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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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David Kaplan, chief operating officer, WatchBox

It is a small percentage of the retailer’s total $500 million in sales.

“Single digits,” he says, but it is an important option.

The average order value for cryptocurrency-paid orders is $80,000, Kaplan says.

“[AOV] is skewed by several high-dollar transactions,” he adds.

WatchBox’s median cryptocurrency transaction is $20,000. This “is similar to non-cryptocurrency transactions — but the average is way higher,” Kaplan says.

“We have clients that have spent seven figures in cryptocurrency with us. Then we have the normal run-of-the-mill $10,000, $20,000 or $50,000 transactions,” Kaplan says. “I woke up this morning and we had one $40,000 cryptocurrency transaction overnight.”

WatchBox sells its authenticated watches online and in retail stores.

“We lead with our website, but buying a watch is a very personal kind of sale,” Kaplan says. “We found that having locations and staff in the biggest watch markets in the world help us catalyze those markets.”

WatchBox ranks No. 264 in the Top 1000. The database is Digital Commerce 360’s ranking of North American online retailers by web sales.

What it costs WatchBox to offer cryptocurrency

Cryptocurrency processing charges are less than credit cards, but more than wire transactions.

“It’s a relatively low transaction cost for us,” Kaplan says. WatchBox uses third-party bitcoin payment services provider BitPay. BitPay allows merchants to accept payments from cryptocurrency users.

Domestic outgoing wire transfer fees range from $0-$35. International outgoing wire transfer fees fall between $35-$50, according to Bankrate.

BitPay fees for monthly transactions:

• Less than $500,000: 2% + $0.25
• $500,000 – $999,999: 1.5% + $0.25
• $1 million or more: 1% + $0.25

Fighting fraud

From a fraud standpoint, cryptocurrency is also a plus, Kaplan says.

“Because as a [retailer], you’re on the hook for fraud,” he says. Whereas, for credit card transactions, WatchBox has spent a “lot of energy” following up with credit card transactions, he says.

“If we get into a dispute with American Express, they almost always side with the client,” Kaplan says. “The transactions are reversible. With cryptocurrency, once you have the money, you have the money.”

BitPay takes on the risk. It accepts the cryptocurrency payment and deposits cash into WatchBox’s account the next day.

Much of the cryptocurrency transactions are in digital currencies like USDC, he adds. Stable coins are a type of cryptocurrency where the value of the digital asset, or, digital coin, is fixed to another form of currency. This includes currency like the U.S. dollar or a precious metal, such as gold. Stable coins are considered more likely to retain their value compared with cryptocurrencies. Other cryptocurrencies can be volatile. Value can rise and fall dramatically within any given day.

Concerns about cryptocurrency instability

The heyday of cryptocurrency in 2021 ended in 2022. A series of selloffs and the collapse and arrest of former FTX CEO Sam Bankman-Fried, as well as the collapse of Silicon Valley Bank, fueled further volatility. In March 2023, the Securities and Exchange Commission told cryptocurrency payments vendor Coinbase that it will file a lawsuit because it believes the largest U.S. cryptocurrency exchange violated investor-protection laws.

Vice president of marketing at BitPay Merrick Theobald says merchants need to do their due diligence. “Look for red flags,” he says. “If a company is based in the Bahamas, you have to ask why there instead of the U.S. or another country that has tough (cryptocurrency) regulations.”

Vendors like BitPay focus on following all laws and regulations of the U.S., “which tend to be stricter than other countries,” Theobald says.

Customers pay at checkout using their cryptocurrency wallet in BitPay. Merchants do not have to hold onto cryptocurrency which can change value unexpectedly.

Outsourcing cryptocurrency processing is necessary for WatchBox, Kaplan says. It ensures the retailer isn’t breaking any laws, including Know Your Customer (KYC). BitPay monitors anti-money-laundering processing. This is especially important because WatchBox sells portable and valuable items, Kaplan says.

“We have a lot of attention on us,” Kaplan says. “All the countries in which we operate [want] to make sure that we’re following proper money laundering [rules] to avoid sanctions.”

