Now that the dust has settled, we can say that neither proved to be true.

As part of the recently released Top 1000/Top 500 Report from Digital Commerce 360, we examined the ecommerce growth from 2019 through 2023 for the 1,000 largest North America-based retailers and consumer brand manufacturers by global online sales. And there were quite a few surprises.

How did the pandemic affect sales growth for the Top 1000 online retailers?

It is true that the Top 1000’s online sales grew rapidly during the pandemic. In fact, their global ecommerce revenue exceeded $1 trillion in 2023 for the first time, growing 6.9% over 2022.

And for 2019-2023, online sales for the Top 1000 increased at a robust compound annual growth rate of 17.2%, nearly doubling during that period. But online retailing was growing at an even faster rate before COVID hit. The Top 1000 posted an 18.6% compound annual growth rate from 2016-2019, well above the pandemic-era CAGR.

How fast did Amazon grow during the pandemic?

And while Amazon (No. 1 in the Top 1000) did fine during the pandemic, posting a 17.8% CAGR during the five-year period, store-based retailers collectively did even better, growing at a 19.2% annual rate.

As a result, their share of Top 1000 sales increased to 34.0% in 2023 from 31.8%. Amazon’s share also grew, but more modestly, to 38.7% in 2023 from 38.0% in 2019.

Amazon accounted for 7.4% of global online retail sales in 2023. But that global number includes the $2.17 trillion in e-retail sales in China, where Amazon effectively no longer competes. Taking out China, Amazon accounts for 12.2% of online retail sales in the rest of the world. That more accurately reflects its dominance everywhere but China.

2024 Top 1000 Report

Analysis of North America’s leading 1,000 online retailers. Includes over 175 charts, rankings by annual web sales, benchmarking data, and growth analyses by category and merchant type.

View Details

Growth in online grocery sales

A big reason for the online growth of physical store retailers is the surge in online grocery shopping during the pandemic.

The Food/Beverage category posted the highest compound annual growth rate from 2019-2023 at 26.0%. That mainly benefited traditional supermarkets like Kroger (No. 6 in the Top 1000), which increased its online share of total sales to 10.5% in 2023 from 5.3% in 2019, and Walmart (No.2), which sells the most groceries of any U.S. retailer and increased its ecommerce penetration to 15.4% in 2023 from 7.6% in 2019.

Here are some of the other data highlights from the Digital Commerce 360 Top 1000/Top 500 report:

• Conversion rate for Top 1000 retailers ticked down to just over 2.6% in 2023 from nearly 2.8% in 2022. But that still was ahead of the 2.2% rate in 2019.
• Shoppers 55 and older accounted for only 18.4% of visits to Top 1000 sites in 2023, down from 21.8% in 2022. That suggests that older consumers were especially likely to return to shopping in physical stores as the pandemic eased in 2023.
• Larger retail chains are more likely than smaller ones to offer a mobile app, and store operators with apps are more likely to offer omnichannel services: 33.0% of store-based retailers with a mobile app offered curbside pickup in 2023 versus 13.5% of those without an app, and 87.0% offered in-store pickup of online orders compared to 50.4% of those without an app.
• The Top 1000 accounted for 19.2% of global retail ecommerce sales in 2023, unchanged from a year earlier. Amazon alone accounted for 7.4% of global e-retail in 2023, up from 7.2% in 2022.

What else is in this year’s Top 1000 report?

The Top 1000/Top 500 Report includes all of the following:

• Top 1000 growth by merchant type and merchandise category, comparing 2023 to 2022 and analyzing the five-year period from 2019 to 2023.
• Website traffic trends, broken down by merchant type, merchandise category, gender and age.
• Average order value and conversion rate by merchant type and merchandise category.
• An analysis of winners and losers within the 2024 rankings of the Top 500, North America’s leading retailers by global online sales.
• Mobile traffic and sales for Top 1000 ecommerce sites.
• International shipping methods, payment types and shopping features offered by Top 1000 sites.
• Which online marketplaces Top 1000 retailers sell on, broken out by merchant type and merchandise category.
• An analysis of omnichannel retail services offered, including in-store pickup of online orders, curbside pickup and showing store inventory on retail chain websites.
• How digitally native brands are faring online.

