The web-only consumer electronics brand built a generative AI tool that summarizes a product’s reviews into one succinct comment. Newegg displays this review, called SummaryAI, above the individual reviews.  

The generative AI tool also displays “Pros” and “Cons” for each product at the top of the reviews section, again taken from the published site reviews. These “Pros” are also displayed directly underneath the product image at the top of page and labeled as “Review Bytes.”   

“We feel that this would be helpful for many customers that are looking for a quicker analysis,” says Andrew Choi, director of brand and website experience for Newegg.  

Reviews are important for Newegg. 20% of Newegg.com shoppers read reviews and they spend 40% more than shoppers who don’t read reviews, so any way to enhance this section of the website is important to Newegg.  

“We ultimately want the customer to get the right product for their needs,” Choi says.  

Newegg is one of the early-adopting retailers of generative AI, the rapidly developing form of artificial intelligence that can create text, images and other kinds of content that often seems like it was produced by a human. These tools draw on large amounts of data they are exposed to, such as, in the case of online retailers, all the attributes and images of a product catalog.    

Major brands including marketplace eBay Inc. and chocolate brand Ghirardelli Chocolate Co. also are using generative AI to enhance elements of their product detail pages, such as optimizing the pages for conversion and creating pages faster. Many other retailers and brands are experimenting with how this type of AI can improve product detail pages, though most are still testing it and have not yet debuted their results to the public.  

AI is a hot topic in retail. 26% of retailers said they planned to increase their investment in artificial intelligence in 2023 compared to 2022, according to a Digital Commerce 360 survey of 135 retailer executives in October 2022. Plus, 11% said investments in AI will be critical to improving online conversion in 2023, and an additional 44% said it would be important, according to the survey.   

What’s more, that survey was conducted before the OpenAI consortium released generative AI-based chatbot ChatGPT in November 2022, sparking massive interest in the new form of AI. The bot uses generative artificial intelligence and natural language processing to answer questions and create content.   

Generative AI helps retailers with large product catalogs  

Retailers can use generative AI to create new content on a product detail page, such as a summary of the product reviews, or the actual product details. Each element on the detail page is “selling” the product with information with the goal of getting shoppers to add the product to their carts and ultimately buy it. But if these pages are not optimized, they are not doing the best job possible at converting shoppers.   

“Generative AI can help identify the opportunity among the product catalog and product pages and potentially suggest copy and ways to optimize pages,” says Kassi Socha, director analyst, retail, at research firm Gartner.   

Many product detail pages are not fully optimized for various reasons including:  

• Large consumer brand manufacturers have thousands of SKUs.  
• Brands sell their goods online through dozens of retailers and marketplaces.  
• Global brands sell across dozens of sites in many countries.  
• Marketplace operators host thousands of sellers, each responsible for their own product pages.   

Generative AI can help, particularly by automating the creation of product page content.   

“So many retailers have extensive product catalogs that they simply cannot manually update them on a regular or semiregular basis,” Socha says.   

“A more complete product page with more extensive product information allows the consumer to make a more informed decision and quicker decisions,” Socha adds.  

EBay Inc. saw the potential generative AI could have on its marketplace of more than 1 billion SKUs to help address two key challenges: helping shoppers find items faster and more easily, and helping sellers list items faster with fewer obstacles, says Xiaodi Zhang, vice president of seller experience at eBay.   

Xiaodi Zhang, vice president of seller experience at eBay.

“On the buyer side and the seller side, and this is a new tool to help solve these problems,” Zhang says. “It may not work for every type of customer, but there are a lot of different types of customer problems that generative AI can help solve in a way that other types of technology haven’t been able to address before.”  

Early in 2023, the marketplace built a tool based on Open AI’s ChatGPT that creates a product description based on data sellers provide about a product’s category, condition, color, brand and more. It took about a month to develop the feature, Zhang says.   

“What’s amazing with generative AI is how quickly it works. We had a proof of concept in a matter of weeks,” Zhang says.   

EBay piloted the tool internally before slowly rolling it out to a randomized group, representing 5% of sellers in May 2023. In August, eBay offered it to all sellers listing an item via its app. 

EBay has been “pleasantly surprised” by the overwhelmingly positive seller feedback, Zhang says. As of late July, the customer satisfaction score was 80%, which is among eBay’s highest CSAT scores for recent, new feature launches, according to the marketplace. 

The tool is meant to address “the cold start problem” that consumers face when trying to sell items, Zhang says.   

“When you find something to sell at home, and you are going through the listing, and you are asked to describe the item, a lot of people face writer’s block of, ‘How do I describe this dress I bought last year that I never wore?’” Zhang says.  

Zhang says roughly 30% of sellers shown the generative AI tool use it, and of those, 95% accept at least part of the description. Sellers can tweak the description, edit and delete as they like, Zhang says. The AI bot tends to add adjectives and be “a little flowery in the way it describes things,” Zhang says, and it’s up to the seller to edit the wording and ensure it’s accurate.   

Because the marketplace seller edits and approves the listing, eBay does not label which reviews have been created by artificial intelligence.   

Newegg, on the other hand, labels any content produced by its generative AI tool. And, unlike eBay, Newegg does not have a human review the content before making it live on the website.   

Brands exercise caution before launching generative AI  

Gartner’s Socha cautions brands that at this early stage of generative artificial intelligence, it would be wise to have a human oversee content before displaying it to shoppers.   

“Generative AI can suggest copy and suggest opportunities, but there still needs to be a team in place to validate some of the outputs,” Socha says. “With any machine learning or artificial intelligence, it’s only as good as the inputs, and it take time to optimize and learn.”  

Socha says consumer distrust of generative AI is another reason retailers need to tread lightly with the technology.   

In a July 2023 Gartner survey of 303 consumers, 34% of consumers rated their comfort level with generative AI in retail as “very or somewhat troubled,” 53% said they think it will strongly or somewhat negatively impact society, and 66% said they are concerned about discrimination or bias in generative AI.  

“I applaud retailers that are adopting the technology with confidence and testing the use of generative AI, but the continued guidance at Gartner would be to approach with caution and be prepared to adapt quickly if a weakness is exposed,” Socha says.   

This lack of maturity is what makes both Ghirardelli Chocolate Co. and tool manufacturer The Stanley Black & Decker Co. hesitant to go live with generative AI tools now.   

“We’re excited. It’s such an interesting time with AI right now, but it needs to be tempered with a bit of caution and guardrails,” says Pam Perino, ecommerce content operations and development manager at Ghirardelli.  

That’s particularly true for a food manufacturer like Ghirardelli, given strict government regulations about food and beverages. For example, Ghirardelli can’t call its products “white chocolate,” because they do not contain cocoa and are not technically chocolate. Instead, products are labeled as “white baking chips” or “vanilla flavored.” Perino isn’t confident that generative AI would understand this distinction.   

Similarly, The Stanley Black & Decker company ran into issues when piloting generative AI with what it would call “claims,” says Dean McElwee, director, global ecommerce collaboration.  

For example, the tool it piloted might say, “These are the best ear pods and they will last longer.” That type of content would be considered a claim, and Stanley’s legal department would reject it, McElwee says.  

Stanley pilots generative AI  

Still, like many large brands, Stanley is looking to generative AI to speed up creation and optimization of product detail page content.  

Of Stanley Black & Decker’s 200,000 SKUs, only 5%-10% of them are optimized, McElwee says, although those items account for roughly 80% of its revenue, he says. There is potential to unlock more revenue if more product pages were optimized.  

With that in mind, Stanley tested technology from two generative AI vendors, Jasper.AI and Copy.AI, for three months. The brand compared the product descriptions and detail page content the two vendors produced for 10 different categories across a mix of its brands in English, Spanish, French and Portuguese.  