Wire transaction sales have not decreased, he says.

“But I’d say the majority of our cryptocurrency transactions are transactions that would have been wire transfers otherwise,” Kaplan says.

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Total sales were down 5.2%, $145.1 million, in the fourth quarter to $2.7 billion, Signet Jewelers reported. During that same period, ecommerce sales grew from $556 million in Q4 2021 to $650 million in the fourth quarter of 2022, a 16.9% increase.

For the year ended Jan. 28, 2023, the retailer said total sales were up 0.2%, $16.1 million, to $7.8 billion. Same-store sales were down 6.1% year over year. Ecommerce accounted for 20.4% of those sales, a larger proportion than 19.3% of total sales in 2021.

Signet Jewelers ranks No. 64 in Digital Commerce 360’s Top 1000 ecommerce retailers in North America.

The majority of online sales come from James Allen and Blue Nile, which are both fully digital brands under Signet. Blue Nile ranks No. 144 in the Top 1000. Signet acquired Blue Nile for $360 million in August 2022. Since the acquisition, the digital business has grown, CEO Virginia Drosos told investors. The company had its best-ever Cyber Monday in 2022 with traffic up 18%. Enrollment in Signet’s loyalty program nearly tripled in the fourth quarter compared to the previous quarter.

More ecommerce investments are planned for 2023, Drosos said. About $100 million will go toward ‘”next-gen automation” and other feature to drive digital conversion, she told investors. The retailer is anticipating minor challenges to the bridal industry in 2023, which makes up 49% of Signet’s sales, with the expectation that conditions return to normal the following year.

Signet Jewelers earnings summary

For the quarter ended Jan. 28, Signet Jewelers reported:

• Total sales were down 5.2% to $145.1 million.
• Ecommerce sales grew from $556 million in Q4 2021 to $650 million in the fourth quarter of 2022, an increase of 16.9%.
• Average transaction value was up 3.9% year-over-year.

For the year ended Jan. 28, Signet Jewelers reported:

• Total sales were up 0.2%, $16.1 million, to $7.8 billion for the year
• Store count decreased by 46 locations.
• Ecommerce sales made up 20.4% of sales, compared to 19.3% in 2021.
• Average transaction value was up 11.2% year-over-year.

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

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Net sales were down for the fiscal quarter ended Dec. 31 by 1.9%, to $119.6 million from $121.9 million. However, sales for the entire year were up 15.7%, to $439.9 million from $380.2 million.

Brilliant Earth ranks No. 221 in Digital Commerce 360’s Top 1000 ecommerce retailers in North America.

Brilliant Earth expanded its customer base through social media

The jewelry brand’s customer base grew significantly in 2022, CEO and co-founder Beth Gerstein told investors. 

Gerstein credited the growth to Brilliant Earth’s online origins and large reach on social media. Online searches for the brand reached an all-time high, and email capture grew 38% in 2022, she said.

The company made “huge strides” in online engagement, according to Gerstein, with a 70% increase in social impressions and partnerships with influencers. These efforts led to growing total customers by “approximately 25%” over 2022, she said. 

Brilliant Earth expects to increase influencer partnerships in 2023 for further growth from social media.

Total orders grew 13.7% for the quarter and 26.6% for the year.

Customers are spending less

Though Brilliant Earth grew its customer base, those customers gravitated towards less expensive pieces. Average order value (AOV) was down 13.7% in the fourth quarter, and down 8.6% for the year.

Women buying jewelry for themselves was a major growth area, up 70% year-over-year, Gerstein said. These contributed to lower AOV because the products are typically priced lower than engagement rings and wedding bands, though they offer higher margins. Overall customer demand grew for jewelry priced below $10,000, but shrank for pieces above that price point, chief financial officer Jeff Kuo said.

Sales grew outside of wedding jewelry, especially for new customers. Cocktail rings, tennis bracelets, and necklaces all “generated strong results” in the fourth quarter, Gerstein said. Fine jewelry, which includes those pieces and does not include engagement rings, made up 16% of purchases in December, its highest level ever. More than one-third of new customers bought fine jewelry in the fourth quarter. 