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That’s also the third-highest quarterly penetration since the department started tracking ecommerce sales. The highest to date was last quarter — Q4 2023 at 23.4%. Before that, the highest ecommerce penetration in a quarter was 22.6% in Q4 2020, the first year of the COVID-19 pandemic.

“Since Q1 2020, this is the fastest Q1 growth we’ve seen for ecommerce, and ecommerce growth accounted for a huge share of total retail growth for the period (52.8%),” said James Risley, research data manager and senior analyst at Digital Commerce 360. “That means price-conscious shoppers are using ecommerce to find the best offers and shifting buying to online amid inflationary worries.”

Breaking down Q1 2024 ecommerce and total sales

At the same time, total retail sales in Q1 2024 reached an estimated $1.820 trillion, according to Commerce Department data. Excluding spending in segments that don’t typically sell online, that comes out to $1.205 trillion, according to Digital Commerce 360 analysis.

Although ecommerce sales declined in Q1 2024 compared to Q4 2023, Risley said that’s the norm. They fell 17% quarter over quarter, and total retail sales dropped 12.7% in the same period.

“Q1 sales are almost always lower than the Q4 of the previous year because of holiday sales,” he said.

Year over year, though, Q1 sales growth was an inverted image of the quarter-over-quarter decline. Whereas ecommerce sales fell at a faster rate than total sales from Q4 2023 to Q1 2024, they grew at a faster rate than total sales in Q1 2024 compared to Q1 2023.

Ecommerce sales grew year over year at more than twice the rate of total sales in Q1 2024 — 8.5% and 3.4%, respectively.

How is ecommerce penetration calculated? 

Including all retail and food-service sales, U.S. ecommerce accounted for 15.9% of total sales in Q1 2024, according to the Commerce Department. Unadjusted figures show U.S. ecommerce sales represented 15.6% of total sales, the Commerce Department said. It estimates total U.S. ecommerce sales in Q1 2024 reached $268.1 billion.

Digital Commerce 360 studies non-seasonally adjusted commerce department data and excludes spending in segments that don’t typically sell online. These segments include:

• Restaurants
• Bars
• Automobile dealers
• Gas stations
• Fuel dealers

U.S. ecommerce penetration reflects the share of dollars consumers could potentially spend online.

The Commerce Department defines ecommerce sales as the sales of goods and services where an order is placed by the buyer or price and terms of sales are negotiated over:

• Internet
• Extranet
• Electronic Data Interchange (EDI) network
• Electronic mail
• Other online system

Payment may or may not be made online. The Commerce Department publishes estimates it adjusts for seasonal variation and holiday and trading-day differences, but not for price changes.

Percentage changes may not align exactly with dollar figures due to rounding. Here’s last quarter’s update.

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Brad Wolansky, founder, CEO-emeritus, Dover Saddlery | Photo credit: Brad Wolansky

Understanding the dichotomy between a hot economy and current negative consumer sentiment may be achieved by looking through the lens of the service economy. Front-line customer service workers, particularly in Retail, have taken a continued hit to their livelihood over the last few years. We may see clues to this by looking at the cost of providing customer service, along with its progression pre-, during, post-COVID and today.

• Pre-COVID: Economy booming, service providers fully employed; status quo. Lots of service-oriented establishments.
• COVID:  Service providers laid off; no help at all available in Retail.
• Post-COVID; Stores re-open, some workers dribble back to Retail, some still on the couch, but staff shortages abound and those in-store were overworked and not in a good mood.
• Today: More staff present, as the value of customer service re-visited, but inflation has wreaked havoc on pay scales and retail/hospitality profitability.

Customer service has never gone out of style, although it did take a hiatus while the world decided whether a pandemic would end civilization as we know it or not. 

