Below, we recap some of Digital Commerce 360’s most insightful articles about online retailers from 2023 regarding 10 key coverage areas:

1. Industry news and trends (including the Bed Bath & Beyond saga)
2. Artificial intelligence
3. Digital marketing
4. Exploring new technology
5. Fulfillment and delivery
6. Livestreaming
7. Mergers and acquisitions
8. Online marketplaces
9. Payments and fraud
10. Sustainability

These stories highlight meaningful changes to online retailers’ ecommerce operations in 2023. Most notably, they include new and improved technologies and strategies that online retailers have implemented. We published roundups specifically for some of these coverage areas over the first couple weeks of 2024, and we link to them below. Those topic roundups — about artificial intelligence, fulfillment and delivery, and payments and fraud — include subtopics.

1) Industry news and trends

Silicon Valley Bank’s collapse hit the ecommerce world. See a list of impacted companies.

The bank had a history of investing in ecommerce startups, and Etsy, Shopify, and others had accounts with Silicon Valley Bank. 

Gathering data in the age of privacy 

Learning how to collect and use first-party data is key if retailers are to navigate a world without third-party cookies. 

Data shows online retailers with the highest carbon footprints

Websites emit carbon dioxide emissions (CO2). Recent data shows which retailers top the list of offenders versus those who don’t. 

Retail profitability rebounds but remains pressured by online costs

Retailers’ profits declined from 2012-2019, in part due to the costs associated with online and omnichannel sales, but bounced back during the pandemic, Deloitte says. Cutting costs, including by limiting free shipping and handling returns more efficiently, will be essential to maintaining profit margins.

What ecommerce retailers can learn from HomeGoods exit

Despite giving ecommerce a go, HomeGoods found out that off-price retailing is not well suited for its online sales.

1.5) The Bed Bath & Beyond saga

Amid all this ecommerce news and the largest online retail trends of 2023, one story remained at the forefront for months. Bed Bath & Beyond’s downfall had — and continues to have — a meaningful impact on the retail industry.

Bed Bath & Beyond says it’s not beyond help, but reports further losses

Coming just days after the retailer said it might seek bankruptcy protection, the poor earnings report paints a dismal picture for the beleaguered retailer. 

Which retailers will benefit from Bed Bath & Beyond’s demise?

Bed Bath & Beyond’s bankruptcy presents an opportunity for retailers to cash in on the shopping experience both in store and online. 

Overstock CEO says brand name is a “boat anchor” ahead of Bed Bath & Beyond relaunch

Revenue and other key metrics were down for Overstock, but CEO Jonathan Johnson says the Bed Bath & Beyond relaunch will be a “new phase.” 

Goodbye, hello: Buy Buy Baby preps to be born again

Under new ownership, Bed Bath & Beyond’s former baby-products retailing unit plans an ecommerce and brick-and-mortar revival.

2) Artificial intelligence

Perhaps the most-talked-about subject for months, if not the entire year, artificial intelligence had a resurgence in 2023. Many retailers were already using it — and machine-learning technology — to guide operating processes. But then, generative AI entered the arena at the end of 2022, and it drew global attention to its capabilities. Here’s how some online retailers are leading AI integration into ecommerce.

3) Digital marketing

How are digital marketers using AI to boost conversion?

Artificial intelligence allows digital marketers to quickly test how consumers respond to ads, images and emails. Over time, the algorithm learns, and its predictions become more accurate. Learn how three retailers increased their online sales after investing in AI.

Online flower retailer UrbanStems increases conversion 12% during Valentine’s Day season

Conversion through paid social channels drove that overall increase, growing 83% year over year.

Why wacky ads work on TikTok, while sober is better for Facebook

Four online marketers share ways they curate their brands’ social media content to cater to their target audience on each platform, and explain when it’s OK to repurpose content.

80% of Chico’s customers sign up for its loyalty program in the first nine months

Chico’s updated its loyalty program for the first time in 30 years, and after one year, more than 80% of customers are members.

Lights, camera, conversion: How some retailers use videos to entice shoppers to buy

Online retailers use video to provide shoppers with a rich customer experience that informs, engages and converts.

4) Exploring new technology

Generative AI wasn’t the only new technology to hit retailers’ tech stacks in 2023. Companies dived into the metaverse and other virtual realities. They also took advantage of atypical payment methods and found ways to change business models entirely.

American Girl invests in its virtual museum

The retailer’s digital museum provides content so girls can play, learn more about the brand’s doll characters and create product wish lists.

Crurated’s wine platform uses NFTs and memberships to find a younger market

70% of Crurated’s members using the blockchain wine service are under 45 years old.

Forever 21 caters to Gen Z shoppers with fast checkout, metaverse products

Despite an initially turbulent relationship, apparel brand Forever 21 and payment provider Bolt Financial are now touting positive results from the integration of the streamlined checkout button.

What online retailers can learn from Evite’s business model pivot

Evite’s customer experience suffered because of the company’s reliance on advertising revenue, CEO David Yeom tells Digital Commerce 360. Evite took the lull in parties during the pandemic to overhaul its revenue streams. 

UK crafts retailer uses data to guide website replatforming process

Hobbycraft had to learn what parts of its website did and didn’t make sense for its shoppers, what bugs to work out, and what changes its website wasn’t capable of. And after about 12 years with its previous website, it replatformed in March 2022.

5) Fulfillment and delivery

Online retailers continued learning how to cut and manage shipping costs in 2023. Some major retailers optimized fulfillment and delivery by using stores to fulfill orders, whether via delivering from them or urging customers to use in-store and curbside pickup options. These stories highlight meaningful fulfillment trends among online retailers in 2023.

6) Livestreaming

Natori invests in livestreaming to appeal to new generation of customers

Luxury apparel brand The Natori Co. believes livestreaming will enable the brand to appeal to new customers. 

