Xometry’s fourth-quarter American Manufacturing Resilience survey, which polled more than 150 chief executive officers of manufacturing firms of all sizes, found that 76% of respondents had successfully re-shored some or all their operations or were in the process of doing so. That figure is well above the 48% of CEO respondents who said they were re-shoring in the third quarter, and 35% in the second quarter.

The latest survey found that 83% of manufacturing leaders say the health of American manufacturing depends on re-shoring, and that AI and re-shoring go “hand-in-hand,” Xometry CEO Randy Altschuler said in a statement.

Reconsidering supply chains

Although American labor costs more than labor in Asia or Mexico, manufacturers are coming to believe that more localized supply chains are less prone to disruptions than far-flung ones. Bill Cronin, chief revenue officer at North Bethesda, Md.-based Xometry, tells Digital Commerce 360 that the “post-COVID CEO” is overly concerned about potential supply chain disruptions in the wake of the COVID-19 pandemic, inflation, and the geopolitical risks of global sourcing. Examples of geopolitical risk sources abound, especially recent U.S.-China tensions and now the Israel-Hamas war in the Gaza Strip.

“Companies are looking at those different options — ‘how can I get this done in the U.S.,’ ‘how can I get this done in North America?’” Cronin says.

With AI, manufacturers can get better reads on their supply risks and options, according to Cronin.

“They are now trained and better prepared,” he says. “It helps them to be more efficient in how they’re prepared to manage any disruption that comes up.”

Some 76% of respondents said they use AI for supply-chain management, more than for any other business function. Next were procurement, cited by 71% of the CEOs; quality control, 47%, and automation, 37%.

“These are areas that are ripe for innovation,” Cronin says. “It’s also about the ability to modernize.” He adds: “it’s amazing what they [manufacturing executives] are able to look at.”

The survey was done by research firm John Zogby Strategies and cobranded by Xometry and the business publication Forbes.

Other uses for AI

In other findings, AI is driving positive responses. Among CEOs who reported they had deployed AI, 67% said they had received a “significant” return on their investments. Some 31% said they expected it will take time to see a strong return but were confident they will. The survey did not ask how much each company had spent on AI technology.

Xometry uses AI to give prospective buyers instant price quotes on its B2B marketplace. As of Sept. 30, Xometry’s marketplace had 52,467 active buyers, up 43% from a year earlier, and 7,415 active paying suppliers, down 2%. The company has developed its AI systems in-house, but on Nov. 9, Xometry announced it will deploy Vertex AI technology from Google’s Google Cloud unit to accelerate further development of its auto-quote methods and models. The goal is to eliminate the time-consuming back-and-forth exchange of pictures, price lists, and paper-based documentation as buyers and sellers negotiate prospective sales, including those involving custom manufacturers.

“For us, it is driving greater efficiency in custom manufacturing and the industrial marketplace,” says Cronin.

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Temu, owned by PDD Holdings Inc., which operates Chinese ecommerce site Pinduoduo, launched in the U.S. in September. It quickly became the most downloaded app on Apple Inc.’s U.S. App Store. Its marketplace carries clothes and home decor at rock-bottom prices. The company is aiming to take on global retail behemoths like Amazon.com Inc. and Ebay Inc.

But Tel Aviv-based Ultra Information Solutions says it found at least 10 items made or sold by businesses located in Xinjiang that are also available in the U.S. on Temu, where their company links and origins are obscured. Ultra used its digital vetting platform Publican to compare products sold on Temu, such as sandals, sunglasses and other items, with those sold by the parent company inside China.

“It’s a systematic violation of U.S. trade policies,” said Ultra co-founder Ram Ben Tzion.

Representatives for Temu and PDD didn’t reply to multiple requests for comment.

Import bans in the US

Citing what the U.S. State Department has called “horrific abuses” against the Uyghur people of Xinjiang, who are predominantly Muslim, federal officials banned the importation of cotton from the region in 2021. It expanded the law and its enforcement to all Xinjiang products last year under the Uyghur Forced Labor Prevention Act. Statements from former detainees and reports from an array of researchers and advocacy groups have alleged that the Chinese government put more than 1 million people in detention camps in the region and that laborers in fields and factories were forced or coerced. The Chinese government has said the camps are for re-education purposes.

In the U.S., Temu has grown in popularity with two advertisements aired during the Super Bowl in mid-February. Its 30-second spot — which cost millions to produce and air — features a trendy shopper twirling and dancing in an array of outfits with the tag line “Shop Like a Billionaire.” The ad has since been viewed on YouTube 341 million times. Temu is chasing Shein, the Chinese fast-fashion behemoth with estimated U.S. sales of $8 billion last year. If it succeeds, it would join only a handful of Chinese internet services to have become popular in the U.S. market, including Alibaba Group Holding Ltd.’s AliExpress and ByteDance Ltd.’s TikTok.

Alibaba owns Taobao, No. 1 in the Digital Commerce 360 database of Global Online Marketplaces. It also owns Tmall (No. 2). Amazon ranks No. 3, and Ebay is No. 6.

