NMG is the parent company of Neiman Marcus, Bergdorf Goodman, Last Call and Horchow.

“NMG is well positioned with exceptional technology, talent, and resources to further invest in and expand our digital and ecommerce capabilities,” a Neiman Marcus representative told Women’s Wear Daily. “Our focus remains on continuing to deliver a differentiated luxury experience across all facets of our integrated retail model, and to position our business for sustainable, profitable growth. We appreciate Farfetch, which continues to be a minority investor in NMG.”

Neiman Marcus ranks No. 72 in the Top 1000. The Digital Commerce 360 database ranks North America’s leading online retailers by their web sales. Farfetch is No. 30 in the Global Online Marketplaces Database, Digital Commerce 360’s ranking of the top 100 online marketplaces by gross merchandise value.

Neiman Marcus and Farfetch

The department store first announced a partnership with Farfetch in 2022. Farfetch, a luxury fashion online marketplace based in the U.K., invested $200 million in Neiman Marcus. That made Farfetch a minority investor in Neiman Marcus, which it remains today.

As part of the agreement, Bergdorf Goodman planned to replatform its website and mobile app using Farfetch Platform Solutions. Both Bergdorf Goodman and Neiman Marcus agreed to join Farfetch marketplace as partners and expand to new global markets, they said in a joint press release at the time.

“We continue to partner closely with thousands of brands and boutiques around the world to provide an elevated online luxury experience for millions of customers,” a Farfetch spokesperson said a statement regarding the end of the partnership.

Farfetch’s acquisition

NMG and Farfetch ended their relationship just days after Coupang completed its acquisition of Farfetch. Farfetch faced potential bankruptcy and agreed to be taken private by the South Korean ecommerce platform. The deal consisted of $500 million in bridge loans through a partnership with the investment firm Greenoaks Capital Partners. 

Coupang ranks No. 12 in the Global Online Marketplaces Database. It operates the largest online marketplace in South Korea.

“Farfetch is a landmark of the luxury landscape and has been a transformative force in demonstrating that online luxury is the future of luxury retail,” said Bom Kim, founder and CEO of Coupang. “Farfetch will rededicate itself to providing the most elevated experience for the world’s most exclusive brands, while pursuing steady and thoughtful growth as a private company. We also see tremendous opportunities to redefine the customer experience for luxury clients everywhere.”

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“We delivered a strong holiday, with continued progress on our Next Great Chapter: Accelerate plan and third quarter results that exceeded our expectations led by continued momentum in our direct-to-consumer channels,” Patrice Louvet, President and CEO said in a statement. “These results underscore the diversity of our strategic growth drivers around the world in a still-volatile operating environment as well as our culture of operating discipline and agility.”

Ralph Lauren ranks No. 78 in the Top 1000, Digital Commerce 360’s database of the largest North American e-retailers by online sales.

Ralph Lauren revenue by channel

Comparable sales on Ralph Lauren’s ecommerce websites grew 8% year over year, the retailer said. That was on top of 11% growth in the year-ago period.

In North America, online sales grew 4% while in-store sales grew 6%. Meanwhile, wholesale revenue declined 15%. North America total revenue remained flat year over year at $933 million.

In Europe, online sales led growth, up 12% year over year. Ralph Lauren brick-and-mortar sales grew 10%, and wholesale revenue grew 5%. Total European revenue grew 11% to $522 million. 

Revenue in Asia grew fastest of all, up 16% to $446 million. Online sales grew even faster, recording a 25% increase. Ralph Lauren Asia brick-and-mortar sales grew 13%.

Ralph Lauren Q3 highlights

The apparel retailer noted some of the high points behind the successful quarter. In Q3, Ralph Lauren added more customers than in any quarter since the onset of the pandemic. It gained 1.7 million DTC customers.

Much of the growth was attributable to a successful holiday season, the retailer said, pointing to the “Season for Dreaming” holiday campaign. Traffic to outlet stores especially grew over the holidays, it said. Average unit retail (AUR) grew 9% in the third quarter across DTC sales, on top of 10% growth last year. 

During the same period, Ralph Lauren recorded strong online sales on Singles Day, the online shopping holiday in China on Nov. 11.

Finally, Ralph Lauren credited dressing Taylor Swift for her Time 2023 Person of the Year issue for growing brand awareness.

For the fiscal third quarter ended Dec. 30, 2023, Ralph Lauren reported:

• Revenue grew 6% to $1.9 billion.
• Global DTC same-store sales grew 9%.
• Ralph Lauren online sales in North America grew 4%.

For nine months ended Dec. 30, 2023, Ralph Lauren reported:

• Ralph Lauren revenue grew 3% to $5.1 billion.
• Gross profit grew 5% to $3.4 billion.

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

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Digital Commerce 360 followed the most important stories discussed on the Javits Center floor in New York City. These are the top ecommerce stories from NRF day three.

Tractor Supply shares AI applications

Tractor Supply Company CEO Hal Lawton started off the day with a keynote session about the retailer’s rapid growth. The chain nearly doubled revenue since the pandemic, and it just reached $1 billion in ecommerce sales, he said.

Lawton also addressed one of the biggest topics of the conference: AI and its applications for retailers. He likened the discussion around AI today to conversations retailers had about the internet in the early 2000s. This time around, though, retailers aren’t asking “When is this going away?” — but rather, “How can we use this?”