In my writing “Raving Fans Creation,” I point out that customer service is best financed as marketing investment rather than an expense and smart retailers know that good service will get them more sales. Lousy service doesn’t get repeat business.  

No different today, although the cost of providing human customer service has gone up. This has manifested itself in some new mitigating changes:

• Some restaurants have implemented 10% service fees. Which customers dislike. But they dislike even more paying more for already increased menu prices.  Not popular but easy to understand: the price of meals has already gone up (inflation) + labor costs.  There’s only so much price elasticity and inflation has pushed that limit.
• AI is now being cited as the reason for staff reductions reducing staffing needs. Perhaps AI can replicate or improve the service, but less human interaction has rarely proven as desirable. Rather, AI may do a better job and displace other (disliked by users) legacy cost-savings measures like Interactive Voice Response (IVR).

IVR and the dreaded “Press 1 for…” have been praised as cost-saving by companies and cursed by consumers.  Who doesn’t prefer to call customer service and be directly connected to an agent without navigating the phone tree?

Consumers like human interaction, but who’s to pay for it?  In Dover Saddlery’s physical equestrian tack shops customers continue to prefer to shop in-store to smell the leather, try on the hard-to-fit helmets and breeches, and schmooze with other riders. When given a convenient in-store shopping option (vs. online) these customers more often than not choose the mode of higher human interaction.

The death of the physical store, as many predicted, has not happened as the internet, while convenient in many cases, doesn’t replace the higher level of customer service and human interaction found in those retail points that provide a valid service-oriented reason for frequenting them.

Through COVID and beyond, we see customer service remaining as valuable (and desired) as ever and worth the investment.  Those companies that figure out (as many always have) how to pay for it (as a marketing cost) will continue to be successful. Those that don’t — won’t.  The trick is the cost of the humans (that provide the best customer service) has exponentially risen with the impact of inflation, a $20 minimum wage, and even this week’s recent floating in the news of a $50 minimum wage.

Service providers, seeing their low-wage buying power erode, are grumpy.  Their employers, seeing their payroll costs skyrocket, are frustrated.  Inflation and what service workers view as a permanent reset to their earning potential makes them a constituency hard to convince that the economy is strong.

So, while economists see an economy chugging along by the numbers, your waiter and retail clerks — the real-world, front-line service quarterbacks — aren’t feeling the rosiness or economic bluster.  Their compensation hasn’t translated to their paycheck keeping up with the expenses they pay in the grocery store and to their landlord.   And with higher wages and less staff to show for it, neither are their bosses seeing a resurging economy adding to their EBITDA. Only when customer service can return to pragmatic economic structural support will they start to feel better about the economy.

About the author:

Brad Wolansky is CEO-emeritus of Dover Saddlery and author of “Raving Fan Creation: Your guide to growth and profitability amidst margin reducing tactics of your competitors.” 

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In Q4 2023, U.S. ecommerce sales accounted for 23.5% — or more than a fifth — of total retail sales. Meanwhile, total retail sales in Q4 reached $1.380 trillion, Digital Commerce 360 analysis revealed.

2023’s quarterly ecommerce sales growth has been “remarkably steady,” said James Risley, research data manager and senior analyst at Digital Commerce 360. Each quarter in 2023, U.S. ecommerce made up between a third and half of total retail sales growth.

“Q4 caps off a steady year for U.S. ecommerce growth as post-pandemic buying trends normalize,” Risley said. “With consumers frustrated and confused by the economic outlook, spending growth remained low. However, online shopping deals and holiday spending helped keep ecommerce growth up to finish off the year strong.”

US ecommerce sales continue to grow in Q4 2023

As was the case for each quarter of 2023, ecommerce sales in the U.S. grew at a faster rate than total sales in Q4.

In Q4 2023, U.S. online sales grew at more than double the rate of total sales. Ecommerce sales grew 7.2% year over year, whereas total retail grew 3.5%.