Orchard Mile takes control by livestreaming its own shopping events

Luxury online marketplace Orchard Mile hosts livestreaming shopping events through its own website rather than other channels. 

Newegg livestreams more than 24 hours a day

Newegg livestreams 30 hours of content on weekdays, which includes livestreams across its six handles and in China. 

Women’s apparel retailer ‘Evereve TV’ attracts shoppers, increases conversion

Evereve staff model clothing and share their styling tips through video on the retailer’s Evereve TV — and it’s boosting sales.

7) Mergers and acquisitions

Although there were many more mergers and acquisitions in 2023, these are some of the most notable ones impacting the industry.

Walmart sells outdoor retailer Moosejaw to Dick’s Sporting Goods

It’s the latest example of Walmart selling off online-focused brands it acquired as it bulked up its ecommerce business several years ago. Moosejaw will be part of the Public Lands outdoor business unit that Dick’s launched in 2021. 

Unilever is selling Dollar Shave Club after seven years

Private equity firm Nexus Capital Management will acquire a 65% stake in Dollar Shave Club, with Unilever retaining 35%. The deal is expected to close by the end of the year. 

UPS to acquire Happy Returns

Happy Returns’ service for online orders will soon be available at more than 12,000 U.S. locations, the CEO of UPS says.

What Sycamore gets for $1 billion to buy Chico’s

Private equity firm Sycamore Partners unsuccessfully tried to buy Chico’s FAS in 2019. Why is Chico’s worth $1 billion? 

Why a serial ecommerce entrepreneur bought Blue Apron

Blue Apron is being sold to Wonder Group, an online food-to-home delivery company, founded by serial ecommerce entrepreneur Marc Lore.

8) Online marketplaces

Michael’s is the latest retailer to add a third-party marketplace

The digital marketplace will quadruple the number of products for sale, with the majority from third-party sellers.

Walmart and Amazon are growing their online marketplaces. Here’s how they compare.

They are both growing the number of third-party sellers on their online marketplaces, but Amazon has a significant lead. 

Selling on Amazon is key for SMBs, but it might not make money

Small and medium-sized retailers say selling on Amazon is a necessary part of customer acquisition, despite added costs. 

Amazon fee change ‘completely out of the blue’ for some Amazon sellers

Amazon announced it will end its Small and Light Program and introduce Low-Price FBA rates for all items priced below $10 (previously $12). 

Prime Day’s mixed message: some merchants boost prices during the event

Last year, retailers raised prices on 13% of top-selling items during the Prime Day promotion, according to new research. And this year, Amazon rolled out invitation-only deals that limit price drops to select shoppers. 

Amazon announces updates to Buy with Prime to stay competitive

Updating Buy with Prime is a way for Amazon to collect data and keep its market share while competing with Shopify.

What were the biggest ecommerce takeaways from Amazon’s Q2 earnings call?

CEO Andy Jassy said Amazon is developing more AI technology, making its fulfillment more efficient and improving its B2B division for business buyers.

EBay rolls out its generative AI listing tool to all marketplace sellers in app

The generative AI tool writes product descriptions for eBay’s app marketplace sellers based on their listing’s metadata. 

Michaels launches MakerPlace online marketplace

Michaels MakerPlace does not charge sellers a listing fee and allows them to sell access to virtual classes and how-to guides. 

9) Payments and fraud

Buy now, pay later was already on the rise going into 2023, when its popularity continued to grow. And as retailers considered implementing BNPL, even if late in the game, they also looked into other ways to make the payments process smoother for their consumers. These stories highlight meaningful payments and fraud trends from last year, showing how online retailers are staying focused on their bottom lines.

10) Sustainability

Grove Collaborative CEO talks sustainable shipping

With a goal to be plastic-free by 2025, personal care and home products brand Grove details ways it makes direct-to-consumer shipping more sustainable.

The secondhand retail industry grew 28% in 2022, according to ThredUp’s latest report

The report shows Gen Z and millennials are growing more open to buying and selling used clothing online. 

How an apparel brand eliminates polybags

Toad and Co. commits to less packaging by sending orders in reusable bags and switching to paper-based polybags that can be regularly recycled.

Bedding brand aims for luxury unboxing without extra tissue paper

Beflax, a small online business, ships its $300 linen bedsheets in reusable packages. The brand wants its customers to have a premium package without extra waste.

Jewelry retailer strives for sustainability on different levels

J’evar uses an in-house generative AI tool to boost its sustainability efforts, which also include using a solar farm to grow its own diamonds.

Archive helps retailers resell their own products

Hanna Andersson customers take advantage of store credit options as they list items on the retailer’s Hanna-Me-Downs resale site. 

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Online retailers added buy-now-pay-later payment (BNPL) methods in 2023, continuing a trend that boomed in 2022. U.S. consumers used BNPL for $8.3 billion in online orders between Nov. 1 and Nov. 27, according to Adobe Analytics, up 17% year over year. Some online retailers even went fully digital, adding cryptocurrency payments to their ecommerce sites. On the flip side, retailers like Lowe’s piloted a way to prevent in-store theft that lead to sales of stolen products on secondary marketplaces. Other retailers added automation to their fraud-detection processes.

Below, we recap some of Digital Commerce 360’s best coverage about online payments — and the fraud attempts accompanying them — in 2023. These stories highlight meaningful payments and fraud trends from last year, showing how online retailers are staying focused on their bottom lines.

What did online retailers do in 2023 to make payments easier for consumers?

Online price matching: pros and cons

Guaranteeing to match the online prices of competitors makes sense in categories like consumer electronics, where it’s easy for shoppers to compare prices on branded products. But one expert says price-matching is less important today now that many big brands limit online discounting. 