Tractor Supply Co. is already using AI in several ways, both customer-facing and behind the scenes. The retailer is using AI to write marketing copy as well as machine learning in supply chain and inventory replenishment.

Customer service is one of the largest applications for generative AI at Tractor Supply so far, Lawton said. It used Microsoft’s Azure OpenAI toolkit in its internal GURA customer service platform. GURA uses AI to scrape Tractor Supply’s web and training materials. Then, workers can ask questions about customer inquiries, such as “What dog food is good for sensitive skin?” It then answers with specific SKUs available in that store, and can answer follow-up questions to narrow down the results.

Tractor Supply also uses computer vision to allocate labor in stores more effectively. Security cameras located over the checkout use machine learning to determine if another cashier is needed based on how many customers are in line and how many items they have. 

Tractor Supply is No. 99 in the 2023 Digital Commerce 360 Top 1000, a ranking of North America’s leading retailers by online sales.

Saks addresses organized retail crime

Saks president Marc Metrick ended his session by addressing crime, a topic that other speakers addressed less directly throughout the show. Metrick called organized retail crime a “huge issue” facing his business and luxury ecommerce more broadly. These crimes directly impact consumer experience in a negative way, he says. 

Retailers like Saks have to “put plexiglass over the experience online,” he said, akin to measures taken by retailers like Walgreens in stores, where products are locked behind glass to combat theft. In practice, that means putting additional roadblocks in front of consumers for customer service help, he explained. Walgreens is No. 19 in the Top 1000.

Customer service reports of “merchandise not received” more than doubled in just a few years, Metrick said. In the past, Saks would give that customer a refund or credit for the purchase that never arrived. Now, the retailer has invested in wider fraud protections to determine if that customer has made other similar complaints or has a history of returns.

In December, the NRF retracted a previous statement on the financial impact of organized retail crime. The organization previously attributed nearly half of total retail shrink to the issue in an April 2023 report.

“We stand behind the widely understood fact that organized retail crime is a serious problem impacting retailers of all sizes and communities across our nation,” a spokesperson from the NRF told Digital Commerce 360 in December. 

Saksfifthavenue.com is owned by Hudson’s Bay Co., which ranks No. 28 in the Top 1000. 

Retailers try to emulate strategies of Shein and Temu

U.S. retailers can learn important marketing lessons from Shein and Temu, Jason Goldberg, chief commerce strategy officer at the Publicis Group, told attendees. Both retailers have strong paid and organic social media driving their growth, he said. A diverse affiliate program is behind many of these posts on platforms like TikTok, and drives sales, says Coresight Research CEO Deborah Weinswig. 

Shein and Temu are also adept at gamifying shopping, Weinswig said. She pointed to features like virtual gift boxes, spinning wheels for discounts, and awarding points to customers for making purchases and leaving reviews. 

Goldberg praised the way Shein and Temu created trust with U.S. consumers as unfamiliar brands. Both offer free shipping and returns, and a shipping on-time guarantee. Making these promises to consumers helps make the case for purchasing from them versus a legacy brand, he says. 

Goldberg warned U.S. retailers not to discount Shein and Temu as real competitors, especially as they expand into new categories. 

Shein is No. 2 in Digital Commerce 360’s ranking of ecommerce retailers in Asia. Temu, which Pinduoduo owns, launched in 2022 and isn’t yet reflected in rankings. Pinduoduo operates an app-only marketplace for Chinese consumers. Because it doesn’t operate an ecommerce website, it is not included in Digital Commerce 360’s Asia Database.

Catch up on Digital Commerce 360’s other daily recaps from the 2024 NRF Big Show:

• Here’s what you missed from NRF Day 1.
• Here’s what you missed from NRF Day 2.

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The data, from fraud management and chargeback protection services vendor ClearSale, found a decrease in attempted fraud between Black Friday and Cyber Monday. Notably, whereas ClearSale data showed attempts at fraud (or fraud avoided) decreased 37% year over year, order volume and order value also fell among the same group of online retailers.

Bruno Farinelli, senior director of risk at ClearSale, said there are a couple feasible possibilities for the decreases in order volume this year. The first is that many online retailers started their Cyber 5 sales and promotions weeks—and in some cases months—before the actual Black Friday weekend.

“This could have spread out the order volume that would normally happen in one weekend to a broader number of days,” Farinelli said. “The other very reasonable assumption that we could make is that the economic slowdown and the interest rate hikes in the U.S. and across the globe have seen shoppers more cautious in their spending and more frugal with their wallets during seasonal shopping.”

ClearSale’s network includes more than 35 online retailers in the Top 1000, including eight that rank among the largest 100 retailers. The Top 1000 is Digital Commerce 360’s database ranking the largest ecommerce retailers in North America based on their web sales. ClearSale ranks third in the Payment Security and Fraud Prevention category in Digital Commerce 360’s new report, 2024 Leading Vendors to the Top 1000 Retailers.

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.

View Details

Fraud decreases from Black Friday to Cyber Monday

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.

The percentage of fraud attempts in relation to total orders also decreased slightly, according to information shared by ClearSale. It decreased to 1.5% of orders being fraud attempts during the Cyber 5 in 2023, from 1.75% last year.

