Albert Nahmad, founder, chairman and CEO, Watsco Inc.

The company said quarterly revenue rose 6.8% year over year. That’s up to a record $2.139 billion for the second quarter ended June 30. And ecommerce grew at nearly twice that rate, at 13%, to $770.16 million.

In Q2, Watsco ecommerce sales accounted for 38% of total sales. Watsco is well-known as a prominent online distributor in the highly fragmented, $64 billion North American HVAC and refrigeration products industry.

“A cornerstone of Watsco’s growth strategy is the acquisition of long-standing, family-owned businesses,” Nahmad said on the Q2 earnings call. He noted that, since its founding in 1989, Watsco has completed 69 acquisitions, “achieving industry-leading scale and preserving many wonderful business legacies into future generations.”

Nahmad added, “Over the last five years, Watsco has acquired eight businesses that today generate approximately $1 billion in annual sales.”

Watsco’s entrepreneurial spirit and ecommerce sales focus

The company’s growth strategy relies heavily on continuing the entrepreneurial spirit of acquired companies, whose executives typically remain to lead their operations.

“Simply put, Watsco’s entrepreneurial culture, which empowers local leaders to make local decisions, continues to perform well,” Nahmad said on the earnings call today.

He noted that Watsco’s long-running strategy of investing in digital commerce technology “continues to have an impact” on financial performance.

“Greater adoption and use of our platforms by a growing number of contractors has produced growth and market share gain,” he added.

Watsco is a Miami-based company that other HVAC suppliers have said they emulate for its digital commerce strategy. It also noted other developments related to its “digital ecosystem of technologies” configured to “transform the customer experience and transform how our industry operates.”

Watsco’s digital ecosystem

The digital ecosystem includes:

• OnCallAir
• Watsco’s HVAC Pro+ Mobile Apps
• Watsco’s product information management (PIM) system

OnCallAir is Watsco’s ecommerce sales platform that lets HVAC contractors digitally engage with homeowners and sell them products and services. It compiled approximately $1.4 billion in gross merchandise value for the 12-month period that ended June 30.

For the six months ended June 30, contractors used OnCallAir to present quotes to about 160,000 households. That’s an 18% year-over-year increase. It also generated a 27% increase in GMV to $743 million.

Watsco’s HVAC Pro+ Mobile Apps provide contractors and their customers with real-time access to ecommerce activity. They also include such information as product specifications, inventory availability, systemwide product matchups, and technical support. For the 12 months until June 30, the number of HVAC Pro+ Mobile Apps users grew 12% to approximately 60,000.

Watsco’s product information management (PIM) system is a repository of rich product data. It provides data on over 1.5 million SKUs to more than 375,000 contractors and technicians who visit or connect digitally with one of its nearly 700 physical locations across the United States, Canada and Latin America.

Watsco is updating its technology systems to “optimize the launch of new GWP (Global Warming Potential) A2L” refrigeration systems designed to be more efficient and sustainable to reduce the adverse effect of refrigerants on climate change.

Though it accounted for 38% of total Q2 sales companywide, Watsco ecommerce sales exceeded 60% in some regions.

Watsco’s pitch to would-be partners: ‘Come to Miami to see us’

In his earnings call remarks, Nahmad, forever on the lookout for acquisitions, said, “Our proven culture, customer-focused technologies, scale and access to capital provide unique advantages and opportunities.” He added to anyone listening: “If you have an interest in learning more, please come to Miami and see us. We are transforming an industry, and we would enjoy telling you about it.”

Here’s last quarter’s update on Watsco ecommerce sales.

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

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In other words, if Amazon is holding a sales event, so are other online retailers. Furthermore, if Amazon is holding a sales event, consumers are shopping — whether on Amazon or elsewhere — to capitalize on promotions.

Amazon is No. 1 in the Top 1000, Digital Commerce 360’s database of North America’s largest online retailers based on web sales. It’s also No. 3 in the Global Online Marketplaces database, which ranks the 100 largest global marketplaces. Digital Commerce 360 projects Amazon’s total web sales in 2024 will reach $469.01 billion.

As one of the largest online merchants on the planet, its decisions — such as when to hold promotions — affect the entire ecommerce industry.

How much did consumers spend on the first of Amazon’s Prime Days in 2024?