It would take a human about one hour per page to do this work, McElwee says, and the goal would be to reduce this to about 10 minutes for a person to validate the content and check with the brand’s legal department for any issues.  

Stanley measured the AI tools’ performance across such factors as accuracy, readability, tone of voice, style guidelines, legal parameters and usability. Neither tool scored perfectly, and each had a few errors across all the measured categories, with many errors in tone of voice and style guidelines, McElwee says.  

“These tools are great — but, caveat — we found they don’t quite meet our needs for a number of reasons,” McElwee says.  

For example, Stanley Black & Decker has several brands, each with its own audience, including its do-it-yourself-focused brand Black & Decker, and its professional power tools brand Dewalt. The Dewalt buyer wants information quickly about how the tool will work and a quick demonstration, while the Black & Decker shopper needs more information, education and inspiration. The AI tool created content that did not match the tone of voice of each audience, such as using exclamation points for Dewalt shoppers, McElwee says.  

“These tools don’t really understand nuance and tone of voice,” McElwee says. “Even if we were to use them, we need to go in and check tone of voice and in some cases rewriting a large portion, which negates the use case of speeding everything up.”   

Translation is also important to the global company, as language varies, even among English-speaking countries. For example, in the U.S., the term for the concrete where pedestrians walk is “sidewalk,” whereas in the U.K. it’s “pavement.”   

Using the correct term also greatly impacts SEO. For example, a U.S. shopper looking for a tool to trim grass would search for a weedwacker, while shoppers in the U.K. and Ireland would enter terms like “string trimmer” or “strimmer.”   

If the term “weedwacker” is not consistently used on the product detail page, the product will not show up high in search results in Google in the U.S. or on a retailer’s website.  

“When people search for things on the internet, it’s unbranded normally with a category-based descriptor,” McElwee says.  

Because of the issues encountered in its test, Stanley Black & Decker is still looking for a generative AI vendor that could help it optimize product detail pages, and McElwee estimates it will be 18 months before the company is actually using generative AI for this purpose.  

“It’s still immature,” he says.  

Stanley Black & Decker is among the 5% of retailers using AI who say it is not meeting their expectations, according to a Digital Commerce 360 retailer survey of 97 retail marketers in May 2023.  

Colgate uses generative AI within software   

Toothpaste CPG brand Colgate-Palmolive is also in the process of testing how generative AI might improve its product detail pages.   

Unlike Stanley’s test that focused on creating content, Colgate is piloting generative AI as a way to more efficiently extract information from analytics data in the Profitero Inc. platform it uses.   

Colgate has close to 1,000 online product detail pages when factoring in dozens of SKUs across the 10-plus retailers where it sells its products, including Amazon.com, Walmart.com, Thrivemarket.com, Instacart.com, Albertsons’ brands and more, says Todd Hassenfelt, global digital commerce director, strategy and execution at Colgate-Palmolive. It takes a team of people to keep those product pages up to date and resonating with the target audience on each site.   

Profitero’s tool allows brands to ask the generative AI bot questions about specific details on any of those many product detail pages. For example, if Colgate wanted to improve the conversion rate of its mouthwash on Walmart.com, an employee could ask the bot, “What is the optimal title length in this category on Walmart.com?” The bot could answer with the ideal number of characters for that category on that website.  

Another example of how Colgate plans to use the tool is to produce automated summaries of the sentiment of ratings and reviews, replacing a manual analysis. Colgate could ask “what is the sentiment of reviews for this product?” If many of the highest-ranking reviews highlight a certain attribute, such as good flavor, Colgate could update the product detail page to highlight flavor.  

Effective product detail pages impact in-store as well as online sales, Hassenfelt says. Shoppers frequently check their phones while shopping in stores and might look up additional details on product detail pages. Plus, retailers may pull information from a product detail page for in-store signage or product promotions. Ensuring its online information is current with the information a retailer’s audience cares most about could help boost sales in stores, Hassenfelt says.  

Hassenfelt expects this tool to save its teams weeks or months of manual analysis. At present, it takes a long time to create content and suitable variations for one SKU in multiple places, and it could take months to analyze conversion rates and make changes, he says. Generative AI potentially could do all that faster.  

In the short term, the goal is to, “make it simpler and faster for our teams to take the analysis from our products to then actionability, going to act on those insights, specifically for conversion rate and improving sales,” Hassenfelt says. Longer term, he says, it could make it easier to consolidate data and identify trends.  

While many retailers are focusing on how generative AI can produce text for product pages, it also could play a role in creating more effective images faster than humans can.   

Ghirardelli Chocolate Co. is testing generative artificial intelligence both for updating product copy with relevant search engine optimization words and for creating images, Perino says.  

For example, Ghirardelli wants its product detail pages regularly updated with season-appropriate SEO words, such as chocolate for Halloween, Christmas, Mother’s Day or graduation. Today, this copy is updated manually to ensure product pages show up high in search results.   

Like Stanley Black & Decker, Ghirardelli finds that generative AI is not yet refined enough to have mastered brand voice and tone, and it is waiting until it improves before deploying AI to write copy for its site.    

It also is waiting for more refined generative AI tools to help with image creation. Today, adding new images to a product detail page takes about a month from idea, photo shoot and editing to going live. With generative AI, it could be “10 to 100 times faster than a manual process for image creation,” Perino says.   

“That’s a great opportunity to do something quickly versus having to wait for a photoshoot or having to use stock images,” Perino says.  

For now, Ghirardelli is using generative AI to help edit images. On a recent photo shoot for its new no-sugar-added baking chips, the brand used generative AI to remove part of a napkin in the image and fill in the background with a part of the product’s bag.   

Ghirardelli often makes small tweaks like this to improve images. Since Q2 2023, the brand has used image-scoring software Vizit to evaluate how well its images engage shoppers. Vizit uses artificial intelligence to analyze how impactful an image is and to catalog the attributes of the image. Based on publicly available metrics, such as likes or shares on a social media website, Vizit can analyze how impactful an image is and list its attributes.  

The technology is helpful when deciding which images to use on product detail pages and the changes Ghirardelli might make so the images perform better, Perino says. For example, Vizit’s technology scored many of its closely cropped baking images higher than those that were zoomed out, and so those are the ones Ghirardelli will use on its page, Perino says.   

But when it comes to actually creating images to use on its site, Perino says generative AI is not ready yet. For example, if the brand were to say, “create a Ghirardelli logo,” Perino is not confident the AI would get the logo exactly right.  

But that immaturity could disappear fast. The more brands and consumers test, use and implement generative AI tools, the smarter they become. And while generative AI tools may not be creating entire product detail pages today, it may not be long before they do.   

The post Retailers test generative AI to create product detail page content appeared first on Digital Commerce 360.

But with the new generative artificial intelligence tools available to brands, it could be “10 to 100 times faster than the manual process for image creation,” Perino says.

“That’s a great opportunity to do something quickly versus having to wait for a photoshoot or having to use stock images,” Perino says.

But right now, Perino is not confident generative AI is ready to create images from scratch for its brand. For example, if the brand were to say, “create a Ghirardelli logo,” Perino is doubtful the AI would get the logo exactly right.

And getting it exactly right is critical.

“We have very high expectations for how our images to look,” she says.

Where Ghirardelli Chocolate Co. is currently using generative AI is for editing images on its product detail pages. On a recent photo shoot for its new no-sugar-added baking chips, the brand used generative AI to remove part of a napkin in the image and fill in the background with a part of the product’s bag.

Ghirardelli uses AI to decide how to tweak product images

But editing is as far as Ghirardelli will let the generative AI create. The brand will, however, use artificial intelligence to help guide its decisions about what images should look like.