Brilliant Earth plans to expand those offerings in 2023 and “become known as the fine jewelry destination for the next-generation consumer.”

Bridal business is booming

Non-wedding sales are growing, but engagement rings and wedding bands are still key for Brilliant Earth. 2022 was a record year for weddings, dubbed a “wedding boom,” and the bridal category remains resilient, Gerstein said. Brilliant Earth is releasing new bridal collections this spring, and the company forecasts a growth in market share.

The retailer is working on new ways to market products to brides, including growing its list of showrooms. Brilliant Earth describes it as an omnichannel model where customers make appointments online and select the styles they’re interested in, and then see them in person in a showroom. The company opened 10 showrooms in 2022 to 25 total, with plans to add at least 10 more in 2023.

Brilliant Earth earnings summary

For the quarter ended Dec. 31, Brilliant Earth reported:

• Net sales decreased to $119.6 million, dropping 1.9% from $121.9 million in 2021.
• Net income was down to $6.2 million from $11.4 million in 2021.
• Average order value decreased to $2,664, down 13.7% from $3,088 last year.
• Total orders grew 13.7%, to 44,898 from 39,475 .

For the year ended Dec. 31, Brilliant Earth reported:

• Net sales grew 15.7% year over year to $439.9 million, compared to $380.2 million in 2021.
• Net income decreased 27.5% to $19 million from $26 million previously.
• Average order value was down 8.6%, to 2,940 from $3,216,
• Total orders were up 26.6%, to 149,613, from 118,208 in 2021.

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

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COVID-19 factored less into supply chain issues for most online retailers this year than in 2021. Instead, the war in Ukraine led to inflated prices for fuel, affecting shipping costs. United States retailers also had inventory surpluses that they struggled to sell off, as many consumers worried about a looming recession.

Online retailers joined or created their own marketplaces in 2022 in addition to selling on their own ecommerce websites. In doing so, they navigated how to manage their products across different ecommerce sites. E-retailers also changed their approaches to digital marketing this year to collect first-party data rather than relying on third-party tracking cookies.

Digital Commerce 360 editors have been interviewing online retailers and analyzing data trends in 2022 to cover all these subjects and more. Here are our favorite stories in 2022.

Industry news analysis:

2022 kicks off with a flurry of mergers and acquisitions 

1-800-Flowers.com, Evo, Club Champion, Worldwise and Thrasio each make an acquisition to build international expertise and add new ecommerce options.

Six ways to maximize the value of an Amazon brand in a tough market 

Buyers specializing in small brands that sell on Amazon raised $15 billion in recent years and purchased hundreds of companies, driving up the value of these businesses dramatically. Demand has cooled in 2022, but Amazon brand owners can still walk away with millions of dollars if they meet the requirements of increasingly picky buyers.

Keeping Score: Is inflation lower online than offline? 

There is some reason to believe it has been in the past year, with overall retail prices rising faster than online prices in 10 of 14 categories. If true, it could give online retailers a way of appealing to value-conscious shoppers.

How Black History Month inspired retailers’ February marketing campaigns 

More than a quarter of the top 100 online retailers mentioned Black History Month on their ecommerce sites while one in five spotlighted Black-owned or -founded brands, Digital Commerce 360 research shows.

Customer experience:

The Shopper Speaks: Is retail crime another reason to shop online? 

Post-COVID-19, both empty storefronts and retail crime can be seen as deterrents to shopping in physical stores. Digital Commerce 360 explored the sentiments of shoppers and found little impact regarding online shopping.

How online retailers cater to their young, mobile shoppers 

Younger shoppers are on their phones, and want to check out fast, with their preferred payment provider on site a or app designed for their small screens. MVMT, Azazie and True Religion share how they fine tune their mobile shopping experience for young shoppers.

OMG: Another Amazon sale? 

As Amazon rolls out its Early Access sale months after Prime Day, consumers wonder how many sales retailers can offer around the holidays.