U.S. consumers spent $7.2 billion on July 16, the first of Amazon’s 48-hour Prime Day 2024 sales event, according to Adobe Analytics. But that’s not just sales on Amazon.com. Adobe’s analysis is based on 100 million stock keeping units (SKUs) across 18 product categories and covers more than 1 trillion visits to U.S. retail sites.

That $7.2 billion represents 11.7% year-over-year growth and marks the single-largest ecommerce spending day of 2024 yet, according to Adobe data. It also substantiates the likening of Prime Day to “Black Friday in July,” as some retailers offered promotions using the marketing term that overlap with — or directly compete against — Amazon’s sales event.

200 online retailers in the Top 1000 use Adobe Analytics for their web analytics, and 97 use it for site design and development. Top 1000 online retailers also use it for content delivery and management, as an ecommerce platform, a marketing platform, for personalization and more.

Trending spending habits

Moreover, the first 24 hours of Amazon’s Prime Day 2024 event also marked the biggest mobile shopping day of the year so far, Adobe said. The Amazon Prime Day effect contributed to $3.5 billion in mobile spending on July 16, which is 49.3% of sales, nearly equal to desktop shopping.

Specific categories drove the sales, Adobe data shows. Electronics sales as a whole increased 33% compared to average daily sales in June 2024, Adobe said. Across specific products, headphones and Bluetooth speakers saw the largest sales growth at 164%, followed by:

• Televisions (up 83%)
• Fitness trackers (81%)
• Tablets (71%)
• E-readers (65%)
• Computers (64%)

Consumers used curbside pickup for 18% of online orders from online retailers that offer the service. That represents a decrease from 20% for the same period last year, Adobe said.

Buy now, pay later (BNPL) accounted for 7.5% of online orders in the first 24 hours of the Prime Day 2024 event. That represents $540 in revenue, which is a 17.1% year-over-year increase, according to Adobe.

“Steep discounting has been the story of e-commerce so far this year, as consumers look to get the most value out of their dollar,” said Vivek Pandya, lead analyst at Adobe Digital Insights, in a statement. “It is driving up demand for major categories like electronics and apparel, which have seen more modest growth in recent months, while also capturing back-to-school shoppers at just the right moment.”

What is the Amazon Prime Day effect?

Prime Day creates a small “halo effect” for North American retailers, as Salesforce puts it. Online sales growth in North America hit 3% year over year in the first 24 hours of Prime Day, according to the platform provider, based on the activity of 1.5 billion shoppers across Salesforce Commerce Cloud and other Salesforce products. Its results encompass retailers and brands outside of Amazon, it said. Web traffic to North American online retailers grew 4% year over year.

In North America, 76 of the top 2000 online retailers use Salesforce as their ecommerce platform, according to Digital Commerce 360 data. And in 2023, those 76 online retailers combined for more than $136.077 billion in web sales.

In the U.S., specifically, online sales grew 3% year over year during the first day of the event. For Canada, that was 4% growth over the same period. Meanwhile, web traffic to online retailers grew 4% in the U.S. and 6% in Canada.

Globally, year-over-year sales during the first 24 hours of the Prime Day event were flat for retailers other than Amazon, Salesforce said. However, global web traffic to Salesforce-powered online retailers grew 2% year over year for the first 24 hours.

Salesforce also broke out which categories had the largest sales growth and discounts during the first 24 hours of the 2024 Prime Day event.

Top-performing verticals by sales growth

1. Health & Beauty (23% increase)
2. Active Footwear (10%)
3. General Handbags (12%)

Highest discounts globally by category

1. General Apparel  (average discount of 28%)
2. Beauty & Makeup (26%)
3. Home & Furniture (24%)

Global discounts grew 10% year over year during the first 24 hours of the Prime Day event, Salesforce said. The average discount rate across categories was 20%.

Highest discounts by category in the US

1. General Apparel (average discount of 33%)
2. Home Goods, which includes dining, furniture and art (23%)
3. Health & Beauty (20%)

Discounts from U.S. online retailers grew 13% year over year during the same period, according to Salesforce. The average discount rate across categories was 22%. For online retailers in Canada, those figures are 8% and 27%, respectively.

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If the two-day Amazon Prime sale event July 16 and 17 does drive $14 billion in ecommerce activity, that would represent a 10.5% increase year over year. It would also be the highest-ever result recorded during Amazon’s best-known promotion.

