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Think back to January 2022.
Holiday ecommerce sales had just broken records. Omicron and supply chain snarls were making headlines. Inflation and reopening were not at the top of the conversation, yet.
A lot can change in a year.
In the spirit of reflection, we posed a question to ecommerce leaders as we looked back on a year of change:
What ecommerce trend in 2022 surprised or inspired you?
The answers dig deep into operations like checkout and CX, and step back to consider the big-picture shifts in media and technology that are reshaping commerce.
Below is a look at the responses in full. Once you're done reading, check out the trends that leaders believe will shape 2023.
Consumers are embracing hybrid, connected shopping experiences more than ever as they head back into stores after the pandemic spurred a period of ecommerce acceleration. Brick-and-mortar locations will continue to be a driver for ecommerce activity going forward while interactions with the service or sales teams are holding increased value. And as part of this hybrid experience, we're finding that consumers expect frictionless experiences and flexibility. From alternative payment options to BOPIS to social commerce and beyond, these options allow consumers to shop how they want, when they want, and where they want. We are moving into a blended world of digital and traditional shopping and it will be exciting to see how brands navigate those nuances to come out on top.
–Scot Gillespie, GM and EVP of Commerce Cloud, Salesforce
Between ongoing supply chain challenges and inventory issues dominating headlines for the better part of the year, it's no surprise that 77% of U.S. consumers were worried about product shortages heading into the 2022 holiday shopping season. This made it all the more important for ecommerce businesses to get a handle on their inventory – especially if they’re selling across a variety of channels like their own ecommerce site, Amazon, Etsy, social media platforms and more. Businesses didn’t just need to know their current inventory levels, they had to figure out ways to communicate that to customers in real-time. We’ll continue to see the importance of real-time inventory management and customer communication in 2023.
–Shilpa Reddy, VP of QuickBooks Commerce, Intuit QuickBooks
Rising CAC, retail media and recommerce
How hard and fast customer acquisition cost (CAC) escalated: It has long been going up, but Meta and Google have just gotten prohibitive. I don't need to go into all the litany of why, but the impact was devastating on DTC business models.
'22 as the year Retail Media Networks (RMNs) achieved mediocrity: Not unrelated to the first point about the difficulty of growing direct brands with traditional social and search channels, even the poorest department stores and big boxes are now rolling out RMNs and marketplace platforms. While not all are good yet (hence the mediocrity), at least it’s an area for a brand's revenue officer or marketer to fund some revenue growth. Let's hope for a continued maturation of these in '23.
Recommerce & returns interception: Instead of commenting on the gross over-production, promotion and inventory this holiday season, we could talk about the positive side in folks actually doing something about climate change. I'm very excited about Zara's rollout of customer-to-customer recommerce in the UK with XRC portfolio startup Recurate. I, like most ecommerce customers, love the customer-to-customer recommerce model, and I hope many other brands will explore this in the future.
-Al Sambar, general partner, XRC Labs
The fall of Kanye West
Seeing multiple companies ensnared in the toxicity of Kanye West’s meteoric fall from grace has spurred others to reevaluate how they work with high-profile personalities moving forward. Despite star endorsements being a hallmark marketing strategy, the unpredictability of public perception and celebrity behavior means retailers should be proactive and start scenario planning to avoid getting “Kanye’d” should a brand ambassador suddenly be caught up in controversy.
–Bob Debicki, Sr. Director, Global CPG & Retail Industry Solutions, Anaplan
The meltdown of the ecommerce aggregator market took many by surprise – and most surprising of all was the speed at which conditions for these companies changed. These businesses started the year as movers and shakers, sponsoring every ecommerce event and pushing to acquire brands as quickly as possible. Then the shake-out began in earnest. To some extent, consolidation and right-sizing of a new industry segment is to be expected. With negative economic pressures and quickly rising interest rates, everything changed. Some struggling aggregators began to look for bailouts or to be acquired themselves, while others just laid low and tried to make it through the storm.