Compared to both the prior quarter and the prior year’s Q4, ecommerce sales slowed in Q4 2023. In Q3 2023, U.S. ecommerce sales grew 7.8%. That’s closer to the growth rate in Q4 2022 (7.7%).

Q4 2023 marks the slowest fourth-quarter ecommerce sales growth in the U.S. since 2008, when Q4 online sales decreased 6.1% year over year as a result of the Great Recession. Although Q4 2023 ecommerce sales growth is still positive, it is the slowest (positive) fourth-quarter growth to date, according to Digital Commerce 360 analysis of U.S. Department of Commerce data. The department’s ecommerce data goes back to the year 2000.

On the other hand, total retail sales growth increased quarter over quarter to 3.5% from 3.2% in Q3 2023. That 3.5% growth is still slower than the previous Q3’s growth (5.0% in 2022).

Along with Q4, 2023 as a whole reached a new record for U.S. ecommerce sales. In addition, the online penetration of total sales also marked a new high.

How is ecommerce penetration calculated? 

Including all retail and food-service sales, U.S. ecommerce accounted for 15.6% of total sales in Q4 2023, according to the Commerce Department. Unadjusted figures show U.S. ecommerce sales represented 17.1% of total sales, the Commerce Department said. It estimates total U.S. ecommerce sales for the full year surpassed $1.118 trillion.

Digital Commerce 360 studies non-seasonally adjusted commerce department data and excludes spending in segments that don’t typically sell online. These segments include:

• Restaurants
• Bars
• Automobile dealers
• Gas stations
• Fuel dealers

U.S. ecommerce penetration reflects the share of dollars consumers could potentially spend online.

The Commerce Department defines ecommerce sales as the sales of goods and services where an order is placed by the buyer or price and terms of sales are negotiated over:

• Internet
• Extranet
• Electronic Data Interchange (EDI) network
• Electronic mail
• Other online system

Payment may or may not be made online. The Commerce Department publishes estimates it adjusts for seasonal variation and holiday and trading-day differences, but not for price changes.

Percentage changes may not align exactly with dollar figures due to rounding. Here’s last quarter’s update.

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The post US ecommerce sales hit new quarterly record despite slowing growth rate appeared first on Digital Commerce 360.

“While overall retail growth has slowed as economic uncertainty looms, shoppers are still increasing online spending,” says James Risley, research data manager and senior analyst at Digital Commerce 360. “Despite just a fifth of retail goods spending taking place online, it accounted for nearly half of the year-over-year growth.”

The Department of Commerce’s estimated total retail sales, both online and in-store, for Q2 2023 were $1,798.2 billion.

Total vs. ecommerce growth

Ecommerce penetration increased just 0.9% year over year. That’s the highest growth since the first quarter  of 2021, when penetration grew 4.7%.

Ecommerce grow slows, but pandemic-related boost remains

While ecommerce growth is slow, it’s still above pre-pandemic levels.

“We still haven’t seen ecommerce’s share of spending dip to the levels we would have predicted for this time frame pre-pandemic,” Risley says. “This means that the COVID boost to ecommerce was a permanent change to how people shop, even if other pandemic changes have worn off.”

How do we calculate ecommerce penetration?

Digital Commerce 360 studies non-seasonally adjusted Commerce Department data and excludes spending in segments that don’t typically sell online.

These segments include:

• Restaurants
• Bars
• Automobile dealers
• Gas stations and fuel dealers

U.S. ecommerce penetration reflects the share of dollars consumers could potentially spend online.

The Commerce Department defines ecommerce sales as the sales of goods and services where an order is placed by the buyer or price and terms of sales are negotiated over an internet, extranet, Electronic Data Interchange (EDI) network, electronic mail, or other online system. The customer may or may not make the payment online. The Commerce Department publishes estimates it has adjusted for seasonal variation and holiday and trading-day differences, but not for price changes.

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

Do you rank in our database?

