Parentheses indicate the merchant’s ranking in the Top 1000.

Amazon.com Inc. (No. 1)

Amazon beat expectations with earnings for its fiscal fourth quarter ended Dec. 31, 2023. Its net sales in the quarter grew 14% year over year to $170.0 billion.

Full-year sales grew 12% to $574.8 billion in 2023, up from $514.0 billion in 2022. Read more about Amazon’s earnings here.

Costco Wholesale Corp. (No. 6)

Costco said net sales grew 6.1% to $56.72 billion in its first fiscal quarter of 2024 ended Nov. 26, 2023. Ecommerce comparable sales grew 6.3% in the same period. E-gift cards, snacks and pet items were all strong in the ecommerce channel, the retailer said.

Read more on Costco’s earnings here.

Crocs Inc. (No. 104)

Crocs reported that revenue grew 1.6% to $960 million in its fiscal fourth quarter ended Dec. 31. Direct-to-consumer sales, including ecommerce, grew 6.8%, while wholesale declined 4.6%. Revenue grew 11.5% to $3.96 billion for the full year. 

CEO Andrew Rees says he expects personalization to be a major trend Crocs can capitalize on going forward. He pointed to Jibbitz sales, which grew 17% in 2023 to $250 million in sales.

Hanesbrands Inc. (No. 277)

Hanes reported net sales declined 12% to $1.3 billion in its fiscal fourth quarter ended Dec. 30. Activewear sales declined 24% in the quarter. For the full year, sales declined 9.6% to $5.6 billion.

“Our fourth-quarter performance did not meet our expectations as the sales environment proved to be more challenging than expected,” CEO Steve Bratspies said in a statement. 

Hasbro Inc. (No. 555)

Hasbro said revenue declined 23% to $1.2 billion in its fiscal fourth quarter ended Dec. 31. Revenue declined 15% for the year to $5.0 billion. In both periods, digital gaming grew but was offset by declines in consumer products and entertainment segments. Hasbro attributed some of the entertainment segment decline to lower film and TV revenue from strikes in the entertainment industry in 2023.

“The consumer remains value conscious and we anticipate entertainment will be less of a tailwind in the year ahead, behind a reduced box office slate,” CEO Chris Cocks said.

Shopify Inc.

Shopify revenue and gross merchandise volume (GMV) both increased in the ecommerce platform provider’s Q4, which ended Dec. 31, 2023. Its revenue and GMV both increased for the full fiscal year, too.

45 retailers in the Top 1000 use Shopify as an ecommerce platform. Read more about Shopify’s earnings.

Target Corp. (No. 5)

Third-quarter sales declined 4.9% for the mass merchant, to $25 billion from $26.12 billion in its fiscal third quarter ended Oct. 28. Meanwhile, Target online sales decreased 6% year over year.

Moreover, Target’s online sales declined 6.7% year over year for the first nine months of its fiscal year. Read more about Target’s earnings here.

Walmart Inc. (No. 2)

Walmart reported that U.S. online sales grew 24% for its fiscal 2024 third quarter ended Oct. 27. Global ecommerce sales grew 15% over the same period, while international ecommerce declined 3%.

U.S. comparable sales grew 4.9%, and total revenue grew 5.2% to $160.8 billion. Read more about Walmart’s earnings here.

Yeti Holdings Inc. (No. 135)

Yeti reported sales increased 16% to $519.8 million in its fiscal fourth quarter ended Dec. 30. DTC sales grew 11%, and wholesale increased 26%.

Full-year sales grew 4% to $1.66 billion. Sales through Amazon were strong, the retailer said, although it did not participate in Amazon’s October Prime sales event.

“The channel continues to prove effective in reaching both new and existing customers on the platform,” CEO Matt Reintjes said. Amazon makes up about 25% of DTC sales, Yeti said. However, higher fees and freight costs negatively impacted margins, the retailer said.

So what does it mean?

• Amazon has the power to make or break retailers that rely on online sales, as evidenced by Yeti. The retailer is feeling the pinch of higher fees, and it relies on the 25% of DTC sales that go through Amazon.
• The toy industry remains challenged. Hasbro fared worse than competitor Mattel, which forecasted further industry declines in 2024.

Ecommerce earnings calendar

Here’s when other ecommerce earnings are scheduled to report this quarter:

• Amazon.com Inc.: Feb. 1
• Best Buy Co Inc.: Feb. 29.
• Costco Wholesale Corp.: Dec. 14
• The Home Depot Inc.: Feb. 20
• Lowe’s Cos Inc.: Feb. 27
• Target Corp.: March 5
• Walmart Inc.: Feb. 20

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Harley Finkelstein, president, Shopify Inc.

Harley Finkelstein, Shopify’s president, said on a Q4 and  year-end earnings call this week that the vendor’s B2B gross merchandise volume doubled last year. He added that, in the fourth quarter, Shopify’s business with B2B companies “was up nearly 150% year over year.”

Shopify did not immediately reply to a request for specific figures on B2B-related revenue and GMV, but executives said on the earnings call that that they see the B2B market playing an increasingly vital role in Shopify’s growth plans.

An ‘exciting’ B2B growth opportunity

Finkelstein — referring to B2B as a “big and exciting growth opportunity” — said Shopify is experiencing B2B market growth with two types of companies: existing Shopify retail merchants adding a B2B channel, such as The Home Depot, home furnishings retailer Lulu and Georgia, and jewelry retailer BaubleBar; and newcomers to Shopify like Carrier, a global manufacturer of heating and cooling and other building-management systems.

He added that getting a client company like Carrier, which signed on as a client in Q4, was “opening the door to a whole new opportunity of industries we previously didn’t serve.”