Temu’s growth

PDD became successful in China as a dollar-store version of Chinese online retailers Alibaba and JD.com Inc., selling lower-priced goods. Its domestic app Pinduoduo is a marketplace that recruits suppliers to offer various products. Temu operates a similar model but goes a step further and handles delivery, promotion and after-sales services for merchants on its platform, as its Chinese parent seeks to expand in the U.S. and European markets quickly.

It opened an office in Boston to serve the U.S. and Canada, where it launched in February. Temu also operates in Australia and New Zealand. According to data analytics firm YipitData, U.S. Temu sales grew 6% on a weekly basis during the last week in May, the most recent data available, with an average of $34 an order.

Product origins

The vetting platform Publican couldn’t find conclusive evidence that any of the products sold on Temu and PDD were made with forced labor, only that the companies that produced them are located in Xinjiang.

“However, their proximity means there is a probable risk, not just a theoretical risk,” Ben Tzion said.

Publican’s supply-chain vetting has been contracted to more than 35 government agencies, including tax, customs and law enforcement in South America, Africa and elsewhere with a goal of interdicting fraudulent and illegal shipments, he said.

In addition to sunglasses and sandals, Publican also found children’s clay, a ring, wall paneling, rice storage containers, a car-window ice scraper, colanders and a bathmat sold on the PDD and Temu sites. The PDD-available items were identified as coming from companies in Xinjiang.

Ultra said it wasn’t paid for its research and it wasn’t commissioned by any third party.

“It was our initiative to illustrate how our technology can be a critical component in the enforcement of UFLPA as well as other trade-related compliance challenges,” Ben Tzion said.

Compliance

Shipments from China sold directly to consumers can bypass the U.S. ban on Xinjiang products because they fall below an $800 value threshold that triggers reporting requirements to U.S. Customs and Border Protection. Bloomberg testing on Shein garments shipped to the US on two occasions last year found that their cotton came from Xinjiang.

US lawmaker response

An April report from the Congressional U.S.-China Economic and Security Review Commission said Shein and Temu pose “risks and challenges to U.S. regulations, laws, and principles of market access” resulting from such direct-to-consumer sales. Republican Representative Mike Gallagher, chair of the House Select Committee on the Chinese Communist Party, and the panel’s top Democrat, Raja Krishnamoorthi, sent letters to Temu, Shein and two other companies in May seeking to determine whether they are importing products derived from forced labor in China.

The U.S. Department of Homeland Security named two new Chinese companies it will be restrict from sending goods to the U.S. under the UFLPA. The additions bring the total to 22 Chinese firms. Customs and Border Protection began enforcing the UFLPA in June 2022. In its first year, the CBP has reviewed more than 4,000 shipments valued at over $1.3 billion, according to the DHS.

Responding to the revised entity list, Republican Representative Chris Smith and Democratic Senator Jeff Merkley said the list is only one part of enforcement. They are co-chairs of the Congressional Executive Commission on China. Forced labor goods with ties to Xinjiang, “such as car parts, solar panels, rayon, and garments from fashion companies such as Temu and Shein continue to enter the US market.”

The representatives said they will work “toward the goal of stopping imports of forced labor-made goods. American consumers should not be unwittingly subsidizing the PRC’s genocide” in Xinjiang.

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Asked where they made their last purchase from a retail website outside their home country, 27% of consumers said Amazon while 17% cited Alibaba’s AliExpress marketplace, which mainly offers inexpensive goods from Chinese manufacturers. The results are based on an October 2022 survey of 33,009 consumers in 39 countries who had made at least one cross-border online purchase in the previous three months.

Amazon’s share ticked up from 25% in the similar survey IPC conducted in 2019, the last year before the COVID-19 pandemic struck. AliExpress was down slightly from 20% in the 2019 survey.

EBay declined to 9% in 2022 from 14% in 2019. Wish, a U.S.-based marketplace that features mostly inexpensive goods from China and elsewhere, fell to 5% from 11%. Two retailers not mentioned in the 2019 IPC report were among the leaders in the latest survey: Shein Group Ltd., the Chinese fast-fashion retailer, accounted for 6% of most-recent purchases. German online apparel merchant and marketplace operator Zalando accounted for 3%.

Amazon is No. 3 in the Digital Commerce 360 Global Online Marketplace Database, which ranks marketplaces by total value, or gross merchandise value of sales. EBay is No. 5, AliExpress No. 15, Wish No. 16 and Zalando No. 24. Shein is No. 36 in the Digital Commerce 360 2022 Asia Database, which ranks Asia-based retailers by their online sales.

Why the US attracted a smaller share of cross-border ecommerce

Despite Amazon’s strong showing, U.S. e-retailers overall are losing ground in cross-border ecommerce. The U.S. accounted for only 10% of survey respondents’ last cross-border online purchase in 2022. That’s down from 11% in 2019 and 15% in 2016, according to IPC.

