on the rise

According to Digital Commerce 360, 3.6% of companies in the Top 1000 are full-subscription-based business models. Subscription-based business models are defined as retailers that earn online sales focused mostly on subscriptions even if it is possible to buy a one-off item. The Top 1000 is a listing of leading retailers ranked according to annual web sales and headquartered in North America.

Web sales growth for those retailers offering a full subscription model is 19.9%, slightly higher than web sales growth for the overall Top 1000 retailers (19.6%).

And the gap between Top 1000 retailer AOV growth (7.6%) and full-subscription-model AOV growth (6.8%) is less than 1%.

When broken down by category, some subscription retailers perform better than others, according to The Subscription Trade Association’s (SUBTA) “State of the Subscription Annual Report,” released in Q2 2022. Consumers still want the convenience of items being delivered to their doors. 54% of all U.S. subscriptions in 2021 were either in the beauty/personal care and food/beverages areas.

This bodes well for subscription retailers like Winc.com, which offers a subscription service for wine and other alcoholic beverages. So much so that in 2022, the subscription retailer launched a second wine subscription service, Societé, catered specifically to its Rosé-drinking customers for its brand Summer Water. Winc sells Summer Water on its own direct-to-consumer site, SummerWater.com, and on Winc.com. 

Winc.com uses surveys to gauge customer experience

Founded in 2012, Winc.com is a wine subscription merchant that offers personalized wine recommendations. Customers received a shipment every month. In 2019, Winc.com changed to a credit-based subscription model to avoid amassing a backlog of wines or if they want to cut back on monthly shipments.

Jai Dolwani, chief marketing officer, Winc.com

How did Winc.com learn what customers wanted? There are three main buckets that Winc uses to review customer feedback: the Net Promoter Score, customer surveys and its customer experience representatives, says Jai Dolwani, chief marketing officer. These data sources are how Winc measures how impactful certain changes are from a customer standpoint. Winc can then make adjustments.

The Net Promoter Score (NPS) measures customer loyalty through questions like: On a scale from 0 through 10, how likely are you to recommend this product to a friend or colleague? Dolwani declined to share Winc’s NPS but said the customer insights and comments are incredibly helpful. Winc reads through the comments customers leave. 

In July 2020, Winc reviewed low NPS responses and narrowed the problem down to selection and availability. As a result, Winc increased its SKU count to over 100 wines, up from 30 wines.

“[Making those changes] is incredibly cash-intensive and takes a long time to do in the wine space,” Dolwani says. “We ran a match market test for 50% of our customers where we sourced third-party wines, put those on the site, and saw a tremendous [increase] in NPS, AOV and LTV from the test group.”

Shipping and delivery was another problem area Winc noticed via the NPS. Customers were unhappy with the process, which involves being home to sign for an alcohol delivery.  And so, Winc started offering additional shipping options, such as holding a package at a nearby FedEx/Walgreens location or shipping to a place of business where someone could sign for the delivery.

Customers communicate through surveys and customer experience representatives

The second method is through member surveys. Winc runs surveys for all new customers as well as an annual survey of its entire customer base. Those results then factor into the merchant’s digital product roadmap, Dolwani says.

For example, previously, Winc asked customers what their favorite coffee was or whether they liked orange juice or milk in an online quiz to help determine what wines they might like. Dolwani says Winc has learned that its Gen Z and millennial shoppers are not solely focused on flavor, but increasingly about organic, low sugar, low sulfur, biodynamic and natural wine options. Because of these surveys and quizzes, Winc has a better grasp on what wines to sell on its site. 

The third is interactions with Winc customer experience (CX) representatives.

“They’re meant not only to be a support channel, but also follow up with key customer issues as soon as possible,” Dolwani says. “[Feedback from CX representatives show] how many members experienced similar issues or have that same request.” Dolwani says. 

For example, shoppers complained wines they wanted to purchase were repeatedly appearing out of stock on the website. CX representatives discovered that these wines were actually in stock and there was a problem on the backend. Winc’s CX team contacted the engineering team to fix the problem within the hour, Dolwani says. 

Combating subscription fatigue

Coming out the pandemic and into 2021, like Kids Art Box, Winc has noticed subscription fatigue, Dolwani says. To entice more shoppers to buy, Winc has increased its selection, such as increasing its wine selection with a wider range of prices. In April 2021, Winc also expanded into other categories, including hard cider and Sake. 

“We saw a strong need for consumers who wanted to get more out of a single subscription versus having to use two or three different [subscription services] to get their alcohol beverage needs,” Dolwani says. 

Winc also sells through wholesale channels like grocery stores, through its own DTC website for Summer Water, which went live in May 2022, and through delivery services like Drizly. 

Summer Water is Winc’s own wine label. Demand for the product peaks during the summer, Dolwani says. Summer Water customers can make one-time purchases or subscribe to its subscription Societé. AOV for Summer Water’s direct-to-consumer website ranges from $100 to $150. He did not share AOV for the subscription model.

As a subscription model, Dolwani says Societe is different from Winc.com.

“Societé is built for the Summer Water fan,” he says.

The retailer markets to shoppers through Instagram as well as by providing members access to exclusive events, special “swag” surprises in each subscription delivery box and early access to new product launches.

“Winc focuses on introducing the next generation of consumers to the world of wine in a friendly, non-pedantic way,” Dolwani says.