Jeff Hoffmeister, Shopify’s chief financial officer, added that Shopify is seeing more demand from large enterprise B2B companies for the vendor’s multiple technology offerings, including Shopify Plus, international B2B sales, online payments, and physical store point-of-sale systems that integrate with Shopify’s ecommerce platform.

“All those things are the growth engines for the future,” he said.

Shopify says its store point-of-sale terminal is designed to integrate with the Shopify ecommerce platform and support “over 1,000 physical stores.” Referring the POS systems as new “on-ramps or entry points into Shopify,” Finkelstein said they “substantiate our role as the unified commerce operating system for merchants, whether they come to us to sell online, off-line, or anywhere in-between.”

He added, “We are building on our commitment to help merchants sell to all of their customers from a single, unified commerce platform, with upgrades to our B2B offering, including headless B2B storefronts and support for sales reps.”

Among other new features, the ecommerce technology company has also launched for merchants on the Shopify platform:

• Shopify Bill Pay, an expense management tool that lets merchants pay their vendors directly from their Shopify administrative application.
• Shopify Credit, a “pay-in-full” business credit card designed to help manage monthly cashflow and earn cashback savings without paying interest or fees.
• Shopify Collective, an application that enables merchants to source products from other companies on Shopify and have them shipped directly to customers.

Perks of unified commerce and integrated POS

A unified commerce environment, including integrated POS systems, can play a vital role for B2B companies trying to keep up with omnichannel commerce that extends to their physical branches and other outlets, B2B industry experts say.

“Key aspects such as ERP integration, branch-selling, and tools that aid the end customer in their job are crucial for a successful B2B platform,” says Justin King, managing partner of advisory firm B2X Partners. “Shopify’s acknowledgment and incorporation of these elements, along with their significant growth in B2B GMV and the acquisition of B2B-only merchants, position them as a potentially formidable player in the B2B e-commerce technology sector. Their commitment to providing a unified commerce platform for both online and offline B2B transactions further solidifies their intent to capture and expand their market share in this domain.”

Jay Schneider, the founder of digital advisory firm B2BSquared, adds that the Shopify platform still needs to show that it can handle complex online B2B interactions, such as those involving displays, configurations and quoting of products with extensive lists of attributes and complex pricing.

Finkelstein said that Shopify generated $441 million last year from its offline offerings, including POS hardware, “more than five times what our offline revenue was just four years ago.” Shopify estimates its total addressable market for offline and B2B business at “over $450 billion,” he said, adding, “We have barely scratched the surface of this opportunity and expect it to be a key growth driver in 2024.”

Paul Demery is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. paul@digitalcommerce360.com.

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Just 9% of those consumers said they’re satisfied with their in-store shopping experiences, though that figure is slightly higher at 14% for ecommerce experiences.

Every two years, the IBM Institute for Business Value surveys global consumers about their shopping habits and preferences. For its third study, IBM surveyed 20,000 respondents in September and October 2023. It asked them to describe their digital habits, their use of AI and generative AI, their expectations for brands, and their sentiments regarding sustainability.

In North America, 18 online retailers in the Top 1000 use IBM for order management services. Those 18 retailers generated more than $90.56 billion in web sales in 2022. The Top 1000 is Digital Commerce 360’s database of the region’s largest online retailers, ranked by their annual web sales.

IBM 2024 consumer study’s findings

“Roughly four in five consumers who haven’t yet used artificial intelligence for shopping would like to see how it can help them research products or get product information (86%), look for deals and promotions (79%) or get service, ask questions, and resolve issues (82%),” IBM said in reporting its survey results.

But that process isn’t always smooth, IBM found. Shoppers want to easily access orders, shopping carts and purchase histories every step of the way, IBM said.

“They crave more choices but less hassle, with accurate inventory data, delivery timelines, and targeted offers available in real time, at the click of a button. Most of all, they want things to just work. But they often don’t,” IBM said in its report.

It said many chatbots still lack the training, capabilities and skills they need to understand basic requests and answer customers’ questions. Because of this, just a third of consumers who have used chatbots and virtual assistants are happy with their experience, IBM found.

Benefits of implementing generative AI

Generative AI assistants can serve consumers more helpful shopping suggestions, and in natural language, IBM said. They can tap customer support emails, call transcripts, purchase history and more in real time to improve the customer experience. Similarly, generative AI can improve search functionality to then improve the customer experience, according to IBM.

Generative AI requires data collection for its large language models to be effective. In retail, that data can include what customers clicked on, where they shopped, how long they spent on certain pages, and more. It can also analyze historical sales data, market trends and other factors to predict future demand more accurately, IBM said. That would, in turn, help companies optimize production levels, reduce overstock and minimize waste.

“But consumers want to know how their information is being used (44%) and want more control over how companies use their data (40%),” IBM found. “To build trust with wary consumers — while also offering the unified experiences they want — companies must get customers’ explicit permission to track and analyze their behavior. Setting expectations up front for every interaction can make customers feel like they’re being catered to, rather than spied on.”

Sustainability continues growing as a consumer priority

Consumers “want hard data, not vague PR statements” about sustainability, IBM found. And less than half (41%) of consumers said they have sufficient information to shop sustainably. Meanwhile, nearly eight in 10 (78%) of consumers said sustainability is important to them when choosing a brand to shop from. Additionally, 61% said they’d change their shopping habits if it meant helping reduce negative environmental impacts.

That’s not just a hypothetical, the survey’s findings showed. More than two in three (67%) consumers surveyed said at least half of the products they bought in their last purchase were sustainable.