“The strong U.S. dollar made U.S.-made goods more expensive in recent years, which accounts for part of the decline,” says Jim Okamura, digital practice lead at retail consulting firm McMillanDoolittle and co-founder of the Global Ecommerce Leaders Forum, which brings together retailers and brands that sell internationally online. “Plus, the rapid deployment of ecommerce for any brand or retailer who wanted to survive during COVID greatly expanded domestic choice to a level where consumers had less need to go out of country for certain products.”

China led the way, accounting for 30% of shoppers’ last foreign online buy. That was down from 36% in 2019, but an increase from 26% in 2016.

Germany gained ground during the pandemic, increasing to 14% of shoppers’ last cross-border purchase. That’s up from 12% on 2019. The U.K. went in the other direction, slipping to 10% in 2022 from 13% in 2019. Those shifts likely reflect European Union shoppers buying less from the U.K. post-Brexit, now that they have to pay customs duties that are not charged by retailers in EU member states, such as Germany.

Consumers will shop more online, but not necessarily from the U.S.

Looking ahead, 74% of shoppers said they expect to purchase more from domestic retail websites, including 24% who said they expect to purchase much more. Meanwhile, only 6% expect to buy less (2% much less). But U.S. retail websites won’t see as much growth, as only 39% expect to shop more with U.S. e-retailers (8% much more), while 35% will shop less (16% much less.)

The biggest increase is in shoppers saying they will buy more from neighboring countries: 58% say they will buy more from retail websites in countries next door, including 10% much more, and only 11% less (3% much less).

“In countries with less-developed ecommerce, where there isn’t sufficient selection or competition among sellers, consumers look to neighboring countries where the ‘grass is greener’ and therefore more attractive to shop there,” Okamura says.

Shoppers buy apparel and footwear from international websites

Clothing and apparel are most frequently purchased cross-border. 36% cited them as the products they bought during their most recent cross-border purchase. That was followed by consumer electronics and accessories (20%) and personal care and beauty (16%).

“The category to watch is personal care and beauty — the  combination of greater consumer demand and more cross-border sellers should see this grow,” says Kent Allen, principal at consulting firm The Research Trust and co-founder of the Global Ecommerce Leaders Forum. “It’s also a category where social content is exploding and new direct-to-consumers brands, for example, ‘clean beauty’ brands free of harmful chemicals and wellness brands, should drive above-average growth.”

Consumers in the Americas were most likely to buy clothing and footwear from retail websites in other countries. Meanwhile, South Americans frequently buy consumer electronics cross-border and Asian shoppers buy personal care products, IPC says.

Most cross-border ecommerce purchases are relatively inexpensive

Other findings from the IPC survey include:

• 50% of purchases were valued at 50 euros ($55) or less. Only 6% of purchases were above 100 euros in value.
• 37% of respondents said they received their last cross-border purchase within five days, but 38% said it took 10 days or longer.
• 79% of cross-border shoppers were made aware of any customs fees at the time of purchase. 50% paid those fees while making the online purchase, 30% while the package was en route and 16% upon delivery.
• 10% returned all or part of their most recent cross-border purchase. The return rate was highest in China (25%), New Zealand and Switzerland (both 22%) and the U.S. (21%). 75% said their return was free, with the highest rate of free returns provided by Zalando, Amazon and Shein.
• 73% of consumers said they would wait a few days longer for a package to arrive to reduce the environmental impact of the delivery, including 30% who strongly agree with that statement. But 72% agree (29% strongly) that it’s the responsibility of the online retailer, not the consumer, to cover the costs of sustainable delivery.

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It was that kind of year. Neither earth-shattering nor dismal. Neither ground-breaking nor a return to the norm.

We got the first indications of this in January. The COVID-19 pandemic wasn’t over, but the retail industry was pretty eager to act as if it was. The National Retail Federation planned a return to the real world for its Big Show. But just days before attendees were due to arrive, coronavirus cases spiked in New York and the keynote speaker — Honest Co. founder, actor and celebrity Jessica Alba canceled. Still, the show must go on, as actors say. The Big Show did come to New York. But not many attendees did.

There was another indication back in January that 2022 would be less than remarkable. The big business story in retail that month was that Kim Kardashian’s underwear label Skims had doubled its valuation to $3.2 billion in nine months. That suggested innovation in 2022 would involve attaching a celebrity’s name to a version of an actual innovation from two decades earlier.

By February, there was a throw-the-spaghetti-against-the-wall-and-see-what-sticks air about the entire retail world. Target Corp. offered Starbucks beverages as part of its curbside pickup. Peloton, Home Depot, Wish.com and Shipt all decided to try new CEOs, and Amazon laborers — who hadn’t had much luck working with the giants of organized labor — decided to organize themselves.

Then, on Feb. 24, Russia invaded Ukraine.

In the following weeks, the retail world behaved admirably. Toy companies became symbols of the resistance, while major companies around the globe cut ties to the Russian economy. In the meantime, there were other ominous signs for ecommerce. A global supply chain crisis was poised to worsen. And inflation for the year ending March 2022 hit 8.5% — the largest 12-month increase since 1981.