Since Q2 2023, the brand has used image-scoring software Vizit to evaluate its images. Vizit uses artificial intelligence to analyze how impactful an image is and to catalog the attributes of the image. Based on publicly available metrics, such as likes or shares on a social media website, Vizit can analyze and score an image, and suggest tweaks.

The technology is helpful when deciding which images to use on product detail pages and the changes Ghirardelli might make so the images perform better, Perino says. For example, Vizit’s technology scored many of its closely cropped baking images higher than those that were zoomed out, and so those are the ones Ghirardelli will use on its page, Perino says.

Instead of having a 2D static image of its chocolate chip bag, another tweak Vizit suggested was to have the image on the package “burst” off the package for more of a 3D look. In the same image, Vizit also suggested to make the text larger for “12 oz.” With these tweaks, Vizit scored the image at a 95, meaning it has a high likelihood of converting shoppers, compared with the image without these changes, which it scored at a 6.

Vizit’s AI technology scores Ghirardelli’s package image above lower compared to the one below with the chocolate chips bursting off the package and the 12 oz. bag size in a larger text size.

Perino did not share any data about increases in conversion since using Vizit’s technology. Vizit says its clients typically have a 15%-25% increase in conversion rate when using the images it suggests, says CEO and founder Jehan Hamedi. Hamedi did not share how many clients it has, but in 2021, he told Digital Commerce 360 that Vizit has less than 100 brands that use its technology, including padlock products MasterLock, shoe brand Reebok, and food brands OceanSpray, Tyson, Cliff Bars and Mars Petcare.

Brands jump on using AI technology

While Vizit’s technology doesn’t use generative AI, it uses artificial intelligence to help brands more effectively and more efficiently increase sales, Hamedi says.

“Where the rubber really meets the road for these businesses is how AI and these tool sets actually help drive sales,” Hamedi says. “Because at the end of the day, every brand is in business and exists to sell products and create positive outcomes.”

With the popularization of OpenAI’s ChatGPT generative AI chatbot, Hamedi says many in the ecommerce industry are talking about AI and becoming more educated on how AI can be practical for businesses.

“It’s created urgency among our customers about how to adopt AI because it’s a new arms race,” Hamedi says.

Ghirardelli’s future applications of generative AI

Ghirardelli has plans to use generative AI in other ways in the future, such as  creating product copy on the product detail page and updating product copy with relevant search engine optimization (SEO) words and for creating images, Perino says.

“We are excited about artificial intelligence as a digital technology and how can it help us be faster and more nimble, and how do we update, create and improve our content,” Perino says.

For example, Ghirardelli wants its product detail pages to be updated with seasonal SEO words, such as chocolate for Halloween, Christmas, Mother’s Day and graduation. Today, the brand manually updates this copy to ensure the detail pages can show up high in search results.

Ghirardelli, however, finds that generative AI is not yet refined enough to have mastered brand voice and tone, and it is waiting until it improves before having a tool write copy to go live on its site.

“We’re excited,” Perino says. “It’s such an interesting time with AI right now, but it needs to be tempered with a bit of caution and guardrails.”

Brands should use caution with generative AI right now

That’s particularly true for a food manufacturer like Ghirardelli, given strict government regulations about food and beverages. For example, Ghirardelli can’t call some of its products that might be commonly referred to as “white chocolate,” because they do not contain cocoa and are not technically chocolate. Instead, it labels products as “white baking chips” or “vanilla flavored.” Perino isn’t confident that generative AI would understand this distinction.  

At this early stage of generative AI, brands should have a cautious approach to using the technology, says Kassi Socha, director analyst, retail, at research firm Gartner. If brands are using generative AI today in their business to create content, she suggests still having manual oversight before anything is published.

“Generative AI can suggest copy and suggest opportunities, but there still needs to be a team in place to validate some of the outputs,” Socha says. “With any machine learning or artificial intelligence, it’s only as good as the inputs, and it take time to optimize and learn.” 

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The post Ghirardelli taps generative AI to edit photos but not yet to generate images appeared first on Digital Commerce 360.

The performance apparel brand works to make its clothing in a sustainable way, such as designing products with sustainable materials like recycled water bottles and manufacturing its garments in factories that adhere to its standards, such as using a waterless dye method.   

So when it comes to getting that product in a shopper’s hand, Coalatree prioritizes shipping it in a sustainable way, says John Michael Fabrizi, president and chief operating officer for the apparel brand.   

“It doesn’t make sense for us to make products out of sustainable inputs and then on the flip side, ship things out in the least sustainable way possible,” Fabrizi says.   

Coalatree ships its products in a compostable mailer, and the plastic polybags that encase each item are made from recycled plastic.   

Fabrizi estimates that this packaging costs the brand about 25% more than what it would cost to use traditional shipping materials.   

“We’re a pretty mission-driven brand, and that’s key to what we are doing, which is why these costs need to be factored into the business from the get-go. That’s why people buy our products,” Fabrizi says. 

And therein lies the burden for all brands when it comes to sustainability — the cost. For brands with an eco-mission, including Coalatree, cleaning products brand Cleancult, household products brand Grove Collaborative and apparel brand Toad & Co., the extra cost of environmentally friendly shipping is worth it to them and, they believe, to their customers. And they’re constantly testing new packaging options coming to market as they seek to improve their offerings and minimize the cost of backing up their commitments to environmental responsibility.  

Shoppers care about sustainable materials, but it costs retailers   

The push to find eco-friendly ways to deliver online orders is a response to the concerns of many shoppers. 56.8% of consumers say sustainable packaging and shipping is important (33.8%) or very important (23%) when purchasing online, according to a March 2023 survey of 500 consumers by logistics software vendor Sifted.  

What’s more, 69% of consumers say sustainable shipping has influenced their past purchases, and 76% of shoppers that they would pay an extra 5% for more shipping options that minimize environmental damage, according to the survey.   

This large share of shoppers taking into account sustainable shipping does not surprise Caleb Nelson, chief growth officer at Sifted.  

“Consumers are demanding sustainability improvements across the board, so we didn’t find it surprising that there’s such a demand for it when it comes to shipping,” Nelson says. “Ecommerce saw unprecedented growth during the pandemic, and that shift made a lot more consumers think about the impacts of having products shipped to their doorsteps.”  

But that shift in thinking doesn’t mean it’s an easy decision for online retailers to discard traditional packaging materials and practices. Sustainable packaging is more expensive, and there is no guarantee that consumers’ desire to minimize environmental damage will actually change the shopping habits of many.  

For now, the online retailers using eco-friendly packaging are the exceptions.  

Globally, the ecommerce industry used nearly 2.1 billion pounds of plastic packaging in 2019, according to an analysis published in a 2020 report by Oceana Inc., a nonprofit organization dedicated to protecting oceans. Plastic packaging includes mailers, bubble-lined paper and plastic mailers, air pillows, shrink films and more. Amazon.com Inc. alone produced 465 million pounds of plastic packaging waste in 2019, according to the report.   

Coalatree’s polybags and mailers are printed with messages like, “Don’t worry, I’m compostable,” or “Don’t worry I’m made of recycled materials,” which educates shoppers about the company’s environmental commitment.

“We are in the new part of the curve, where everyone thinks it’s a good idea and there’s some authentic application that is economical,” says Bernardine Wu, executive managing director of digital strategy at digital consultancy OSF Digital, referring to sustainable packaging. “But we’re not there yet in our industry with reusable packaging or materials that are better, or degradable. It’s not competitively cheaper.”   

Meaning, there is not enough demand from retailers and shoppers for sustainable packaging for there to be enough vendors to make prices competitive. Wu draws an analogy to the food industry offering more plant-based foods. It took years to scale, but now consumers have multiple plant-based alternatives for foods that are comparable in price to meat products at the grocery store, she says.   