“Consumers want to see how companies measure up in the areas they most care about, such as the use of safe and natural ingredients and recycled materials — but companies aren’t providing enough information,” IBM said in its report.

Top three sustainability factors consumers care about:

1. Safe ingredients or materials
2. Natural ingredients or materials
3. Use of recycled materials

Top three sustainability metrics that consumer-product companies report on:

1. Scope 1 GHG emissions
2. Percent of women in the company’s workforce
3. Scope 2 GHG emissions

GHG refers to greenhouse gases. Scopes 1 and 2 refer to the different kinds of emissions of those gases.

Scope 1 emissions are direct emissions that come from sources controlled or owned by an organization, according to the United States Environmental Protection Agency (EPA). Examples include emissions associated with fuel combustion in boilers, furnaces or vehicles. Scope 2 emissions are indirect and associated with the purchase of electricity, steam, heat or cooling. According to the EPA, although scope 2 emissions physically occur at the facility where they are generated, they are accounted for in an organization’s GHG inventory because they are a result of the organization’s energy use.

Key takeaways from the IBM study:

• Nearly two-thirds of Gen Zers and Millennials want to shop for products from multiple brands on a marketplace with a single checkout.
• 3 in 5 consumers would like to use AI applications as they shop.
• 73% of consumers who care about sustainability are willing to pay more for sustainable products—up from 50% in 2022.

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Aarthi Ramamurthy joined the company as chief product officer before the name change in 2023. This year, as chief product and technology officer at Rithum, she will play a leading role in bringing its offerings into their first year under the new brand. A veteran of the tech world, Ramamurthy previously held roles at companies including Facebook (pre-Meta), Netflix and Microsoft. Now, she is entrenched in online retail — and especially AI in ecommerce.

What does Rithum do?

Rithum’s offerings already included legacy brands such as ChannelAdvisor and Dsco. They encompass product listing management, marketing, sales and delivery, inventory management and more.

Among retailers in the Top 1000, Digital Commerce 360’s database of the largest North American e-retailers by online sales, 157 use Rithum for channel management. In addition, 45 retailers in the Top 1000 use Rithum’s fulfillment software. 41 use it for online advertising, and 24 use it for search engine marketing.

Ramamurthy fielded a range of questions from Digital Commerce 360 about Rithum’s future following the rebrand, as well as how it sees AI playing a role in the future of ecommerce. She corresponded via email.

Interview

Digital Commerce 360: I want to start with the recently announced changes – CommerceHub becoming Rithum, and the acquisition of Cadeera. What did Cadeera bring to the portfolio of AI capabilities in your offerings? What else have you added over the past year?

Aarthi Ramamurthy, chief product and technology officer at Rithum

Aarthi Ramamurthy: With regard to AI and the new capabilities the technology brings to our business, the end goal is always focused on the customer and what we can help them achieve. In the age of adaptive AI and advanced chatbots, customer expectations are exponentially increasing. To succeed, retailers must become even smarter about how they onboard and sell products across multiple marketplaces, personalize offerings for consumers, and facilitate seamless delivery.

Over the past year, we’ve integrated AI into the Rithum platform to help with tasks like automatic channel mapping, including inventory compliance and error correction. For example, we can take a brand or supplier’s product data and leverage AI to automatically map it all internally and have a normalized source of truth. From our normalized schema, we can then map the data to any marketplace’s specifications at the click of a button, shortening the time to market for brands to go live on any marketplace.

With Cadeera specifically, the company’s technology provides Rithum with a multi-modal AI platform that brings together capabilities across computer vision, language processing, and machine learning, to help automate and scale manual processes like product onboarding, search, and discovery. This technology will also be used toward streamlining tasks like product content generation and image validation. Additionally, Cadeera’s capabilities will enable AI-powered supplier and product recommendations.

Focus on AI in ecommerce in 2024

DC360: What are you most proud of in terms of AI capabilities that have been developed there since you joined the company? And what are you most eager to build out as you look ahead?

Ramamurthy: We’ve made significant progress in the past year. I’m extremely proud of the new capabilities we’ve introduced, from automatic channel mapping to scaling product onboarding across marketplaces, this year was a major milestone in Rithum’s AI journey — and it’s only the beginning. We’re being pragmatic about AI’s capabilities and limitations and leveraging the technology to solve well-established customer problems focused on time to value for our sellers.

We’re very excited about what’s to come over the next few years. We have a robust strategy where we expect to leverage AI in several ways. First, we’ll continue to invest in supplier onboarding and launch experience, shortening the time to go live by leveraging Cadeera’s technology.

Second, given that Rithum is the largest commerce network on the planet, we will leverage AI to make network discovery and matching a seamless process. What this means is, we will build out systems that accurately predict what sellers (and which categories of products) a specific retailer needs to be connected to, and make the discovery and connection a straightforward process.

And finally, we will invest in solving for inventory management for retailers. Stocking the right inventory at the right fulfillment centers so that the products can reach the customer on or ahead of customer expectations is a big priority for retailers and we plan to roll out products to help with this.

What AI means for retailers

DC360: Whether it’s reducing time spent on a certain cycle or improving the quality of a certain experience (on a retailer’s backend or for a customer), what are the most tangible ways you see the AI in your technology stack having an impact for retailers?

Ramamurthy: For Rithum, AI has always gone beyond the hype. We think about AI in a very customer-centric way. Ultimately, everything we do that involves AI boils down to customer benefits, such as driving faster time to market, reducing costs, and increasing customer revenue. 

Beyond channel mapping, AI within Rithum’s technology stack enables our customers to identify how quickly merchandise can be delivered based on real-time insight into matching inventory levels with customer fulfillment centers. Capabilities like this help keep product costs within the threshold that retailers want. 