–Lesley Hensell, cofounder, Riverbend Consulting
DTC meets wholesale
In prior years, brands were identified by their channel strategy. You were either DTC or wholesale. Amazon or Shopify. Over the last year, many brands realized that a single channel strategy was no longer enough, and brands expanded their presence across channels. For evidence, look no further than Target aisles, where endcaps now highlight DTC favorites that were once most commonly viewed in Instagram ads. While this motion was building, the acceleration of this omnichannel embrace in 2022 seemed to catch many by surprise. At the heart of the shift was a recognition that the best strategies involve combining the unique data assets of DTC with the ubiquity of marketplaces and the scale of wholesale. As part of this, it was inspiring to see more brands investing in data ownership and the downstream decision making capabilities afforded by such an asset.
–Jesse Leikin, cofounder and chief product officer, Tradeswell
Charging for returns
Retailers charging for online returns gained traction in 2022. Doing this runs counter to what many consumers want, but economic realities and pressures on the bottom line have necessitated some retailers to make this move. Online returns is a huge issue, especially in a category like apparel, and retailers need to take action to reduce the volume.
–Neil Saunders, managing director, GlobalData Retail
Storytelling on Amazon
Brand story went mainstream on Amazon. I have encouraged the selling community for years to tell a story and to tell it well. It was inspiring to see so many FBA sellers pivot and focus on this in 2022. Sellers used tools like video and A+ content to really deliver on this and bring something to the market rather than just a "good product." Expect to see more development here as sellers become more "DTC-like."
–Jon Elder, Amazon seller consultant and founder, Black Label Advisor
Multi-step checkout forms have been incredibly successful in 2022. The overarching idea of user experience and a clear flow, omitting multiple steps in the process, makes a lot of sense at first. However, the real outcome is a long, overwhelming form with dozens of fields, scaring users away and cluttering the web or digital experience. Multi-steps forms provide better experience, clear flow and the ability to remarket users once they submit their email first.
–Mario Peshev, CEO, DevriX
The growth of social networks and the democratization of ecommerce capabilities has truly changed how merchants can build their business. Capabilities once limited to retail giants with massive budgets and access to advanced technologies are now readily available. Now more than ever, anyone who wants to create a retail brand can do so by leveraging ecommerce platforms to create an online store with advanced ecommerce capabilities, as well as generate awareness by leveraging social media and quickly begin selling their merchandise.
-Oren Inditzky, Vice President of Online Stores, Wix
Pre-pandemic, consumers defined ecommerce convenience as speed, better prices, and broad product selection. In 2022, however, that definition has shifted. According to Pitney Bowes BOXpoll research, convenience is now about consumers’ ability to shop whenever and wherever inspiration strikes.
–Gregg Zegras, Executive Vice President and President, Global Ecommerce, Pitney Bowes
One of the most surprising trends this past year was the growth of streaming ecommerce – or live commerce – especially in the North American market. This form of selling had been growing in popularity in certain Asian markets in recent years, and 2022 saw considerable uptake in the western hemisphere. Streaming ecommerce leverages popular online influencers in combination with an integrated buying tool, allowing viewers to make purchases directly while watching the stream. Of course, this idea isn’t particularly new; it’s a modern take on the television infomercials that were popular in the 1990s and early 2000s. But with the massive growth in online streaming content in recent years, brands will likely see a renewed opportunity to connect directly with a large and highly engaged audience.
–Ruslan Fazlyev, GM, ecommerce, Lightspeed
What was most surprising was this year’s nearly 2% decline in average CX quality scores in the U.S., the first decline since 2017, according to Forrester’s 2022 US Customer Experience (CX) Benchmark.
We’re increasingly encountering companies with a growing commitment to improving omnichannel CX as they realize the best way to ensure their continued success is to keep pace with consumer expectations.
–Michael Scharff, CEO and cofounder, Evolv AI
Increased use of artificial intelligence (AI) has continued to revolutionize ecommerce and retail, as companies work to personalize the shopping experience for consumers and optimize their own operations. This greatly inspires our team at GS1 US as interoperability is key and standards, like those from GS1, help to ensure that different systems and technologies can integrate seamlessly, enabling consumers and businesses to easily conduct transactions online. Insights garnered from AI are only as effective as the data provided, and organizations risk business inefficiencies and unhappy customers if the data is not standardized and accurate.
–Melanie Nuce, SVP of Innovation & Partnerships, GS1 US
The awakening of brands to the power of owning and leveraging their own datasets across customers, campaigns and product catalogs. Thanks to iOS, many marketing leaders are vowing to never get caught flat footed again and investing in building this insurance policy. The truly innovative are already deploying machine learning models off these for segmentation and predicting future cash flows.
