Top 4 Global Retail Ecommerce Articles for January

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For those who are new here, I'll share various topics that I think are important for the modern leader in Retail Ecommerce Management (REM).

Every month, I'll try to share the articles that stood out to me that are worth a few minutes of your time to read.

To kick off 2023, it’s worth examining the big picture of the dominant retailers in the Retail Ecommerce space in the US, Amazon and Walmart, as well as how shopper behavior might be changing in the US and Europe.

Article 1:?Is Amazon disrupting retail?

Our first article is from Retail Dive and asks if Amazon is past its Prime. It brings up several points that should be considered. Amazon’s retail competitors have closed the gap in fulfillment capabilities over the past three years, eroding one of the key differential benefits of the online behemoth. Today, the majority of Amazon’s retail growth comes from its more profitable third-party marketplace sales. This carries some risk as Amazon has less control over the customer experience here than it does with its first-party products. Low product quality or delayed shipping times could risk reduced customer satisfaction and long-term brand erosion even if it boosts sales in the short term.

On the other hand, Amazon is still very much a growing company. The stock price correction over the past year reflects its struggle to keep costs low and maintain profitability as opposed to driving growth. Both AWS and its retail division continue to grow rapidly. As Amazon continues to grow its cost structure will likely improve vs. its state in 2022. The larger question in front of Amazon is how will consumers continue to shop. If shoppers increasingly expect an online experience akin to browsing a store vs spearfishing for specific products, then Amazon may need to reinvent itself once again.

Article 2:?4 hurdles Walmart needs to clear in 2023

Walmart sits in retail’s opposite corner, facing its own challenges. Its stores give it an advantage in driving profitable ecommerce at scale, but its total online sales volume is still a far cry from Amazon’s level. Walmart must fight upstream against Amazon’s strong first-mover advantage by both copying what worked well and effectively differentiating itself: a difficult task. I expect 2023 to be a year of shakeups and innovation at Walmart’s ecommerce organization now that its fulfillment capabilities are vastly improved.

Like Amazon, Walmart is looking to supplement its profitability with new verticals like healthcare and banking, but both are fraught with challenges. Will shoppers trust Walmart to handle their finances and health in the same way they trust it to provide low-cost products? Walmart’s plan to grow its healthcare center footprint has been stagnant for several years. Its foray into banking will face stiff resistance from established players. In some sense, these issues are common to all businesses that saturate their core market. To beat industry growth, they have to expand into fresh new areas where fast growth is easier to come by for fledgling initiatives.

Article 3:?Retailers brace for tougher times and more frugal customers in 2023

At this point, I think it’s safe to say that 2022 defied expectations. The second half of the year was awash with expectations of a recession that never quite materialized. The downturn in consumer spending has now been “delayed” until sometime in 2023.?Nevertheless, brands should assume shoppers will be more frugal moving forward. Higher credit card debt reported by numerous media sources and lower savings rates indicate that shoppers have blown through their pandemic savings, especially after a stronger-than-expected holiday season. Target mentioned in its Q3 earnings call that its shoppers were becoming increasingly hesitant to buy items at full price as the quarter continued.

Allocating limited resources in a time of scarcity is at the crux of effective Retail Ecommerce Management (REM). Of particular importance for brands will be how to balance discounts with retail media spend. Our data at CommerceIQ shows strong retail media spend throughout 2022 as paying for visibility still pays off for big for brands.

Article 4:?Last year saw a big jump in the number of shops closing

The recession that the US is either avoiding or delaying has taken hold in the UK. Store closures jumped to their highest level in 5 years. For the most part, these closures are occurring as chain stores downsize their footprint and smaller, independent retailers close up shop altogether. Bankruptcies for larger chains are not as frequent. As a result, an eventual economic rebound could see large chains expand more easily to fill the gap at the expense of local and independent retailers. Thus, the UK recession could lead to greater retailer industry consolidation for the rest of the decade.