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That was the main appeal for top home furnishing retailer Lamps Plus Inc. to upgrade its order management system with Manhattan Associates Inc. to the Active Omni platform, Bill Gratke, senior vice president of supply chain, planning and reporting told Digital Commerce 360 at the Manhattan Momentum 2023 conference in Phoenix last week.

Instead of going through a major upgrade for any change it wants to make to its order platform, such as adding a new payment feature, the Active Omni platform is “version-less,” Gratke said. Manhattan Associates will continually update the software every 90 days with new features. If Lamps Plus wants a specific feature, it will have to wait until Manhattan adds it in one of its releases. It may not need every feature that the vendor will continually add, but it will be available to the retailer. A refresh of features every 90 days is a huge benefit compared with waiting for the company to do an upgrade, which could be seven years later, said Clark Linstone, president and chief operating officer.

Lamps Plus upgrades with Manhattan Associates

Lamps Plus has a good track record with Manhattan Associates, as it uses Manhattan’s older Distributed Order Management system, which it implemented in 2012. In addition, Lamps upgraded its point-of-sale system to Manhattan’s Active POS in 2018.

“Our success with Active POS has paved the way for us to move on to Active Omni,” Gratke said. “We have a high degree of confidence. The people who helped implement, they’re smart, and they delivered the product they said they would. And I can tell you, that’s the reason why we’re moving on to Active Omni.”

The cloud-based system also means Lamps Plus will have less physical hardware at its location.

“(The benefit) is it’s getting out of the hardware business, and basically having the ability to get more sleep at night because the system is not going down or you don’t have to reboot a server weekly or something like that. And those are all the things that happen with a hardware-based system in your own data center,” Gratke said.

The brand expects the store-side of the upgrade to go live in August 2023, and the online customer-service integration will go live in summer 2024. Lamps Plus decided to stagger the release dates in order to lower the amount of risk on such a critical system, Gratke said.

The implementation fee for the integration is more than $1 million and the annual subscription fee also is more than $1 million, Lamps Plus said.

Order management complexity

Order management, however, is a huge animal to tackle. Consider this: Lamps Plus takes orders from its website, LampsPlus.com, from its 36 showrooms and a handful of marketplaces, including those operated by Amazon.com Inc., Target Corp., Walmart Inc., eBay Inc. and Google Inc.

Lamps Plus supplies its products from 700 vendors, which Lamps Plus views as 700 additional warehouses with its products. It takes inventory feeds from all of them at least once a day to ensure its inventory counts are accurate. Lamps Plus has two distribution centers, its main one in California, which sprawls 784,000 square feet, a distribution center in Pennsylvania and a returns center in California. Lamps Plus ships about 70% of its products from its own distribution center and drop ships the other 30% from one of its vendors’ warehouse.

“The hardest install we’ll ever have is order management, because it’s the brains of entire order system,” Gratke said. “Every order in your entire company from POS to kiosk orders to marketplace orders to your own proprietary website — Lampsplus.com — all come through that same system and goes to the brains. And the brains, which is the order management system, decides where to place order: vendor, your own warehouse store or whatever it might be.”

More sophisticated rules

With the new order management system, Lamps Plus can implement more sophisticated rules about where to ship items from based on freight costs, shipping costs, speed, proximity to shopper among others. For example, the new system will allow the retailer to allocate sensitivities and thresholds with each of its priorities. As an example, if an order is $3 cheaper to ship from a vendor, but the customer would have to wait 10 more days, the new system may opt for a more expensive shipping source in order to have faster shipping, based on the rules the retailer set.

“It’s both speed and costs, and cost has gotten to be the bigger issues as oil price increase significantly,” Linstone said. “So the timeliness of how quickly we can get the product to the customer and how cost effective are the drivers behind this and trying to figure out the absolute best place to ship from.”

While the older system worked, it was “clunky” and tweaking the rules in the new system will be much easier, he said.

Lamps Plus is No. 109 in the 2023 Digital Commerce 360 Top 1000.