Additionally, AI is helping to curate the perfect product catalog for brands and retailers. This has major implications for environmental conservation. Eliminating unwanted inventory means reducing waste, which is a major issue in the fashion industry. More than just increasing profits from high-demand items, AI can be a catalyst for a healthier corporate carbon footprint.

Impact for online retail professionals

DC360: Which professional roles at retail companies do you see benefiting the most from your AI-powered features?

Ramamurthy: On the seller side, we expect the onboarding and revenue teams to see direct impact, since our AI-powered onboarding process cuts out a lot of unnecessary time spent manually onboarding sellers to marketplaces and gets sellers live and selling products faster.

On the retailer side, the merchandizing teams will reap the most benefit in the immediate term since they will have valuable insights on which sellers and which products to onboard in order to profitably grow their business.

DC360: Do you have any best examples of specific retailers using AI-enabled features in Rithum products right now that you could point to?

Ramamurthy: We are using AI when we onboard new suppliers to a retailer, which is no small feat. For example, a supplier might categorize a product’s (such as a shirt) color to be indigo, while the marketplace that the supplier onboards to might only accept the color blue. That’s an AI use case – how to transform product attributes and match them. In this case, the technology would be simple algorithmic AI at work.   

There are also applications for machine learning. For example, the system might discover that in Q2, puffer jackets will be especially popular. Then it can automatically alert the retailers, figure out the supply for those items and onboard the suppliers.  

Then there are large language models, made popular by ChatGPT. In this case, we are using LLMs to mine data, including data that’s poorly structured. The LLM can also distill input from customers on what they’re seeking or what feedback they’re providing.

Speeding up onboarding

DC360: When you speak about speeding up the ecommerce lifecycle, which steps or processes have you seen impacted the most by AI?

Ramamurthy: The onboarding process — specifically onboarding onto large public marketplaces as well as retailers, has traditionally been an unoptimized process, and is time consuming, leaving valuable revenue on the table. This is the area that will and already is having the most impact. 

DC360: For retail and ecommerce generally, where do you think AI use will be most pervasive in the coming year?

Ramamurthy: AI will be a game-changer for ecommerce — and it is happening faster than many realize. Its two most likely impacts are first, the customer shopping experience to provide a more personalized, curated experience. Second, AI has the ability to meaningfully reduce the operating expense for retailers of all sizes by increasing speed to site for new products and reducing the manual effort required with today’s methods. We expect that these trends will combine with asset-light models like drop shipping and marketplaces to help retailers better serve their customers, more rapidly adjust selection, better personalize the ability to serve customers, all while growing sales and margins. 

We continue to invest in and accelerate our capabilities in this area and look forward to significant expansion of AI across our entire platform.

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Its brands are available on five connected websites, and PRADCO is also a distributor for other brands, too. Trent Welbern, graphic design manager at PRADCO, works in the fishing division, where PRADCO sells items from its 20 fishing brands online through LureNet.com.

Welbern said PRADCO is “constantly adding brands on the fishing side,” and that requires efficient technology. He and his team use software from headless commerce provider Fastr — formerly known as Zmags — to help manage website updates for their many brands.

What is headless commerce?

Headless commerce is a type of ecommerce website structure that effectually separates the front end of a website (the user experience) with the back end of a website (the content management system where administrators typically make changes). In doing so, it allows brands to work on the front ends of their websites without going through web developers and IT teams, which often requires filing a service ticket.

In the case of PRADCO’s LureNet, it also allows designers like Welbern to create ecommerce pages without relying on web developers.

Headless commerce meets generative AI

Fastr offers headless commerce technology, which it refers to as Fastr Frontend. The option “allows non-developers to control every aspect of their ecommerce site without dependence on developers,” the company says.

Welbern has been using Fastr technology for three years. He said it has helped with efficiency as far as “not having to bog down IT” when PRADCO acquires brands. “It gives us a tool to work on the website,” he explained.

“All of our top-performing pages on LureNet, Fastr has had a part in that,” Welbern said.

In addition, Fastr has added generative AI to its technology suite, building on OpenAI’s GPT-4. Fastr Frontend, now implementing generative AI to its headless commerce technology, allows Welbern and his team to make more changes to LureNet’s website than before.

Welbern can type in what he wants in an ecommerce page, and Fastr AI will use that prompt to generate an entirely new web page. That could include specific images LureNet has selected, fonts that suit its branding guidelines and more.

“All of our top-performing pages on LureNet, Fastr has had a part in that — whether it be our custom lures section, our new brand, Bank & Creek, which is one of our subscription services, and some of our custom soft plastics. All those have been created using Fastr,” Welbern said. “They’re our top-performing pages.”

Can generative AI build web pages?

Ryan Breen, chief technology officer at Fastr, said ecommerce merchants and brands can set up asset libraries as a foundation. This means inputting fonts, images and logos for the generative AI to use. From there, the user would go to the Experience Canvas that Fastr provides and write a prompt with directions on how the generative AI should build the page.

Breen said every brand has its own style of what an H1 field should look like on its website, acceptable colors to use, and sets of images that suit its style. For example, when he tests FastrAI, he likes to have the generative AI include emojis in the copy it produces.

“I typically say, ‘go nuts,’ and it knows what I mean,” Breen said. 

Upon entering a prompt, the user sees the generative AI populate the web page in real time. It will pause intermittently to check in with the user about its progress, asking if the page looks good and if the user wants the generative AI copilot to proceed.