How Bed Bath & Beyond’s rewards program stacks up against other retailers’ paid memberships 

Although all offer free shipping and discounts, Amazon Prime and Walmart+ have far more traction than Bed Bath & Beyond’s loyalty programs membership. More than a quarter of Top 1000 online retailers offer free loyalty programs while less than one in 10 have paid memberships.

Digital marketing:

What to do when Google won’t take ads for your products 

That’s the problem e-bike retailers face now that Google has strengthened enforcement of a rule that bars ads for virtually all electric bikes sold in the U.S. Retailers can risk Google suspending their account, advertise on other channels or find work-arounds to a policy the e-bike industry finds puzzling.

The cord cutters: Retailers move to appeal to consumers on streaming devices 

As consumers cut the cord and stream entertainment, retailers are taking advantage of lower costs to reach an ever-expanding audience through CTV.

Beyond the buzz: TikTok’s trajectory prompts retailers to reassess how it reaches younger consumers 

TikTok gains eight new users every second. However, ad spend share allocated to TikTok grows at a much slower rate — but that is changing. To reach younger consumers, digital marketers need to assess whether to proactively invest in TikTok while costs are low or risk rushing to catch up as more retailers look toward the future on a platform with 1 billion global active users each month.

Increased digital marketing regulations create clever tactics 

Cannabis regulations created a prime opportunity for resourceful, privacy-compliant data collection and application.

Omnichannel shopping:

Stores aren’t going away, but their role keeps evolving 

Retail chains and born-on-the-web brands find their way to adopting an omnichannel business model.

Smaller store-based omnichannel retailers prep for holiday season 

Brick-and-mortar stores take advantage of both their physical locations and online sales to meet customers on whichever channel they prefer.

Payments and fraud:

Buy-now-pay-later options catch on with online retailers and shoppers 

The installment payment option is here to stay, but consumers want choices. Retailers are seeing increases in average order value, conversion rates and sales when they offer their customers’ preferred buy now, pay later system as a payment option at checkout.

Apple debuts a deferred payment service and iPhone updates to developers 

The new payment feature, called Apple Pay Later, is a highly anticipated addition to the Wallet app. It is part of an expansion into the financial world that also includes bringing more infrastructure in-house.

Inside the battle against ecommerce fraud 

Ecommerce fraud has gotten hard to detect and stop. More than half of fraud attempts against ecommerce retailers are now deemed “sophisticated,” meaning professional criminals used state-of-the-art methods aimed at circumventing anti-fraud systems.

Retail response to war in Ukraine:

Russian ecommerce slows in wake of invasion, as retail industry looks to help Ukraine 

Digital sales in Russia have dropped dramatically in the wake of global sanctions, and Wall Street is warning of tough times ahead for Putin’s Russia. Meanwhile, ecommerce merchants are raising money for besieged Ukraine.

Toy retailers respond to Ukraine war; LEGO becomes a symbol of resistance 

A poster of a lego block painted in blue and yellow, a child singing “Let it Go,” boycotts by PLAYMOBIL and others are playing a role in fundraising for Ukraine and boosting morale in the wake of Russia’s invasion.

Retailer spotlights:

Patagonia demonstrates how digitization helps both the environment and the bottom line 

Patagonia reduced landfill waste by 170,000 pounds over the course of a single season just by changing its garment paper hang tag process. The retailer urges other retailers to use technology to reduce single-use materials.

Perry Ellis launches buy online, pick up anywhere 

The apparel merchant is allowing shoppers to pick up their online orders at third-party physical locations, such as Walgreens, Dollar General and FedEx. The rollout is part of a larger omnichannel and delivery push. Perry Ellis plans to launch buy online, pick up in store and same-day delivery before the holidays. 

Furniture retailer Floyd launches resale program for returns 

Floyd’s Full Cycle program allows shoppers to purchase returned or imperfect products for a discount. 25% of Full Cycle shoppers come back and purchase a full-price Floyd product.