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American Signature’s current supply chain technology is powerful, as it integrates with the warehouse, delivery and warranty systems, Kiggin said. But, it is outdated and a barrier to growth, customer satisfaction and recruiting top talent to work with the technology, Kiggin told Digital Commerce 360 at Manhattan Associates Inc. Momentum 2023 conference in Phoenix last week.

Inventory accuracy and working with old technology

“Some of the major pain points were inventory integrity and knowing where it was and if it was real,” Kiggin said.

For example, if a shopper wants to order a couch, the associate could look up the inventory level of that couch on his iPad or on the checkout desktop terminal. Often, those inventory numbers didn’t match. These numbers also likely didn’t match the online inventory system.

American Signature always gives shoppers an estimated delivery date for their product. But because it lacked an accurate inventory count, it only met that promise 60% of the time, Kiggin said.

Inventory integrity is important with the furniture category, as the majority of sales for bulky pieces are made in store and delivered to the shopper’s home. Few shoppers buy in store and leave with the product. Kiggin said about 7% of its sales are online, a number it wants to grow.

Kim Huebner, director, store operations said the current supply chain technology is an AS/400 system from the 1980s. She described it as looking like a DOS screen, with function keys and green type, and no graphical interface.

“We were very clear on where we were. That was not the hard piece. The harder piece was defining where we wanted to go and how to get there,” Kiggin said.

American Signature selected and began working on upgrading its system with six of Manhattan Associates’ applications in January 2022. They were: Warehouse management, order management, point of sale, customer engagement, customer service and customer service index reporting suite.

The retailer is currently testing the warehouse management and order management platforms, scheduled to go live in early June. The merchant will test and implement the remaining four applications for the rest of the year and with a go-live date of 2024, Huebner said.

Implementing warehouse management and order management

Of American Signature’s four distribution centers, one of them is currently testing the new Manhattan technology alongside its current technology to ensure everything is functioning correctly. So far, so good, Huebner said.

Training its warehouse employees on the new system only took three hours, and the employees were happy to have a better system, Huebner said. American Signature decided to train employees with bite-sized short videos, instead of long handouts to read. It took about a week, or roughly 40 hours, to train its middle group of above entry entry-level employees. It took roughly 40 hours to train its warehouse leaders on the new system.

American Signature will measure the success of these systems by how much its labor management standards at the distribution center are maintained or improved, she said. These metrics include speed of picking, speed of processing and speed of loading.

“Time is money,” Kiggin said.

With the improved system, the goal for American Signature is to meet its delivery promise at least 85% of the time, Huebner said. While 100% is really the goal, the retailer factors in changes that a customer makes after purchase, such as changing a design element on a custom-made piece of furniture or choosing to switch the delivery date because of their own personal circumstances.

Getting buy-in from employees on the new system

As a family-owned company, Kiggin said it was important to American Signature’s management to incorporate many employees in the overhaul process. This included the end-users of the product.

For all of its new systems, American Signature is pulling employees out of their day jobs to put them on the project. This helps ensure that employees using the software can make it the most functional for their jobs, Huebner said. This also helps with buy-in when the systems go live and some employees might be resistant to change.

American Signature gives continual updates to warehouse managers not directly involved in the project. They can still voice their opinions, Huebner said.

Kiggin would not reveal the overall cost but says it is “way over” $1 million.

“It’s a significant investment. And it’s worth every penny,” Kiggin said.

Kiggin described it as a long-term investment, as the Manhattan technology will continue to update and improve alongside the American Signature business.

American Signature is the parent company of Value City Furniture and ranks No. 592 in the 2023 Digital Commerce 360 Top 1000.

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

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

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

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

Home Depot led the pack in web traffic 

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

Ikea has the most web visits that lead to conversion

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

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

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

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

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

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

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

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

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

Ace Hardware gains the most web traffic in Q1

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

Wayfair web traffic also increased 3.1%.

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Beflax sells $300 linen sheets, and sustainability is one of its brand values. Many online luxury shoppers have come to expect an online package to arrive with ample tissue padding sealed with branded stickers, paper filler and ink branding on the box, says Katerina Rothman, founder and CEO of Beflax Linen.