Shervin Dehmoubed, founder and CEO of sustainable packaging vendor ecoPackables, says recycled plastic is just as durable as virgin plastic and costs about the same. At ecoPackables, compostable packages cost about 30-50% more than non-compostable alternatives, and recycled paper costs about 50-70% more, he says. Compostable packages include plant-based plastics. These materials, however, can be complicated for consumers to recycle as they require delivery to a special facility. If recycled improperly, they can contaminate good recycling and if thrown out, they can emit even more methane than traditional trash.  

EcoPackables has been in business for four years and has more than 100 enterprise clients using its products, such as apparel retailers Ted Baker and Revolve, and more than 2,000 small businesses, many of them Etsy sellers.  

LimeLoop is another vendor that offers reusable packaging to retailers. The vendor rents out reusable bags for $1 per bag per month that retailers can use to ship products to customers. Shoppers are asked to mail the bags back to the retailer. LimeLoop launched in 2018 and has 45 online retail clients, mostly small businesses with annual revenue less than $5 million. It does have some enterprise clients, with a handful more in the pipeline, a spokesperson says without revealing more.   

No plastic in packaging   

Like Coalatree, both Grove Collaborative and cleaning products brand Cleancult believe their stated brand missions require offering sustainable shipping to shoppers. And that means minimal to no plastic.   

“We can’t use plastic. It can’t ruin our value proposition,” says Ryan Lupberger, co-founder and CEO of Cleancult.   

Ryan Lupberger, co-founder and CEO of Cleancult.

Cleancult uses corrugated paper to pad its products, which is typically two to three times more expensive than plastic polybag filler, Lupberger says. It also pads its glass bottles with cardboard beds to ensure products don’t bump into each other.   

The brand uses Forest Stewardship Council-certified paper for its product cartons and shipping boxes. FSC is a nonprofit organization that ensures the paper is from a forest that is responsibly managed for environmental, economic and social benefits.   

Grove is plastic-neutral, meaning for every pound of plastic sold, it collects and recycles that same amount in nature through rePurpose Global, a plastic action platform that aims to reduce waste.  Grove’s goal is to be plastic-free by 2025. To achieve its goals, Grove Collaborative continually seeks ways to improve its packaging.  

When it comes to minimizing the carbon footprint of a fulfillment box, it’s all about lower weight, smaller size and less package, says CEO and co-founder Stuart Landesberg.  Grove focuses on only selling products that are smaller in size — or changing them to make them smaller, and thus easier to ship. For example, instead of selling a full-size mop, which is bulky to ship, it made its broom stick collapsible to fit into a much smaller box. Similarly, it sells concentrated laundry detergent that shoppers can add water to at home, instead of full-size bottles which are large and heavy to ship.   

That brings Landesberg to a tip for merchants striving to be more sustainable: Invest in multiple box sizes to minimize the number of packages that are larger than necessary. 

“The best solution is well-trained labor and enough box sizes that you can match products to appropriately,” he says.  

At one point, Grove experimented with 30 box sizes. Now, it has settled on its four boxes and two mailers, which can appropriately fit all of its orders.   

Fitting all products into one box  

Box size is important at Grove, as it prides itself on fitting all the products for an order — the average order size on Grove.co is eight to 10 products — into one box. This requires investment in its talent. Grove’s warehouse workers need to “Tetris” or puzzle together the fulfillment box so all the products fit inside, Landesberg says.  

Packers receive a week of hands-on training, then a month of guided supervision as they learn how to pack the boxes and their expected goals. The position represents a promotion over an entry-level position and comes with more money. Landesberg declined to share its warehouse employee wages.  

Grove is plastic-neutral, meaning for every pound of plastic sold, it collects and recycles that same amount in nature.

“The training process at Grove is longer than most ecommerce packer training programs because the nature of our product and packaging expectations requires a level of detail that isn’t always necessary in a traditional packing role,” Landesberg says. “Our team members understand the importance of optimizing products and packaging materials in such a way that does not contribute to a higher carbon footprint.”  

Landesberg describes the role as a “pressure seat.” The employee receives the touts with the products picked for the order and the appropriately sized box. Then, they have to quickly fit it all in, as employees have a units-per-hour goal, and that goal increases according to their experience level and job function.   

Other warehouses might use a robot to perform this task. But Grove is willing to pay a bit more to have this step of the fulfillment process done correctly.  

“I haven’t seen anything robots can do as good as a human,” Landesberg says about this box-packing step. Grove weekly tracks customer satisfaction and feedback as the primary success metrics for Grove packers. Grove, a publicly traded company, is operating at a loss.   

Stuart Landesberg, CEO and co-founder, Grove Collaborative

Shipping multiple items in a single box reduces the amount of packaging required, and the environmental impact of producing and disposing of packaging materials. Even though this requires more time and training — which equates to more cost — the carbon footprint is much larger for multiple boxes instead of a slightly larger box that can hold a few more objects, Landesberg says.  

Some larger orders must be shipped in more than one box, but Landesberg says such split shipments represent less than 5% of its orders. This is below the industry standard, as 21% of orders on average from retailers arrived in more than one shipment, according to data from fulfillment vendor Narvar Inc. collected October-December 2021.  

 Cleancult has four box sizes, and 99% of its orders arrive in one box.   

Lupberger admits that shipping its heavy and bulky products in sustainable packaging is expensive and eats into the retailer’s margin. With its ecommerce site “break even at best,” it has shifted its focus to selling wholesale to retailers instead of direct-to-consumer online.   

Sustainable shipping: An arduous effort for a thankless task  

Even though Coalatree, Grove and Cleancult have made considerable efforts to make their packaging more sustainable, they often don’t get feedback from shoppers about this.   

“[Shoppers] don’t notice it when it arrives,” Lupberger says.  

Coalatree’s polybags are printed with messages like, “Don’t worry, I’m compostable,” or “Don’t worry I’m made of recycled materials,” which educates shoppers about the company’s environmental commitment, Fabrizi says. But, Coalatree’s customers mostly say something about the packaging when they’re not happy about it.   

Optimized and alternative polybags   

The company heard plenty of complaints after it switched from the traditional packaging materials it had used since focusing on online sales in 2015 when sustainable options weren’t available, to compostable mailers in 2019. It ordered 10,000 packages with its brand on them, but quickly received a glut of customer service complaints about packages not arriving, arriving damaged or with a product that was wet.   

John Michael Fabrizi, president and chief operating officer, Coalatree

While the compostable package is better for the earth, if it doesn’t do its job, it’s worthless, Fabrizi says.   

“If the package doesn’t stay together, we can’t use it,” Fabrizi says.   

Luckily, Coalatree’s packages were compostable, and the brand stopped using that vendor. In 2020 it started working with sustainable packaging manufacturer ecoPackables, which it still uses today. It has had no quality issues with this supplier, Fabrizi says.   

Coalatree wraps each of its apparel products in a bag of recycled plastic. While that adds packaging to each order, the plastic is essential to delivering a quality product.   

“It needs to be in its own bag,” Fabrizi says. “If it gets wet in shipping, if the product gets damaged and it’s not wrapped in a polybag, you’re (out of luck) essentially.”  

Steve McCann, marketing director at Toad and Co. agrees with Fabrizi that polybags are wasteful plastic, but needed to protect the garment.    

Steve McCann, marketing director at Toad and Co.

“Polybags are the worst thing in the world. Everyone hates them, but they are a necessary evil,” McCann.   

Since Toad and Co. started selling online in 2014, the brand went from using one traditional polybag, to optimizing the design to be more sustainable by having five sizes. It aims to eliminate polybags completely by 2024.   