By April, the bad news had everyone in ecommerce worried that things were falling apart. Everyone seemed to be losing money and/or going deeper into debt. Buy-now-pay-later options grew popular with shoppers and retailers. Amazon.com Inc., No. 1 in Digital Commerce 360’s Top 1000, posted a $3.8 billion loss. Bed Bath & Beyond said its net sales fell 22%. Young adults borrowed money and engaged in crypto speculation, and Etsy sellers went on strike.

April showers are supposed to give way to May flowers. But in 2022 … not so much. The bad news continued. Surplus inventory levels soared. Ecommerce growth continued to slow. Wayfair Inc., No. 7 in Digital Commerce 360’s Top 1000, announced a hiring freeze. EBay’s sales fell and Target’s earnings plummeted. In the meantime, the spaghetti-against-the wall craze continued as Amazon started subleasing warehouse space while opening a clothing store, just as Walmart announced plans for delivery by drone.

In June, things grew darker. Bed Bath & Beyond’s CEO stepped down as sales fell further. So too did the CEO of The RealReal, No. 40 in the ranking of Digital Commerce 360 Top 100 Online Marketplaces. Meanwhile, Apple and PayPal both made it easier for shoppers to go deeper in debt.

July was supposed to be a time of great excitement in ecommerce, as Amazon held its Prime Day sale. But shoppers were underwhelmed. As if in response to the disappointment, Amazon announced a drop in ecommerce sales (albeit for the quarter before Prime Day), Shopify slashed its workforce, and soaring inflation pushed consumers to amass BNPL debt to pay for groceries.

In August, things grew both darker and brighter. Best Buy, No. 6 in the 2022 Digital Commerce 360 Top 1000, said U.S. online sales dropped 14.7%, while Macy’s said its Q2 online sales fell 5% and multiple retailers struggled to unload excess inventory. By contrast, Walmart said its online sales rose 12% in the second quarter, albeit largely because of inflation. Overall ecommerce numbers grew, but at a pace that was well below what the industry had grown accustomed to. U.S. ecommerce spending in Q2 marked its fourth straight quarter of single-digit growth following the 45%-50% jumps during the first year of the pandemic, according to a Digital Commerce 360 analysis of U.S. Department of Commerce figures.

The industry responded once more by throwing pasta against the wall. Peloton said it would sell on the Amazon marketplace, and Walmart added streaming video to its membership program.

In September, things turned macabre. Bed Bath & Beyond’s chief financial officer died by suicide. Shortly before that, the world learned that Chewy founder and activist investor Ryan Cohen — who had driven Bed Bath & Beyond shares higher during the meme stock craze — had sold his entire stake in the retailer. Shares fell 40% in the wake of Cohen’s action. Unsurprisingly, Bed Bath & Beyond soon announced it had another dismal quarter.

By now, the pattern was clear. Times are tough; pasta must be thrown. So Amazon announced it would have another Prime Day sale. Meanwhile, Kanye West severed ties with the Gap, suggesting that in 2022 true innovation might mean removing a celebrity’s name from someone else’s innovation.

In October, the ecommerce world watched as that second Prime Day — dubbed the Amazon Prime Early Access sale, in a sign that in 2022 true innovation might mean changing the name of an earlier innovation — fizzled.

Meanwhile, in a particularly disturbing development, online prices for food hit a new record high. Then, in a move that no one thinks would help those prices fall, The Kroger Co. said it had agreed to buy rival Albertsons Cos. Inc. for $24.6 billion.

As October ended, Digital Commerce 360 warned that “online retailers again will have a tough go of it this season, trying to convince shoppers who are contending with inflation and recession fears not to skimp on their gift lists.”

November, of course, is when the hopes and fears of all of ecommerce converge in the Cyber 5 period. Early in the month, there were some pieces of bad news that suggested Cyber 5 results might prove disappointing. Alibaba Group Holding Ltd. decided not to disclose full sales results for its signature Singles’ Day shopping festival for the first time, after forecasts that the figure may suffer a decline unprecedented in the event’s 14-year history. Alibaba owns and operates Taobao and Tmall, which hold the No. 1 and No. 2 spots in the ranking for Digital Commerce 360 Online Marketplaces. And Singles’ Day is the world’s largest shopping festival.

Meanwhile, Amazon said it planned to cut about 10,000 jobs — the largest ever headcount reduction at the ecommerce giant as it braces for slower growth and a possible recession.

Yet December — like 2022 itself — saw the release of news that was both good and bad. Cyber 5 results, the effects of inflation, struggles over supply chain and inventory levels, all proved to be neither earth-shattering nor dismal. Neither ground-breaking nor a return to the norm.

Early in December, the industry learned that web sales grew 4% to reach $35.27 billion in the Cyber 5, or the five-day period of Thanksgiving through Cyber Monday, according to Adobe Analytics. Amazon and Walmart were the big winners. That news came just days after the U.S. Commerce Department said the value of overall retail purchases dropped 0.6% in November — the largest decline in 11 months.