A shift to fundraising guides communication approach for Double Good 

The COVID-19 pandemic accelerated the company’s transformation from a popcorn retailer to a virtual fundraising company. Now, most of its revenue comes from its virtual fundraising, said Anton German, chief technology officer and chief product officer.

Selling on marketplaces:

Managing products across multiple marketplaces isn’t easy, merchants say 

Given the various approaches that marketplaces take to product pages, sellers must dedicate resources to managing SKUs and listings across multiple marketplaces.

Macy’s officially launches its marketplace

Macy’s joins a growing list of top retailers that operate a marketplace alongside their ecommerce site. The retailer says its online marketplace will boost their product assortment, add incremental revenue at a ‘low incremental cost.’

Marketing on Amazon is all about keywords and presentation

Retailers find different ways to stand out among competitors when selling on marketplaces.

There is more than one way to manage customer data 

In an increasingly competitive ecommerce landscape, DTC retailers are figuring out how to reach new customers by linking up with larger merchants like Walmart or selling on marketplaces like Amazon — without losing too much control. The key is to take a step back and assess before diving into new ventures or technologies.

Supply chains, sustainability and fulfillment:

The costs and rewards of sustainable fulfillment 

Customers are increasingly aware of how their shopping habits affect the environment — and they’re holding retailers accountable. Online retailers including Taylor Stitch, Carter’s, REN Clean Skincare and Sabai Furniture give examples of how they implemented changes to consider sustainability by cutting back on what ends up in landfills, while maintaining profitability.

Making a 3PL relationship work 

Retailers seeking to outsource their fulfillment operations must understand their own needs and carefully select a firm they can trust to meet them.

US retailers unload a glut of slow-moving inventory in Q2 

Discounting hurt online retailers’ bottom lines and caused many to scale back their sales and earnings projections for the rest of 2022.

Rethinking resale as a giftable option 

Consumers are increasingly more comfortable buying secondhand merchandise for themselves. When it comes to gift giving, however, shoppers are reluctant to give used products as gifts — for now. That’s beginning to change as young shoppers are embracing resale as a giftable option for the holidays.

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“As prices went up, customers didn’t understand why we had to raise some of our prices — but they’re not watching metal prices,” says Sarkis Kalandjian, president. “They have no clue half the time that gold prices were jumping.”

As of July 2022, gold cost approximately $1,700 an ounce, but spiked as high as $2,000 within the last year, Kalandjian says.

“That’s a significant increase,” Kalandjian says. “We try to stave off increasing prices to our customers, but we couldn’t do it anymore [in 2022].”

Despite price increases of anywhere from 10% to 30% on certain pieces, Kalandjian says consumers are still buying jewelry.  As a result, Ziamond’s average order value (AOV) increased about 24% over the last 12 months, Kalandjian says. AOV falls within the $900s range. Ziamond is No. 1501 in the Digital Commerce 360 Next 1000.

Kalandjian attributes this change to customers buying items for themselves, as opposed to gifts.

“We’ve noticed an increase in customers ordering custom jewelry, which typically have a higher AOV,” Kalandjian says. Ziamond’s customer demographic is mainly female, ages 35 to 65.

The larger pieces tend to be heavier, resulting in the use of more raw material, which costs more. Though platinum is not as expensive as gold per ounce, platinum is pure. A 14-karat gold item is only 15.5% pure gold, while the rest is made from alloy metal, which is less expensive. Platinum pieces require 95% pure platinum, and it’s heavier. Kalandjian says demand for platinum-set pieces has grown. Sales for platinum pieces grew 5% in 2021 compared with 2020, he says. And the more platinum used, the higher the cost.

Retailers offer free shipping, but most often with minimum purchase

Ziamond offers free domestic shipping for orders more than $100.

“We haven’t increased that threshold yet, but our [domestic] shipping costs have increased 15% to 20%,” Kalandjian says.

When Next 1000 retailers offer free shipping, it’s most often with a minimum purchase, with 48.8% of Next 1000 merchants now offering this option compared with 46.2% in 2020. The median order threshold for free shipping remains $75 in 2021. The 2022 Next 1000 includes online retailers that generated annual ecommerce revenue between roughly $1 million and just over $39 million in 2021.