“While fraud is extremely dynamic, economic pressure is one of the drivers behind it, which is why we are seeing a general increase over the last couple of years of attempted fraud in ecommerce,” Farinelli said.

As a rule of thumb, he said, an increase in order volume and value means an increase in fraud, and vice versa. This year’s data followed this formula, he said, but the overall rates of fraud are increasing.

Watches and glasses led as the categories with the highest percentage of fraud attempts during the 2023 Cyber 5, according to ClearSale. 12.83% of orders in the category were subjected to fraud attempts. The next-largest category was computers, at 4.84%. That’s about a third of the rate of the watches/glasses category.

The top categories of fraud attempts in 2023:

1. Watches/glasses: 12.83%
2. Computers: 4.84%
3. Phones/Electronics: 4.47%
4. Digital: 4.44%
5. Jewelry: 2.71%

Three of those categories were also in the top five last year, according to ClearSale data. However, none of the categories ClearSale tracked in 2022 reached 10% of its orders being fraudulent.

The top categories of fraud attempts in 2022:

1. Accessories: 7%
2. Computers: 5.49%
3. Jewelry: 4.56%
4. Phones/Electronics: 4.52%
5. Luxury apparel (over $200 ticket value): 3.14%

The computers, jewelry, and phones/electronics categories all remained in the top five this year. However, the rates of fraud for each decreased year over year, with the jewelry category’s fraud decreasing the most.

Data consistency

The decrease in fraud during the Cyber 5 is consistent with data from Signifyd, another cybersecurity vendor. Signifyd’s network includes 115 retailers in the Top 1000. It found that fraud attempts during the Cyber 5 decreased 20% year over year.

J. Bennett, chief customer officer at Signifyd, said 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.

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The tool allows J’evar’s jewelry designers to input information about the product’s materials and specifications, and the generative AI will produce an image of that product. The tool saves the brand weeks of manual design time on products, says Amish Shah, founder and CEO of the direct-to-consumer brand of jewelry featuring lab-grown diamonds.

J’evar began using its jewelry product AI generator last year in 2022. The retailer feeds metrics and images into a knowledge bank — or a database of text, images and metrics for materials that include the weight of gold and silver, among other key details — for the generator to refer to before it produces an image. Shah jokingly refers to it as “JevarGPT 1.0” and “AI for Jewelry 1.0,” the former a reference to OpenAI consortium’s ChatGPT.

For example, Shah says if he wanted to make a bangle, he could input a text prompt to the generative AI, specifying how much the weight of gold should be for that piece, how thin or wide it should be and what design style he would like. He can even ask it to produce 50 iterations from that single prompt. In return, the generative AI will output complete designs, some of which might be ready to turn into tangible products. Other product designs the AI outputs require J’evar designers to modify the design until it can be producible.

Shah says one key reason J’evar can’t produce all the designs is because of the inability to cut diamonds into the shape the AI generates. But even this ability is coming soon with new machinery, he says.

Exploring generative AI for design

“You’re looking at optimization, efficiency, speed — which is of course going to lead to cost reduction in the longer term,” Shah says about using generative AI. “But importantly, from an output perspective, we’re looking at precision and a higher level of creativity.”

In the past few years, developers have trained artificial intelligence to do more than analyze data and tell its users what to make of the data. They’ve trained AI to generate writing, images, videos and sounds. This is called generative AI, and online retailers have already begun to design new products and produce new variations of existing products — and do so quickly. With generative AI, retailers can create and test multiple product ideas in just minutes, much faster than the weeks or months it might take to design now. Online retailers, including J’evar and Auricle Technology, are learning how to use generative AI to assist their product designers, making the process more efficient. But because generative AI is still new, it has limitations on what it can do.

J’evar uses its own generative AI technology to help its human designers speed up the creative process.

Gen AI’s value outshines its current limitations

While generative AI is excellent for learning and processing massive amounts of data, it is not yet at a point that it can understand movement through space, says Brendan Witcher, vice president and principal analyst at research firm Forrester. It doesn’t think about engineering and structural elements or physical viability yet, he says. Although generative AI is not at that point yet, he says, that doesn’t mean it can’t be eventually.

“You want to design a shoe. Great,” Witcher says. “Well, a shoe’s a shoe until you put it on and have to run in it, then it falls apart on you because you didn’t think about the physics of how movement happens.

“The big question is when do we bridge the gap between the work that needs to be put into generative AI to understand the movement through physical space that objects need to go through often, and the commercial viability of doing that.”

Informed assessments

However, even with its current limitations, Witcher says generative AI’s value comes from the assessments it already has learned to make. He says people do their jobs based on the knowledge they receive in their training, and “AI kind of works like that too.” But generative AI “takes it to the next step” and looks at more data than humans can process, and then make assessments about what the best subsequent steps are. It can also come up with ideas humans couldn’t or wouldn’t think of because the human mind doesn’t process information the way artificial intelligence tools can, he says.

“We can’t absorb that much data and extract from it an idea. It’s just impossible for us,” Witcher says. “It shouldn’t be lost that just developing an image of something that you wouldn’t be able to think of because you weren’t trained to think that way has huge possibilities.”

Witcher says generative AI’s value extends beyond production speed to unique creations.

“A lot of people talk about generating imagery with AI, but what to me is most important is the ability to do it over and over and over again until you get something you like,” Witcher says.