“I want to give the best experience to customers,” Rothman says. “They are paying on average $300 per set, and people want to see the value — even in the box when they are receiving and opening it. There is still a missing link in the majority of consumers. Even if they are more sustainably minded and ecofriendly, they still want to have this luxury experience of all this tissue paper and opening a nice slick box.”

Initially, Beflax shipped its orders in an unbranded cardboard box — Rothman refused to use a plastic bag — with recyclable craft tape instead of plastic tape and extra tissue paper to connote a luxury unboxing experience.

Katerina Rothman, founder and CEO, Beflax Linen

“It’s against my principles to put the product into plastic bags or plastic tape over the boxes,” Rothman says.

Often, when a box is branded with too much ink, it can no longer be recycled. Rothman was close to signing a contract for custom boxes that included Beflax branding while still recyclable, but she decided against it.

“The price was good, but the part was killing me — there was no guarantee the factory in China was working up to ecofriendly standards,” Rothman says. “And it logically didn’t make sense to me to ship products from across the world.”

Beflax is based in Denver and manufactures its linen sheets in Portugal.

How shipping with LimeLoop works

In Q3 2022, a colleague introduced Rothman to LimeLoop packaging. The vendor provides reusable ecommerce packaging to retailers. The bags are made of recycled polyester, mostly old billboards, on the outside, have a zipper closure instead of tape and are a recycled cotton on the inside. On the outside, the package has a sleeve for the retailer to insert the shipping information, instead of using a sticky label.

After a few weeks of negotiating and a month of implementation, Beflax started using the LimeLoop bags as its packaging. Here’s how it works: Beflax ships all its products in one of three sizes of reusable bags to the shopper. The shopper receives the product, which includes a card for how to return the bag. The bag will have the return shipping label on the back of the main shipping label, which the shopper will flip over on the front of the package. The customer then mails this bag using any U.S. Postal Service box, and it will make its way back to Beflax.

Beflax ships all its products in one of three sized reusable LimeLoop bags for a luxury unboxing experience.

The bags can be reused at least 200 times. After that, LimeLoop will recycle them again into new reusable packages. Beflax rents the bags from LimeLoop for $1 per bag per month. Currently, Beflax rents 50 bags, which it can use multiple times per month. Beflax, which launched in 2017, has annual revenue around half a million dollars, Rothman says.

On average, it costs Beflax $16-18 to ship the product and about $4.50 for return shipping. Beflax absorbs some of these costs as it charges shoppers $15 for shipping. (Beflax provides free shipping for a consumer’s first order.)

Reusable packages works in practice for Beflax

The cost for Beflax is comparable to what it would cost the brand to purchase traditional shipping materials, including unbranded boxes, tissue paper, tape and sticky labels, she says. And the main return on investment, Rothman says, is that it’s the right thing to do.

For each LimeLoop medium bag, a retailer reduces 92% of carbon dioxide emissions and 99% of water use compared with shipping that order in a medium-sized cardboard box, according to LimeLoop. Similarly, for each small LimeLoop bag, a retailer reduces 42% of its carbon dioxide emissions and 9% of its water use compared with a polymailer plastic bag, according to the vendor.

Beflax has not conducted a poll about how shoppers feel about using the LimeLoop bags. Rothman, however, is confident the bag provides a luxury unboxing experience, describing the bags as slick with very nice inside fabric. The inside of the bags are so soft that the brand doesn’t wrap the sheets in any additional packaging, such as a polybag, Rothman says.

Beflax has not had an issue with shoppers returning the bags in the three quarters it has used the bags. If a customer is ever slow to return its packaging, Beflax contacts her reminding her to send it back, and she does.

Beflax also sells its products on Wayfair Inc., Etsy Inc. and Amazon.com Inc. Because Beflax doesn’t receive the customer information when selling on these platforms, it does not use the LimeLoop bags and uses its previous, disposable packaging, without the extra tissue paper. It’s too big of a risk to send out bags without the shopper information, Rothman says.