Submit your data and we’ll see where you fit in our next ranking update.

Sign up

Stay on top of the latest developments in the ecommerce industry. Sign up for a complimentary subscription to Digital Commerce 360 Retail News. Follow us on LinkedIn, Twitter and Facebook. Be the first to know when Digital Commerce 360 publishes news content.

The post US ecommerce Q2 sales indicate permanent COVID-19 boost appeared first on Digital Commerce 360.

Annual adjusted earnings will be $4 to $4.05 a share, the Deerfield, Illinois-based company said Tuesday in a statement, down from the earlier range of $4.45 to $4.65. Adjusted earnings for the third-quarter were $1 a share, short of analysts’ average estimate of $1.06.

Walgreens is facing a rapidly changing competitive environment. On Nov. 17, 2020, online retail giant Amazon.com Inc. said it would expand its push into US prescription drug sales.

Walgreens Boots is ranked #19 in Digital Commerce 360’s Top 1000, which ranks retailers by annual web sales.

“We have seen changing market trends that have consumers prioritizing value in response to a more uncertain and challenging economic environment,” Chief Executive Officer Roz Brewer said on an earnings call. “There has been a steep drop-off in Covid vaccines and testing, and with the end of the public-health emergency we are also experiencing a slower profit ramp for US health care.”

After the pandemic pulled people into drugstores for vaccines and tests, cracks are starting to reappear in the business model that depends on pharmacy-driven foot traffic to sell higher-margin items like toothpaste and over-the-counter therapies. The end of the pandemic emergency has also seen states drop residents from the rolls of Medicaid, the health program for low-income people.

Savings Target

And while Walgreens is betting on an expansion into the wider health world —adding primary-care centers to US locations, partnering with insurers and moving into clinical trial recruitment — the transition hasn’t been simple.

“The health-care services segment is taking longer to stand up,” Bloomberg Intelligence analyst Jonathan Palmer said in a note, “which isn’t a huge surprise and at the same time, Walgreens’ ability to catalyze the unit by deploying capital is slowly drying up.”

Quarterly revenue in the US health-care business matched analysts’ average estimate of $2 billion.

Walgreens raised the target for savings from a cost-cutting program to $4.1 billion from $3.5 billion, and expects savings of $800 million in fiscal 2024. The company said in May that it would cut 10% of its corporate workforce, or about 504 employees, as it seeks to restructure to align better with a focus on patient care. Those job cuts were completed in about four months, Chief Financial Officer James Kehoe said on the call, saving more than $100 million.

2024 Top 1000 Report

Analysis of North America’s leading 1,000 online retailers. Includes over 175 charts, rankings by annual web sales, benchmarking data, and growth analyses by category and merchant type.

View Details

The post Walgreens slashes outlook as pandemic-driven demand fades appeared first on Digital Commerce 360.

JD sales

Retail chief Xin Lijun expects JD’s core ecommerce business to accelerate this quarter after the company posted its lowest-ever pace of overall revenue expansion during the January to March period. JD Retail’s sales should return to growth, he said, after declining 2.4% last quarter. All that reflects a gradual, if uneven, rebound in consumer sentiment following China’s Covid Zero years that should underpin a broader recovery in 2023’s back half.

“You will see an upward curve of growth rate when we release the results for the second quarter,” Xin, who runs the main retail and commerce operations, told Bloomberg Television. “We are relatively optimistic and confident in the second half of the year, overall.”

Regional sales

Chinese retail sales grew 12.7% in May but were down from April and less than projected. Along with disappointing data on unemployment and investment, that suggests the world’s second-largest economy is struggling to regain its footing. Still, Beijing is prioritizing economic growth and once again allowing its giant private sector to expand, after a two-year clampdown that obliterated growth in sectors such as online commerce.

JD is wrestling with internal issues as well. Its chief executive — once the presumptive heir to billionaire founder Richard Liu — is departing just as the company grapples with intensifying competition from traditional rivals Alibaba Group Holding Ltd. and PDD Holdings Inc. as well as upstarts like ByteDance Ltd.