Will generative AI replace human designers?

Generative AI is not here to replace humans in the design phase, Shah says. Especially not in the jewelry industry.

“Human intelligence supersedes artificial intelligence, at least I can say that for jewelry,” Shah says.

Generative AI is more like an assistant to human designer, Shah says. It’s not the technology that’s telling designers when a piece has been finalized. It’s a human making that decision, Shah says. Just like Adobe and Corel are graphics software tools for designers, generative AI is a design tool, not a human replacement, he says.

“Once we get the initial output, it is then modified to be producible,” Shah says.

Forrester’s Witcher agrees that AI should be used as a tool and not a replacement for creative individuals.

“If all the people learn how to do things on generative AI, then no one learns how to do it beyond generative AI,” Witcher says. “Over time, you start weeding out the expertise from the low-level individuals and nobody becomes a high-level individual.”

Witcher adds that the majority of AI use isn’t leaving artificial intelligence “to its own devices.”

“It’s more assisted intelligence — the AI standing for assisted intelligence — where we’re using it to be more productive in our own jobs that we currently do today,” Witcher says.

J’evar uses generative AI to speed up the design process

Traditionally, Shah says, jewelry design is a long process that can take a few weeks or even more than a month. In the case of commissioned designs, J’evar designers would first have to understand what kind of product a customer wants before going into iterations. In the example of designing a bangle, the designers would have to first determine if a customer wanted a wide cuff or something they could stack, something lightweight or heavy, thick or thin, if they wanted diamonds or gemstones, and so on.

Then, the designers would do initial mockups to ensure they understood the customer’s request correctly. This process would typically be one to three weeks of showing designs to the customer and sketching accordingly, Shah says.

In one case, Shah says he and his team had gone through 55 variations before a customer said, “I love it.” After that, his team would then go to computer-aided design (CAD). From there, it would go to rendering.

“By using AI, we are able to take that process down to pretty much hours and in some cases, literally within minutes,” Shah says.

Moreover, when working manually, the designer has to move every single diamond into place, making sure they are in the correct position. AI speeds up that process, Shah says. In milliseconds, the generative AI processor can move diamonds and gemstones, raise or lower gold weight, or change the width or thickness.

“It’s almost like putting a thousand designers and the type of work they would have done into the knowledge bank and then letting the system do a combination from those thousand designs to give you back results,” he says.

J’evar fed years’ worth of jewelry data into its generative AI platform. The platform produces images that human designers then adjust in the design phase.

Developing a custom generative AI processor

Shah says his family’s 90-year history in the jewelry business gives him an advantage over others in developing custom generative AI technology for J’evar.

“It sounds complex, but you have to keep in mind: We’re in the business,” Shah says. “We’re in the jewelry business, so the core bank or the core information that’s required is sitting with us. It’s not something I have to go outside and source.”

J’evar feeds text and imagery into its generative AI to teach it what to output. When inputting prompts, J’evar designers primarily use text to generate an image.

“That knowledge bank is sitting there,” Shah says. “Now, it’s all about organizing it and feeding it into the system in a format that can then be analyzed and the GPUs can run and start combining things and getting them back to you.”

Iterations at scale

Sometimes, what generative AI produces needs less human modification than others. For example, Auricle Technology uses generative AI tools to swap out logos and colors on its different products.

Auricle Technology founder William Cooksey says he created his electronics accessory brand out of necessity. He uses Apple AirPods for long hours most days, and the hard plastic begins to hurt his ears after a while. That led him to create AirPod skins made from silicone that are softer and anchor better into his ears.

When his manufacturer sent back prototypes, it printed Auricle’s logo on them. That led Cooksey to realize the importance of branding and how he can “pivot and get into the licensing game.”

The direct-to-consumer brand launched in 2021 now creates customized merchandise including AirPod skins, AirPod charging case skins, phone cases, wireless chargers and mouse pads. And through licensing agreements, it prints these products with logos for more than 90 teams in Major League Baseball, the National Hockey League and Major League Soccer, as well as about 130 college teams.

Rather than have a designer manually change the colors and logos for each team, the brand has integrated generative AI into its design process, Cooksey says.

Unlike J’evar, however, Auricle does not have the budget nor the in-house capacity to develop an all-new generative AI engine. Its business model is also different, focusing on customization rather than new product development.

New technology, but make it affordable

Cooksey instead works with Goals Media Group to use generative AI into its product iterations. Goals uses technology Microsoft for Startups provides, says Goals founder and CEO Aubrey Flynn. This means it receives access to Microsoft’s resources, including technology and tech experts, among other benefits. Microsoft has announced it would invest $10 billion into OpenAI — the company behind text-based generative AI brand ChatGPT and image-based DALL-E.

Cooksey says his lead designer and Flynn determined generative AI was the way to go from designing products with one team logo to hundreds “in a short period of time without breaking the bank.”

Auricle also uses Goals and its generative AI offerings to develop marketing materials like images for social media that highlight products from different teams at different stadiums. The generative AI creates an image complete with Auricle branding, the team’s branding, and any copy it needs.

“Being a small business, not having a lot of capital, it’s really exciting me that we can still come up with quality images without breaking our budget,” Cooksey says.

“When you deal with those leagues, they want you to be able to launch all the teams at the same time,” Cooksey says. “I just wouldn’t have been able to afford to do that.”