Brands search for more sustainable but luxury unboxing

Bernardine Wu, executive managing director of digital strategy at digital consultancy OSF Digital, says LimeLoop is an interesting packaging vendor to watch, as it provides a sustainable packaging initiative that can scale and make an impact.

“Retailers and brands should focus on the approach that makes most sense and is most viable to their business, but at the same time, it is important to make sure that sustainability initiatives are aligned to the customer values, and it has to be a sincere and prioritized effort,” Wu says.

LimeLoop launched in 2018 and has 45 online retail clients, mostly small businesses with annual revenue less than $5 million. It does have some enterprise clients, with a handful in the pipeline, a spokesperson says without revealing more.

EcoPackables is another ecommerce vendor that provides sustainable packages to ecommerce merchants, including recycled plastic, recycled cardboard and compostable materials. EcoPackables has been in business for four years and has more than 100 enterprise clients, such as Ted Baker and Revolve, and more than 2,000 small businesses, many of which are Etsy sellers, that use its products. It does not count many luxury sellers in its client roster, however. Founder and CEO Shervin Dehmoubed says this is because many higher-end brands are reluctant to give up the extra tissue paper “garnish” in their packages.

“The reason why we don’t do high-end packaging is it goes against our ethos. The amount of waste in that packaging is crazy,” Dehmoubed says.

But Dehmoubed is hopeful that this might change as more brands want a better sustainability story and more consumers demand it. In fact, it may even come down to social media influencers not doing unboxings with confetti coming out of the box but to having recycled paper in there one day, he says.

Toad and Co. reduces packaging with LimeLoop

Similarly, apparel brand Toad and Co. also thought deeply about its packaging and wanted it to tell its brand story in a robust and rich way, says Steve McCann, marketing director. For example, many new or luxury brands, such as Apple Inc. will tell their brand stories within the packaging and will include a booklet highlighting the products’ features or other details about the brand for a luxury unboxing.

“You say, ‘I want this for my brand,’” McCann says. “Then you ask yourself, ‘Is this what my brand stands for? And you say ‘No, that is so much waste.’ And how do we get beyond that? How do we still have that story while being minimal and being responsible?”

And so, Toad and Co. went minimal, with no inked boxes, no attached hang tag and no booklet describing its brand. Instead, it gives shoppers the choice between recycled paper mailers and reusable LimeLoop bags.

About 12%-15% of Toad and Co.’s online shoppers select the LimeLoop package option, and 20% of those who chose LimeLoop as their fulfillment method choose it again, McCann says. These are healthy numbers, McCann says, especially when considering how many new customers Toad and Co. has, he says without revealing more.

“When brands have an option and it’s different and it’s addressing the issue, they love it and grab on to it,” McCann says about the LimeLoop bags.

Toad and Co. is No. 1623 in the 2022 Digital Commerce 360 Next 1000.

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The transaction will combine two well-known brands at a time when consumers are pulling back from pandemic-era splurges on home furnishings. The companies said in a May 9 statement that they will fund the purchase with about $2.7 billion of cash and $1.3 billion in stock.

Mattress Firm — the largest U.S. specialty mattress retailer, with more than 2,300 stores across 49 states — is expected to operate as a separate business unit within Tempur Sealy. The combined company will have about 3,000 retail locations globally, 71 manufacturing facilities and more than 21,000 employees.

Keith Hughes, an analyst at Truist Securities, called it a “landmark deal for the mattress industry” but noted that U.S. regulators may have antitrust concerns.

“The deal had been speculated upon for some time, and we believe the question now shifts to government approval,” Hughes said in a research note. “The deal will bring the potential of significant revenue and cost synergies, but also dis-synergies around the loss of other retail at TPX and suppliers at Mattress Firm.”

The companies expect the combination to streamline retail operations, customer service and supply-chain management for Tempur Sealy. The company expects the deal to add to adjusted earnings in the first year and sees annual cost savings of at least $100 million within four years.