–Jake and Eulalie Cook, cofounders, Tadpull
Curbside staying power
Curbside pickup is sticky, showing magical things happen when a consumer approaches a retail store in buyer mode. Retailers are selling an additional item in addition to the original curbside order to 30%-45% of their customers. That means consumers show up to pick up their order, and 30%-45% of them are walking into the store to buy an additional item(s) not a part of the original curbside order.
–Spencer Kieboom, CEO, Pollen Returns
The refocus on getting to profitability. The leaders who can get to profitability will not only control their destinies, they will be creating stronger and better brands and setting themselves up for the best possible exits.
-Ben Tregoe, CEO, Bainbridge Growth
The success of companies like Vuori or FIGS inspired me. They zigged when the rest of the DTC industry zagged. Vuori intentionally optimized for wholesale distribution with retailers like Nordstrom—a song as old as time—and outflanked all competitors who rode unsustainable digital ad growth for direct models. Meanwhile, FIGS intentionally focused on customer acquisition channels that weren't paid ads, and were one of the few public direct-to-consumer companies who did okay in 2022.
–Jason Murray, CEO, Shipium
A new post-COVID landscape
A first surprise, at the beginning of the year, was actually the broken trend of the post-Covid growth. The numbers expected were far away from reality and the whole industry had a "black" quarter (Jan-Mar) that ended up into strategy reshapes over the year.
On the other hand, we had confirmation of how the social network industry has been revolutionized (mainly by the TikTok impact). They aren't proper "social networks" anymore, as they connect people less and less, but rather provide content sharing means that became the main channel used by brands to generate awareness and demand. An average Chinese consumer spends 4-5 hours a day on apps as they are caught by them through content. This is where the industry is going.
–Simone De Ruosi, cofounder and CEO, Go Global Ecommerce.
(This story was updated at 3:14 p.m. on 1/5/23.)
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Topping the year's Dealboard: The Kroger-Albertsons merger, Hero's acquisition and Liquid Death's massive valuation.
Every week, The Current rounds up the latest funding and M&A news in Dealboard. As 2022 draws to a close, let's look back at the deals that we're most likely to be recalling for a long time to come. Whether it was due to size or impact, these were the moves that made waves in the industry. Throughout, there are plenty of opportunities to learn from entrepreneurs who exited, and get a glimpse at where the big platforms see commerce heading next.
Check out the top ecommerce deals of 2022:
Kroger x Albertsons merger
The word mega-merger doesn’t often live up to its billing, but this one qualifies. The top two pure-play US grocers announced plans to come together in October in a deal that would see Kroger acquire Albertsons for $24.6 billion. It will combine physical footprints of two grocers that already have a nationwide reach, as well as data from a combined 85 million households to fuel retail media and personalization. This is not a done deal, as there are regulatory hurdles to clear before the deal closes and the companies will likely have to give up some stores. But the move in and of itself signals how the grocery market is being reshaped by big players like Walmart, Amazon and Costco, as well as digital and delivery offerings that saw use accelerate in the pandemic.
Liquid Death’s $700M valuation
Image: Liquid Death
The Liquid Death story was already becoming a touchstone of brand building lore, as many looked to study the strategy and tactics that made canned water one part craft beer, one part punk rock. The company’s living legend was only confirmed further by a $70 million Series D fundraise in October that valued it at a whopping $700 million. Will it be the next startup brand to IPO?
Hero Cosmetics acquired
Ju Rhyu and Hero Cosmetics showed the way to launch a brand on Amazon, and boostrap to acquisition in five years. On the back of the runaway popularity of The Mighty Patch, the acne and skincare brand was acquired by Church & Dwight for $630 million in a deal announced in September. In a year where the direct-to-consumer model came under pressure from rising CACs and privacy changes, Hero’s story showed another path, and provided hope to disruption-minded founders everywhere in the process. The brand's story is already the subject of Twitter threads across the platform.
Resale was among the hottest retail trends of 2022, as climate concerns and logistics imperatives led brands and retailers to stand up and expand channels to make secondhand products part of their primary offerings. The movement in the market included deal activity among the existing players. Poshmark was acquired by resale South Korean internet giant Naver in an October deal valued at $1.2 billion. A few weeks later, resale platform manager GOAT Group added men’s fashion with the acquisition of Grailed. It’s a reminder of a truism about emerging market areas: Growth can bring consolidation. Is more coming in resale?