Like Grove with its box sizes, Toad and Co. shrunk the standard width of each polybag to better fit its garments. Instead of using one larger polybag that would hold any of its products, it invested in polybags of different sizes so that each bag fits the garment, reducing the plastic required. It also thinned out the plastic to further minimize the amount of plastic used.   

What’s more, it changed the location of the airholes on its polybags, moving them from the bottom of the bag to the top and alerting shoppers these polybags could be reused to pick up dog waste, McCann says.   

And even after all these efforts, the retailer is working to eliminate all these polybags.   

In 2020, Toad & Co. started working with packaging vendor Vela to pilot paper polybags, which are made of FSC-certified paper and can be recycled with normal mixed paper. McCann says that makes it more likely consumers will actually recycle these bags than they would a compostable polybag which requires the shopper bringing the polybag to a specific collection point that takes the material.    

After piloting the paper polybags with a few products, the retailer confirmed they were sturdy enough to protect its garments and of the same quality as a traditional polybag, and began rolling out the bags across all of its products. Once the brand hits a certain minimum order volume of products at each of its factories, it makes the switch to using this paper polybag. As of Q2 2023, about 82% of its products use the alternative polybag and by spring 2024, 100% of them will, McCann says.    

A more dramatic alternative to sustainable shipping: reusable packaging  

To further lower its carbon footprint, Toad and Co. also gives shoppers the option to have orders shipped in a reusable package. With vendor LimeLoop, Toad and Co. rents reusable packages from vendor LimeLoop. The packages are weatherproof bags made of recycled billboards and other recycled polyester. The bags zip close, instead of using tape, and are lined with recycled cotton on the inside of the bag.   

Each bag has a sleeve on the outside, so the shipping information can be inserted, instead of using a sticky label that would make it harder to reuse the bag. The bags can be used at least 200 times, LimeLoop says.   

After a Toad and Co. shopper receives an order, she has to print a return label and then return the package in the U.S. mail. It takes about two weeks from when Toad and Co. ships an order to when it receives the bag back. Via LimeLoop, Toad and Co. can send shoppers automatically reminders to return the bags.   

 If Toad and Co. can use a LimeLoop package twice in one month, that’s when using the package becomes “break even” in cost compared with traditional packaging. Otherwise, this more sustainable shipping method is more expensive, McCann says without revealing more. So far in 2023 it has hit the twice-a-month frequency for each bag.   

About 12-15% of Toad and Co.’s online shoppers select the LimeLoop package option.

 Most LimeLoop clients include a return shipping label in the order, but Toad and Co. is still ironing out the logistics of how to remove the barrier of shoppers having to print the return label.    

 About 12-15% of Toad and Co.’s online shoppers select the LimeLoop package option, and 20% of those who chose LimeLoop as their fulfillment method, choose it again, McCann says. These are healthy numbers, McCann says, especially when considering how many new customer Toad and Co. has, he says without revealing more.   

 Unlike thinning its polybags and increasing the number of polybag sizes it uses, this type of sustainable packaging is highly visible to the customer and something Toad and Co. receives a lot of positive feedback on, McCann says.    

“It’s something that people when they look out their window, they get it. They get how many boxes they get from Amazon that you can’t even fit it all in your recycling bin anymore,” McCann says. “[Shoppers] understand it’s an issue, but they don’t see anyone doing anything about it. But they also love the convenience of [online shopping] and are not willing to change the convenience aspects. I think when brands have an option and it’s different and it’s addressing the issue, they (shoppers) love it and grab on to it.”  

Overall, retailers, analysts and vendors agree that a key to making packaging and ecommerce shipping more sustainable is less packaging, whether that’s with a smaller box or less plastic. Plus, a number of merchants have committed to eliminating plastic in their packaging or are only using plastic that is recycled or materials that can be composted.  

For now, these packaging options add to an online retailer’s costs. But those extra costs can be viewed as a marketing expense that helps brands reach and retain consumers who are concerned about the environment.  

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“We would never do that,” he says.

Instead, the online merchant of cleaning and household products has about four box sizes and two envelope sizes to appropriately fit each size order into the correct box. And for orders with a few products — the average order size on Grove.co is eight to 10 products — its warehouse workers “Tetris” or puzzle together the fulfillment box so all the products fit inside, Landesberg says.

Packing in the Grove warehouse

Stuart Landesberg, CEO and co-founder, Grove Collaborative

This packer position at the Grove warehouse is not entry level. It requires more training and comes with a promotion. Packers receive a week of hands-on training, then a month of guided supervision as they learn how to pack the boxes and their expected goals.

“The training process at Grove is longer than most ecommerce packer training programs because the nature of our product and packaging expectations requires a level of detail that isn’t always necessary in a traditional packing role,” Landesberg says. “Our team members understand the importance of optimizing products and packaging materials in such a way that does not contribute to a higher carbon footprint.”

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Landesberg describes the role as a “pressure seat.” The employee receives the touts with the products picked for the order and the appropriately sized box. Then, they have to quickly fit it all in, as employees have a units per hour goal.

“In addition to specific quality and safety goals, packers at Grove have an incremental units per hour goal to meet based on how long they’ve been in the job function,” a Grove spokesperson says. “The quality goals focus on ensuring that packed items arrive to our customers safely and in good condition.”

Other warehouses might use a robot to perform this task. Grove is willing to pay a bit more to have this step of the fulfillment process done right to be a more sustainable merchant. Landesberg declined to share its warehouse employee wages.

“I haven’t seen anything robots can do as good as a human,” Landesberg says about this box packing step. Grove weekly tracks customer satisfaction and feedback as the primary success metrics for Grove packers.

A sustainable Grove

Grove launched in 2012 as ePantry, and in 2016 rebranded to Grove Collaborative, an online-only brand with sustainability as its core mission. About 13% of the products sold on Grove.co are its own brand. The remaining 87% are from other brands it sells, such as Mrs. Meyer’s, Method and Rooted Beauty. Today, Grove is publicly traded, a certified B. Corp., and sells a selection of its branded products at Walmart, Target and Amazon. Grove Collaborative generated $321.5 million in net revenue in 2022. This was down 16% year over year, the merchant reported, and it is operating at a loss.

Grove is plastic-neutral, meaning for every pound of plastic sold, it collects and recycles that same amount in nature through rePurpose Global. Its goal is to be plastic-free by 2025. And that means Grove Collaborative has routinely iterated on its product and fulfillment packaging.

Packaging: lighter, smaller and less

To achieve the lowest carbon footprint on a fulfillment box, it’s all about lower weight, smaller size and less package, Landesberg says.

Grove focuses on only selling products that are smaller in size — or changing them to fit this mission. For example, instead of selling a full-size mop, which is bulky to ship, it made its broom stick collapsible to fit into a much smaller box. That brings Landesberg to a tip for merchants striving to be more sustainable: Invest in multiple box sizes.

“The best solution is well-trained labor and enough box sizes that you can match products to appropriately,” he says.

At one point, Grove had 30 box sizes. Now, it has settled on its four boxes and two mailers, which can appropriately fit its all of its orders.

Fewer boxes per order

Another shipping practice that Landesberg claims Grove “would never do” is splitting up an order of eight to 10 products into eight to 10 shipments. The carbon footprint is much larger for multiple boxes instead of a slightly larger box that can hold a few more objects, he says.

While orders arriving in multiple boxes sometimes happens, especially for larger orders, Landesberg says split shipments are less than 5% of all of its orders. This is below the industry standard, in which 21% of orders from an online retailer arrived in more than one shipment, according to data from fulfillment vendor Narvar Inc. collected October-December 2021.

Because Grove launched as a vertically integrated online brand, it purposely designed its products to ship directly to consumers, not for a store shelf, Landesberg says. For example, it’s laundry detergent is sold in a 1-ounce concentrated glass bottle that shoppers can mix with water at home, unlike the large bottles sold in stores. Its candles are packaged in a box with a thinner glass, unlike the freestanding, thick-glass candles at stores.