Tempur Sealy is No. 164 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American online retailers by web sales. Mattress Firm is No. 281.

Pandemic boost

The home-furnishings industry was bolstered during the pandemic as Americans spent more time indoors and used government stimulus checks and inflated savings to buy more items for the house. Spending on such things has fallen as the pandemic has eased and inflation has put pressure on shoppers’ budgets.

Stellenbosch, South Africa-based Steinhoff bought Mattress Firm for $3.8 billion in 2016 at the height of an acquisition spree. The company has sold shares in many of its units to pay down debt. It’s still trying to rebuild after an accounting scandal in late 2017. This is the first sale since it started a court process to avoid bankruptcy.

The company announced in January that Mattress Firm was withdrawing its initial public offering registration to explore all options.

The companies expect to close the agreement in the second half of 2024 subject to regulatory approvals. More than 80% of Mattress Firm shareholders have approved it, and doesn’t require approval from Tempur Sealy holders.

J.P. Morgan Securities is serving as financial adviser to Tempur Sealy. Goldman Sachs, Barclays and Jefferies are financial advisers for Mattress Firm.

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Total net revenue decreased for the eighth consecutive quarter. Revenue was down 7.3% year over year to $2.8 billion. The majority of the revenue, $2.4 billion, is from U.S. sales, which were down 5% year over year.

Despite decreasing revenue, CEO and co-founder Niraj Shah called Q1 a “strong quarter” for the online furniture retailer. Wayfair expects to report a profit as soon as Q2.

“We have always known, and now we are clearly demonstrating that the Wayfair model is inherently profitable and that there is considerable opportunity in front of us to rapidly drive further margin expansion,” Shah said.

Wayfair ranks No. 10 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American online retailers by web sales.

Customer and order growth

Wayfair’s plan to report a profit in Q2 is based on growing customer and order numbers, Shah told investors. The retailer says it has a “dense” promotional calendar for 2023, with sales including its annual Way Days.

In Q1, active customers were down 14.6% year over year to 21.7 million. Wayfair delivered 9.7 million orders in the quarter, down 6.7% over the first quarter of 2022. The average order value stayed consistent at $287.

So far in Q2, which includes April and the beginning of May, orders are up year over year for Wayfair.com, Shah said.

Some experts also predict Wayfair will see a small bump from the downfall of Bed Bath & Beyond.

Reducing shipping costs

Wayfair continued its focus from last quarter on cutting costs, with extra attention on shipping. The retailer classifies all orders as small or large depending on size and weight. Small items are shipped through UPS or FedEx, and larger items go through Wayfair’s delivery network. Many of the most frequently sold items straddle the line at around 150 lbs., Shah said. Wayfair began using more sophisticated analytics to determine which items needed to be shipped in a Wayfair truck with two delivery drivers. Shipping this way is more expensive, but the decreased incidences of damaged products created cost savings, he said.

For the quarter ended March 31, Wayfair reported:

• Total revenue decreased 7.3% year over year to $2.8 billion.
• U.S. net revenue decreased 5% year over year to $2.4 billion.
• Net loss was $355 million, up from a net loss of $319 million in the year-ago period.
• Active customers were down 14.6% to 21.7 million.
• Average order value was unchanged at $287.      

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

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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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Each year, Digital Commerce 360 and Bizrate Insights looks at the behavior of home goods buyers. We begin with their online buying penetration, assess the user experience they seek and address the role of the store in a category where touch and feel may matter more than others.

I’ve been spending significant time on home sites as I help my daughter think about furnishing her first apartment. Thinking back to a decade ago and the impact of the pandemic on the online home goods experiences, online retailers have elevated their online and omnichannel experiences, driving category growth.

6 in 10 online shoppers purchased 26%+ of their home goods online in the past year

Online shoppers remain active with home goods research and cross-category buying as they upgrade homes, seeking savings along the way.

