17 June 2022
eBay, Walmart and Roku are mixing entertainment and commerce
Plus, Walmart is bringing fulfillment tech to the store, and Meta's designer digital clothes.
Plus, Walmart is bringing fulfillment tech to the store, and Meta's designer digital clothes.
Welcome to Near Future. In this weekly feature, The Current spotlights innovations powering the next wave of commerce.
With Stores are becoming part of ecommerce, while video is getting more shoppable.
It’s all part of the evolution of ecommerce taking place through betas, pilots and tests being conducted by brands and retailers.
Here are a few forward-looking initiatives that caught our eye this week:
Walmart is making brick-and-mortar stores a key piece of its ecommerce strategy.
It might sound like a paradox, but details the retailer released this week about a store in Toronto help the strategy make sense.
Walmart said space inside a Walmart store just outside Toronto in Scarborough, Ontario, was recently repurposed with technology designed for order fulfillment. Working side-by-side with automated technology and proprietary Walmart systems, about 200 associates will support fulfillment of grocery orders and pickup from the store.
This allows the associates to pick items for online grocery orders six times faster than they would on a regular sales floor. One of the advantages is tighter inventory control, Walmart said. This results in fewer substitutions, and automated processes. The system also uses data to manage the freshness of items that will be selected.
Though they are being installed at a single store, the introduction of these systems will help with scale. According to Walmart, it can now fill 1,200 grocery orders a day at the site. Further, more than 70% of downtown Toronto customers could have online grocery deliveries fulfilled through the store. The company said it will also be able to reach customers in underserved areas from the store, as well.
"We've embraced technology to help us increase capacity for orders, providing our customers with more available timeslots and expanded access to delivery," said Walmart Canada Chief Ecommerce Officer Laurent Duray, in a statement. "Our associates and our stores are the key to the journey we're on to keep making the online shopping experience better and faster for our customers."
Outfitting stores with fulfillment technology is part of a C$3.5 billion investment that Walmart is making in infrastructure and shopper experience for ecommerce. In the US, it has a network of 4,700 stores which can be put to work as part of the ecommerce strategy. Walmart Chief Ecommerce Officer Tom Ward told CNBC recently that 75% of the company’s stores currently fulfill ecommerce orders, and it is making upgrades in those stores, as well.
The renovation of a segment of the Toronto store to reach a wide area fits into a less-is-more strategy that is beginning to emerge as Walmart rolls out details of its ecommerce upgrades. Earlier this month, the company announced the upcoming construction of four new fulfillment centers that will enable it to reach 75% of the US population via same-day or two-day delivery.
For Walmart, stores, regional distribution centers and larger fulfillment centers are all working together toward ecommerce.
A shoppable streaming ad. (Courtesy photo)
Walmart is also one half of a partnership that’s bringing ecommerce to streaming TV.
In a blend of entertainment and commerce, the retailer is partnering with Roku to make TV ads on the streaming service shoppable.
Here’s how it works:
Roku previously teased such a service at this year’s Newfronts advertising event. With the partnership, Walmart is the exclusive retailer making products available on Roku. Walmart will handle all fulfillment of these items. Roku is putting its advertising technology, called OneView, to work with this partnership for targeting and measurement.
Walmart and Roku say that the experience seeks to go beyond QR codes. Instead of scanning a code that brings a checkout page up on a mobile phone, the buying experience remains on the TV screen.
“We’re working to connect with customers where they are already spending time, shortening the distance from discovery and inspiration to purchase,” William White, chief marketing officer at Walmart, said in a statement. “No one has cracked the code around video shoppability. By working with Roku, we’re the first to market retailer to bring customers a new shoppable experience and seamless checkout on the largest screen in their homes – their TV.”
It comes as commerce is increasingly being embedded into digital spaces where people gather. Long a home of advertising for brands, a host of social media platforms are now adding in-app shopping and brand storefronts. TV, of course, is no stranger to advertising. Instead of using a remote to change the channel when an ad comes on, this feature holds the promise of clicking "buy" on an ad, instead.