Generative AI’s impact on metrics

Goals has about 650 clients and nearly half are online retailers, Flynn says.

Flynn says that social media marketing creatives that generative AI produced can increase consumer interactions with the ad by more than 35% compared with that brand’s normal creative, according to data from its clients.

This includes creatives entirely generated through AI, visuals that already existed that AI has augmented, and copy that generative AI has helped develop for those types of visuals.

“I’ve seen AI-powered creative outperform to the extent where cost per click on a certain product may have been 30%-40% less expensive based on some of the guidance from AI on the copy and the imagery,” he says.

He adds that brands like Auricle — which lack access to capital, resources, infrastructure and more that large brands have — need to adopt technology like generative AI early on because it’s less expensive than some alternatives like hiring designers or manufacturers from the start.

Early results are insightful, but ‘is this just another buzzword?’

Shah, Cooksey, Witcher and Flynn all expressed the same idea: It may be early, but the application of generative AI in product development is promising.

While some may say generative AI is another buzzword, Witcher says what separates this technology from other tech fads is that companies are already allowing individuals in their organizations to play with, understand and experiment with generative AI.

“They’re almost crowd-sourcing proof of concept,” Witcher says. “It’s a unique characteristic to generative AI that it’s so easy to do and work with that almost anybody can do it.”

Although results are limited in some ways and sometimes imperfect, online retailers are using generative AI imaging to design new products essentially from scratch, customize existing products and develop marketing content. They can develop multiple iterations of these images at once or continue iterating on the same image multiple times until they’re satisfied with how the image looks. They can then take the design that generative AI produces and tweak it manually, saving them the time of doing each iteration manually — and saving them the creative energy it takes just to design a new product iteration.

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Shah launched J’evar, a direct-to-consumer brand, in February. Before that, he learned from years of experience through ALTR, which he founded in 2016 and sells through retailers like Borsheims and Michaels Jewelers. Shah and his team developed an in-house generative AI tool that mocks up designs for new pieces of jewelry. To teach the tool, his team used data from ALTR and 90 years’ worth of jewelry from his grandfather’s business.

J’evar uses diamonds ALTR grows. ALTR grows those diamonds with energy from a solar farm with a capacity of 10 megawatts. It generates 35 to 40 kilowatts of energy each day.

The megawatt is the standard term of measurement for bulk electricity, according to EcoWatch, an environmental news outlet.

“A megawatt measures power on a large scale,” according to EcoWatch. “So one megawatt can power a lot more than one household.”

“We grow our own diamonds, we cut and polish them, we design jewelry, we manufacture the jewelry, and we bring it to the consumer. We use recycled gold for making our jewelry — recycled metals, so gold and silver,” Shah said.

With generative AI-driven design, J’evar achieves a level of precision that Shah says dramatically reduces material waste and boosts the retailer’s sustainability goals. Shah said he expects a 10% to 20% reduction in energy consumption and wasted materials in the jewelry industry because of generative AI.

“Sustainability is actually core to us,” Shah said. “We’ve made sustainability as a part of our DNA rather than a marketing buzzword.”

It all starts on a (solar) farm

Shah’s brands run on electricity from a solar farm in Surat, a city in Gujarat, India. It currently generates 10 megawatts of solar energy, and Shah says he plans to scale that up to 17 megawatts. To put that into perspective, the Solar Energy Industries Association calculates that on average, 1 megawatt of solar power generates enough electricity to power 173 U.S. homes.

The energy is then transmitted through the power grid into J’evar diamond-growing facilities with help from the local government.

“In order to grow diamonds, the single largest raw material is energy,” Shah said. “They’re very high energy consumption. You are basically using solar energy to power the systems.”

And in terms of carbon neutrality for the diamond growth, Shah said, the facility is audited for climate neutrality based on the United Nations greenhouse gas protocol. The protocol holds corporations, organizations, cities and countries to different standards.

Shah said J’evar offices and facilities are both audited for all its energy consumption, from shipping packages to employees traveling and various other factors.

‘JevarGPT’ and generative AI for jewelry design

J’evar’s generative AI tool allows its human jewelry designers to input information about a product’s materials and specifications, and the generative AI will produce an image of that product. The generative AI tool saves J’evar weeks of manual design time on products, Shah said. 

J’evar began using its jewelry product AI generator last year in 2022. The retailer feed metrics and images into a knowledge bank — or a database of text, images and metrics for materials that include the weight of gold and silver, among other key details — for the generator to refer to before it produces an image. Shah jokingly refers to it as “JevarGPT 1.0” and “AI for Jewelry 1.0.” The former is a reference to OpenAI consortium’s ChatGPT.  

For example, Shah said if he wanted to make a bangle, he could input a text prompt to the generative AI, specifying how much the weight of gold should be for that piece, how thin or wide it should be and what design style he would like. He can even ask it to produce 50 iterations from that single prompt. In return, the generative AI will output complete designs, some of which might be ready to turn into tangible products. Other product designs the AI outputs require J’evar designers to modify the design until it can be producible.

J’evar fed years’ worth of jewelry data into its generative AI platform. The platform produces images that human designers then adjust in the design phase.

Technological advances

Shah said J’evar can’t produce all its AI’s designs yet. A key reason is because of the inability to cut diamonds into the shape the AI generates. But even this ability is coming soon with new machinery, he said.