Breen added that users can reuse a prompt and the copilot will still ” trigger a really thoughtful, interesting, ‘I can’t believe it’s not a human’ type of feeling. It was disorienting at first, but every time you’re interacting with it, it’s going to say I have a different idea.”

Breen said Fastr’s team taught the generative AI tool “everything about what an asset means.” That includes what an experience means, how to create designs on a canvas, and where to put text and images.

How does generative AI build web pages?

“Content creation velocity and output can soar,” Fastr said in a statement. That provides “greater opportunities for experimentation to determine what content works best at driving conversions.”

At the National Retail Federation’s Big Show in New York City this week, ecommerce platform provider Salesforce announced its own generative AI technology to build web pages. Salesforce debuted Page Designer, which is in its pilot stage. The tool allows online retailers to build web pages through text prompts. Retailers can customize the design or specify that it mirrors existing branded web pages.

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“Companies that leverage their customers’ data effectively to build trusted, connected commerce experiences will see stronger customer loyalty and profitability,” Jujhar Singh, executive vice president and general manager of Salesforce Customer 360 Applications and Industries, said in a statement. “Every business must focus on driving efficiency and growth with new integrated and AI-powered innovations that enable a faster path to purchase and greater customer satisfaction.”

Salesforce provides technology services to retailers in the Digital Commerce 360 Top 1000, including to 69 retailers as an ecommerce platform, 55 for content delivery network, and 56 for web hosting and cloud services. The Top 1000 is Digital Commerce 360’s ranking of the largest online retailers in North America by sales.

Salesforce generative AI tools for productivity

Salesforce’s newest AI releases are all intended to give retailers ways to use the emerging technology in relatively low-risk ways, says Michael Affronti, general manager of the Commerce Cloud. Retailer clients tell Salesforce they want to use generative AI, but they’re nervous about implementation and maintaining privacy protections. That’s why the products in this release from Salesforce are focused directly on improving productivity as an easy way for retailers to test the waters, Affronti says. 

As part of the new rollout, Salesforce debuted Page Designer, a tool that allows retailers to build web pages through text prompts. Retailers can customize the design or specify that it mirrors existing branded web pages. For now, Page Designer is in the pilot stage, though Salesforce already claims to be seeing results among early users. During pilot testing, the tool has increased designer productivity 10%-30%, Affronti says. 

Generative AI tools to increase conversion

In another new launch, the Return Insights Tool gives retailers insights based on returns data. It uses generative AI to look for patterns in the data, then gives retailers suggested changes to product display pages that could minimize future returns. It also monitors reviews and reasons for returns to give those retailers specific ways to address issues causing frequent returns. Return Insight is available now, according to Salesforce.

Salesforce also detailed a new inventory management tool. The Inventory Insights tool gives retailers almost real-time access to information about their inventory and insights based on it. Insights based on the data can help in anticipating future demand and advising customer service workers on specific product recommendations when upselling to customers during service requests.

Other new insights from the announced offerings will be based on shopper data delivered through a feature called Customer and Product Insights. For example, the Commerce Cloud and Data Cloud will tell retailers the top product bundles customers buy, and the most engaged customers’ demographics, which can be leveraged to make strategic decisions. Inventory Insights and Customer and Product Insights will be available in summer 2024, Salesforce said.

What did Salesforce release for consumers?

Salesforce also announced Einstein Copilot for Shoppers. The generative AI assistant will have conversations with consumers through ecommerce stores or messaging apps and make product recommendations. Einstein Copilot takes into account a particular consumer’s preferences, location, purchase history, and other factors to make an appropriate recommendation. The consumer can then complete the purchase within the conversation.

Salesforce says Einstein Copilot for Shoppers will be available in summer 2024. The software company isn’t releasing specific results from the pilot test yet, but Copilot has adoption equal to or greater than traditional chatbots in tests, Affronti says. 

Other Salesforce releases

Salesforce announced its new releases on the first day of the National Retail Federation’s Big Show in New York City.

Prior to these latest generative AI features, Salesforce announced a new integration with Amazon’s Buy with Prime. Buy with Prime allows consumers to check out using Amazon’s payment systems and receive orders using Amazon’s fulfillment network from a website other than Amazon.com. Retailers using Salesforce Commerce Cloud will have access to Buy with Prime later in 2024, the companies said. 

See the other NRF stories Digital Commerce 360 is following here.

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In a phone interview with Digital Commerce 360, Gerbig reflected on the lessons he learned taking Pink Lily from a bootstrapped ecommerce site with a team of two to a company with 300 employees and $120 million in annual revenue. With 15,000 products in its inventory, the company found new paths to its customers, thanks to its early focus on nascent social media trends.

The Pink Lily Boutique is No. 836 in the Digital Commerce 360 Top 1000, a ranking of North America’s leading retailers by online sales.

Coming out of 2023, Gerbig cited a “really solid holiday season, comparable to last year,” but he is also looking ahead. From merchandising to ecommerce platform changes and staffing, he shared what he believes Pink Lily got right early on, as well as where his attention will be in 2024.

What sold well in the 2023 holiday season?

Asked what has been selling the best on Pink Lilly of late, Gerbig credited its mainstays.

“Basics and athleisure, and loungewear continues to be a top seller for us,” he noted. These standards have long made up the staples in Pink Lily’s colorful online catalog. But it has invested in new technology along the way.

“We have an in-house design team that creates a lot of our graphic tees and graphic sweatshirts,” Gerbig explained. “We just invested in a large DTG — direct-to-garment — printing machine that can print, you know, 900 shirts an hour with various designs.”