Price cuts coming for accepting online debit?

The Federal Reserve is proposing to reduce its price cap for transactions from big debit card issuers by more than 25%. What are the specifics, and what does it all mean for card-accepting merchants? 

Etsy Payments expands to seven more countries

The technology helps both sellers and buyers make relevant options available across the global marketplace, an executive said. 

PayPal usage among Top 1000 retailers up 7.3%

Online payment system PayPal Holdings Inc. is accepted at 82.8% of the online retailers ranked in Digital Commerce 360’s Top 1000. 

Demand for buy now, pay later (BNPL) increases

Apple launches long-awaited Apple Pay Later

Apple throws its hat into the buy-now-pay-later ring with the official launch of its own BNPL service: Apple Pay Later. 

Apple Pay Later threatens other BNPL services, experts say

Industry experts weigh in on how Apple’s buy-now-pay-later service, Apple Pay Later, is an opportunity for retailers to grow their market share. But it is important to be transparent with consumers. 

BNPL is a low-risk option for attracting new customers 

Executives at Overstock and Forever 21 say buy now, pay later lets consumers without access to traditional credit buy their products. But an increase in BNPL payments could lead to a debt problem, experts say.    

Some customers distraught after duplicate charges from BNPL service Affirm

Some buy-now-pay-later Affirm users were incorrectly charged multiple times for their loan payments Jan. 13.

Affirm cuts 19% of workforce, reports losses for fiscal Q2 2023

Buy-now-pay-later vendor Affirm Holdings Inc. cut 19% of its workforce. The BNPL provider reported a loss of $322.5 million in its fiscal Q2 2023.  

Overstock CEO says customers are using BNPL for purchases as low as $10

Younger customers without established credit history are the most likely to use the service, CEO Jonathan Johnson said. 

Ikea adds BNPL late in the game — why?

Ikea added buy now, pay later for orders ranging from $40-$500. Why now and why the $500 limit? The retailer weighs in. 

Consumers embrace buy now, pay later during Cyber 5

Buy-now-pay-later spending reached record levels during Cyber 5, putting November on track to be the biggest month yet. 

Online retailers implement cryptocurrency payment options

Is offering cryptocurrency at checkout worth the reward for retailers?

Cryptocurrency payments are still a nascent payment form for online retailers. And rightly so, as the digital currency is notoriously volatile — the value can change dramatically in any single day. Two top online retailers that accept cryptocurrency payments have outsourced the headache of complying with ever-changing regulations and money-laundering worries to appeal to consumers with cryptocurrency to spend.  

Shop.com: ‘Low cost’ of outsourcing cryptocurrency processing is worth avoiding possible legal missteps

Shop.com says the 1% transaction fee to outsource cryptocurrency processing at checkout is worth it. Offering cryptocurrency gives customers more options to pay, while BitPay ensures the retailer is in line with rules and regulations. 

Watch reseller offers cryptocurrency at checkout to entice international shoppers

A portion of luxury watch reseller WatchBox’s international customers prefer to pay using cryptocurrency instead of wire transfer. While it is a small percentage of the retailer’s total $500 million in online sales, it is an important option, the retailer says.

With payments come fraud attempts. How did online retailers address fraud in 2023?

Lowe’s pilots new way to prevent theft at stores, sales of stolen goods on secondary marketplaces

Lowes’ Project Unlock uses point-of-sale activation and a transparent record solution as a technology-forward and low-cost way to prevent theft at physical stores. But it puts the onus on purchasers to verify if they are purchasing a stolen item in the secondary market.

Sportitude cuts fraud costs by 55%

After switching its fraud prevention technology, footwear merchant Sportitude says fewer transactions are flagged as potentially fraudulent, requiring manual review to approve. But its fraud rate has stayed the same while its costs have decreased. 

Will AI power all of fraud management?

Fraud prevention technology powered by artificial intelligence can improve the fraud-fighting operations for many merchants. Still, most online retailers employ manual review teams to further review transactions the software flags as risky. But some merchants hoping to increase efficiency are looking to eliminate manual review altogether and have AI make all the fraud decisions. 

6 quick tips to manage ecommerce fraud

Ecommerce fraud analysts share tips online retailers can implement to help verify legitimate transactions and block fraudulent ones. 

NRF retracts statement on financial impact of organized retail crime

The NRF removed a statement attributing nearly half of shrink to organized retail crime from a report released in April.

Rainbow Apparel says the biggest challenge in ecommerce fraud is allowing legitimate orders through

Rainbow uses Signifyd’s anti-fraud software and AI to detect and flag potential fraud and allow other orders through. 

How one furniture retailer combats fraud during online checkout

The outdoor furniture merchant Polywood automated its fraud-detection processes at checkout, resulting in higher conversion rates. 

How is Amazon handling fraud?

Amazon is cracking down on counterfeiters, and a legal expert says consumers should be ‘cautiously optimistic’

Ecommerce lawyer Robert Freund says Amazon’s efforts are promising, but it’s nearly impossible to eliminate counterfeits completely. 

Amazon accuses former employees of conspiring with fraud ring

Amazon says seven employees committed fraud by processing illegitimate returns, costing the retailer $500,000. 

How did fraud affect online sales during the 2023 holiday season?

Higher web sales and lower fraud brighten retailers’ holiday

While online sales increased over the Thanksgiving weekend, fraud attempts were down 20% compared to the same period in 2022, says Signifyd, a provider of fraud prevention services. That’s because there has not been a repeat of a massive fraud attack on U.S. online retailers during the 2022 holiday season, Signifyd says. 

Fraud decreases during Cyber 5, ClearSale data shows

At the same time, ClearSale found that from Black Friday to Cyber Monday, order volume decreased 41% year over year. Order amount decreased, too, down 27% year over year. 