“You’re looking at optimization, efficiency, speed — which is of course going to lead to cost reduction in the longer term — but importantly, from an output perspective, we’re looking at precision and a higher level of creativity,” Shah said about using generative AI.

J’evar marries generative AI and sustainability

In the case of J’evar, generative AI can determine exact material amounts before creating an item, helping with sustainability by limiting waste.

“If we are able to predict the exact amount of gold we’re going to need, what the design is going to be, how much cubic millimeters of gold, the wastage will go down dramatically because you know exactly what you’re looking to produce. More importantly, the level of precision from a point of engineering will go much higher,” Shah said. “The amount of gold that is used will be very precise. How and what is printed in terms of the level of resolution will go higher, ultimately lowering the amount of wastage.

“Gold wastage will go low, but yes, that means the speed will go up, which means the energy requirements will go down. The material wastage from wax to silicon to machine usage, everything will go down. From a sustainability perspective, AI is going to have a direct impact on sustainability or improving the reduction of wastage.”

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Allbirds Inc. (No. 342)

Allbirds reported net revenue declined 9.8% year over year to $70.5 million for the second quarter ended June 30. The decrease can be attributed to a decline in average sales price due to promotional activity, the online shoe retailer said in a statement. Allbirds also reduced inventory 24% as part of a plan to cut costs and get rid of out-of-season styles, it said.

Arhaus Inc. (No. 370)

Arhaus reported net revenue grew 2.2% to $313 million in the second quarter ended June 30. Retail sales from Arhaus showrooms were flat, while online sales were up “double digits,” the home retailer said. However, revenue was lower than expected due to delivery delays from updates to the retailer’s IT and distribution systems, said CEO John Reed.

Beachbody LLC (No. 233)

Beachbody reported total revenue was down 24.7% to $134.9 million in the second quarter ended June 30. Digital revenue declined from $78 million in the year-ago period to $65.2 million. Subscriptions were down 12% to 1.53 million subscriptions, the retailer said. 

Blue Apron Inc. (No. 190)

Blue Apron reported net revenue declined 14.5% to $106.2 million in the second quarter ended June 30. However, average order value grew 12.7% year over year to $75.66, and average revenue per customer grew 21.3% to $397. That’s largely due to a price increase implemented during the quarter, the meal kit company said in a statement.

Blue Apron also lowered its costs when adding new customers. Cost per acquisition declined 30%, and conversion rates improved by 25%, per CEO Linda Findley.

Brilliant Earth LLC (No. 196)

Brilliant Earth net sales grew 1.3% to $110.2 million in the second quarter ended June 30. The jewelry retailer said it reached a record number of orders in the quarter, up 21.2%. Sales grew more slowly due to a 16.4% decline in average order value. 

Brilliant Earth started as an online retailer, and in Q2 it focused on further growing omnichannel capability by opening four showrooms for a total of 32.

Cricut Inc. (No. 473)

Cricut reported revenue declined 3% to $177.8 million in the second quarter ended June 30. Subscription revenue, meanwhile, grew 13% to $76.1 million. Cricut has 2.7 million subscribers, up 15%, the company said. The total user base, including subscribers, amounts to 8.7 million, up 17% over last year.

On July 18, following the end of the quarter, Cricut launched its newest machine exclusively via online channels. 

Fossil Group Inc. (No. 236)

Fossil recorded worldwide net sales declined 13% to $322 million for the second quarter ended July 1. Comparable retail sales grew 3%, offset by a 4% decline in direct-to-consumer sales and 19% decline in wholesale. Traditional watch sales grew, while smartwatch sales declined, the retailer said.

HanesBrands Inc. (No. 276)

Hanes reported net sales declined 4.9% to $1.44 billion in the second quarter ended July 1. Gross profit declined 16% to $483 million, the retailer said. Innerwear sales grew 3%, ahead of expectations, while activewear sales declined 19% due to “soft consumer demand and excess channel inventory,” the retailer said in a statement. Direct-to-consumer sales also declined, though Hanes did not specify by how much. 

SmileDirectClub Inc. (No. 199)

SmileDirectClub reported a 19.1% decline in revenue to $102 million for the second quarter ended June 30. CEO David Katzman cited the “continuing challenging economic backdrop impacting our core customer” in a call with investors. SmileDirectClub raised prices in July, and it says it expects that to help with revenue in the next quarter.

The retailer also began rolling out its mobile scanning app using AI to create dental treatment plans in the U.S.

ThredUp Inc. (No. 580)

ThredUp reported revenue grew 8% to $82.7 million for the second quarter ended June 30. The clothing resale retailer said active buyers declined 0.8%, but total orders grew 5% to 1.8 million in Q2. ThredUp’s target is a budget customer who is “feeling the pinch across their discretionary purchasing power” from broader economic trends, CEO James Reinhart told investors. 

In Q2, ThredUp also added new resale partnerships with 11 retailers including American Eagle and SoulCycle. 

Warby Parker (No. 339)

Warby Parker reported net revenue grew 11% to $166.1 million in the second quarter ended June 30. The eyewear retailer said average revenue per customer grew 9.2% to $277. Active customers also grew slightly, up 1.2% to 2.28 million.