Adobe’s analysis is based on 100 million stock keeping units (SKUs) across 18 product categories. 200 online retailers in the Top 1000 use Adobe Analytics for their web analytics, and 97 use it for site design and development. Top 1000 online retailers also use it for content delivery and management, as an ecommerce platform, a marketing platform, for personalization and more. The Top 1000 is Digital Commerce 360’s database of North America’s largest online retailers based on web sales.

Why Prime Day could see ecommerce sales reach $14 billion

“Adobe expects day 1 of the Prime Day event (July 16) to drive $7.1 billion online, up an impressive 11.3 percent year-over-year (YoY),” Vivek Pandya, the director at Adobe Digital Insights, wrote in a July 15 blog post. “Day 2 (July 17) is expected to drive $6.9 billion online, up 9.2 percent YoY.”

In addition, Pandya said Adobe anticipates July 16 will “be the biggest mobile shopping day of the year so far, driving $3.4 billion in online spend, and representing a 48.4 percent share compared to desktop shopping.”

Why the dramatic increase from 2023? Among the factors cited are deeper discounts ranging from 9% to 22% off listed prices, according to Pandya. He also credited back-to-school shopping, where Adobe already saw an 80% increase in spending during the first week of July. With Prime Day occurring closer to the beginning of the new school year after landing on July 11 and 12 in 2023, proximity could fuel more buying activity, Adobe predicts.

Buy-now-pay-later (BNPL) promotions may fuel activity as well.

“Adobe expects a substantial uptick in BNPL usage during the Prime Day event, driving between $1.09 and $1.11 billion in online spend across both days, and representing 18.1 percent and 19.6 percent growth YoY, respectively,” Pandya wrote.

How important is Prime Day for Amazon?

Now in its 10th year, Amazon uses Prime Day to drive paid memberships to its Amazon Prime membership program, in addition to sales of its own products and those of third-party sellers. In 2024, the company announced that Prime members would have “exclusive access to millions” of deals. Some of those deals would be circulated through invitations that only Prime members can request. Examples include 40% discounts for Sony wireless headphones and as much as 30% off Peloton products.

Amazon web sales by year

Amazon is No. 1 in the Top 1000. It’s also No. 3 in the Global Online Marketplaces database, which ranks the 100 largest global marketplaces. Digital Commerce 360 projects Amazon’s total web sales in 2024 will reach $469.01 billion.

Alongside other promotions this year, Amazon is showcasing back-to-school and college shopping deals. The online retailer is offering young adults and college students special “Prime Student” accounts with six-month trials. Those offers will be accompanied by discounted Amazon Basics products for school-related needs.

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HVAC equipment distributor Parts Town launched this week a visual search feature on its mobile app designed to quicken how contractors identify and purchase the exact parts required for a particular unit of HVAC equipment.

Jeff Audette, senior vice president, HVAC, Parts Town

Rather than looking up an HVAC unit’s details and calling them in to a parts center, contractors can now use the new HVAC Data Plate Scanner in the Parts Town app to scan the manufacturer’s data plate attached to the HVAC unit they’re servicing.

The scanner identifies criteria such as the unit’s model and serial numbers, circuit ampacity, and circuit break size. The app’s scanner supports the scanning process by using optical character recognition (OCR) technology.

The app then directs users to a product landing page on PartsTown.com that displays information on the OEM (original equipment manufacturer) parts and service manuals available for the identified unit. Contractors have the option to place an online order through the app or contact a Parts Town rep.

“Technicians are the backbone of our industry,” says Jeff Audette, senior vice president of HVAC at Parts Town. “Our mission at Parts Town is to equip our customers with the tools they need to work efficiently and effectively.”

Parts Town is still beta-testing the data plate scanner to gather customer feedback for making ongoing improvements, Parts Town says. The scanner’s initial launch supports products from the Trane and YORK brands, but Parts Town, which distributes HVAC parts from dozens of companies, says it will expand it to include “a wider range of manufacturers in the near future.”

Paul Hancox, senior vice president, ecommerce, Parts Town

Parts Town Unlimited also distributes parts for food-service equipment parts and residential appliances. The privately held company reported a 25% increase in 2023 revenue to $2.3 billion, crediting continued growth in B2B ecommerce from new features. It has said ecommerce accounts for about 70% of its total sales.