JD.com is No. 1 is in the Asia Database. That’s Digital Commerce 360’s rankings of the largest online retailers in Asia by web sales. Rival Alibaba Group Holding Ltd. owns Taobao, No. 1 in the Digital Commerce 360 database of Global Online Marketplaces. It also owns Tmall (No. 2). JD.com is No. 4 in the marketplaces database.

Heavy discounting

In response, JD kicked off a $1.4 billion discounting program in March — a costly effort to lock in consumers ahead of a broader sales recovery later this year. Consumers gravitate toward value for money products in a downturn, Xin said. That spending spree in turn signaled to investors that JD may be placing a market share grab before profitability, helping wipe 40% off its value since a January 2023 peak.

Xin said JD remains focused on the bottom-line over the longer term but needed to protect its turf now.

“In the long run, I think market share is necessary for the survival of every enterprise. When you don’t have market share, the profits are actually fake,” he said.

A litmus test for JD’s efforts is this month’s “6.18” bargains extravaganza, the summer online sales event often compared with Black Friday and China’s own Nov. 11 gala, when major names from Apple Inc. to Xiaomi Corp. ply shoppers with discounts.

“In the long run, I think market share is necessary for the survival of every enterprise. When you don’t have market share, the profits are actually fake,” he said.

A litmus test for JD’s efforts is this month’s “6.18” bargains extravaganza, the summer online sales event often compared with Black Friday and China’s own Nov. 11 gala, when major names from Apple Inc. to Xiaomi Corp. ply shoppers with discounts.

JD saw demand rebound in select categories such as cosmetics and apparel and its final transactions tally would be “a surprise,” Xin said without elaborating.

What Bloomberg Intelligence says

“Last month’s acceleration of mainland China’s sequential gains in online retail sales from pre-Covid levels raises the likelihood that the gross merchandise value which Alibaba and JD.com derive from the 618 shopping festival, now underway, will rise above year-earlier levels. The lift to online spending from ecommerce firms’ offer of higher perks, including perks from ByteDance’s Douyin, Kuaishou and Little Red Book, could fuel stronger sales gains online than in physical stores this month.”

— Catherine Lim and Trini Tan, analysts

Sale volume

In the first 10 minutes of the event starting late May 31, nearly half of the small and medium-sized merchants that took part tripled volumes from the prior year. The overall turnover of men’s and women’s clothing on the platform more than doubled, JD said. Taobao and Tmall, the marketplaces of JD’s larger rival Alibaba, also shifted the focus of this year’s 6.18 to smaller vendors versus mega-brands.

JD needs a solid result to convince investors keen for signs of a Chinese consumption recovery. The company has experienced slowing growth for its signature June event over the past years. Transaction volumes growth declined to 10.3% last year, from 27% in 2019 and 33.6% in 2020 during the pandemic.

“As long as the measures to expand our market share are reasonable, we should take them to serve more consumers and gain recognition,” Xin explained. “If we do, we’d gain long-term market share.”

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Those first-quarter sales figures suggest 2023 could be another record-setting year for ecommerce. In February, Digital Commerce 360 reported that total 2022 ecommerce sales reached $1.03 trillion — the first time ecommerce revenue had topped the $1 trillion level.

Ecommerce penetration was steady at 21.7% in Q1 2023 compared to 21.2% in the year-earlier quarter, according to a Digital Commerce 360 analysis of the Commerce Department data.

While the record online sales spikes of the pandemic have faded, quarterly ecommerce sales have continued to grow, albeit at a slower pace.

In 2021 and 2022, ecommerce had its slowest share of total retail growth on record for two consecutive years. That’s an indication that offline sales are catching up with digital commerce after COVID lockdowns.

How do we calculate ecommerce penetration? 

Digital Commerce 360 studies non-seasonally adjusted Commerce Department data and excludes spending in segments that don’t typically sell online.