Warby Parker continued to invest in its retail strategy, opening 13 new stores in the quarter and on track to opening 40 for the year. Eye exams offered in these locations are “the gateway to prescription eyewear and contact purchases,” the retailer said. Exams made up 3.4% of revenue in the quarter, up from 2.4% in the year-ago period.

Yeti Holdings Inc. (No. 134)

Yeti reported sales declined 4% in the second quarter ended July 1, to $402.6 million. That’s partially due to a product recall in the quarter costing $24.5 million. DTC sales grew 1%, mostly in drinkware, while wholesale sales declined 10%. DTC accounted for $226.4 million, more than half of total sales.

So what does this all mean?

• Wholesale sales aren’t faring well for ecommerce retailers, with Fossil and Yeti reporting significant revenue declines. Meanwhile, DTC sales are relatively healthy in comparison.
• Consumers remain hampered by budget constraints, and multiple executives called out economic challenges. That’s to the advantage of retailers like ThredUp, which continued to grow sales by appealing to budget-minded customers.

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“It’s coming here to the U.S. But first, we have to start changing shoppers’ mindsets,” he says.

Jak Benardete, CEO, Orchard Mile

To differentiate itself from other retailers, Benardete says it made sense for the online marketplace to build its own livestreaming capabilities and host it on its website.

Orchard Mile sells over 55,000 SKUs from more than 250 brands, Benardete says.

“We thought we already had the most difficult part of the equation — the product to sell,” he says. “The next step was to build a livestream player on top of that.”

That involved building a social media influencer community that could pick out products they love that Orchard Mile sells, he says.

“They sell what they love to shoppers while being authentic to themselves,” Benardete says.

Livestreaming catches on in the US

Currently, China leads the way with livestreaming shopping events, according to consultant group McKinsey & Company. 57% of live-commerce users in the country have used the shopping format for more than three years, according McKinsey’s Global Live Commerce Study from August 2022 to September 2022. Only 5%-7% of Europe, Latin America and U.S. consumers have used the shopping format for more than three years.

But popularity is shifting as 78% of live-commerce users surveyed in the U.S. used the shopping format for the first time within the last year, according to the survey.

Orchard Mile’s use of influencers taps into consumer desire for an authentic experience, Benardete says. Livestream viewers want transparency from their hosts, according to a survey by Coresight Research conducted on April 11, 2023, of 500 respondents, December 20, 2022 (954 respondents) and September 20, 2022 (1,187 respondents). Over half (53%) of all livestream viewers surveyed in Q2 2023 expect to see “expert” reviews.

Influencers guide shoppers during livestream shopping events

Orchard Mile built its livestream player with livestreaming product vendor Agora in Spring 2022. Agora charges Orchard Mile per minute, which Benardete says is feasible because the cost per minute decreases the more minutes you buy to stream. Agora gave Orchard Mile 10,000 minutes a month to start, he says.

Prices change depending on the quality of the livestreaming as well. It costs more for high-definition 4K resolution, for example.

Since launching its livestreaming capabilities, Orchard Mile has accumulated over 60 videos.

“Live streaming is a different type of hustle [for influencers],” Benardete says. “It’s not they take pictures, or make a video and get paid a flat fee of $1,000. Instead, it’s launch a [livestream video] and then there can be residual sales [from video replays] for months to come.”

Benardete says some influencers had to “wrap their heads around” the different pay scale, but once they did, “it’s beginning to scale really fast,” he says.

“We’re adding new brands every day, and we ask our influencers which brands they love and we reach out to those brands,” Benardete says. “I’m building partnerships. We want to become a golden place for influencers to find products they love to sell.”

Testing what sells

In general, less expensive items tend to sell during the livestreaming events, with the average order value during a live shopping event at $200, Benardete says. Orchard Mile’s typical AOV is about $350-$400, he says.

Benardete says live shopping event shoppers tend to be younger than the overall customer base. As such, the marketplace gears merchandise to appeal to a younger crowd. Live shopping event shopping carts consist of lower-cost items, like $20 hair ties.

“We knew it would be easier to sell impulse products like this,” he says. “It’s easier to see someone wearing it, it’s not too expensive, and they can check out with their Apple Pay on their phone. It’s very easy.”

And consumers want a good deal, according to Coresight’s survey. 45% of shoppers surveyed in April watched livestreaming shopping events, compared with 38% in Q1 2023 and 48% in Q4 2022.

The conversion rate for livestreaming events is slightly higher than the website, he adds, without revealing more. But conversions range between 1%-3% depending on the type of item. Lower-priced items have a higher conversion rate, he says. Digital Commerce 360 estimates OrchardMile.com’s conversion rate at 1.5%, according to Top500Guide.com.

In addition, longer videos drive more sales, Benardete says. Besides Jacqueline Miranne, Orchard Mile plans to have four other influencers host longer-form videos. Eventually, Benardete says he wants to feature a daily influencer live selling video.

The process is still new, but brands Orchard Mile sells on its marketplace have contacted Benardete to be featured in future live shopping videos, he says.

“Brands say they have new products and ask if we can have one of our influencers consider featuring it,” he says.

Retailers can strategize how to sell during livestreaming events

Livestreams are typically three to five minutes long. During the video, the influencer shows one product they love, he says.

“It’s almost like a product review, but you can buy it right inside the video,” Benardete says. He said sales are starting to come in for those videos but did not specify how many.