And online shoppers often have home needs that require researching to make the right selection. Part of those home needs included:

• Upgrades to their homes (47%)
• DIY projects (38%)
• Moving to a new home (13%)
• Kicking off contractor projects (12%)

Gathering information about these activities often meant researching ways to enhance their home online (29%) and perusing social media for ideas (25%). This should suggest to retailers that comprehensive information fosters purchasing for home goods shoppers.

A broad assortment allows for purchasing in many categories and we surveyed online shoppers across 4 particular areas: outdoor (35%), new furniture (33%), appliance/high ticket (26%) and home office (22%).

Remaining competitive with promotions encourages purchasing, and 42% of shoppers showed interest in saving money by taking advantage of promos on interested products.

Price, savings, past experiences and being in stock are the conditions most likely to lead to online purchasing

When online shoppers are asked what drives them to place an order, money talks. That starts with the right price at 68%, along with the always-in-favor free shipping at 61%. Free return shipping continues to see traction with 38%, suggesting it leads to placing an order. 26% cited promotions beyond free shipping, while the ability to finance (at 14%) saw more limited interest.

Past experiences with retailers engender trust for future buying. In fact, 57% suggested that was a reason to buy again. Other factors included trust in the brand (39%), being a member of a loyalty program (29%) and the retailer’s support of causes that resonated with the shopper (among 10%).

Online shoppers have become accustomed to a strong user experience that is efficient and replete with imagery, information and tools. Half of those surveyed cited the overall experience as an important conversion attribute.

Other UX elements focused on speed and included an efficient site search, which 31% cited, fast checkout (21%) and a fast-loading site (18%).

Content that most factored into conversion was the quantity/quality of product reviews at 43%. Others that had more limited impact on conversion were:

• Ample product information/imagery (16%)
• A personalized site based on past behavior (15%)
• Videos (12%)
• Interactive tools (6%)

Fundamentals such as product selection (at 53%) remain atop the list for online shoppers. There is no substitute for being in stock and having timely delivery, as 45% of survey respondents suggested. Logistics also continue to play a role with guaranteed delivery times (27%), BOPIS (16%) and curbside pickup (10%) a more limited factor.

Customer service had some impact as those surveyed cited easy access to customer service information (19%) and the ability to contact customer service via multiple means (18%).

Home goods shoppers require many details when shopping online and like to compare products along the way

Basic information is most important to guide decision-making, from ratings to price and getting a range of views of the product. Customer ratings/reviews topped the list of features at 52%, while access to pricing (51%) was also critical for the majority of online shoppers. Seeing the details was a must in this category and thus having the ability to zoom in on images at 35%, images in the home setting (23%) and photos from other shoppers (21%) also resonated with shoppers. Videos at 12% and livestreaming (5%) were the least important elements.

Product comparison is important in this feature-rich category. Being able to look at products side by side is invaluable for shoppers, as 35% noted. Category-specific content that enriches the experience seems to have more of a niche following. How-to guides were important to 17%, while room design tools (11%), product configure (10%) and product customization (9%) followed behind. Trailing in the end were augmented reality (8%), fabric swatching (7%) and styling profilers (7%). While tools are abundant, only a small group of shoppers see them as important.

Logistics are critical in this category, as it often lends itself to scheduled delivery with more complexity than a typical standard shipment. 30% said accurate delivery windows are important to them. That may be elevated due to supply chain concerns during the pandemic.

Merchandising is about inspiration, and retailers used it extensively to capture online shoppers’ attention. Topping the list were new products and product recommendations, both at 20%. They are often personalized using both similar and related products, making the shopping experience more efficient as well. Top sellers (at 15%) and trending products (9%) also had roles to play.

Add-on services are valuable for shoppers and can be an important revenue generator for retailers

The majority of online home goods shoppers are likely to take advantage of add-on services, with 23% on the fence and only 26% unlikely. The convenience and confidence that comes with being able to leverage such services is invaluable. Additionally, the likely margin among retailers and the growth of partners to help fulfill these needs appears to have grown in past years.

When buying home goods, shoppers increasingly use mobile devices while also watching video and gathering information. 51% indicate they have used smartphones for research and purchasing so certainly a mobile-first mentality is advised for today’s home goods sellers.