VF Corp. discloses cyberattack on first day of new SEC rule

Although consumers can purchase available merchandise, VF Corp. is experiencing operational disruptions as a result of the cyberattack. 

How Everlane fights ecommerce fraud during the holiday season

Online retailers must adjust their ecommerce fraud defenses to take into account that consumers buy more and more frequently during the holiday season, says TJ Stein of apparel brand Everlane. He says clear communication throughout the purchase process can minimize customer disputes that stem from confusion or the shopper not being able to get questions answered. 

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Signifyd provides fraud prevention services to web merchants. Its network includes 115 retailers in the 2023 Digital Commerce 360 Top 1000 ranking of North America’s leading online retailers. The vendor’s data comes from transactions across thousands of ecommerce websites and 600 million unique shoppers.

Average order value grew 3% year over year for the three-month holiday season, Signifyd found. Meanwhile, fraud attempts declined slightly, down 1%.

Online holiday spending habits

Online holiday shopping started early this year and continued strong through the end of the season, Signifyd found. That’s contrary to some predictions that early season sales would pull spending forward and December sales numbers would be modest. 

“Both we and our merchants were pleasantly surprised by the staying power of the consumer throughout what has typically been the peak holiday period,” Signifyd chief customer officer J. Bennett said in a statement. “This felt like a return to normalcy, with consumers waiting for better deals later in the season. When retailers ultimately offered those deals, consumers responded in a big way.” 

Spending resembled pre-COVID shopping patterns, peaking from mid-November to Dec. 20, Bennett said. 

Growth increased over the three months Signifyd counted as part of the holidays. October sales grew 4% year over year, November sales grew 8%, and December sales were up 11%, it found. That’s the opposite of the trajectory of Signifyd’s predictions of 7%, 5% and 3%, respectively.

Some of the December growth was due to late-season discounts, according to Siginifyd. 23% of all online sales in December used a discount code, a 14% increase from December 2022. 

Online sales by category

Online grocery sales recorded the largest year-over-year change in Q4, Signifyd found. They increased 24% over 2022 levels. Alcohol, tobacco and cannabis sales also showed a significant increase, up 19%. Leisure and outdoor sales grew 11% and electronics sales grew 9%. 

Signifyd also shared sales growth by category in December, the month with the largest year-over-year increase in online sales. Grocery again led growth, up 27% from online grocery sales in December 2022. Electronics were the next-highest category, growing 19% year over year. Leisure and outdoor and luxury sales grew 14% and 12%, respectively.

How do Signifyd’s results compare to other data?

Signifyd reported a larger increase in U.S. online holiday sales than Adobe Analytics. Adobe, however, measures a shorter holiday season encompassing November and December. It found that sales grew 4.9% year over year, based on 1 trillion visits to U.S. retail sites, 100 million SKUs and 18 categories. 

Signifyd’s findings aren’t far off from Adobe’s. Signifyd found that November online sales grew 8% year over year, while Adobe recorded a 6% increase.

Despite slightly different numbers, the technology companies noted many of the same categories driving growth. Signifyd names grocery as the top-growing category during its holiday period. Adobe found that grocery was the fourth-largest of its 18 categories, accounting for $19.1 billion in sales in November and December. Electronics sales also grew significantly in December, per Signifyd. Adobe found electronics were the largest single category over the holidays, responsible for $50.8 billion in sales.

Mastercard SpendingPulse reported a figure in the middle of Adobe’s and Signifyd’s. Online sales grew 6.3% between Nov. 1 and Dec. 24, the credit card company found.

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Drayton Wade, the head of operations at Kognitos, shared the San Jose, California-based startup’s perspective on AI strategy in retail. Wade is based out of Charleston, South Carolina, where the company is currently expanding its presence. He worked previously for the automation platform UiPath, eventually joining Kognitos in 2022.

Kognitos has already worked on use cases in retail and consumer packaged goods, as well as manufacturing and logistics. Companies using its tech include PepsiCo, Wipro, Century Supply Chain Solutions and Norco Industries. Wade explained to Digital Commerce 360 how he thinks Kognitos’ existing capabilities fit into AI strategy in retail. He also talked through the problems that the technology in the startup’s platform is designed to solve.

Current demand for AI solutions

“One of the main things we hear from executives, CIOs, CFOs, CEOs,” said Wade, is “‘Hey, I know I need to have an AI strategy. I know that I want to implement some form of generative AI. But I have various concerns about safety, or I don’t know where to begin.’”

That perspective at the executive level reflects known sentiments in the business world. A 2023 study from IT solutions integrator Insight and research firm The Harris Poll found that 73% of leaders at Fortune 500 companies expect to incorporate generative AI within the next three years to improve employee productivity. Also on the list of respondent priorities were customer engagement (66%), along with supply chain (41%) and inventory management (40%).

In the same survey, however, respondents acknowledged concerns about AI, with worries about quality and control (51%) and safety and security risks (49%) showing up most often.

Visibility and auditability

For Kognitos, Wade sees the way forward being to increase visibility where a high degree of documentation exists, focusing on accessibility through a natural language interface. The company touts its AI strengths with logic and pattern-recognition capabilities, but transparency and auditability are areas where Wade sees a chance to respond to common worries.

“When you type something into ChatGPT and it gives you an answer, you don’t know why it came up with that answer,” Wade explained. “Even if you’re fine-tuning a model, you don’t really know why it did what it did. And neither does OpenAI or anyone else, even though they have amazing technology.”

Protective vs. opportunistic needs

He believes that can be a way to differentiate their approach while anticipating organizational needs to govern and explain what Kognitos’ platform is doing at the client level. Visibility, meanwhile, is a demand he sees coming from both protective and opportunistic needs.