Paul Hancox, Parts Town’s senior vice president of ecommerce, will speak on B2B ecommerce growth strategies at the EnvisionB2B Forum in Chicago on Sept. 12.

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

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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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Comparable sales declined 5.7% in the same period. Meanwhile, ecommerce sales had back-to-back quarters of positive growth, according to CEO Steve Lawrence. Academy Sports also announced an exclusive partnership with DoorDash that offers its consumers same-day delivery from its stores.

The retailer has 285 stores in 19 states. It opened two new stores during its fiscal Q1. Looking ahead, Academy Sports plans to open another 12 to 14 stores in the second half of the year.

Lawrence said in a statement that the retailer’s Q1 results reflect its consumers remaining “under pressure in the current economic environment.”

In an earnings call with investors, Lawrence explained that part of Academy Sports’ core strategy is to grow its ecommerce sales to reach 15% penetration over the next five years. To achieve that target, he said the retailer’s goals are “to streamline and elevate the omnichannel shopping experience, offer expanded assortments online, and improve our fulfillment speed.”

Academy Sports + Outdoors ranks No. 144 in the Top 1000. The database is Digital Commerce 360’s ranking of North America’s top online retailers by their annual web sales.

Academy Sports + Outdoors ecommerce sales in Q1

In its fiscal Q1, Academy Sports sales totaled $1.36 billion. That’s down from $1.38 billion in the year-ago quarter.

Academy Sports ecommerce sales grew 8% year over year. Additionally, Academy Sports ecommerce sales comprised 9% of total sales in Q1 2024. That compares to 8.2% in the year-ago period. Buy online, pick up in store (BOPIS) and ship-from-store sales represented more than 80% of Academy Sports ecommerce sales.

Lawrence said that “highlights the true omnichannel approach that we’ve taken to growing this business.”

He added that there are three primary sales drivers regarding the retailer’s customers:

1. Newness
2. Value
3. Driving traffic during key periods

Academy Sports also seeks to push its My Academy rewards program by expanding buying power for customers. That includes a welcome offer of 10% off a customer’s next purchase of up to $200. It also includes free shipping on purchases of more than $25. That compares with a $50 minimum for free shipping for non-rewards members. In addition to expanding buying power, Lawrence said those in the program will have faster checkout both online and on its app, as well as “insider access to personalized offers, deals and products, and a birthday reward.”

Academy Sports partnership with DoorDash

As of June 10, consumers can shop from Academy Sports via the DoorDash app. Consumers can order items for same-day delivery from all Academy Sports locations. Those locations are also available on DashPass, DoorDash’s membership program that offers members a $0 delivery fee and reduced service fee on eligible orders.

Chad Fox, executive vice president and chief customer officer, said in a statement that Academy Sports is excited to give its customers “another convenient way to get the products they need quickly.”

“Academy Sports + Outdoors is continually looking for ways to help our customers get to the fun faster, and we believe this partnership with DoorDash will provide them with a new option to get the gear they need,” Fox said in the statement.

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The smaller screen size can make it more difficult to find products, so Casio UK and its G-Shock watch website, have been using content personalization and artificial intelligence (AI)-powered search in an effort to boost conversion. So far, it seems to be working.

One way has been through creating a sense of urgency. Casio UK has tested FOMO (fear of missing out) messaging on its website. Monique Green, ecommerce manager at Casio UK, told Digital Commerce 360 that an SKU with less than 10 remaining units for sale will display messages such as “last chance” or “only five left in stock.” This has driven conversion rates up to 18%, according to Casio.

Using technology from Nosto, Casio UK’s website will display how many times a product has been viewed (on its Casio site) or purchased (on its G-Shock website) in the past 24 hours. Nosto is a commerce experience platform (CXP) that offers automation and AI tools to provide insights on ecommerce data.

Casio sells watches, calculators and musical instruments. It has different ecommerce websites for:

• North America
• Latin America
• Europe (including a separate website for the UK and Ireland)
• The Middle East and Africa
• Asia and Oceania

Casio UK taps Nosto for personalization tools

Although Casio sells wholesale, it said it wants to encourage shoppers to buy directly from both its Casio and G-Shock websites. Using a Nosto feature, Casio and G-Shock’s UK websites have achieved a 40% conversion rate on a retention campaign that triggers a pop-up message offering consumers a discount code. The catch is that it appears when a shopper copies and pastes product details to potentially search online for the same product elsewhere.

