Commerce chronicles: Feb 12, 2024

PayPal announces new ecommerce tools, Amazon’s shopping assistant, the secret behind E.l.f.’s staggering growth, how ecommerce is changing logistics and the Taylor Swift influence

In this week’s news, UPS’s new report shows how logistics are changing. Plus, meet Rufus, Amazon’s new AI assistant. We’ll also try to answer how Taylor Swift affected Super Bowl ads and discuss beauty brand E.l.f. and its 20 straight quarters of growth. Visit our blog every Monday for a roundup of the latest commerce news.

UPS’s latest report shows how ecommerce is changing logistics

In results from a newly released survey conducted UPS Capital, merchants reported a 30% increase in shipping volume in 2023 driven by rapid ecommerce growth over the past two years.¹ This staggering number highlights the growing focus on shipping and logistics and ensuring supply chains can stand up to the continued projected growth. Experts predict that ecommerce sales will continue to grow more than 10% annually from 2024 to 2027.²

Also noted was that 54% of surveyed merchants expected their ecommerce shipping volume to increase by at least 30% in 2024. This raised concerns that with more packages, there was a greater chance of shipping and delivery issues and more errors in the post-purchase stage, such as late, lost, stolen or damaged packages. These issues could also affect the overall customer experience and create a higher need for customer service.

Merchants also touched on one of the biggest issues facing the increasing need for shipping and logistics: The demand for fast and free shipping and what it costs. Customers also wanted visibility into delivery dates and a variety of return options – and a growing number seek retailers with sustainable shipping.

The report noted the importance of anticipating logistics challenges as ecommerce grows. Because shipping and logistics play a pivotal role in shaping the customer experience, timely delivery, accurate tracking information and hassle-free returns are essential components of a positive shipping experience. It fosters customer trust and loyalty, influencing their perceptions of reliability, convenience and satisfaction. The report highlights that today’s ecommerce brands must provide efficient shipping and logistics operations to meet rising consumer expectations, enhance brand reputation and drive repeat business.

Meet Rufus, Amazon's AI-powered shopping assistant

Let’s face it: shopping on Amazon can be a distinctly overwhelming experience. Amazon alone sells around 12 million products – but with its marketplace, there are over 600 million product listings.³ On February 1^st, Amazon launched an expert shopping assistant called Rufus in beta. Using generative AI, Rufus is trained on the product catalog, customer reviews, community Q&As and information from across the web.⁴ When Rufus is asked a question, it can guide customers to the ideal product for their needs.

Questions for product discovery include anything from “What are the best toys for an active 1-year-old?” to “What’s the most durable waterproof shoe.” Customers can ask Rufus for product differences or something much broader, like “What do I need to start golfing.”

Amazon lists Rufus’s use cases as what to look for when shopping for a product, shopping by occasion or purpose, helping with comparisons, finding the best recommendation and asking questions about a product while on the detail page. While Rufus beta is only used by a select group of customers through the mobile app, it will progressively roll out to additional US customers in the coming weeks.

Beauty brand E.l.f. has grown for 20 straight quarters: What’s their secret?

Founded in 2004, E.l.f will be celebrating its 20^th year with something to celebrate. After closing out the last quarter on December 31^st, the company recorded its 20^th consecutive quarter of growth. Additionally, net sales increased 85% to $270.9 million YoY, up from $146.5 million a year earlier.⁵ The beauty brand found strength in both retailer and ecommerce channels, with CFO Mandy Fields pointing to three growth drivers. According to an interview with Fortune,⁶ Fields stated that the brand’s value proposition stands out, their innovative products cost less than prestige-brand equivalents and they increased their marketing spend from 17% of net sales to 26%.5 Last year, E.l.f.’s regional ad gained 57 billion global impressions behind the Super Bowl. This year, the company is aiming higher, investing in a national ad featuring cast members of Suits and the infamous Judge Judy playing “Judge Beauty.” E.l.f. aims to keep the momentum going, using the latest Super Bowl ad to build on their core values: Clean, cruelty-free, high-performance beauty products at a remarkably affordable price. The brand now expects net sales to be between $980 million and $990 million in fiscal 2024.⁷

Is Taylor Swift driving brands to invest in Super Bowl ad sales?