“No bank’s gonna do mortgage applications if they can’t see why it’s doing what it’s doing,” he said, citing an example of protective motivations. “It’s too much of a liability, because if [the AI] hallucinates once, you’re going to have serious issues.” Hallucinations are instances where an AI model sees patterns or conditions that don’t reflect what a human user would see, resulting in factually incorrect output.

From an opportunistic perspective, Wade sees shortening paths to internal data and information as a challenge that AI can answer, both in terms of time and reduced numbers of steps. Those needs for speed and efficiency may extend beyond AI in retail, but it’s a sector where Kognitos is already in use.

“We’re already working with some customers on that where they can go back through all the runs and query, ‘What was my average margin on all orders in November?’” he said. The next step on the platform would be to “ask the simple question and actually query on that data because now it’s all logged in English in a way that’s very easy to query,” he explained.

Reducing technical work to plain-language interactions

“We have built an interpreter for English, which effectively makes English code,” Wade said. “Then we use large language models in different ways to enhance the user experience.”

LLMs are one of the most common types of deep learning models for AI in use now from Amazon, Google, Meta, OpenAI, and other tech companies. Wade stressed that the interpreter is the “core” of what Kognitos is offering. On top of that, they use multiple LLMs to generate output.

“It’s a combination of fine-tuning LLMs like [Meta’s] Llama,” he stated. “And then we also use things like [OpenAI’s] ChatGPT at times.”

According to Wade, this approach allows Kognitos to avoid becoming too dependent on one single LLM. Use cases for leveraging them, though, can include asking questions about fields in non-standard forms. Those could be purchase orders coming from different vendors. In some cases, another search system might encounter an error because it is not aware of one vendor’s format. Kognitos hopes to do better by helping non-technical users troubleshoot through conversation.

Examples of output

“[The Kognitos platform] would actually create an English question of ‘Hey, I can’t find this purchase order or this purchase order number. Can you help me?’” he said. “And then the business user can respond in free-flowing English saying, ‘For Amazon, the purchase order is always directly below the date.’”

The system could also create an output for a response to the customer, based on internally available data.

“The other way large models come in is there’s times when we want to generate content or we want to use large language models to do things like translation or context,” Wade said, talking through the process flow. “We call it Koncierge, but we’ll say, ‘Ask Koncierge to create an email based on a summary of the customer support ticket. And we’ll say ‘Use the model GPT4.’” Alternative LLMs such as Llama or Falcon would also be options.

Customer service

Customer-facing impact could also potentially come from more efficient call-center experiences. This is an area where Wade expects to see an intersection with AI in retail.

“I think you see a lot of this in retail and ecommerce as well — both have large contact centers,” he explained. “We’re actually doing a use case with a contact center where we are live-transcribing, or we’re connected with the transcription tool that is live-transcribing the call. It then goes in and writes a note and uses a large language model to create a summary of that conversation into Snowflake.”

This is where documentation comes into play, because the platform can refer to known standard operating procedures.

“That information and then taken and based on that summary, we look up a standard operating procedure of what the agent should do in that particular scenario,” he said. “Based on that standard operating procedure, it will then take action and create an email to send out to the customer with what actions are being taken as a follow-up.”

Fraud prevention

One other area of focus for Kognitos is fraud prevention. Wade discussed that use case in the context of a loyalty points project with a Fortune 500 consumer brand.

“They have a program where you take a picture of your receipt, and it shows their products on that receipt, and you get points,” he said. “The issue is receipts from every single gas station and every single grocery store all are different formats. It’s largely unstructured.”

Again, unstructured data is where the platform is intended to provide value.

“With Kognitos, though, we’re able to actually take that information, extract it from all the different receipts, classify it into an Excel format that then gets uploaded into their marketing software for market research, look at the things that they’re buying with those particular products, and from there even run fraud detection.”

The intended outcome of that process would be the elimination of duplicate receipts being submitted. That outcome clears up multiple problems on the client’s end.

“We actually use large language models and some custom models we build, and we can run it within the interpreter to put those fraud signals in and make sure they’re not paying out extra points in those scenarios or corrupting their market research data.”

Ultimately, that will be part of the interpreter’s true test. Its mission will be to turn those signals into actionable insights that are easy to understand for general business users. That will involve not just speaking to people, but understanding them as well.

“We’ve always been teaching people how to communicate with machines, which is really backwards,” Wade stated. “Instead, we needed to build it to where machines can understand people at the end of the day.”

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There’s big money involved. Interchange is a fee set by card networks— Visa Inc. and Mastercard Inc. dominate the U.S. debit market, but there are 13 in all — charged to the merchant acquirer and paid to the issuer of a card used in a particular transaction. The acquirer—a bank or processor that provides card-acceptance services to merchants — typically passes the cost on to its merchant clients, and it’s a major source of expense. Interchange fees from debit and general-use prepaid cards totaled $31.59 billion in 2021, up 19.1% from 2020, spurred partly by the Covid-19 pandemic that powered an ecommerce boom from millions of newly shut-in consumers.

“Any merchants with regulated debit volume are going to see some benefit if the proposal is finalized in its current state,” Christian Johnson, senior global advocacy manager at CMSPI, an Atlanta-based consulting firm specializing in payment card cost issues, tells Digital Commerce 360.

The public comment period ends in February

The Fed reports payment card networks in the United States processed 92.11 billion debit and general-use prepaid card transactions valued at $4.26 trillion in 2021. Card-not-present transactions, now dominated by Internet purchases but also including phone and mail orders, totaled 29.54 billion to account for nearly a third — 32.1% — of debit volume. CNP debit transactions averaged $64.50 in 2021, well above the average $37.64 card-present debit sale, according to the Fed.