That machine replaced an old screen-printing process for the online retailer. The time and labor to build each screen and change out designs became too intensive. So they brought in a larger machine to apply new designs on demand. Those graphics include simple callouts to coffee, emotions and locations on cozy t-shirts and sweatshirts. The Pink Lily site currently shows about 100 options, according to Gerbig. He credits remote work with driving demand.

“As more people just work from home and more people want to wear comfortable clothes, I mean, yoga pants, workout pants, hoodies, just your basic casual stuff continues to be a pretty solid performer,” he explained.

Gerbig on growing Pink Lily’s team to 300 staff

Remote work has played a role for Pink Lily’s growth internally, as well. The company is located in Bowling Green, Kentucky, which is where the Gerbigs studied together at Western Kentucky University before starting Pink Lily. Gerbig believes staying in the area was the right call, though he acknowledged that attracting top talent to relocate can be a challenge.

“It’s not exactly a giant digital talent hub, you know, like if I was in Dallas or L.A. or Atlanta — or even Nashville for that matter,” said Gerbig. “But the good thing is we have a lot of remote jobs.”

As much as 25% of Pink Lily’s staff is remote, according to Gerbig. That number would likely be higher, he said, if it weren’t for the onsite needs at the warehouse that come with managing inventory and shipping orders. Still, opening up to remote hires has allowed him to fill out departments for non-warehouse positions.

“Otherwise, I think we might have struggled a bit,” he admitted. “But the fact that we can make these guys remote — we have a lot of remote staff now — a lot of remote employees and everything seems to work out just fine.”

Testing out physical retail

As Pink Lily’s staffing expanded from in-person to remote-heavy, the online retailer also piloted a physical retail presence for its sales. That flagship store was set — like the company — in Bowling Green, and it’s something that Gerbig is contemplating in the coming year.

“The majority of our sales are online,” he stated. “But I know a lot of companies do have a strong retail strategy and strong retail presence, and that’s the conversation that’s come up recently. So we’re paying attention to a few things, and we might look a little bit deeper into that — maybe later on in 2024.”

Like other retailers, Gerbig is watching what happens with macro trends in the economy and consumer habits. Signals on those fronts are likely to influence the company’s next steps.

“We’re paying a lot of attention to the economy and the markets and competition, just some of the ideas floating around about what to do with retail stores,” he explained. “Are customers going back to more retail, or are they shifting to more ecommerce?”

AI and ecommerce tech

As an ecommerce brand, Gerbig is also paying attention to Pink Lily’s tech stack. That extends to their ecommerce platform, as well as emerging uses for artificial intelligence.

“We’re paying attention, but we haven’t quite dived into the full AI, yet,” he said.

Currently, he likes solutions for automating some responses in customer service.

“Those have been helpful for us —  to not have to staff so many full-time customer service reps considering the same questions: ‘Hey, what’s my tracking number? When does this restock? What’s my order number?’ — things like that that can easily be answered by a machine or a robot,” he cited as examples. “Those have been helpful.”

Beyond those use cases, he is hopeful that better AI-powered options will emerge for fit recommendations.

“[The technology is] still kind of young, and it’s not perfect yet, so we haven’t started using it, but we are paying attention because one of the main drawbacks of being an online business is you can’t try to clothes on,” he said. “People have different body sizes, different shapes, things fit differently. So the ability to kind of do that digital try-on will be very, very helpful once the technology is proven.”

Pink Lily’s ecommerce platform

Pink Lily uses Shopify, which has been its ecommerce platform since 2020, according to Gerbig. After initially starting with Volusion, moving to BigCommerce, then eventually making the move to Shopify, he seemed confident that it’s the right fit for the time being.

“There’s a lot of add-ons, a lot of apps, a lot of different plugins that work,” he said, calling the overall user experience “great.” He also values Shop Pay, and the checkout session speed that Pink Lily is able to achieve as a result.

“I don’t know if it’s Shopify specifically, but just the app partners that they have,” he explained. Gerbig cited inventory control, customer service, restock alerts and website heat maps of customer activity as features he values.

“I think I don’t see any reason why we wouldn’t have Shopify,” he stated. “It’s been good to us.”

Pink Lily’s social media strategy

One area where Pink Lily proved itself early on was on social media, where Tori spearheaded its presence. Over 10 years, platforms have changed and opportunities have shifted, but Gerbig noted how the company has learned and evolved along the way.

“We’ve learned that if you’re the first one to a trend and utilize that trend to its maximum potential, you can really grow it,” he said. In the early years, that meant using social media posts to organically grow traffic. Later, that shifted to paid strategies.

“So once social media organic posting kind of died out a little bit, we jumped on the paid ads bandwagon,” Gerbig recounted. “We really pushed paid ads, Google ads, Facebook ads, YouTube ads, pretty heavily back in I would say 2016-2017, before the whole world caught on and before it got extremely flooded.”

That was followed by prioritizing influencer marketing in 2017-2018, when Gerbig said Pink Lily “put 60%-70% of our marketing budget on influencers.” Now, the company has a holistic marketing approach, which he said encompasses “social, paid ads, email, influencer” and notably in 2024: TikTok.

“We do a lot of text alerts, so we have this holistic marketing approach where we have, you know, eight to 10 different channels and make sure that we kind of spread the budget across different areas,” he said. “But if we see that one is performing well or if there’s something new and up and coming, we’re quick to shift and throw a few more dollars of budget at the channel, and to see what happens.”

Potential on TikTok

TikTok alone represents one of Pink Lily’s priorities in the coming year. Against the backdrop of the company’s historical successes on social media, Gerbig specifically sees the ByteDance-owned platform as having “the biggest potential.”