Creating videos in support of the buying experience is desirable to shoppers who take advantage of available content. 37% of survey participants watched video about a product in consideration and 26% watched home and garden TV.

Social media has a role to play in gathering information and inspiration, as 24% peruse social media to get ideas and 17% read blogs for design ideas.

Services are integral, but adoption is not universal

Tool usage including A/R came in at 13% and 3D room planners at 12%. While I have found them valuable personally, they’re not always easy to find on the sites and not all buyers have such sophisticated needs.

The same goes for appointments and services, which are often product dependent. From our survey respondents, just 10% booked in-home services while 9% booked Home Advisor/Task Rabbit services and 8% purchased product assembly.

From a design and appointment point-of-view, 8% used in-store design services, and/or a virtual appointment with an associate/designer, so they are still relatively limited among home goods buyers.

Online home goods shoppers have a heightened awareness of where products are available and enjoy the conveniences of an omnichannel experience

Omnichannel-wise, there was a need to know about availability as 44% checked product availability in-store. But unfortunately, from an inventory perspective, 31% encountered out-of-stocks online.

These shoppers have come to enjoy BOPIS (28%) and curbside pickup at 21%. And many like me visit the store in advance of placing an order (26%) for a variety of reasons.

Expectations around logistics continue to grow as 20% ordered for same-day delivery. Complications arose with late deliveries seen among 16% while 14% had orders canceled. And sadly, 13% said they couldn’t reach customer service in a timely manner.

Services-wise, 12% contracted for haul away as it certainly makes things simple, while just 8% used a retailer’s white glove service.

From a design perspective, just 11% took advantage of design services while 10% used AR or 3D tools. Though small in number, I imagine this customer would be of great interest from a dollar contribution standpoint.

Home goods buyers like to visit the physical store to see products in person when they need items quickly and to save money

There is no substitute for the visit as stores allow shoppers to see and experience products first-hand.

The biggest reason shoppers visited the store, 60% said, was to see products in person. 31% also wanted to road test the products. There is also a trust factor in play, too. 24% of online shoppers trust the product more when they buy in person. And of course, there is the experience for 22% as they enjoy seeing how products are displayed, while 18% find they get a full sense of the brand experience.

There is the people factor for 16% as they like to get advice from in-store experts. Some 12% find the website experience inadequate and 8% are not satisfied with online customer service.

A unified experience

Stores allow shoppers to avoid shipping and channel-only promotions are seen as appealing. In fact, 40% didn’t want to pay for shipping. 36% took advantage of in-store sales or promotions and 11% feared dealing with counterfeit goods.

Omnichannel options are convenient for shoppers facilitating pickup and returns. That especially comes into play for the 41% who need items quickly. Additionally, there is a desire among some 24% of those surveyed to support local retailers. Another 21% like the convenience of picking up at the store. Similarly, 16% appreciate being able to return to the stores as well.

Looking ahead, the home category has clear growth opportunities that would benefit online shoppers. The majority of online shoppers said they will at least spend the same (37%) or more (25%) in the first half of 2023.

The home goods category is one that requires investment. Retailers often add new products to the mix. The combination of inspiring merchandising, robust product and category content, and tools is just the start. This, coupled with the logistics and services to compete with the best retailers, will move the growth needle higher once again.

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The post The Shopper Speaks: Will home goods make a comeback in 2023? appeared first on Digital Commerce 360.

Bed Bath & Beyond has experienced years of dwindling sales. Most recently, the merchant lost 33% in digital sales in 2022 compared with a year earlier, according to Digital Commerce 360 data.

There is not much ground to be gained by competitors. By the end of its tenure, the ailing home goods merchant accounted for 1.4% of overall houseware/home furnishings in the U.S. market in 2022, according to Digital Commerce 360 analysis of U.S. Department of Commerce data.