Also in December came the piece of news that most perfectly summed up the entirety of 2022 in retail. Celebrity Justin Bieber blasted H&M for what he called the “trash” of the all-new Justin Bieber-themed merchandise sold by H&M, suggesting that the biggest innovation of 2022 involved attaching a celebrity’s name to innovations they don’t like.

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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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The research firm says online sales will top $1 trillion this year and grow at a 10% compound annual growth rate (CAGR) through 2027. In 2021, total (online and offline) retail sales (online and offline, excluding automotive and gasoline) reached a record high of $4.3 trillion and will grow to $5.5 trillion, Forrester says.

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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“We expect ecommerce to take share from physical retail in the years ahead,” says Sucharita Kodali, vice president and principal analyst at Forrester and one of the report’s authors.

Growth rates return to pre-2019 norms

As the coronavirus lockdowns eased, shoppers returned to stores in 2021. That shifted sales growth from online to physical retail. In 2020, online retail sales grew 29% compared with 2019. That was more than double the 13% year-over-year ecommerce growth rate in 2019. From now on, Forrester expects ecommerce growth to revert to the levels seen in 2019 and before, Kodali says.

With the pandemic becoming less severe, ecommerce will continue benefitting from the factors that drove its growth before COVID-19, the Forrester team wrote. Forrester says those growth drivers are lower prices, larger product selection, fast delivery and convenience.

Forrester added that the top three merchandise categories in ecommerce are clothing and footwear, consumer electronics, and food and drink. In 2021, together, those categories represented 38% of U.S. online retail sales and 41% of total U.S. retail sales. By 2027, Forrester projects those categories will account for 42% of U.S. online retail sales. And the same categories will also be 40% of total U.S. retail sales.

“We expect clothing and footwear online retail sales to almost double in the next five years, from $153 billion in 2021 to $278 billion in 2027. Consumer electronics online retail sales will see similar growth, increasing from $123 billion in 2021 to $216 billion in 2027. And food and drink online retail sales will almost triple from $69 billion in 2021 to $183 billion in 2027,” the Forrester report says.

Online sales for pickup to double by 2027

Forrester says buy online, pick up in store (BOPIS) and curbside pickup services will help ecommerce keep growing in the coming years. That’s at least partly because retailers invested in order-pickup capabilities, the report says.

“Retailers have been increasing their numbers of pickup locations. Walmart now has pickup services available in 4,600 locations, and 3,500 of its stores offer same-day delivery. The Home Depot offers BOPIS, lockers, and/or curbside pickup in over 2,300 retail stores. Target’s click-and-collect sales grew 45% in 2021 — and that’s on the top of 235% growth for that service in 2020. Lowe’s increased its omnichannel capabilities by offering BOPIS lockers in all of its U.S. stores,” the Forrester team wrote.

Americans will buy $100 billion in goods online for pickup at stores. Sales like that will more than double to $208 billion by 2027. By that year, they will represent 13% of all U.S. online retail sales, the firm projects.

Walmart ranks No. 2 in the Top 1000, Digital Commerce 360’s database of North American retailers by web sales. The Home Depot ranks No. 4, and Lowe’s ranks No. 11.

Tough times ahead?

While online and offline retail sales will keep growing, Forrester warns that the marketplace presents retailers with significant short-term challenges. For example, the report says consumers have shifted their dollars to non-durable goods in 2022.

Also, the report says high inflation means consumers are spending more on gas and groceries. So, “retailers face declining profitability as they offload excess inventory by offering discounts,” the Forrester team wrote. Beyond that, retailers face the possibility of a U.S. recession. Other potential problems include “unknowns,” such as when supply chains might normalize, and geopolitical risks, such as the possibility of China invading Taiwan.

Forrester says its forecasts rely on “demand-side data balanced with company supply-side metrics” and the work of the firm’s subject-matter experts. Forrester says it “develops comprehensive historical and base-year market size estimates based on a variety of sources, including public financial documents, executive interviews, Forrester’s proprietary primary research and surveys, and analysis of global companies’ distribution and growth.”

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Silverman addressed the recent Etsy seller strike after the marketplace increased transaction fees, its plans to bring in new buyers and concessions for sellers in Ukraine.

For the period ending Mar. 31, online marketplace Etsy reported revenue was $579.3 million, up 5.2% year over year. Gross merchandise sales (GMS) were $3.25 billion, up 3.5% year over year from the same period in 2021.

Etsy reported net income of $86.1 million, a decrease of 40.1% year over year. The decline in net income was attributed primarily due to increased employee compensation-related expenses due in part to a 71% increase in new employee hires. That includes acquisitions of U.K.-based peer-to-peer fashion marketplace app Depop, and Brazilian arts-and-crafts marketplace Elo7.