The approach to live shopping depends on what’s for sale. Promoting products during a live shopping event is very different if you’re selling a luxury handbag versus cleaning products, says Joe Kwong, head of business development, Agora.

When streaming from their own website, retailers can control the experience by adjusting discounts or cross selling other products during the event, Kwong says. Retailers can see in real time which products are selling and can adjust what is featured during the event to ensure that if a product runs out, they can switch to alternate options.

“In luxury categories, you might not want to publish transactions happening in real time,” Kwong says. “Compare that to a blowout sale of a hair dryers — [retailers] want to show that you have 1,000 left. If the product is [perceived] as acceptable and people are actually buying it, it triggers more buys.”

The type of production is also evolving. User-generated content, versus very polished, highly produced videos, are appealing to consumers that want authenticity, Kwong says.

Orchard Mile is No. 100 in the Digital Commerce 360 ranking of Global Online Marketplaces.

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The rest of the collection was supposed to launch in March 2020, said Chrissie Jemison, vice president of digital. As with much of the world, the pandemic changed that.

With a full product assortment available, Furtuna Skin had to cover its ecommerce bases and make sure it had a strong enough conversion rate and average order value. It launched a skin care quiz to help with that.

Guiding the shopper

Jemison said Furtuna Skin has a 9% conversion rate among users who complete the skin care quiz and make a purchase. It helps grow AOV, too, she said.

“After taking a number of these myself, it got to the point I would see results and think, ‘well, you’re just trying to sell me on everything,’” Jemison said. “Our goal is to really get the right products in our customers’ hands.”

So the brand uses its quiz to offer a “hyper-curated” assortment that’s typically two or three products, Jemison said.

“We want to guide users to the items that will help them with their skin concerns,” Jemison said.

Moreover, rather than trying to sell a full-size product, Jemison said Furtuna Skin offers shoppers a “custom sample set.” Shoppers can pick any four items, which the product recommendations from the quiz help them select, and buy sample-sized versions of them to test.

“We’re giving them two to three recommendations and saying test them out; see for yourself. Buy a discovery set,” Jemison said. “It is a lower-priced item because it’s a sample set, but that’s where we’re seeing greater success rather than just in lifting AOV.”

Learning the basics about loyalty and ecommerce subscriptions

By February 2021, it was time to focus on retention, Jemison said. That’s when Furtuna Skin simultaneously launched its loyalty program and auto-replenishment. Furtuna Skin’s full collection had launched in June 2020, but items had only been available for one-time purchases.

“Skin care is one of those categories that lends itself so beautifully to a subscription program,” Jemison said. “So we knew there was opportunity there.”

Furtuna Skin uses retention marketing platform Yotpo for its loyalty program. But the platform Furtuna Skin used to power its subscriptions wasn’t the best fit, Jemison said.

The subscription provider at the time, Recharge, required Furtuna Skin to duplicate its product catalog to identify which products were selling for one-time purchase and which sold for subscriptions. This was especially a problem for Furtuna Skin, Jemison said, because all its products are produced from ingredients in the retailer’s private estate in Sicily, Italy. The 800-acre estate — with a farm and wild terrain where its employees forage for ingredients it uses in its products — is also where sister brand Bona Fortuna’s products come from.

“That means we do small batches of products,” Jemison said.

She added that from an operations perspective, that means producing a new SKU for every new batch. Swapping out SKUs constantly, and having to create duplicates for each one in the online product catalog, was too much for Jemison’s “very lean” team, she said.

Moreover, shoppers would check out with a subscription product on Furtuna Skin’s website and get “kicked over” into a different checkout experience. Jemison referred to this as “hijacking” the cart in the checkout page.

This was a problem because, for example, when consumers were going through the checkout process while Furtuna Skin offered a promotion of a special gift with purchase, Jemison would have to set up the promotion on two separate platforms for the shopper to redeem it: Shopify (which hosts the brand’s ecommerce website) and Recharge.

Subscription switch

Furtuna Skin replatformed from Recharge to Ordergroove in summer 2022. Since then, its subscription orders more than doubled, to more than 7% of sales now from 3% before making the switch. Jemison said she projects subscriptions to account for 10% of total sales by the end of the year. She said the long-term goal is to get that up to 15% to 20% of total sales.

Furtuna Skin shares examples of how its checkout page looks before and after replatforming to a different subscription vendor.

Moreover, since making the switch, Furtuna Skin boosted its subscriber count 103%, and 50% fewer subscribers abandon their subscriptions. Furtuna Skin retains more than 30% of its customers too, and she said that number is still growing.

“A significant reason for our success with Ordergroove is that they were more flexible with their UX and UI options for us to present on our product detail page to make it very, very clear that you can make a one-time purchase or do auto-replen, and here’s your offer for doing auto-replenishment,” Jemison said.

She said Ordergroove’s platform integrates with Yotpo without issue. It doesn’t “hijack” checkout, and Jemison doesn’t have to duplicate her product catalog.

Ordergroove also allows Furtuna Skin to offer different incentives for one-time and subscription purchases, she said. Furtuna Skin currently offers 10% off the first order of a subscription product. It offers 15% off for every recurring order thereafter. Those recurring orders also build up loyalty points, which consumers can later use toward subscriptions as well.

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