Danny Power, head of digital at Casio UK, told Digital Commerce 360 that the retailer’s focus “has been on DTC improvements in the past 5 years anyway, to understand the customer more and serve content that fits.”

He added that Casio UK had “a lot” of customers shopping directly on its websites during the pandemic, but that tailed off over the past few years and is building back up toward peak levels.

“Stock was difficult to move to retailers as their warehouses shut, so customers had to come direct during [the COVID-19] pandemic,” Powers said.

Additionally, Green said, Nosto will generate a pop-up on Casio UK’s site suggesting returning visitors pick up where they left off. That pop-up would take consumers to pages they’ve already visited, nudging them to convert.

“If I want to put a banner on the site, that’s a bit different,” she said. “I would go in and manually do that. But a lot of the things like PLP, products gone out of stock, that would drop to the last page. No one wants to see an out-of-stock product they can’t buy. So that’s, I’d say, like 90% just working in the background.”

Product recommendations

Casio UK said it also uses Nosto’s product recommendations feature “to help consumers find the right products quickly.” The retailer said it uses A/B testing to optimize where those recommendations appear across its site. That can include triggering a notification on a product listing page that a newer model of a product is available. This is driving 26% of sales on G-Shock’s UK site and 11% on Casio UK’s.

Green said Casio UK doesn’t have options on its site to save a product for later or to compare it with another product. However, the site shows recently viewed products at the bottom of the page as consumers are browsing.

“So for example, our GA 2100 is our best seller, and we have it in like four different colors,” Green said. “So before, you would only see that product when you clicked on it. Now, when you click on that product, you can see the different colors also on the PDP.”

Improving search functionality

Casio said Nosto’s AI-powered search makes it easier for consumers — especially those on mobile — to find products on its website by entering attributes including color, shape, or product names.

12% of Casio and G-Shock UK’s site visitors use the search bar during their buying journey. But Casio said its “previous search functionality suffered from a lack of advanced product data processing, meaning it couldn’t provide relevant matches to complex queries unless the team spent time manually linking attributes for each product.”

Other technology Casio UK uses

Green said Casio UK also uses Yotpo for user-generated content. Yotpo is a retention marketing platform that retailers can use to produce reviews, text messages, email, subscriptions and more. Casio UK also uses Hotjar, which offers website heatmaps and behavior-analytics tools.

Heat maps are “really useful, especially when you’re trying to see what’s annoying people or bugs,” Green said. “Or if someone’s clicking on something loads and it’s not working, it helps you pick up things on the website. … But because it requires you to go back and watch it, it’s quite time consuming.”

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Underpinning a 20.7% rise in ecommerce sales year over year, Gary Millerchip, executive vice president and chief financial officer at Costo, listed gold bars and silver sales as significant drivers. Meanwhile, appliances and electronics played key roles as CEO Ron Vachris, who stepped into the role in January, said Costco warehouses have seen returning interest to discretionary purchases in categories such as toys and health and beauty products.

Those warehouses saw two new openings during Q3, both in the U.S., with two more than have since followed in Loomis, California, and Nanjing, China. Millerchip said Costco expects to open 12 new locations in 2024, with nine of those in the U.S., plus “two in Japan and one in Korea.”

Costco is No. 6 in the Top 1000, Digital Commerce 360’s ranking of the largest North American online retailers. Digital Commerce 360 categorizes it as a mass merchant, a group that also includes Amazon.com Inc., Walmart Inc. and Target Corp.

Costco ecommerce sales in Q3

“Total ecommerce sales growth in the quarter was led by gold and silver bullion, gift cards and appliances,” said Millerchip during Costco’s Q3 earnings call, according to a transcript published by Seeking Alpha.

In other metrics, Millerchip pointed to increased activity across Costco’s website and apps.

“Our app downloads were up 32% versus a year ago with about 2.5 million new downloads in the quarter, bringing total downloads to more than 35 million,” he noted. “Site traffic was up 16% and average order value was up 8%.”

In addition, Millerchip said the retailer’s curated marketplace, Costco Next, added eight new vendors during Q3, as the total number of vendors in the marketplace reached 75.

Asked about buy online, pick up in store (BOPIS), which Costco refers to as “buy online, pick up in warehouse,” Vachris described a focused effort for expanded offerings with electronics as a priority.