These segments include:

• Restaurants
• Bars
• Automobile dealers
• Gas stations and fuel dealers

U.S. ecommerce penetration reflects the share of dollars consumers could potentially spend online.

The Commerce Department defines ecommerce sales as the sales of goods and services where an order is placed by the buyer or price and terms of sales are negotiated over an internet, extranet, Electronic Data Interchange (EDI) network, electronic mail, or other online system. The customer may or may not make the payment online. The Commerce Department publishes estimates it has adjusted for seasonal variation and holiday and trading-day differences, but not for price changes.

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

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Follow us on LinkedIn, Twitter and Facebook. Be the first to know when Digital Commerce 360 publishes news content.

The post US ecommerce Q1 sales rise, but penetration is flat appeared first on Digital Commerce 360.

While some retailers like Kohl’s Corp. discontinued its curbside pickup service in August 2022, and book retail chain Barnes & Noble removed designated parking spots for curbside, others are ramping up services.

Tractor Supply Co. (No. 102 in the Top 500) is investing more in BOPIS and curbside. The retailer’s conversion rate for these omnichannel services is 60% higher compared with home delivery. Men’s big and tall apparel retailer Destination XL Group Inc., (No. 458 in the Top 500) prefers to use its stores as additional fulfillment locations “as a last resort.” And home improvement merchant The Home Depot Inc. (No. 4 in the Top 500) is investing in its mobile app to give shoppers the flexibility to research products while in store as well as navigate BOPIS and curbside.

Omnichannel report findings

US ecommerce growth falls as shoppers opt for in store

Retail chains are giving Amazon a run for market share. Amazon and its third-party marketplace sellers represented 35.7% of digital spending in the U.S. in 2022. That’s down from 36.9% in 2021. While the web giant accounted for a fifth — 20.7% — of all gains in U.S. ecommerce in 2022, according to Digital Commerce 360, that’s a big drop compared with 34.4% in 2021 and 35.1% during the pandemic-fueled ecommerce boom of 2020. There’s ground to be gained by retailers able to leverage technology and strategy — like omnichannel services — to convert a shopper who wants convenience and dependability online and in store.

Digital Commerce 360 projects U.S. retail sales will grow 4.2% in 2023 to $5.08 trillion. Online retail sales will increase 5.8% to $1.08 trillion — the slowest growth for total retail since 2019 and for e-retail since the banking crisis of 2008-2009.

Ecommerce growth has slowed, but it continues to take market share from brick-and-mortar stores. U.S. ecommerce grew 7.7% in 2022. That’s less than half of 2021’s 17.8% and still lower than pre-pandemic 2019 with 12.5% growth.

BOPIS and curbside availability shifts in the Top 500

Retail chains in the Top 500 in 2023 reflect a consumer more comfortable returning to in-store shopping while leveraging online buying capabilities. BOPIS for retail chains in the Top 500 reached 82.7% penetration in 2023, up from 76.3% in 2022.

Curbside for retail chains in the Top 500 declined to 47.5% adoption in 2023, down from 61.2% in 2022. The ability to schedule an in-store appointment also dropped, to 16.5% in 2023 from 24.5% in 2022. This suggests that consumers are returning to impromptu shopping as pandemic-related fears subside and people are no longer fearful of gathering in public.

2024 Omnichannel Report

Analysis of omnichannel trends for the Top 1000 U.S. retailers. It includes over 15 charts, consumer survey results on omnichannel shopping habits, and new developments in the race to fulfill online orders.

View Details

This article is based on Digital Commerce 360’s 2023 Omnichannel Report. Digital Commerce 360 Gold and Platinum Members receive a complimentary copy of this report as part of their membership. Non-members can purchase a downloadable PDF of this report for $399. View the table of contents here.

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Evite’s user activity plummeted roughly 95%, says Evite’s current CEO David Yeom, down to consumers sending about 1,000 invites a day. This is compared to normal pre-pandemic activity, with consumers sending 20,000 invites every day to 30-plus people, he says.