These modifications to the product package allow Grove to ship orders to consumers in a way that weighs less, takes up less space and uses less interior packaging in the box.

And after the packages are snuggly fit in the box, Grove uses a recycled paper to pad the products during the shipping journey. In May 2019, Grove went through its supply chain and eliminated single-use plastic and switched to paper materials.

Grove.co’s paid members are its more frequent purchasers

These initiatives resonate with a certain cohort of shoppers who strive to live a sustainable lifestyle. Grove is No. 301 in the 2022 Digital Commerce 360 Top 1000.

About half of Grove.co’s sales are from shoppers making one-time purchases priced 5-20% above the discount it gives consumers who sign up for a subscription to products.

The other half of Grove.co’s sales are from consumers who signed up to receive auto-replenishments of  products or paid $19.99 for an annual VIP program membership. Members receive seven free gifts a year, exclusive sales, early access to new products and free samples. Landesberg says “hundreds of thousands” of customers are paid members, but declined to share the exact number.

Nearly 50% of paying members renew memberships annually, Landesberg says.

Landesberg says he is pleased with this membership retention rate. He points to the value of the program, the strong brand and engaged community as reasons for this retention rate. For example, members can join its private Facebook group, which is “incredibly engaged,” Landesberg says.

The average order value for traditional shoppers compared with members or subscribers is about the same, Landesberg says. He did not reveal that figure. The frequency of purchasing, however, is much higher for members and subscribers, from six to 12 times per year. That compares with traditional shoppers, which is about four times per year.

Grove expands its retail presence

But even with such high engagement rates on its own site, Grove Collaborative knows many shoppers still do not recognize its brand.

To that end, since 2021, Grove has sold a selection of its products with national mass merchants including Target Corp. and Amazon.com Inc. In 2022, Grove expanded to sell its products in CVS Caremark Corp., Harris Teeter Supermarkets LLC, H-E-B Grocery Company, Meijer Inc. and Giant Eagle Inc. Today, Grove products are sold at thousands of retail locations, including at mass merchant Walmart Inc.

“To change the category, we need to play in the channels where the majority of people are buying these products,” Landesberg says.

But the goal, Landesberg says, is not to introduce them to Grove on Target and then get them to buy that product on Grove Collaborative.

“It’s my goal to get them to come back and get them to buy that product again,” Landesberg says.

“Economically, yes, we make more money when they buy their entire regimen from Grove,” he adds.

He knows the majority of shoppers don’t buy their household cleaning and personal care products directly from a brand’s website. They buy these products from a mass merchant. Grove declined to share what percent of its sales are from its direct-to-consumer site or from other merchants.

Kathy Kimple, executive director, digital strategy, at ecommerce consulting firm OSF Digital, says it’s interesting to see subscription-based companies expand into retail. Shoppers save on shipping and get the product immediately. Meanwhile, the brand gets more exposure.

“As access to their products grows, there will be less need for subscription,” Kimple says. “Depending on the company’s goal, lower subscriptions may be offset by brand awareness if retailers start to carry more Grove products.”

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Cleancult sells nontoxic cleaning products, such as soap and laundry detergent, in a cardboard carton. Shoppers then transfer the product into a glass bottle, which the brand also sells. Cleancult’s mission is to reduce plastic consumption, and it has 15 patents on the machines it uses to create its cartons.

Cleancult is not the first brand to tackle reducing plastic packaging in the cleaning industry, as other brand manufacturers sell cleaning products in 1-ounce concentrated glass bottles or sell products in powder form. This appeals to eco-conscience shoppers, but many consumers are not ready for this step, Lupberger says. While concentrated products are lighter, require less packaging and are more sustainable to ship than traditional products, it requires effort for customers at home to create the final product, which is a barrier, Lupberger says. Although Cleancult customers need to purchase a glass bottle in addition to its cleaning products, Lupberger says this is not a barrier to purchase.

Cleancult’s products are packaged and shipped without plastic.

“We want to go after the 99%,” Lupberger says. “We have to meet them where they are with ready-to-use formulas and ready-to-use bottles.”

“How do we change the category, but not change consumer behavior?” he adds about its goal to make choosing its plastic-free products easy for shoppers.

Cleancult.com launches and then pivots to physical retail

Cleancult launched in 2019 with its direct-to-consumer website Cleancult.com.

“I really hoped D2C would work long term,” Lupberger says.

But things quickly changed. As online sales skyrocketed during the pandemic — especially for cleaning products — so did costs. Digital marketing costs to acquire customers and shipping carriers raising their rates were the largest increases, he says. Digital marketing costs increased roughly 50% from 2019 to 2021, Cleancut says. Plus, what once cost the brand $6-$7 to ship now costs it $17-$18.

Plus, post-pandemic, many consumers resumed their normal shopping habits, including buying their cleaning products in stores. And so, Cleancult shifted priorities to get its products in more physical stores instead of working to acquire digital customers. In 2021, Cleancult debuted in a handful of regional grocers. In 2022, it expanded to Walgreens, CVS, and Bed Bath & Beyond, and this year is Cleancult’s Walmart debut. Cleancult also sells on the Walmart and Amazon.com Inc. marketplaces.

Amazon is No. 1 in the 2022 Digital Commerce 360 Top 1000 database. The Top 1000 ranks North American web merchants by sales. Walmart is No. 2. Amazon is No. 3 in the Digital Commerce 360 Online Marketplaces database, which ranks the 100 largest global marketplaces. Walmart is No. 9.

Ryan Lupberger, co-founder and CEO of Cleancult.

“A lot of categories shouldn’t live online,” Lupberger says. “Fundamentally, the cost of shipping big, bulky, low-price items, doesn’t work very well.”

Subsequently, its sales shifted from 100% via its direct-to-consumer website, to 90% its own website in 2020, 70% in 2021, 65% in 2022 to likely 20% in 2023, Lupberger says. Cleancult includes sales made on the Amazon marketplaces in its direct-to-consumer sales figures.

Even though sales are growing 50% year over year for its total business, sales are flat on Cleancut.com.

This shift in sales is fine with Lupberger, as its ecommerce site and Amazon business do not make money.

“It’s break even at best,” he says.

But its ecommerce site still serves a purpose, including building a community and testing new products and scents, he says.

“If they find us in store and believe in the Cleancult brand, join the website. But if they need a quick shipment, buy on Amazon. And if they are grocery shopping, they can pause their subscription and buy from the grocer,” Lupberger says.

Plastic-free shipping packaging

For shoppers who do buy direct from Cleancult.com, the brand works to ensure the products are shipped in the most sustainable way, such as by offsetting the carbon from the freight and by using paper instead of plastic.

“We can’t use plastic. It can’t ruin our value proposition,” Lupberger says.

Cleancult uses corrugated paper to pad its products, which is typically two to three times more expensive than a plastic polybag filler. It also pads its glass bottles with carboard beds to ensure the products are not touching anything and there is space for crushing.

The brand uses Forest Stewardship Council certified paper for its product cartons and shipping boxes. FSC is a nonprofit organization that ensures the paper is from a forest that is responsibly managed for environmental, economic and social benefits. 

Cleancult has four box sizes, and 99% of its orders arrive in one box. This means an order with multiple products is not split up into multiple shipments.

The last person who packs the box is the last quality control to ensure it is packed correctly, with none of its products touching. While this is important to its plastic-free ethos, it’s often thankless.

“[Shoppers] don’t notice it when it arrives,” Lupberger says.