“Right now, we’re rolling out an expanded buy online pickup in warehouse that is always going to be limited in scope based on the volume in our warehouses that we have,” Vachris explained. “We can’t expand to all categories, but we’re expanding as we currently speak in televisions and other electronic items that are there as — and so yeah, we see that as a real opportunity for us.”

Deliveries and Uber Eats

Meanwhile, delivery picked up during the quarter, with Millership citing a 28% rise in volume year over year, with appliances driving order fulfillment through Costco Logistics.

Costco has also expanded its work with Uber, which Millerchip briefly addressed.

“Previously, Uber Eats delivered Costco orders in Texas and this new agreement allows consumers the ability to order from Costco through Uber Eats across all of Canada as well as 17 states in the U.S.,” he stated. “We are also working to expand this partnership to several of our international countries in the coming months.”

Millerchip said Costco will also begin selling Uber gift cards globally, while providing Uber One membership discounts to Costco members.

Signs of growth in discretionary spending

In a quarter that saw announcements of price cuts from retailers such as Target and Walgreens, Millerchip acknowledged an optimistic outlook on inflation with some price cuts happening in Costco’s warehouses as spending returned to discretionary categories.

“As inflation has leveled off, our members are returning to purchasing more discretionary items,” said Millerchip. “And growth in the category was led by toys, tires, lawn and garden and health and beauty aids.”

Vachris elaborated on customers’ spending habits, crediting Costco’s buyers and saying that although “categories such as the home division and toys are categories that have lagged quite a bit post-COVID,” Costco’s buyers have “rejuvenated those categories.” He cited “sporting goods,” “furnishings” and “domestics” as other discretionary areas seeing renewed sales.

As for price reductions Millerchip mentioned specific cuts for Costco’s Kirkland Signature pine nuts and Kirkland Signature frozen shrimp. However, he framed Costco’s larger strategies for cuts as targeted and not broad.

“We believe our strategy of delivering value to drive unit volume and member satisfaction is the winning combination for us,” he said. “In that vein, our buying teams are constantly aware of changing costs across all of their SKUs and are ensuring that we are capturing all cost decreases quickly so that we can pass on incremental value through price reductions.”

Growing Costco’s retail media network team

Asked about innovation and other changes coming out of his first full quarter as Costco’s CEO, Vachris cited Costco’s retail media network operations as an area where he sees potential.

“We have a significant program now with retail media and we see some great upside potential,” he stated. “We’ve expanded that team and we see some good potential and some good runway for us in that as well, things like personalization and so forth.”

Specifically, he cited “a great opportunity for data,” as an area where other retail media networks are seeking to differentiate themselves, leveraging first-party data to target ads.

Costco earnings

For the fiscal third quarter ended May 12, 2024, Costco reported:

• Net sales increased to $57.39. That was up 9.1% from $52.60 billion in the third fiscal quarter a year prior.
• Costco’s net income in the quarter was $1.68 billion. That was up from $1.30 billion the previous year.
• Costco ecommerce sales increased 20.7% year over year.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports. Here’s last quarter’s update.

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Forever 21 is No. 105 in the Top 1000. The database is Digital Commerce 360’s ranking of North America’s online retailers by web sales. Digital Commerce 360 categorizes it as an apparel retailer.

1. Push customers to a mobile app

The mobile app is the “first and biggest way” that Forever 21 improved checkout, Hawkins said. Two years ago, when he started at the retailer, a mid-single-digit percentage of sales were made on the app. Now, more than 50% of total business comes through the app.

“It’s the single fastest, easiest way to shop Forever 21,” Hawkins added.

Customers can see products similar to others they’ve viewed, and once they check out, all of their information is saved for a faster checkout next time. Through the app, consumers can also see prices and availability of specific products in stores and opt for ship to store, Hawkins said.

2. Offer alternative payment options

Giving customers a variety of payment options is an important way to make sure they complete the purchase, Hawkins said. The apparel retailer allows consumers to pay via Apple Pay, Venmo, PayPal, Klarna and Amazon Pay. 

It’s a matter of choosing a variety of payment types without overwhelming the customer, Hawkins said.

“We don’t want to have every [payment type] out there because more is not always more — sometimes you confuse them with 20 different options,” he said. Payment types like Apple Pay and PayPal speed up the checkout process and save the time needed to enter credit card and shipping information, he added.