The online marketplace reported it added 7 million new buyers in Q1 2022, with 89 million active buyers in nearly 250 countries. The company currently has about 5.5 million sellers. Etsy plans to focus on attracting male shoppers, as 70% of its customer base identify as women.

Looking ahead, Etsy said it expects Q2 revenue to fall between $540 million and $590 million. GMS is expected to be between $2.9 billion to $3.2 billion.

Etsy seller strike

In April, Etsy raised transaction fees for sellers from 5% to 6.5%. Some Etsy sellers protested the rate hike, citing a 42% fee increase in 2018 to improve the seller experience. The group said the company did not deliver.

The group also noted dissatisfaction with Etsy’s Offsite Ads program, which charges sellers a 12% to 15% fee. That’s in addition to existing fees and is charged for items sold through one of Offsite’s ads. Offsite Ads is an advertising service that promotes sellers’ items to multiple high-traffic sites including Google, Facebook, Instagram, Pinterest and Bing. Sellers can opt out if they make less than $10,000 a year but not if they make more.

Silverman told investors during the earnings call on May 4 that the 2022 fee increase was necessary to bring in more buyers. One way the company is approaching new buyers is its investment in brand marketing with its “Why Buy Boring” campaign in the U.S. and U.K.

Etsy also noted it has recruited social media influencers and sellers to its “Creator Collector” program, “which encourages content creation and monetization on social media through our affiliate marketing channels.” The program focused on TikTok, which resulted in 20 million views to Etsy.com and accounted for approximately 27% of all purchases from the program during the first quarter of 2022, according to the company.

“No one likes it when prices go up,” Silverman told investors.

He said bringing in more buyers is challenging because more people are spending on travel, dining out and shopping in stores. Silverman noted to investors that during the seller strike, Etsy saw “no material impact to sales for the week, much less for the quarter, and we saw to material impact to churn.”

Ukraine sellers on Etsy.com

Etsy noted that concessions for Ukraine sellers included canceled balances and listing credits totaling $4.6 million. The company is also featuring Ukrainian sellers’ digital downloads in its marketplace Editors’ Picks and buyer marketing. Ukraine sellers made over $11 million in sales in March 2022, an average of approximately $1,400 per seller with a sale, according to Etsy.

For the three months ended Mar. 31, Etsy Inc. reported:

• Revenue of $579.3 million, an increase of 3.5% year over year compared with $550.6 million in 2021.
• Net income of $86.1 million, a decrease of 40.1% compared with $143.8 million year over year.

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

Etsy Inc. is No. 18 in Digital Commerce 360’s 2022 Global Online Marketplaces ranking.

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The moves, announced in a blog post updated late Tuesday, ratchet up the company’s pullback following Russia’s invasion of Ukraine. Earlier Tuesday, Amazon joined the ranks of companies suspending some operations in Russia by announcing it was halting new sales from its Amazon Web Services cloud-computing arm.

Russia wasn’t a major market for the Seattle-based company, for either physical products or software services. The world’s largest online retailer doesn’t operate dedicated web stores for the country, but shoppers there could have products shipped from Amazon’s retail outpost in Germany or other storefronts.

“We’ve suspended shipment of retail products to customers based in Russia and Belarus, and we will no longer be accepting new Russia and Belarus-based AWS customers and Amazon third-party sellers,” the company said in the blog. “We are also suspending access to Prime Video for customers based in Russia, and we will no longer be taking orders for New World, which is the only video game we sell directly in Russia.”

Sony, Uniqlo join global brands disappearing from Russia

Sony’s Playstations, Uniqlo attire, McDonald’s burgers. The list of global brands disappearing from Russian outlets keeps growing as some of the world’s biggest businesses, from energy to consumer goods and electronics, suspend operations in the country.

International sanctions, the closure of airspace and transport links, financial restrictions on SWIFT and capital controls have made it difficult if not impossible for many companies to supply parts, make payments and deliver goods in Russia. Added to that, the potential consumer backlash against any company perceived as supporting Vladimir Putin’s two-week-old invasion of Ukraine has turned the corporate exodus into a stampede.

The rout reverses three decades of investment in Russia by foreign businesses after the Soviet Union broke apart in 1991. Those that pull out could lose their investments. The Russian government is supporting a proposal by the dominant United Russia party to consider the sale or even nationalization of operations of foreign companies that leave the Russian market, according to Kommersant.

On Tuesday, McDonald’s Corp., Coca-Cola Co. and Starbucks Corp. all announced they would temporarily halt operations in Russia. Some companies’ withdrawal makes it easier for others to do the same, said Gene Grabowski, a partner at communications firm KGlobal. McDonald’s action, for example, deprives Coca-Cola of a major client in the country.

Kraft Heinz Co., maker of Oscar Mayer hot dogs and Philadelphia cream cheese, suspended exports and imports of products to and from Russia as well as new investment in the country. Pizza chain Papa John’s International Inc. said it has stopped all support to the Russian market, where it has 188 franchised restaurants. The company said it isn’t receiving any royalties from these stores, which last year accounted for less than 1% of its sales.