But shoppers do notice when there is plastic in the shipping box by mistake. This can happen for some of its Amazon.com orders, which is shipped via Fulfilled By Amazon. Cleancult provides Amazon with its own carboard boxes to use to ship directly to shoppers. Sometimes, however, a warehouse employee may put that box inside another box with a polybag in it, or its box is added to another part of a larger order and plastic is added. Then, shoppers contact Cleancult with negative comments, even though this is outside of its control, Lupberger says. 

Cleancult is No. 1963 in the 2022 Digital Commerce 360 Next 1000.

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Jill Pavlovich, senior vice president of digital customer experience at Albertsons, says adding product reviews will help customers. They’ll be able to make better buying decisions, and it will encourage them to try unfamiliar products. It also will provide the retailer with valuable consumer data.

“Industry research tells us shoppers are more likely to purchase a new grocery item online if it has been reviewed by other customers,” Pavlovich says.

She adds that the online feedback helps Albertsons understand better “what delights our customers and where we can improve.” Pavlovich says customer feedback helps inform decisions, including which kinds of private-label products to offer customers.

To add the reviews and rating capability, Albertsons chose PowerReviews, a vendor specializing in user-generated content (UGC) technology. Examples of UGG include text, videos, images, reviews, or other content that shoppers created.

Besides Albertsons, PowerReviews’ clients include footwear brand Skechers, whiskey maker Heaven Hill and candy maker Jelly Belly.

“We really like how PowerReviews makes the user experience simple and easy for shoppers to read or write reviews on our grocery products. We are excited to partner with the company to continue to fine-tune and improve the way we offer ratings and reviews on our banner store websites and apps,” Pavlovich says.

Albertsons ranks No. 26 in the 2022 Digital Commerce 360 Top 1000.

The case for ratings and reviews

Grocery retailers have added online ratings and reviews for the same reason as other kinds of retailers: customers read them.

In March 2022 PowerReviews surveyed 11,162 U.S. consumers about online grocery shopping. Among online grocery shoppers, 90% of online grocery shoppers read ratings and reviews at least occasionally, the survey found. Also, 83% of those surveyed said they are more likely to buy something they’ve never tried if online reviews are good.

“Product reviews are tremendously influential,” says Andrew Smith, vice president of marketing at PowerReviews.

He says grocery retailers’ ratings and reviews can boost sales when supply chain problems make familiar brands unavailable

“Over the past two years, grocers have been faced with stockouts, often having to source new brands, many of which have less consumer brand recognition. Focusing on reviews for these products can improve sell-through, consumer consideration, and adoption of these new brands,” he says.

Strategic alternatives

Early in 2022, Albertsons hired investment firms Goldman Sachs and Credit Suisse to serve as financial advisors to a board-led “review of potential strategic alternatives.” Albertsons went public in June 2020. Before that, private equity firm Cerberus Capital Management controlled the retailer for about 14 years.

Albertsons operates almost 2,300 across 34 states and the District of Columbia. It operates under 24 banners, including Albertsons, Safeway, Vons, Jewel-Osco and Shaw’s.

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The move to Walmart.com is part of a larger effort to expand into new channels, including “third-party sales platforms that bring significant new audiences to Blue Apron,” the retailer said in a statement. Blue Apron says it expects to announce more offerings of this kind in 2022 but was not specific about potential distribution partners. Blue Apron ranks No. 178 in the 2022 Digital Commerce 360 Top 1000. Walmart Inc. ranks No. 2.

Blue Apron will pack and ship the meal-kit boxes ordered via Walmart.com. The meal-kit company says handling fulfillment itself will maintain “the efficiency and scale of the company’s direct-to-consumer model and strong supply chain.”

On its own website, the retailer sells meal kits using a subscription model. Consumers select how many servings they want every week and can make specific requests, including asking for kid-friendly options or meals intended to assist weight loss. But, on Walmart.com, consumers can buy the kits without a subscription.

Blue Apron says it is the first — and so far, only — meal kit company selling on Walmart.com.

Reaching new customers

“Our partnership with Walmart.com gives us the chance to reach new consumers that are currently using Walmart.com, as well as introduce an entirely new audience of customers that may not have considered purchasing a meal kit before or were hesitant to try Blue Apron because of its subscription model,” a Blue Apron spokesperson tells Digital Commerce 360.

Blue Apron offers Walmart.com shoppers four options that serve up to 12 people, with plans to expand the options in the coming months. The spokesperson says the meals available from Walmart.com are a curated selection of recipes also available on BlueApron.com. In addition to meal kits, the offerings will include a selection of Blue Apron’s Heat & Eat line of prepared, single-serving meals that consumers can heat up in five minutes or less.

Blue Apron is one of just three meal-kit companies in the Digital Commerce 360 Top 1000. The other two are Sun Basket (No. 174) and Goodfood Market Corp. (No. 265).

Moving beyond subscriptions

Company officials have said Blue Apron wants to “build an ecosystem” of partners to help it expand beyond its subscription model. During a May 9 earnings conference call, CEO Linda Findley said Blue Apron was “implementing additional technology to allow us to simplify integration with a larger number of partners at scale.”

Blue Apron says it is the first — and so far, only — meal kit company selling on Walmart.com. The spokesperson said the retailer has no plans to sell its meal kits or prepared meals in Walmart stores but doesn’t rule it out.

“While we currently do not have plans to expand the offering beyond online sales, we can say that this is just the beginning, and we look forward to iterating on and expanding our offerings throughout the year,” the spokesperson says.

Blue Apron’s search for new customers makes sense. According to a May survey of 1,000 online shoppers by Digital Commerce 360 and Bizrate Insights, just 13% of those surveyed ordered meal kits for delivery during the preceding six months.

In addition to seeking distribution partners, Blue Apron also recently freshened its menu. Last month the retailer expanded its food and wine offerings, adding new four-serving recipes, premium sparkling wines and increasing the number of “add-on” items available. Add-ons, which the retailer introduced last year, include breakfasts, appetizers, salads, desserts and à-la-carte proteins. Blue Apron now has 58 weekly food options, more than tripling the variety of choices on its menu since 2019.

Blue Apron financial results

For its first quarter, ended March 31, Blue Apron reported that net revenue decreased approximately 9% year-over-year to $117.8 million. That’s down from $129.7 million a year earlier. Its net loss more than doubled, reaching $38.4 million, compared with a loss of $15.7 million a year earlier.

For the full year, the retailer says it expects top-line net revenue growth to be in the mid-teens percentage range compared with the full-year 2021 revenue. The retailer says it will get there by returning to positive year-over-year net revenue growth starting in the second quarter of 2022 and for the rest of 2022.

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The increase in subscriptions has accelerated over the past couple of years, said Elan Lieber, the brand’s senior performance marketing manager. The pandemic “fast-forwarded” what subscriptions Equator Coffees could offer. It began working with Ordergroove, a subscription-management vendor, in April 2021. Subscriptions now account for more than half of Equator Coffees’ online revenue, and that percentage continues to grow, Lieber said. The lifetime value of a subscription customer is three times higher than for customers who buy individual products, he added. 

“The subscription is the big loyalty component for us,” Lieber said. “When someone comes to Equator and starts a subscription, that’s where we see a really strong, long-term relationship versus just a one-off purchase.” 

Equator Coffees uses Shopify as an ecommerce platform, and Ordergroove powers Equator Coffees’ subscription through a Shopify plug-in application. Ordergroove’s content appears on Equator Coffees’ website as an offer for subscriptions on the product details page. When customers buy a subscription-eligible bag of coffee from Equator Coffees, the subscription offer will appear beside the one-time purchase option for the same product. 

Subscription adjustments

Ordergroove offers a technology called Instant Upsell, said Casey Burt, director of client services at Ordergroove. That’s the ability to add products to an upcoming subscription order either as a net new subscription if it is a replenishable or subscription-eligible product or as a one-time purchase. 