The changes will take effect sometime, possibly months, after a 90-day comment period ends on Feb. 12, 2024. The comment period started on Nov. 14 when the Fed published its official proposal in the Federal Register, the journal of the executive branch.

The so-called Durbin Amendment to 2010’s Dodd-Frank Act, the sweeping law Congress passed in the wake of the 2008 financial crisis, empowered the Fed to regulate interchange received by debit card issuers with more than $10 billion in assets. The ranks of what the Fed calls “covered issuers” include such familiar names as Bank of America, Wells Fargo, U.S. Bank, Chase, and Citi, and dozens of others. Transactions from covered issuers totaled 56.19 billion in 2021, some 61% of all debit purchases. (All of the Federal Reserve data cited in these two stories come from the Fed’s 2021 surveys of payment networks and 163 covered issuers, the most recent available.)

The Fed’s Regulation II, which implements the Durbin Amendment, currently sets a per-transaction interchange cap of 21 cents and 0.05% (five basis points) of the sale, plus another 1 cent for debit issuers that meet certain fraud-prevention standards. That cap, which hasn’t changed since Reg II took effect in late 2011, applies to both card-present and CNP transactions.

Now, the Fed is proposes lowering the interchange cap to 14.4 cents plus four basis points of the sale while increasing the fraud-prevention adjustment to 1.3 cents. On a $50 debit sale, the cap would decline from 24.5 cents to 17.7 cents, a 27.8% reduction.

Next: Will merchants actually benefit from the Fed’s proposed price reduction?

Jim Daly is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. 

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On Oct. 14, Henry Schein Inc. reported a major hack into its core systems, including for distribution and ecommerce. Henry Schein Inc. is a worldwide distributor of medical and dental supplies including vaccines, pharmaceuticals, financial services, and equipment.

The company generated sales of $12.6 billion in 2022. Nearly a month after the hack, it was still bringing its systems back online, CEO Stanley Bergman told analysts on a Nov. 12 earnings call, based on a transcript from SeekingAlpha.

Henry Schein data breach

But on Nov. 22, the company once again announced that its ecommerce systems were down because of ongoing problems related to the data breach, a cyber-attack.

“Certain Henry Schein applications, including its ecommerce platform, are currently unavailable, and the company continues to take orders using alternate means and continues to ship to its customers,” Henry Schein says in an update on its website, HenrySchein.com. “The Company is in the process of securely restoring these applications. Henry Schein has identified the cause of the occurrence. The threat actor from the previously disclosed cyber incident has claimed responsibility.”

The cyber-attack problems hampered HenrySchein.com throughout the long Thanksgiving holiday, with ecommerce systems only being restored yesterday.

“Henry Schein has restored its ecommerce platform in the U.S.,” the company says. “Our ecommerce platforms in Canada and Europe are expected to follow shortly.”

Henry Schein isn’t releasing many details as to who — and what — attacked its data and ecommerce systems. But the trade publication Security Week is reporting that a ransomware group known as Alphv and BlackCat is taking credit for the attack after Henry Schein failed to pay a ransom demand.

The original data breach caused serious disruption to Henry Schein’s ability to process sales, of which about 75% are via digital commerce, the company says.

“If you take EDI [electronic data interchange] plus the web combined, so essentially electronics type of ordering, it’s in the 70% to 75% range,” chief financial officer Ron South told analysts.

The data breach caused Henry Schein to delay filing its full third-quarter earnings report. Henry Schein also expects to file an insurance claim in 2024 related to the data hacking incident.

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Signifyd provides fraud prevention services to web merchants. Its network includes 115 retailers in the 2023 Digital Commerce 360 Top 1000 ranking of North America’s leading online retailers.

Across Signifyd’s network, fraud attempts are 20% lower compared to the 2022 holiday season, says J. Bennett, chief customer officer at Signifyd. He says that’s because last year, there was a big and sophisticated wave of fraud attempts engineered by a crime ring in Southeast Asia, and that has not been repeated this year.

“Last year was the first time we saw a pretty broad-based attack during the holidays,” Bennett says. “This year, we’re seeing measurable levels internationally, but not in the U.S. market.”

Signifyd estimates U.S. online retailers lost $660 million in fraud in November 2022 alone, mostly theft of such high-end items as:

• Laptops
• Mobile phones
• Computer chips
• Gaming devices

2023 Top 1000 Report

Analysis of North America’s leading 1,000 online retailers. Includes over 200 charts, rankings by 2022 web sales, benchmarking data, growth analyses by category and merchant type, and a detailed analysis of post-pandemic ecommerce. 

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Meanwhile, Signifyd says online sales for the season are up about 6% compared to last year. That estimate is generally in line with ecommerce sales data from Adobe Inc. and other ecommerce technology providers.

Online retailers are upbeat about holiday sales

With supply chain snarls that limited web sales during the pandemic largely eliminated, several retailers contacted by Digital Commerce 360 were pleased with early results from the Thanksgiving holiday weekend.

Jeffrey Douglas, director of ecommerce at Nebraska Furniture Mart

Shopping at Nebraska Furniture Mart seemed to start earlier than usual this weekend, perhaps driven by offers of discounts, free shipping and financing, says ecommerce director Jeffrey Douglas.

“We are seeing inventory levels return to pre-COVID levels, so we’re in great shape when it comes to being in-stock,” he says.

Nebraska Furniture Mart is No. 310 in the Top 1000. The Digital Commerce 360 database ranks North American retailers and brands by online sales.

At Beanbox, an online coffee retailer, web sales jumped 15% on compared to last year. That makes it the strongest Thanksgiving Day in terms of sales in the e-retailer’s history, says Ryan Fritzky, co-founder and chief marketer at Bean Box. Bean Box is No. 1329 in the Digital Commerce 360 Next 1000 database. It ranks North American retailers Nos. 1001-2000 in ecommerce revenue.