Some firms have suspended international dealings with Russia but continue to operate within the country. Cereal giant Kellogg Co. suspended shipments into Russia and investment there, but said it will produce food locally at its three Russian plants, which represent just over 1% of the company’s business.

Imperial Brands Plc became the first major cigarette maker to stop all operations in Russia after halting production at its Volgograd factory as well as all sales and marketing. The maker of Kool and Gauloises cigarettes said its 1,000 employees in Russia will continue to be paid. Rival Philip Morris International Inc. is scaling down manufacturing in Russia amid supply-chain disruptions and evolving regulations. The company has halted investments and new product launches in Russia.

Uniqlo reverses decision

Fast Retailing Co.’s Uniqlo apparel chain said it will temporarily suspend operations in Russia, where it has 50 stores. The move marks a reversal after Fast Retailing founder Tadashi Yanai earlier this week said clothing is a “necessity of life” and that Russians have “the same right to live as we do.” Rivals, including Hennes & Mauritz AB and Zara’s Inditex SA, had previously stopped selling there.

Fast Retailing, which found global success with its Uniqlo clothing, entered the Russian market in 2010. The Tokyo-based retailer operated 50 stores in the country as of Feb. 28. That is its largest number of outlets outside of Asia, according to its website. The clothing brand generates 30% of its European revenue (including revenue from Russia) through ecommerce, according to its fiscal 2021 report released in August. The company set up a joint venture with Mitsubishi Corp. in 2017 to further expand in the Russian market.

Yanai, the billionaire founder of Asia’s largest retailer, said in an interview with the Nikkei newspaper earlier this week that clothing was a necessity and that “the people of Russia have the same right to live as we do.” While firms including Apple Inc. and McDonald’s Corp. pull back from Russia, Fast Retailing said last week it is donating clothes and other items to Ukrainians who’ve fled and $10 million to the United Nations’ refugee agency. Fast Retailing’s Uniqlo is No. 10 in the Digital Commerce 360 Asia 300.

There’s been a rush of U.S. and European companies boycotting sales and operations in Russia, but that hasn’t been matched in Japan and other parts of Asia. For Yanai, Russia’s war against Ukraine comes at a time when he’s seeking to expand Fast Retailing’s presence in Europe and reduce the company’s dependence on Japan, where the population is getting older.

Zara owner Inditex (No. 6 in the Digital Commerce 360 Europe 500) announced on Saturday the temporary closing of all of its 502 stores in the country, of which 86 are its Zara brand. The company said it “cannot guarantee the continuity of operations and trading conditions.” Swedish clothing retailer H&M (No. 10) also paused sales in Russia, where it operates 155 stores.

In April last year, the Fast Retailing CEO chose not to comment on the issue of sourcing cotton from China’s Xinjiang region. This came a month before it was revealed the U.S. had earlier blocked a shipment of Uniqlo shirts on concerns about using Uyghurs for forced labor. Uyghurs are a mostly Muslim ethnic group native to China’s northwest Xinjiang region. Yanai said it was a political issue and that the company was diligent about monitoring its factories to ensure that human rights aren’t violated.

Fast Retailing says it will continue working with the United Nations High Commissioner for Refugees.

In its statement from Friday, the retailer said, “Ukraine and many neighboring countries experience harsh winters, often with below-freezing temperatures” and that its donations include Uniqlo’s Heattech blankets and innerwear, as well as face masks.

Crocs, Inc. pauses business operations and importation of goods in Russia

More fashion brands suspend sales in Russia

Levi Strauss & Co. whose jeans were a coveted black-market item in the Soviet Union, also suspended commercial operations in Russia, where it gets about 2% of its sales, citing the “enormous disruption occurring in the region.” It said the business considerations “are clearly secondary to the human suffering.”

Nike Inc. is another that cited logistical problems as a reason for suspending sales in Russia. Spanish fashion retailer Inditex SA, which has 502 stores in Russia, including 86 Zara outlets, is temporarily closing its shops there and halting online sales, saying it “cannot guarantee the continuity of operations and trading conditions.”

German fashion brand Hugo Boss AG closed its stores in Russia on Wednesday and suspended its e-commerce website last week, CEO Daniel Grieder told Bloomberg TV Thursday. Russia and Ukraine account for 3% of revenue, he said.

U.K. mother-and-child retailer Mothercare Plc said Wednesday it has suspended business in Russia, including shipments. The company makes about 20% to 25% of its sales in Russia through a local partner. It said 120 stores will be immediately shut and online sales paused.

Others have divided the action for their product ranges. PepsiCo Inc. suspended soft-drink sales in the country but continues to sell daily essentials such as milk and baby formula. Danone SA’s general secretary, Laurent Sacchi, said the world’s largest yogurt maker would suspend investment in Russia, but will still sell dairy and baby food.

Danone Chief Executive Officer Antoine de Saint-Affrique was among the corporate leaders of some of France’s biggest companies who met with Emmanuel Macron on March 4, according to Le Figaro. The French president urged them not to leave Russia hastily, or without consulting the government, the newspaper reported.