Burt said it is beneficial to the retailer for building average order value. Equator Coffees’ gross merchandise value, including the charge for starting a subscription and recurring revenue, also increased 372% in its first seven months using Ordergroove.

The roaster offers incentives for buying products with a subscription, including 15% off the first bag. Equator Coffees also offers free shipping for all subscription customers, from the first time they order to the end of their subscription, Lieber said. Subscribers can pause and change their subscription at any time. 

“There’s no penalty or ‘you’re committed for X period,’” Lieber said. “It’s very transparent, full control to the customer.”

Ongoing customer communication

That personalized customer experience helps Equator Coffees reach out to new and existing customers differently. 

“You know that they’re getting a specific product on a specific date, and that allows you to do a lot of really interesting things from a post-purchase perspective,” Burt said.

Each subscription delivery comes with its own pre- and post-delivery transactional emails, allowing Equator Coffees to connect several times with each subscriber customer. Equator Coffees can suggest products based on the customer’s subscription. Subscribers get an email confirming their order’s scheduled delivery date, and those emails remind them they can make changes.  

A-B testing helped Equator Coffees determine what type of messaging to use with customers, Lieber said. That could include how much information customers want from the retailer, and how specific they want the information to be. Some customers preferred to learn about the brand’s sustainable supply chain, and others focused on product quality or collaborations. Another segment just wanted information about the retail cafes. 

“Everybody has a very specific palate and flavor profile that they like, so we really focus on meeting them where they are,” Lieber said. “People who buy blends from us, we really only communicate to them about blends. People who are big fans of single-origin coffees, we’re always talking to them about single-origin coffees. A lot of it comes down to meeting our consumers where they’re at so they feel they’re getting relevant information from us.”

Subscribers also get early and first access to any new coffees the brand releases, Lieber said. Equator Coffees also gave them a first look into a cafe it launched in southern California, he added.

B Corp. status

Equator Coffees, a certified B Corp, meets certain environmentally friendly and sustainability standards. It also means meeting certain standards for how it treats its employees and how its suppliers treat theirs. That supply chain experience is part of the selling point for Equator Coffees, Lieber said.

“We really strive for sustainability throughout our entire business,” Lieber said. “We utilize World Centric No Tree cups in our retail cafes, and then we use BioTre 2.0 bags, which are made from 99% renewable resources. Across the board with our supply chain, we really work hard at making sure we can be as sustainable as possible.”

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Greg Alvo, founder and CEO, Ordergroove Inc.

If you were to take a snapshot of the average American family in 2020, you’d likely find a family of four stuck at home trying to manage the new normal of work, school and play, from a single isolated location.

That meant managing work from home for mom and dad while also keeping their family happy, healthy, and safe. Meanwhile, the kids adapted to their first remote school lessons. And don’t forget the new furry friend that an estimated 11.38 million U.S. households welcomed home during the pandemic.

With this new normal came a slew of new needs, including a monthly supply of pet products, an increased necessity for household essentials, and perhaps most important to everyone’s well-being, a self-care routine. At the same time, consumers looked for safe, reliable ways to source these products on an ongoing basis.

In searching for ways to consistently receive these products from the safety of their own homes, many consumers turned to ecommerce – specifically subscription offerings. As a result, subscription programs saw massive growth during COVID-19. According to eMarketer, subscription commerce sales saw 41% growth in 2020, and it expects the market to reach $27.67 billion this year. Our merchant data found that the pet supply, household product and beauty categories draw the biggest demand for subscriptions.

2023 Ecommerce Fulfillment Report

Analysis of the latest trends in ecommerce fulfillment. Includes over 20 charts, expert analysis on top U.S. shipping carriers and how their finances impact retailers, and breakdowns of shipping, returns, and omnichannel offerings among retailers in the Top 1000

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Pet supplies are essential for keeping new four-legged friends happy

Pet parents often go to great lengths to ensure their four-legged children are well taken care of. For many, online subscriptions served as a reliable and convenient method to receive regular supplies such as cat litter or dog treats. In fact, in 2020, subscriptions for pet supplies increased by 340% YoY for our merchants.

 When it comes to the pet supplies you regularly order—like that 25-pound bag of specialty, grain-free dog food your vet insists your dog needs—subscription programs can offer a sense of predictability and convenience. With subscriptions, pet parents don’t have to worry about reaching for a scoop of dog food, only to realize they’re at the bottom of the bag and the local pet store doesn’t carry that all-important specialty food your dog eats. Subscriptions eliminate this friction – consumers no longer need to remember to buy more pet food before it runs out. And just as important, no one must schlep that bulky bag of food home because it’s automatically delivered to your door exactly when needed.

Household product demand increased as remote life took hold

With consumers spending most of their time at home, subscriptions for household products soared. From everyday goods like hand soap or disinfectant wipes to comfort items such as candles, subscriptions became a safe and convenient way to shop. According to our data, subscription enrollment for these types of products increased 288% in 2020 versus 2019.

 The household product category saw increased growth due to the flexibility and control subscriptions provide consumers. Not only are items delivered at a regular cadence, but a consumer can easily pause orders instead of canceling a subscription altogether. That way, if fragrance fanatics find their apartments overflowing with candles they haven’t had time to burn, they can take a short break from receiving any new orders.

In addition, consumers can easily modify the delivery dates of their orders. For example, if a family is going out of town and won’t be home, they can request a new delivery date and receive the order once they’ve returned. As their needs continue to change – even monthly – merchants can demonstrate their value by offering these customizable subscriptions.

2022 Online Home Goods Report

Analysis of North America’s leading online home goods retailers. Includes over 30 charts, total sales of the 114 online home goods retailers in the Top 1000, critical consumer survey data and trends in mobile, fulfillment and in-home services. 

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Beauty gained popularity as consumers turned to new self-care and wellness routines

Last year’s stay-at-home orders disrupted daily routines, causing consumers to turn to self-care to maintain some sense of normalcy. As a result, shoppers sought out beauty and wellness products, from cleansing serums to cures for “maskne” our beauty merchants saw a 117% increase in subscriptions in 2020 compared to the prior year.

Providing a tailored online experience can be challenging for beauty merchants, as needs are hyper-personal according to ingredients, skin tone, scent and more. For example, the daily routine of a dad growing a pandemic beard and a teenager with acne-prone skin looks very different. Given that every shopper’s unique needs vary, merchants have found success in offering a personalized experience by pairing subscriptions with guided selling and loyalty programs. 

Guided selling, for example, is often executed through a chat box or a question-and-answer experience, which helps customers quickly find the best products for their needs. By either speaking to a consultant online or narrowing down products through a series of questions, shoppers receive personalized recommendations for their subscriptions that can help them feel confident in their purchase decision and their new routine. Once complete, shoppers now have a regular, recurring order that satisfies their needs—and a package in the mail to look forward to. What’s more, loyalty programs that are points-based or tiered can incentivize a shopper to continue a relationship with a brand.

Subscriptions create continuing opportunities for customer loyalty and growth

The average American family’s needs continue to change, as many parents are returning to the office and most kids are now attending school in person. However, consumers formed new shopping habits in 2020. They will still expect subscriptions to deliver on these needs, creating ongoing opportunities for merchants to build loyalty and grow their customer base.

Regardless of the vertical, subscription programs are a tool for merchants to establish an essential role in a customer’s life. Merchants must move beyond the fundamentals of a simple subscription offering to improve relationships and better serve their customers. Customers are not one-size-fits-all, and their ecommerce experiences should reflect that. By offering reliable, convenient and customizable subscription programs that customers can control, merchants will ultimately drive loyalty within their brand.

Ordergroove Inc. provides software that powers subscription programs for D2C brands and retailers.

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