Maintaining subscribership involves a constant tailoring of subscription services based on the consumer’s different wants and needs, Dolwani says. That is increasingly difficult in the current economic environment where consumers are making every dollar count.

“Planning and forecasting will be especially difficult for retailers this year,” Dolwani says.

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• 1-800-Flowers.com net loss for Q4 of fiscal year 2022 was $22.3 million compared with a net income of $13.3 million Q4 2021.
• Operating expenses for fiscal year Q4 2022 as a percent of total revenues was 39.2%, compared with 37.5% for fiscal year Q4 2021.
• The company ended fiscal year 2022 with $31.5 million in cash. That’s down significantly from $173.6 million at the end of fiscal year 2021. Senior Vice President, Treasurer and Chief Financial Officer William Shea told investors this is part of the company’s strategy to build and buy inventory ahead of the new fiscal year in efforts to offset future global supply chain snafus this holiday season.
• Increased fuel and freight costs alongside a rise in higher digital marketing and advertising spending impacted profit margins, according to Shea.

For the fiscal fourth quarter ended July 3, 2022, 1-800-Flowers.com reported:

• Total net revenues of $485.9 million. That’s down 0.23% from $487.0 million for the comparable period in 2021.
• Net loss was $22.3 million, compared with net income of $13.3 million a year earlier.
• Adjusted EBITDA loss was $16.8 million, down 57.0% from $30.2 million a year earlier.

For the full fiscal year ended July 3, 2022, 1-800-Flowers.com reported:

• Total net revenues $2.21 billion, which is up 4% compared with $2.12 billion in the prior year.
• Net income of $29.6 million, down a considerable 120.2% from $118.7 million a year earlier.
• Adjusted EBITDA of $99.0 million. That’s down 73.1% from $213.1 million a year earlier.

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

1-800-Flowers.com reported total net revenue of $2.21 billion for its fiscal year 2022. That’s a 4% increase compared with $2.12 billion in the prior year.

Fiscal fourth quarter 2022 total net revenue were $485.9 million, compared with $487.0 million fiscal fourth quarter 2021.

“We finished our fiscal year 2022 with revenues essentially flat in our fourth quarter and full year revenues up 4.0% compared with the prior year, and up more than 75% compared with our fiscal 2019, prior to the pandemic,” CEO Chris McCann told investors during the earnings call.

He noted, “the unprecedented, rapid rise in costs impacted our gross margins and operating expenses, including labor, shipping, commodities and digital marketing,” as continued challenges.

1-800-Flowers.com has expanded its product offerings through acquisitions including Vital Choice in October 2021 and Alice Table in January 2022. For fiscal year 2022, 1-800-Flowers.com attracted more than 5 million new customers. That’s on top of the nearly 10 million new customers that we have attracted since fiscal 2019, McCann told investors.

On Sept. 6, 1-800-Flowers.com announced its plans to hire more than 8,000 seasonal and year-round associates throughout the U.S. to work in areas such as production, assembly, distribution and operational support.

Interactive ads play important role for 1-800-Flowers.com

McCann cited increased digital marketing costs as part of the company’s spending challenges. According to Jason John, chief marketing officer, 1-800-Flowers.com has learned a lot from its interactive ads. For the last three years, the company has used these ads including Instagram, Facebook, Google Display Network, Snapchat, Pinterest, among others.

These ads allow shoppers to chat with an artificial intelligence-powered bot that can answer basic questions and guide shoppers to the best product based on responses. The shopper can then click on selected products and be directed to a checkout page.

Other ads, such as Instagram ads that shoppers see while scrolling through the social media app, allow the retailer to suggest products based on how shoppers interact with the ad.

“On some platforms, interactive ads are our best performing ads,” John wrote in emailed responses to Digital Commerce 360. 1-800-Flowers.com declined to share how much better these ads fared compared with other types.

1-800-Flowers.com ranks No. 54 in the Top 1000. The Top 1000 is Digital Commerce 360’s database of North America’s largest online retailers by web sales.

1-800-Flowers.com has run interactive ads for about three years. These ads work with different platforms including Instagram, Facebook, Google Display Network, Snapchat and Pinterest, among others. The ad asks basic questions to the shopper and then guides them to specific products to begin checkout.

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But that modest growth largely was confined to the retailers we call direct marketers. Top 500 companies in this group generate a significant portion of their sales through channels other than physical stores or websites, like printed catalogs and TV shopping shows. This distinguishes them from retail chains and online-only retailers. And they do not primarily sell their own products, setting them apart from consumer brand manufacturers.

Median conversion rate lift

In 2021, the conversion rate for direct marketers grew 1.4% to reach a median conversion rate of 5.00%. By contrast, retail chains were the only other merchant type to see a rise in median conversion rate. They saw 0.2% growth to 3.70%.

Looking at the numbers by merchandise category tells a similar story. Sporting goods saw 11.8% growth in median conversion rate in 2021 from a year earlier. That’s the only double-digit increase among the 14 categories we track. The best median conversion rate in 2021 was in flowers/gifts: 7.92%. The food/beverage category had a not-too-shabby 5.07% median conversion rate. But that was flat compared with 2020. Shoppers returned to brick-and-mortar grocery shopping as the pandemic receded, suggesting that online grocery shopping may be reaching a ceiling of sorts.

More Charts & Data Stories

This chart is derived from the analysis in our 2022 Top 500 Report. We add new content regularly. Check back soon for more Charts & Data Stories. 

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