“TikTok is huge, TikTok Live, TikTok Shop, and then just organic,” he noted. “We’ve posted on TikTok a lot more and put a few more eyeballs on that category as we try to tweak our campaign strategy. Because, you know, what you do on TikTok needs to be a little bit different than what you do on Facebook, also a little bit different than what you do on Instagram because [there are] different algorithms, different customers, different eyeballs and different chances to go viral on each platform.”

Other retailers have shown new interest in TikTok as well. Both Newegg and Peloton have recently expanded their presence there, and a Morning Consult report in 2023 showed that it played a growing role in driving holiday purchases.

What has worked so far

10 years after launching Pink Lily, Gerbig spoke confidently about the lessons learned and analytics-driven approaches that helped grow its sales and size from the business’ lean years to where they are now.

“We didn’t have money,” he said. “We had a very small amount of capital that we put into a printer and a small amount of inventory. So I had to focus on being cash-flow positive from day one and being profitable.”

After expanding and continuing to experiment with tech, merchandizing and social strategy, he expects to keep those core values in place in 2024.

“Our expectations are to keep doing what we’re doing,” Gerbig stated.

As for what ultimately made the difference in Pink Lily’s growth trajectory, Gerbig points to the early combination of skills that he and Tori brought to the table.

“I think we lucked out when we decided to divide and conquer the roles of running the business, so it just so happens that she is an expert in sales and marketing,” he explained. “And it just so happens that my fields were in finance and operations and business strategy.”

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The announcement comes a few days before The National Retail Federation’s Big Show, where retailers and technology vendors will gather to discuss industry trends and test new products.

Google’s new generative AI retail tools

One of the tools is a generative AI-powered chatbot that can be embedded on retail websites and apps. Google refers to the chatbots as virtual agents. It says the chatbots can carry out “helpful and nuanced conversations with shoppers using natural language and can provide product options based on a shopper’s preferences.”

For example, the virtual agent chatbots can give shoppers personalized recommendations. The suggestions might be based on budget, preferred colors, type of event and other factors, according to Google. Retailers can roll out the feature in as little as a few weeks.

Google also introduced a new large language model (LLM) that it says will improve search capability on retailers’ websites. Retailers will be able to customize an LLM based on their product catalog and the shopping patterns of customers. That will improve search results and surface more relevant products for consumers, Google says.

The technology company also debuted an AI tool for customer service operations. Google launched AI customer service agents that can integrate with whatever customer relationship management system a retailer already uses to take on tasks like scheduling appointments or checking order statuses. Retailers can use AI for customer interactions with real agents, too. Google’s tool will use AI to summarize customer service conversations and help agents find relevant internal information to help customers, it says.

“In only a year, generative AI has morphed from a barely recognized concept to one of the fastest-moving capabilities in all of technology and a critical part of many retailers’ agendas,” Carrie Tharp, vice president of strategic industries, Google Cloud, said in a statement. “With the ability to accelerate growth, boost efficiency, fuel innovation, and reduce toil, generative AI solutions are ready to be deployed now, and Google Cloud’s recent innovations can help retailers recognize value in 2024.”

AI and retail

Retailers and technology companies are embracing AI to cut costs and improve customer experiences. 

Victoria’s Secret announced a multi-year deal with Google to use the generative AI chatbot on its retail website. The purpose of the deal is to use the tool to make personalized recommendations to Victoria’s Secret customers.

“The integration of Google Cloud’s AI and generative AI technologies will not only improve the online shopping experience for our customers, but also will empower our internal teams to drive innovation across various business functions,” said Chris Rupp, chief customer officer at Victoria’s Secret. “This partnership signifies a new era for Victoria’s Secret & Co., where cutting-edge technology meets our passion for enhancing the customer journey and reinforcing our position as a leader in retail.”

Adore Me, another lingerie brand under the Victoria’s Secret umbrella, has already been using generative AI technology through Google Cloud, the retailer said.

Victoria’s Secret is No. 52 in the Digital Commerce 360 Top 1000, a ranking of North America’s leading retailers by online sales.

AI’s impact in retail is growing. Salesforce says AI influenced 17% of all online orders made in November and December. It also says AI accounted for $194 billion in sales over the holiday season. 

Walmart also just announced plans to use AI in new ways at CES. The retailer is adding generative AI-powered search to its app using Microsoft’s Azure OpenAI. A new InHome Replenishment feature will also use AI for Walmart+ members, it said.

Walmart ranks No. 2 in the Top 1000. It also ranks No. 9 among global marketplaces by gross merchandise value.

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In 2024, NRF’s Big Show will be held at The Javits Center in New York City from Jan. 14-16. 

In the wake of the NRF’s announcement this week that industrywide online and non-store sales rose 31.17% year over year in December, this will be the retail and ecommerce news to watch at the show:

Walmart and Salesforce 

Walmart U.S. CEO John Furner and Salesforce CEO Marc Benioff will give a joint keynote session on Jan. 14. The leaders will address the future of artificial intelligence in retail. Furner will also speak at a solo session earlier in the day about the state of the retail industry.

Walmart ranks No. 2 in the 2023 Digital Commerce 360 Top 1000, a ranking of North America’s leading retailers by online sales. It also ranks No. 9 among marketplaces by gross merchandise value.

FedEx on supply chain enhancements

FedEx CEO and president Raj Subramaniam will discuss plans for improvements to its massive supply chain in 2024. The major shipping carrier is slated to discuss how it is using data from its vast network to improve customer experiences from pickup to delivery and returns.

478 retailers in Digital Commerce 360’s Top 1000 use FedEx as a carrier.