3. Optimize the website

Forever 21 took steps to make its website faster for consumers through a third-party vendor, Hawkins said. The entire website is cached and content is loaded from servers close to the customer. About a month after rolling out this change, the website was 50%-80% faster, depending on the device used to access it, he said. 

Consumers don’t have the patience to wait for slow-loading checkout pages, and they expect an instantaneous experience, Hawkins said. Meeting that expectation is good for conversion.

4. Personalization

Forever 21 also added a behavior-informed aspect to its checkout process. For example, a customer will see personalized recommendations when they’re at the checkout page based on other information they’ve shared. There are also recommendations on pages of different products.

“I think checkout is an important piece, but you want to speed the entire process up,” Hawkins said of the customer’s shopping experience.

He noted that speeding up the customer’s journey to checkout is important for retailers to think about, and personalized recommendations help consumers quickly find products they’re interested in. Revenue from personalized recommendations has doubled in the eight months since Forever 21 launched the feature, he said.

5. Show customers omnichannel options

Retailers should give customers many options for receiving a product and make it easier for them to decide to check out, Hawkins said. Forever 21 offers ship to home and store pickup. That helps Forever 21 appeal to consumers with slightly different preferences. For example, a customer who doesn’t want to pay for shipping can elect to ship to a store for free. Or, someone who needs a specific dress by that evening can purchase it via buy online, pick up in store (BOPIS) and have it within a few hours.

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Delivery sales continue to benefit from interest and investment in third-party providers and Walmart, said David Bishop, partner at Brick Meets Click.

“One question related to this growth remains whether many of the newer customers who are attracted by the trial offers will behave like streaming subscription service users who choose to use one service at a time until the ‘free’ period expires, and then jump to the next special offer,” Bishop said.

Grocery executives need to focus on technology that enhances the shopping experience, whether that’s online or in-store, said Mark Fairhurst, chief growth officer at Mercatus, in a statement. Mass merchants, such as Walmart and Target, “have already invested heavily in their mobile apps,” he said. Now, they’re “tapping into emerging technologies like machine learning and AI to better predict and adapt to customer behavior in real-time.”

More online grocery shoppers are buying from mass merchants as they seek cost savings and benefit from membership and subscription programs, Brick Meets Click and Mercatus said.

Brick Meets Click and Mercatus define the three receiving methods for online grocery sales as:

• Delivery: Includes orders received from a first- or third-party provider like Instacart, Shipt or the retailer’s own employees.
• Pickup: Includes orders received by customers either inside or outside a store or at a designated location/locker.
• Ship-to-home: Includes orders that are received via common or contract carriers like FedEx, UPS, USPS, etc.

April online grocery sales in the US

Online grocery sales in April grew to $8.5 billion in 2024. That’s up 4.4% from $8.2 billion in 2023, according to Brick Meets Click and Mercatus.

Pickup sales accounted for the most sales, whereas ship-to-home had the largest year-over-year gain of the receiving methods. In April 2024, U.S. online grocery shoppers spent $3.7 billion on pickup. That’s 2.1% growth over April 2023’s $3.6 billion in pickup sales. Brick Meets Click attributed the growth to increased average order value (AOV). At the same time, order volume and monthly active users both dropped.

Delivery accounted for $3.3 billion in April 2024 online grocery sales. That’s 4.3% growth over $3.1 billion in April 2023. Monthly active users increased among all surveyed age groups, Brick Meets Click and Mercatus said. That helped increase order volume year over year, “while AOV remained essentially unchanged,” they said.

Ship-to-home accounted for the smallest portion of the three fulfillment methods but grew the most year over year at 10.2%. Sales grew to $1.6 billion this year from $1.4 billion in 2023. Brick Meets Click and Mercatus attribute the increase “to a substantial year-over-year increase in AOV, after rebounding from a dramatic drop in AOV in 2023 versus 2022.”

Impact of mass merchants

Mass merchants supplied orders to 51% of monthly active users who shop online for groceries, they said. The share of shoppers who order online from supermarkets and discount grocery stores who also ordered groceries from mass merchants increased to nearly 34%, they added.

For households that primarily buy groceries from a mass merchant and also buy groceries online, 83% completed one or more online grocery orders with their primary grocer in April 2024. In comparison, for households that primarily shop at supermarkets and buy groceries online, 54% bought groceries online from a supermarket.

Here’s last month’s update.

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