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The LEGO Group, No. 136 in the 2021 Digital Commerce 360 Europe Database, issued a statement March 5 saying it had “paused shipments of products to Russia given the extensive disruption to the operating environment.” It also said it would donate some $16.5 million to emergency relief efforts, with a focus on providing support for children and families. The donation will be made to existing partners, including the United Nations Children’s Fund (UNICEF), Save the Children, and the Danish Red Cross.

That caught Paweł Jońca’s attention. Jońca is an illustrator from Poland who apparently knows the pain of stepping barefoot on a Lego block. He created a poster showing a giant bear, symbolizing Russia, about to experience that pain by stepping on blue and yellows blocks stacked to look like the Ukraine flag.

Illustrator Pawel Jońca’s poster of a Russian bear about to step on a Lego block has become a symbol of Ukrainian resistance.

The children’s crusade

The poster of the bear and the Lego block is not the only example of something childlike playing a role in the resistance.

A video of a young girl singing “Let It Go,” from Disney’s “Frozen,” in a fallout shelter in Ukraine captivated millions on social media.

Idina Menzel, who voices the character Elsa in the Disney film, retweeted the video to her more than 685,000 followers.

“We see you. We really, really see you,” she wrote to the child, adding blue and yellow heart emojis.

The Walt Disney Co., No. 104 in the 2021 Digital Commerce 360 Top 1000, issued a statement last week.

“We are pausing the release of theatrical films in Russia,” the statement read. (Paramount Pictures, Sony Corp., AT&T Inc.’s WarnerMedia and Comcast Corp.’s Universal Pictures have also halted or postponed the release of movies in Russia, according to Bloomberg News.)

Others in the toy industry show support for Ukraine and disdain for Russia

The Horst Brandstätter Group, which makes PLAYMOBIL, has halted shipments to Russia.

Radio Flyer has changed the lighting scheme at its Chicago headquarters to the blue and yellow colors of Ukraine in a show of solidarity.

The Toy Foundation, a nonprofit funded by the U.S. toy industry, is raising money for Ukraine relief.

The Pokemon Company donated $200,000 for humanitarian relief.

Bobbleheads are also raising funds for Ukraine relief.

More than 1 million people have become refugees since Russia attacked Ukraine. Hundreds of thousands of them are children, according to the U.N.

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The United States tech giant also said it’s working closely with governments of the U.S., European Union and United Kingdom and stopping many aspects of its business in Russia in compliance with coordinated sanctions rules.

“We will take additional steps as this situation continues to evolve,” Microsoft President Brad Smith said in a blog post. Microsoft Corp. ranks No. 94 in Digital Commerce 360’s 2021 Top 1000 Online Retailers Report.

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Microsoft said its “single most impactful area of work almost certainly is the protection of Ukraine’s cybersecurity.”

The company will help officials in Ukraine defend against Russian attacks, such as a recent one against a major Ukrainian broadcaster. Earlier this week, Microsoft said it was removing the news apps of Russia’s state-controlled news agency, RT, from its app store.

The EU, U.S. and U.K. have compiled an extensive list of sanctions to isolate the country, financially, economically and technologically. Beyond concerns about the war, operating in Russia has become challenging for outside companies. Sanctions and a U.S. ban on transactions with the country’s central bank both play a factor. Beside Microsoft, several U.S. tech companies have pulled out of Russia in recent days.

Other tech companies pull out

Apple Inc. (No. 3 in the 2021 Top 1000 Online Retailers Report) has halted sales of the iPhone and other popular products in Russia and removed the RT News and Sputnik News applications from App Stores outside the country. Alphabet Inc.’s YouTube said it will stop running advertisements on channels from Russian state-backed media and certain other accounts. Intel Corp. is suspending all shipments to customers in Russia and Belarus, which is allied with Russia.

Wedbush Securities analyst Dan Ives said he expects even more tech companies to “pull the plug on Russia by this weekend given the horrific atrocities seen coming out of Ukraine.”

In a note to investors on Friday, Ives said he expects the pullback to have a minimal impact on the U.S. tech industry. He said even in a worst-case scenario, a wholesale retreat would amount to a 1% to 2% hit to revenue.

“This is a move the Street would gladly applaud given the heartbreaking Ukraine invasion by Russia that is playing out in front of the world’s eyes,” Ives wrote.

FedEx suspends all service to Russia, Belarus as war intensifies

FedEx Corp. has suspended all services in Russia and Belarus as fighting intensifies following the invasion of Ukraine.

It had only stopped inbound service to Russia earlier. Now, it has halted all package movements including domestic deliveries in both Russia and Belarus, according to an employee memo. The company had also suspended services to Ukraine.

“We are deeply disturbed by what’s happening, and our thoughts and solidarity are with the people affected by this ongoing violence,” the company said in the letter signed by CEO Fred Smith and Chief Operating Officer Raj Subramaniam.

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