Supply Chain 360 Summit

Supply chains will be one of the most important topics for retailers at the event. In addition to Subramaniam’s session, the NRF is also hosting a Supply Chain Summit on Jan. 14 with sessions on AI, expedited delivery, efficiency, and managing weather events. Speakers from Walmart, Target (No. 5 in the Top 1000), Macy’s (No. 17), Stitch Fix (No. 42), and other retailers will contribute.

Retailers discussing AI

Many sessions across the three-day event are scheduled to discuss AI and its many applications in retail. An executive from Estee Lauder (No. 43) will discuss AI and machine learning in demand forecasting. E.l.f. Beauty (No. 950) and Canada Goose (No. 154) are scheduled to discuss the use of generative AI over the recent holiday season.  

Amazon on Buy with Prime

Amazon just announced a new integration with Salesforce Commerce Cloud for Buy with Prime. All Salesforce merchants will have access in 2024, Amazon says, and some can sign up for early access at Amazon’s booth at the show. The retail giant says it will share more about this new development at the event, too.

Technology vendors

The show will feature a floor of booths from technology vendors showing off their latest releases for in-store use and ecommerce. The innovation lab features more than 50 established technology companies with products in AI, AR (augmented reality), machine learning, facial recognition, robotics and other emerging fields. The Startup Hub will be home to newer companies debuting tech solutions to retailers. 

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The ecommerce software provider defined the holiday season as Nov. 1 through Dec. 31. Year over year, Salesforce said, global online sales grew 3%. Moreover, the global average discount rate across the entire holiday season was 21%. That’s the highest it has been since 2020, Salesforce said. Salesforce uses data from more than 1.5 billion global shoppers.

In North America, 76 of the top 2000 online retailers use Salesforce as their ecommerce platform, according to Digital Commerce 360 data. In 2022, those 76 online retailers combined for more than $116.97 billion in web sales.

Meanwhile, U.S. online holiday spending reached $221.1 billion, according to data from Adobe Analytics.

How much did global ecommerce sales grow during the 2023 holiday season?

By week, the largest sales growth during the holiday season was a tie between Cyber Week (the week encompassing Thanksgiving, Black Friday and Cyber Monday) and pre-Christmas, according to Salesforce data. Each of those weeks grew sales 6% year over year, Salesforce reported. The next-highest sales growth (4%) was in the first week of November. Christmas-week sales growth declined 4% year over year.

Based on Salesforce’s data, order growth was correlated with sales growth during the 2023 holiday season. Cyber Week and pre-Christmas week each recorded 6% year-over-year order volume growth in 2023. Meanwhile, order volume during the first week of the holiday season grew 2% year over year, Salesforce said. Christmas-week order volume declined 6%.

For the holiday season as a whole, order volume grew 2% year over year, Salesforce said. That correlated with 2% year-over-year growth in units per transaction growth, and the increase in average selling price was 0.7% year over year, Salesforce said.

How popular was store pickup in the 2023 holiday season?

Each week of the 2023 holiday season, at least 22% of orders were picked up at stores, Salesforce found — or more than one out of every five orders. That grew to at least a quarter of all orders from the week after Thanksgiving through Christmas week, according to Salesforce, with about a third of orders (33%) being picked up at stores during Christmas week.

Share of online orders picked up at store during the 2023 holiday season, according to Salesforce.

Mobile shopping trends during the 2023 holidays

Traffic to mobile devices grew year over year during each week of the holiday season, Salesforce said. The largest growth in mobile traffic, 10%, was during Cyber Week. The first week of the holiday season, post-Cyber Week, and the week before Christmas each recorded 9% growth in mobile traffic, according to Salesforce.

In contrast, desktop web traffic decreased each week of the holiday season, Salesforce found.

What channels drove the most online traffic through the holiday season?

Each week of the holiday season, direct traffic accounted for the largest source of online retailers’ global website visits. From Nov. 1 through the end of December, Salesforce data shows, direct traffic accounted for 37% of all visits to online retailers’ websites, with three exceptions. During and directly preceding Cyber Week, that traffic source bumped up slightly to 38%. On Christmas week, it dipped slightly to 36%.

Search traffic accounted for about a third of all website visits throughout the 2023 holiday season, Salesforce found, hovering between 31% and 33% each week. Internal traffic accounted for 14% to 15% of visits each week during that time frame, and traffic from social media platforms combined for 10% to 11% of total visits each week. Advertising and email traffic each accounted for just 1% of global visits to online retailers’ websites.

Global web traffic growth from social media platforms grew 10% year over year in the first week of the 2023 holiday season, tied with the mid-season week halfway between Cyber Week and Christmas. Such traffic from social media platforms was its lowest during the holiday season during Christmas week (4%).

Advertisement traffic growth increased the most in the mid-season week (27%) and the week before Christmas (23%). The week before Thanksgiving, advertising traffic growth decreased 4%, the only week with negative ad traffic growth during the season.

Email and direct traffic were the only other channels to have negative growth during the 2023 holiday season, according to Salesforce data. Email traffic growth decreased 2% the week before Christmas, with a larger drop (-16%) during Christmas week. Direct traffic growth also decreased year over year (2%) during Christmas week.

How did returns factor into the 2023 holiday season?

Salesforce data shows that returns during the 2023 holiday season were largely consistent with the 2022 season. The percentage of orders consumers returned each week was essentially flat, with the exception that they grew to 19% during Christmas week in 2023, compared with 16% in 2022. They also grew slightly in the second week of November 2023 (11%) compared with the same week in 2022 (10%).

Share of orders consumers returned during each week of the holiday season in 2023 and 2022, according to Salesforce data.

Returns dipped slightly to 10% during the first week of November 2023 from 11% in 2022, and to 4% during Cyber Week 2023 compared with 5% in 2022.

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