Amazon acquires the RoombaA Roomba in action. (Photo via iRobot)
While the theme of most Amazon news tended toward correction and cutback this year, the company was still making plenty of moves to grow in 2022. On the commerce side, nowhere was that more visible than in the acquisition of Roomba maker iRobot. The $1.7 billion deal was Amazon’s fourth-largest acquisition ever. As always with Amazon, this wasn’t only about adding a new product to the portfolio; it was also a way to get closer to the customer. The robot vacuum gives Amazon a window into the home through data. How will it use it?
Shopify's app marketplace offers independent entrepreneurs and developers space to build software that powers direct-to-consumer commerce right alongside the company. Shopify has extended this unique role as ecosystem leader into making investments and acquiring software that it can add to its offerings. That role was prominently on view in two of the deals that turned industry heads this year. To speed expansion in logistics and delivery, Shopify acquired Deliverr for $1.2 billion in a May move that was widely viewed as a counterpoint to Amazon’s then-recent launch of Buy With Prime. Then, in August, Shopify made a $100 million investment in Klaviyo that gave the email and SMS marketing automation software company recommended email partner status with the biggest merchants on its platform. These were just a couple of the highlights in an active year. With Wall Street veteran Jeff Hoffmeister now onboard as CFO, it leaves us pondering what’s on Shopify’s dealboard heading into 2023.
Pinterest x The Yes
Sometimes, an acquisition is exhibit A in where a company is heading. That was true of Pinterest this year. In June, the visual discovery-based social platform acquired The Yes, a fashion-focused shopping platform that uses AI to provide users with a personalized feed. This was quickly followed by the announcement of former Google commerce chief Bill Reddy as the Pinterest's new CEO, and the rollout of a series of new features. With The Yes cofounder and leading ecommerce mind Julie Bornstein leading shopping efforts, Pinterest is poised to integrate shopping more deeply into the experience at a time when platforms are keen to become the first to crack the social commerce code. We'll hope 2023 brings a look at what they're building.
Of the many categories where disruptive brands made an impact, intimates stood out. DTC brands saw an opening to market directly to women, and offer digital shopping experiences while incumbents were still at the mall. This year saw the disruptor and the incumbent come together, as Victoria’s Secret acquired Adore Me for $400 million in November. Victoria’s Secret has aggressively added new products to reinvent itself, but the Adore Me acquisition figures to expand capabilities like home try-on and personalization that could change how the brand reaches consumers, as well. This deal came after fellow disruptor ThirdLove bought Kit Undergarments, offering a sign that even the newer brands have to stay fresh to reach Gen Z.
Instacart’s IPO was the landmark deal of 2022 that wasn’t, as the grocery tech company confidentially filed for a debut on the public markets back in May, then delayed the offering by the end of the year amid a broader market slowdown. Yet Instacart made plenty of acquisitions in the meantime. There were deals in September to bring on pricing and promotions platform Eversight and independent grocery ecommerce platform Rosie. Plus, it acquired smart cart maker Caper AI in fall 2021. In 2023, one question for the company will be how these new teams and technologies integrate with Instacart's existing offerings.
Farfetch building luxury destinationFarfetch CEO José Neves and NMG CEO Geoffroy van Raemdonck. (Courtesy photo)
Farfetch hasn’t been shy about its ambitions to bring luxury into the ecommerce era. Status requires spending, and two deals this year show that Farfetch was willing to back up the talk with significant checks. In April, it invested $200 million into Neiman Marcus Group to bring its platform prowess to the department store retailer. The potential game-changing move came over the summer, when it acquired a sizable stake in Yoox Net-a-Porter that could see it own the fellow platform in the next five years. Johann Rupert, chairman of former Yoox owner Richemont laid out the goal ahead succinctly: “Building an independent, neutral online platform for the luxury industry that would be highly attractive to both luxury brands and their discerning clientele.”
eBay adds to the collection
Look at eBay’s strategy roadmap, and there’s a 2022 deal to pair with many of the planks. Pop culture? It now has a 25% stake in Funko. Auto parts? It now owns myFitment. Collectibles? It acquired trading card marketplace TCGPlayer. NFTs? It brought on the marketplace KnownOrigin. eBay has proven very acquisitive over the years, so we don’t expect this wave to taper off.