Following this initial pilot, the companies said they are planning to introduce “deeper commerce experiences that meet customers where they are.”
eBay Live is starting with trading cards. (Courtesy photo)
Looking to translate success in China to the North American market, ecommerce marketplaces are continuing to integrate live shopping capabilities into their experiences. It's another way ecommerce and entertainment are blending.
The latest example comes from eBay, which is launching a new platform for live shopping that’s dedicated to trading cards and collectibles.
The eBay Live app, which is currently in beta, allows shoppers to interact directly with hosts through chat and reaction buttons. Meanwhile, it has functionality to make it possible to purchase items shown on a livestream.
The first event to take place on the platform will offer a curated selection of trading cards from top eBay seller Bleecker Trading, and will be hosted by trading card enthusiast DJ Skee. It is set to begin at 3 p.m. EST on June 22.
Designer duds in the metaverse. (Courtesy of Meta)
Just before the week was out, Meta announced a new way to shop for designer brands to style your digital likeness. Here's the announcement from CEO Mark Zuckerberg:
The Avatars Store will be rolling out in the next week Facebook, Instagram, and Messenger so you can buy digital clothes to style your avatar. Digital goods will be an important way to express yourself in the metaverse and a big driver of the creative economy. I'm excited to add more brands and bring this to VR soon too.
Zuckerberg shared that designers that looks from designers Balenciaga, Prada, and Thom Browne will be available. It's one sign of how the metaverse will offer a whole new way to shop. Just like shoppers outfit themselves and buy goods IRL, the groundwork for digital buying is being laid now.
Upping marketing spend, growing loyalty members and multichannel sales are key to the beauty brand's strategy.
Digital commerce is helping e.l.f. Beauty pour fuel on the fire.
The brand continues to be one of the shining examples of the staying power of beauty products despite consumer pullback in other areas of discretionary spend. e.l.f. grew net sales 48% in the fiscal year ended March 31 as it reached $500 million in sales for the first time. For the most recent quarter, sales grew by a whopping 78%. The company is seeing profit gains as well, as adjusted EBITDA grew 56%.
With the top-line revenue flowing, the brand was opportunistic about how it invested in marketing in the most recent quarter. After upping spend to 33% of net sales in the quarter, the company ended up with marketing and digital investment at 22% of net sales for the year. That was well above the higher end of its 17% to 19% outlook. In the coming year, it expects 22% to 24%.
The fact that digital and marketing fall in the same category reflects the brand’s approach to marketing. It's a favorite among Gen Z, and has found a home on the social apps that are popular with the generation.
“Our disruptive digital-first marketing engine has built strength across multiple social platforms,” CEO Tarang Amin told analysts on the company’s earnings call. “We are a pioneer on TikTok and are now a four-time TikTok billionaire with our last hashtag challenge garnering nearly 15 billion views. We were the first major beauty company to launch a branded channel on Twitch and the first beauty brand on BeReal.”
As a sales category, digital penetration is now 17%, growing from 14% last year. The channel grew 75% in the most recent quarter.
Amin laid out three factors driving this trend:
Marketing. The marketing investment that e.l.f. made brought strong returns, and the digital-first nature of those ads are bringing people to the brand’s digital sales channels.
Loyalty. E.l.f.’s Beauty Squad loyalty program has 3.7 million members, which is a 25% year-over-year increase. Loyalty members are the biggest driver of the brand’s digital business, accounting for over 80% of sales on the brand’s DTC site.
Multichannel. e.l.f. is the only one of the top five mass cosmetics brands that has a DTC site, Amin said. It is also seeing strong growth at Amazon and other retailer ecommerce websites. The growing presence is “building upon itself,” Amin said.
With digital growth, the brand is seeking to expand capacity in the supply chain that will provide more efficiency and faster delivery, as well. It is shifting to a more distributed ecommerce fulfillment model. Previously, it had one automated warehouse in Columbus, Ohio, which meant shipping to the West Coast could take time. Now, it is moving to a multinode distribution network. With the first couple nodes up and running, there is already improvement in delivery times.
The brand is also adding distribution capacity to its main warehouse in Ontario, California.
As marketing helps more people discover and buy from the brand, the operational improvements will help create a customer experience that lives up to the hype.