While Ziamond hasn’t increased domestic shipping rates yet, it has increased international shipping prices by about 12%. Most international shipping orders cost $40. Kalandjian didn’t specify how much of its web sales come from international customers, but it’s a small portion. Small enough that the merchant does not expect its overall web sales to be affected if international customers must pay more for shipping.

This is an excerpt from the 2022 Next 1000 Report. The report can be downloaded now as a PDF for $499. Digital Commerce 360 Gold and Platinum Members receive a complimentary copy of this report as a part of their membership.

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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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“Due to inflation, we had to remove all items with the lowest margins,” says Brian Anderson, the retailer’s general manager. “Because our cost has gone up across the board, our strategy was to only offer items that had big enough margins that the price increases from our manufacturers wouldn’t hurt us.”

Moriarty’s is not alone in rethinking its business strategy due to inflation. With consumer spending priorities changing and business costs rising, retailers are adapting. That can mean changing their product mixes, seeking efficiencies wherever they can find them, and accepting lower profit margins to limit price increases for their customers.

At Moriarty’s, eliminating low-margin products reduced its offerings by about 20%, Anderson says.

“But it just wasn’t worth the extra work to sell items that didn’t make us enough money,” he says. “This way, we don’t have to increase our prices sitewide, and can still be very profitable, keep our customers happy, even with inflation.”

Smaller luxuries

On Tuesday, the U.S. Bureau of Labor Statistics reported inflation rose 0.1% in August on a seasonally adjusted basis, compared with July. That was after July inflation was flat compared to June. Over 12 months ending in August, inflation increased 8.3% before seasonal adjustment, the federal agency said.

Nikki Baird, vice president of strategy at Aptos, a retail technology company, says inflation will change how people shop for the holidays.

“With inflation still having an impact and consumer budgets shrinking this holiday season, people will be looking for smaller luxuries and gifts that still deliver feel-good quality,” Baird says.

“One way retailers can capture demand and help customers do more with less is through personalization. Customers will value creative and inexpensive ways to help pack a punch with presents, so retailers who can pivot to more personalized offers should definitely emphasize it,” she added.

Retailers also should find ways to make themselves environmentally friendly, she says.

“Despite the crunch on spending, sustainability is still high on consumers’ radar,” Baird says. “While gift wrapping might look stylish, consumers are starting to see that as wasteful. So, retailers who can offer alternatives, like reusable gift bags or stylish packaging, could attract consumers this year.”

Higher prices and ‘shrinkflation’

Passing along rising costs to consumers was unavoidable at nutritional supplement retailer Supplement Warehouse.

“We have seen all the prices of our raw ingredients increase, especially with the cost of protein supplements, which have jumped 20% or more,” says Jeff Moriarty, product manager. “And due to our low margins on these types of products, we have had to pass the cost onto the consumer.”

Supplement Warehouse sells online and in 18 stores around the U.S.

To help offset the price increases, he says Supplement Warehouse worked with manufacturers to add “promotional swag” or supplements unaffected by ingredient price increases for free with purchases.

“This definitely has helped keep sales on those products going,” Moriarty says.

Moriarty says the retailer is talking with many manufacturers about offering smaller packages — a practice known as “shrinkflation”— to lower customers’ costs.

Shrinkflation is “not our first choice, but trying to implement as many options as possible,” Moriarty says.

Moriarty says Supplement Warehouse passes the exact cost of shipping to customers, so those prices have gone up as carriers raised rates. The retailer also recently raised its threshold for free shipping to $99, up from $75.

Nuleev, a retailer that sells cannabidiol (CBD) and other health and wellness products, has so far held online prices steady, but has raised in-store prices due to higher costs, says Robert Burns, chief marketing officer.

“So far, inflation has not caused us to raise prices online,” Burns says. “However, increased wages in our physical stores to keep up with inflation have resulted in higher prices. It was unavoidable. We changed some procedures to make things more efficient in both our ecommerce and physical stores.”