Instagram ads produce strong results

Ryan Fritzky, co-founder and chief marketer, Bean Box

Fritzky says early access deals aimed at top customers and subscribers helped bring sales forward on Thanksgiving Day and likely contributed to the lower 5% growth on the next day, Black Friday. But he notes Black Friday produced strong subscription sign-ups.

“We’re excited about that because it’s a big opportunity for us to reach people who will be with us for the next year,” he says.

Bean Box got a strong response to its ads on Instagram and relatively weak traffic from Google search ads early in the weekend, Fritzky says. He says many consumers were scrolling through their social feeds on their phones Thursday and Friday and responded to appealing ads they saw, whereas they typically go to Google when they’re searching for items to buy.

“We’ll see stronger search demand on Monday as people scramble to make last-minute decisions,” Fritzky predicts.

More family gatherings help boost sales of baking supplies

Tom Funk, ecommerce director, Ann Clark Ltd.

At Ann Clark Ltd., sales turned up with the end of the COVID-19 pandemic and the resumption of social gatherings, says ecommerce director Tom Funk. Ann Clark manufactures cookie cutters and other baking supplies, and it sells direct to consumer at AnnClarkCookieCutters.com.

“U.S. sales growth was modest. As a premium brand, we try to steer away from aggressive discounting,” he says. “International — mostly Europe and Canada — was a bright spot, growing 20% to 50% depending on country.”

Profits have increased as Ann Clark selectively raised prices and tweaked its marketing campaigns, Funk says.

“Paid and organic search declined over prior year,” he adds. “Email revenue grew 35%. We’re a bit more in the mode of engaging existing customers, less about battling to acquire a lot of new customers.”

Sales are ‘better than expected’ for an online gifts retailer

Lynnette Kelley, part owner and business manager of Calamity Worldwide LLC, an online retailer of humorous gift items, says early-weekend sales were “a little better than I was anticipating. Not by much, but considering that our sales were lower than anticipated for Nov. 1 through 22, I’m happy to see that Nov. 23 through 25 so far have exceeded my expectations.”

She says sales were down 20% Thanksgiving Day through Saturday compared to the same days last year, “but we expected sales to be lower this year compared to last, as our whole year has been shaping up to be a little lower than last year.”

Lynnette Kelley, co-owner and business manager, Calamity Worldwide LLC

She says Calamityware.com customers may have put off purchases until Thanksgiving because the e-retailer promised a holiday giveaway of a reusable grocery bag featuring one of the retailer’s original designs.

“I suspect that has something to do with the lower-than-planned sales in the beginning of the month, and higher-than-planned sales so far this weekend,” Kelley says.

On a positive note, she says Calamity has been able to return to full price for some of its best-selling items this year without cutting into the number of larger orders it has received. That’s noteworthy in a season when online prices are generally lower than they were a year ago — Adobe says average online prices were 6% lower in October 2023 than the same month last year — and discounting is heavy.

Will online sales return to pre-pandemic patterns?

The 2023 holiday season could signal a return to pre-pandemic shopping patterns, with heavy discounting driving strong sales in November that result in muted online revenue growth in December, says Bennett of Signifyd.

“I expect Cyber Monday will be big,” he says. Sales that day often follow the pattern set by Black Friday, which was quite strong this year. “I’m very curious how much this will pull forward from December. November has been stronger than I expected, and I would suspect December will be weaker than we expected.”

Funk, the ecommerce director at Ann Clark, which generates most of its online sales on the Amazon Marketplace, foresees stiff competition ahead.

“Ecommerce, especially on Amazon, continues to be brutally competitive,” Funk says. “I expect it will be a challenging season, where much of our growth comes from new products. We recently launched gourmet waffle and pancake mixes, which are doing very well as folks return to more family gatherings.”

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Artificial intelligence was already a key technology for retailers to implement going into 2023. And then generative AI boomed.

Retailers had to start exploring how they could integrate generative AI into their ecommerce sites while keeping up with all the technology they had planned to invest in for the year. And so, Digital Commerce 360 conducted its annual technology survey. It asked about what online retailers would invest in, how much, how that compares to the previous year, and more. Digital Commerce 360’s 2024 Leading Vendors to the Top 1000 Retailers Report details the survey’s findings.

The 2024 Leading Vendors report shows which ecommerce technologies online retailers have implemented — or abstained from — including:

• Artificial intelligence (with a subsection on generative AI)
• Ecommerce sites and platforms (with a subsection on fraud)
• Online marketplace management
• Email and digital marketing
• Fulfillment, with subsections on:
  • Omnichannel
  • Sustainability
  • Subscriptions

Key findings in the Leading Vendors 2024 report

According to Digital Commerce 360′ technology survey, well over half of retailers (62.8%) plan to increase their ecommerce technology and services spending next year. More than a fifth (22.9%) plan to spend the same amount on ecommerce technology next year. Meanwhile, just 14.3% plan to decrease their ecommerce technology spend next year.

Of those who said they planned to increase their ecommerce technology spending, not even a quarter (24%) said they would spend at least 15.1% more than in 2023. Just 3% of respondents said they would spend 50% more on ecommerce technology in 2024 compared with 2023.

Moreover, nearly a third (30.3%) said they would spend no greater than 5% more on ecommerce technology in 2024 compared with this year. A 15% increase in spending is the limit for about three-quarters of respondents.

2024 Leading Vendors to the Top 1000 Retailers Report

Analysis of the leading vendors that serve North America's Top 1000 online retailers. Includes rankings of the Top 10 leading vendors across 24 categories, including Customer Relationship Management, Ecommerce Platforms, Fulfillment Services, Marketing Automation Platforms, and more.

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What kinds of technology are online retailers investing in most?