Digital sales for the housewares and home furnishings category decreased in 2022. Consumers spent less time and money on home improvement projects. Instead, consumers allocated funds to pre-pandemic activities like dining out and traveling. Including Bed Bath & Beyond, the U.S. Top 1000 Digital Commerce 360 retailers accounted for 29.9% of housewares/home furnishings category sales in 2022. That is down from 32.1% in 2021. Notably, without Bed Bath & Beyond, web sales for the category would have declined 4.1% in 2022.

Amazon continues to dominate home goods category

Mass merchants like Amazon.com Inc. (No. 1 in Digital Commerce 360’s Top 1000 retailer rankings), Walmart Inc. and Target Corp. (No. 5) have also experienced a slowdown in ecommerce sales. Amazon still holds the majority of the home goods category market share with 88.47% in 2022. That is down compared with 86.13% in 2021, according to market research company YipitData.

Walmart (No. 2) also experienced a decline. Its market share accounted for 7.27% in 2022, compared with 8.58% in 2021. And Target Inc. also dropped in 2022 to 4.27%, compared with 5.29% in 2021.

A long time coming

Bed Bath & Beyond never quite caught on to ecommerce, says Rich DePencier, area managing partner and chief marketing officer of Chief Outsiders, a management consulting services company.

The retailer didn’t experience the pandemic-induced burst of ecommerce growth other merchants did. Of the top five merchants in the houseware/home furnishings category, Bed Bath & Beyond was the only retailer to have less than 10% 3-year CAGR, according to Digital Commerce 360 analysis.

Where Bed Bath & Beyond shoppers will shop instead

When asked where Bed Bath & Beyond shoppers will shop instead:

• Amazon (68%)
• Target (58%)
• Walmart (48%)
• Home Goods (34%)
• At Home (12%)
• Macy’s (10%)
• Wayfair (5%)
• Crate & Barrel (3%)
• Williams-Sonoma (3%)
• Overstock (2%)
• Nordstrom (2%), according to Numerator, a consumer insights and analytics company survey of 500 verified Bed Bath & Beyond shoppers on April 24.

The opportunity lies in providing the shopping “experience” that Bed Bath & Beyond offered consumers, DePencier says.

“Retailers that are willing to invest in becoming more of a solution for consumers stand to benefit,” he says. That entails connecting the online and in-store experience of shopping for “big cultural moments.” These moments include weddings, babies, and college dorm room shopping.

Wayfair is opening stores in the U.S. to give consumers the option to see in-person what they might buy online. In 2022, IKEA invested $3 billion to turn stores across the U.S. and Europe into delivery hubs and support its ecommerce sales. In April 2023, IKEA invested $2.2 billion to expand storefronts and fulfillment networks throughout the U.S.

“Merchants like Wayfair are trying to create that in store experience. It’s just like how an IKEA has a warehouse right next to the store. You can pick the product on your way out,” says Gopi Polavarapu, senior vice president and general manager of Kore.ai, an artificial intelligence customer experience software vendor. “Especially when it comes to three or four day delivery commitments. It’s impossible to commit to those [timeframes] because they don’t have warehouses in every market.” That’s where locally positioned storefronts come in handy to provide last mile delivery, he says.

Bed Bath & Beyond was too slow to adopt new technology

Before the pandemic, Bed Bath & Beyond had a game plan in place to use technology like QR codes to help consumers shop in-store. Then the pandemic hit and the merchant didn’t adjust its ecommerce side of the business, Polavarapu says.

Polavarapu previously worked at software vendor Zebra Technologies, which sells electronic sensors and industrial scanners. The software and device vendor met with Bed Bath & Beyond in 2019 to introduce these devices to modernize in-store shopping experience, he says. “The plan included placing QR codes [on merchandise] to help shoppers” find what they needed in store, Polavarapu says.

“But when it came to digital ecommerce, they were much slower in adopting technology,” he says. “They tried to save as much [money] as they could rather than modernizing their entire operations.”

Bed Bath & Beyond filed for Chapter 11 bankruptcy on April 23. It plans to liquidate inventory and go out of business.

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The post Which retailers will benefit from Bed Bath & Beyond’s demise? appeared first on Digital Commerce 360.