Nuleev has two physical stores: One in Fargo, North Dakota, and another in Bloomington, Minnesota.

Holiday sales forecasts reflect inflationary fears

Data released Thursday by Salesforce Inc. shows inflation could contribute to a lackluster holiday season for e-retailers.

“Inflation will tamp down consumer spending worldwide. As global online prices grow 7% compared to 2021 — and 15% compared to 2020 — consumers’ total online orders will drop 7% compared to the 2021 holiday season (5% fewer in the U.S.),” according to a Salesforce statement.

The Salesforce Shopping Index indicates online retail sales in November and December “dwarf pre-pandemic levels” — up 55% globally and 61% in the U.S. compared to 2019 sales. But compared with last year, Salesforce expects online holiday sales to decrease 2% globally and increase 3% in the U.S. Salesforce expects November and December online sales to reach $1.12 trillion globally and $265 billion in the U.S. The Salesforce index analyzes global data from more than a billion consumers.

Inflation also weighed on last week’s U.S. holiday sales forecast from Deloitte LLP. The consulting firm predicts ecommerce sales in November through January to rise from 12.8% to 14.3%. That would push holiday ecommerce sales to between $260 billion and $264 billion this season. It would also be up from $231 billion in 2021.

Inflation and an economic slowdown could “further drive ecommerce sales as consumers look for online deals to maximize their spending,” Nick Handrinos, vice chair at Deloitte, said in a statement.

Salesforce is a cloud-based business software provider.

Shoppers prioritize essentials

Ben Rollins, a co-founder of Axon Optics, which makes eyeglasses designed to reduce the impact of migraine headaches and light sensitivity, has not felt the effects of inflation.

“We haven’t seen any clear signs of inflation causing our customers to buy less, because we haven’t seen any dramatic changes in sales,. “Rollins says.” Maybe that’s because our product isn’t an extravagance. People who need it are likely to see it as a necessary purchase. If we had seen a decline in sales, maybe we could attribute it to people having less money to spend overall. But since our prices haven’t gone up, we know it wouldn’t be due to inflation on our part.”

The cost of Axon migraine glasses has stayed the same. However, prices are up sharply for other essential products, such as food. According to the U.S. Department of Agriculture, the cost of supermarket food purchases increased 1.4% from June 2022 to July 2022. Food prices were 13.1% higher in July 2022 than in July 2021.

Retailers say higher food and fuel prices dramatically changed shopping habits this year. Retailers like Walmart Inc. (No. 2 in the 2021 Digital Commerce 360 Top 1000) and Target Corp. (No. 5) have reported selling large amounts of slow-moving inventory at discounted prices, hurting their bottom lines.

During an Aug. 16 conference call with analysts, Walmart CEO Doug McMillon said that, as food inflation continued to rise, Walmart saw its sales shift. It saw “a heavier mix of sales in food and consumables in many of our markets and that put pressure on margins overall.”

Making deals easier to find

One way to attract deal-hungry shoppers is by making it easier for them to find deals they might like.

Flash-sale retailer Zulily recently revamped its site and mobile app in ways intended to help customers more easily find products and brands they want. Zulily hopes the new site will draw more of its core customer base of bargain-hunting mothers and build customer loyalty

Zulily will continue offering more than 100 daily flash sales, most lasting 72 hours or less. To that, the retailer added more than 300 virtual “stores-within-a-store” for brands including BOGS, Carter’s, Champion, Burt’s Bees Baby, Fisher-Price, LEGO, Levi’s and Melissa & Doug. Lastly, the site now includes an everyday discounted assortment of “daily essentials and basics.”

The retailer also started offering free shipping on orders above $89. As in the past, customers can still “unlock” free shipping by ordering for specified periods. Zulily typically consolidates purchases during those time windows, packing as many items as possible into one box.

“Shipping costs are part of every ecommerce business,” says John Lohnas, Zulily’s chief merchant. “But we aim to reduce friction for our customers and pass along savings versus costs.”

Qurate Retail Group, (No. 15 in the Top 1000), is Zulily’s parent company 

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