When the pandemic began, publicly traded media conglomerate Liberty Media Corp. owned Evite. As 2020 wore on and the COVID-19 pandemic raged, Yeom decided to buy out Evite with business partner George Ruan for an undisclosed sum in September 2020. As the new CEO and without public investors to please on a quarterly basis, Yeom used the lull in events as an opportunity to do a major rehaul of Evite’s customer experience and change its business model.

“What’s there to risk? User activity is down in the dumps,” Yeom says. “When you don’t have much to lose, in many ways, that gave us the opportunity to finally make the changes we’ve always wanted to make and get the business back on the path to greatness that it should be on.”

Evite pivots to revenue from premium upgrades from advertisements

Instead of relying on revenue from ads, Evite’s primary revenue stream now is from users upgrading to a premium invitation, which costs $15.99-$89.99. With premium, users have access to enhanced features, like hiding the guest list for an event, no ads on the invitation and access to premium designs, such as ones with a Disney character, premium fonts, animation, envelopes and a design-your-own feature. About 10% of its users pay for premium invitations and this accounts for roughly half of Evite’s revenue, Yeom says.

A third of its revenue is now from affiliate marketing. Evite showcases products that would be relevant to a party, such as paper plates or balloons for the host, or gift ideas for an attendee, from other retailers including Amazon.com Inc., Target Corp., Walmart Inc. and Etsy Inc.

That leaves the remaining roughly 17% of the revenue from advertising, which is now an automated program. Advertising used to be the primary source of its revenue. But the ads were getting in the way of the user experience, Yeom says. Typically, users saw an advertisement at each step in creating the invitation or RSVPing to an event.

“It was too much and everywhere,” Yeom says. “Basically 90% of all those ads are gone now.”

Evite’s move to generate revenue from premium features instead of ads is smart, says Paula Rosenblum, co-founder and managing partner at retail consulting firm RSR Research.

“Websites that are so filled with ads — mostly re-targeted, to boot — are incredibly annoying,” she says. “I’d gladly pay a little to stop the endless parade so I could take my time and peruse the products and/or services.”

But, Evite has to tread lightly with how it showcases its affiliate products, as those can appear just like an ad to a consumer. For example, in an email about a party, Evite will have a link to buy the host a gift from one of its affiliated retailers.

Or, after an invitee RSVPs to an event, Evite shows a pop-up to send the person a gift from one of its affiliates. Yeom says party-throwers have the option to turn this off and about a quarter of consumers elect to do so, he says.

Evite prompts party-goers to buy a gift from one of its affiliate retailers.

“We want to have good balance, and not fall back in the traps of what we used to be as a business,” Yeom says.

Yeom says the affiliate product links are meant to be helpful to planning or attending an event, whereas a banner ad may not be. RSR’s Rosenblum says many affiliates have successfully provided links to other merchants without annoying users.

This overhaul in revenue, however, was a tough change, as half of Evite’s employees were either on the sales team or supported the sales team. At the end of 2020, Evite eliminated its sales team and those employees were let go or received a new role.

Many employees had an “if it’s not broke don’t fix it” mentality about the ads, Yeom says. But that attitude had to go, he says.

“There’s a better way, and you don’t have to compromise the experience for guest or host,” Yeom says.

The new Evite launches

The rebranded Evite launched in April 2022, when many U.S. consumers had already resumed their normal pre-pandemic activities. And that includes going to events, celebrating milestones and going to parties. Meaning, Evite has regained its 100,000 annual active users, who send and receive Evites.

A year after this pivot, Evite turned a profit for the first time in a decade, the company says. Plus, in the birthday category specifically, user activity “has never been higher,” with users sending 25,000 birthday invites every hour, Yeom says without sharing more.

User feedback has been “phenomenal,” Yeom says, and Evite plans to continue adding upgrades to its premium service.

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The post What online retailers can learn from Evite’s business model pivot appeared first on Digital Commerce 360.