You're probably living off the grid if you haven’t heard about Travis Kelce and Taylor Swift. These days, their names dominate social platforms, media and commentary at Chief’s games. And it’s likely that the NFL isn’t too upset – the singer has focused her Swifties on football, with an increasing number of teens tuning into games: NBC Sports reported that viewership among teen girls jumped 53% when Swift attended the Chiefs game against the New York Jets in October 2023.⁸ Advertisers have taken notice as well. According to a CNN article,⁹ marketing professor Paul Hardart believes that Taylor Swift’s attendance at the Super Bowl will significantly impact the audience's size and demographic makeup. This means brands are ‘swift’ly responding, running ads that feature women – but not the ones more traditional to the big game. This time, women are cast more intelligently, powerfully and comedically in ads for brands such as L’Oreal, E.l.f., Dove, Frito-Lay and more. And if you still have any doubt about Swift's influence, check out Cetaphil's new Super Bowl commercial, #GameTimeGlow, A New Sports Tradition for Dads & Daughters.

PayPal launching AI-powered ecommerce solutions

Digital commerce is expected to surpass $6 trillion in 2024, compelling merchants to adopt innovative strategies to streamline the checkout process and minimize lost sales opportunities. Consumers also seek to optimize spending and maximize value from their shopping experiences. In response to the growth of ecommerce, PayPal looks to usher in a new era of value creation for both merchants and consumers, unveiling five new tools that solve customer pain points and change the world of payments and commerce.¹⁰ PayPal new tools include:

• Passkeys: PayPal has accelerated the checkout process by integrating passkeys, letting customers login with their face or fingerprint and avoid password prompts or lagging response times.
• Fastlane: Fastlane by PayPal is a one-click checkout experience. Customers save their information with Fastlane and check out with one simple tap with merchants that use PayPal’s platform.
• Smart Receipts: Smart Receipts let PayPal shoppers track their purchases while also providing AI-generated future purchase recommendations. This enables brands to personalize and offer cashback rewards on receipts.
• Advanced offers platform: The advanced offers platform looks to generate ads based on deeply insightful, unique customer insights. Merchants can then customize relevant customer offers and more opportunities to earn rewards.
• CashPass: CashPass is a gateway to exclusive cashback offers from leading brands across the U.S. With just a tap, users can access personalized offers tailored to their shopping preferences, all seamlessly integrated with PayPal checkout. Powered by AI, CashPass curates offers based on individual shopping behaviors. It ensures a dynamic and rewarding experience for customers who can regularly explore new cashback incentives, enticing them to engage with the app frequently.

References:

1. https://www.insureshield.com/us/en/resources/insights/future-of-shipping.html
2. https://www.insiderintelligence.com/content/us-retail-ecommerce-sales-growth-2027
3. https://amzscout.net/blog/amazon-statistics/
4. https://www.aboutamazon.com/news/retail/amazon-rufus
5. https://www.forbes.com/sites/pamdanziger/2024/02/09/elf-beauty-takes-judge-judy-to-the-super-bowl-after-spectacular-quarter-with-sales-up-85/?sh=58f521b82363
6. https://fortune.com/2024/02/06/e-l-f-beauty-20-quarters-growth-cfo-mandy-fields-super-bowl/
7. https://www.cnbc.com/2024/02/06/elf-beauty-elf-earnings-q3-2024.html#
8. https://nbcsportsgrouppressbox.com/2023/10/02/chiefs-jets-thriller-on-nbc-and-peacock-is-most-watched-sunday-show-since-super-bowl-lvii-averaging-27-million-viewers/
9. https://www.cnn.com/2024/02/06/business/super-bowl-advertisers-target-women-as-swifties-change-footballs-demographic/index.html
10. https://www.prnewswire.com/news-releases/paypal-and-venmo-unveil-six-new-innovations-to-revolutionize-commerce-302044225.html