Digital Commerce 360 asked retailers in the Leading Vendors 2024 report what they found most important to spend on in 2024 when it came to ecommerce technology. At the top of the list, retailers equally prioritized improving the customer experience and improving conversion rate — naturally, the two go hand in hand.

Meanwhile, there was another tie for the next most important reasons for increasing ecommerce technology spending in 2024. Retailers said they want to better attract customers, better personalize shopping experiences, and improve site performance (including speed and efficiency).

Although more than 40% of retailers said they want to increase their technology spend to attract new customers, not even a third (30%) said they’re increasing spending to retain customers. Just over a quarter (26.7%) said they want to increase spending so they can generate more sales from repeat customers. The same number, however, said they want to support more cross-channel shopping.

At the same time, mobile seems to be less of a priority. Less than a quarter of respondents (23.3%) said they want to use increased technology spending to improve their mobile shopping experience. And not even a fifth of respondents (16.6%) said they want to use their increase in tech spending to generate more traffic and sales through mobile commerce.

What are the biggest tech priorities for e-retailers?

The technology survey in the Leading Vendors 2024 report found that there’s a tie for the top priority when it comes to retailers’ 2024 tech budgets. Nearly a third (30% each) of retailers said their biggest technology priorities for 2024 are content management and their ecommerce platforms. Similarly, a pair of priorities tied for second. Just over a quarter (26.7%) want to prioritize product management and web analytics.

Search engine optimization (SEO) tied for third with website performance management and order management (23.3% each). Meanwhile, only a fifth of respondents included artificial intelligence in their top five ecommerce technology budget priorities for 2024. The same number selected affiliate marketing, omnichannel, online marketing, and customer relationship management technology as top-five priorities.

On the low-priority end of the spectrum, just 10% of retailers surveyed listed fulfillment services or payment (including security systems and fraud prevention) as a top-five priority.

Fewer than 10% of respondents said their priorities include customer ratings and reviews, customer service software, international ecommerce software, and sales tax management. And not even 5% of retailer respondents selected social media as a top-five priority, nor supply chain management.

When it comes to artificial intelligence, more than a quarter of respondents aren’t just interested, but they’re using it with good results (28.57%). And just under a quarter are using it but with limited results (23.81%). Meanwhile, not even 5% of surveyed retailers are using machine learning with good results. But a third are using it with limited results. For 2024, 42% of surveyed retailers are considering AI, and a third are considering machine learning. Just under 5% of respondents don’t plan to invest in AI. And over a quarter (28.57%) plan not to invest in machine learning.

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As business grew, so did Polywood’s fraud risk, Valencourt says.

“We were actually targeted by a fraud ring,” he says. The retailer received multiple fraudulent orders, to the point where its manual process for flagging suspicious orders could no longer keep up, Valencourt says.

The retailer was in danger of hitting the 1% threshold where financial companies won’t allow a retailer to process its credit cards anymore, he says. For example, Visa has a 0.9% threshold. The financial institution issues an “early warning” when the percentage of fraudulent orders reaches 0.65%.

“We hadn’t gotten to that point, but we were approaching a 1% threshold on fraudulent orders,” Valencourt says.

The retailer turned to online payment and checkout platform Bolt. Instead of relying on employees to manually flag potential fraudulent orders, the retailer automated the process. That freed up employees to serve customer inquiries directly instead, Valencourt says.

It also increased conversion, Valencourt says. Polywood began using Bolt in 2018. The first year after adding Bolt, Polywood’s conversion rate increased 10% in 2019. By the end of 2020, conversion increased 20%, he says. That’s increased to about 50% conversion currently, he says.

Customer checkout rate

A portion of Polywood’s customers order furniture for locations other than their main home. Some are for second homes or other properties, for example. These orders were often flagged as fraudulent because the billing zip code did not match the shipping zip code.

“A bank might flag it and it hurts checkout,” he says.

That’s a big deal when the average order value for a Polywood order is around $1,000, he says.

Instead, Bolt automates this process and catches these details.

“Now, our customer service agents can answer customer questions like what product is right for them or sizing and colors about products,” Valencourt says.

Polywood uses Bolt as its default checkout processor. Customers can check out as a guest. They can also use Bolt if they’ve purchased through other retailers that also use Bolt or are saved in the Bolt network. This allows shoppers to check out quicker because their information is already stored with Bolt.

Polywood preventing fraud

Bolt flags fraud and offers Polywood the ability to track deliveries. As Polywood expands its customer base, the shopping process has grown more complex. There are split shipping and multiple manufacturing centers and warehouses to navigate, Valencourt says.

“We actually did start offering split shipping a couple of years ago,” he says. “But we didn’t really let the customer know what was going on. A customer might get half an order and call in saying they were missing part of it. They didn’t realize it was coming in a separate shipment. The customer service team didn’t either. They would send a replacement for the missing items only to find out the rest of the initial shipment arrived later.”

That Bolt network is growing, says Shilpi Narang, chief customer officer. The number of Polywood shoppers who check out using a Bolt account has more than doubled since the merchant went live with the vendor. Shoppers with a Bolt account constitute 30% of Polywood’s total volume of checkout as of September 2023.

Merchants don’t typically want to outsource their entire checkout process, Narang says.

“We work with them so they can keep their branded look while tapping into elements of our technology,” she says.

While merchants want an automated fraud and checkout solution, Narang says they also find value in Bolt’s growing network. The vendor claims that its shopper network includes tens of millions of U.S. shoppers and has grown year over year in 2023 by 44%.

“As we work with more merchants, especially with larger more complex merchants, we heard they wanted to increase conversion and leverage our shopper network,” she says. According to Narang, when a U.S. ecommerce merchants turns “on” Bolt, “immediately about 17% of their site traffic is recognized by Bolt,” she says.

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