“Ecommerce Briefs” is my occasional series of news and developments from online merchants. In this installment, I’ll address how an online brand is providing an experiential option for consumers, new online payment options from PayPal, a new revenue focus for Amazon, and an initial public offering from a luxury fashion vendor.
First, some statistics. The U.S. Census Bureau reported that retail domestic ecommerce sales for the second quarter of 2018 (period ended June 30), adjusted for seasonal variation, were $127.3 billion, an increase of 3.9 percent from the first quarter of 2018 and an increase of 15.2 percent over the second quarter of 2017.
Casper Embraces Experiential Retailing
Online bed-in-a-box merchant Casper has opened a nap showroom in Manhattan named The Dreamery. People can schedule a 45-minute nap at The Dreamery in one of its nine Casper-equipped sleep pods, which are furnished with Casper beds, sheets, and pillows. A sleep mask, bathrobe, and earplugs are also available. After their nap, guests can enjoy a cup of coffee in the lounge. The nap costs $25.
Since its founding in 2014 as an exclusive ecommerce business, Casper has been expanding rapidly in physical retail. Casper also opened 15 of its own branded pop-up shops in major cities across the country. A special feature in each pop-up shop is a home-like setting, where customers can test drive the mattresses for 20-minute trial sessions. Casper promotes itself as being in the business of providing customers with a better sleep experience, not just selling mattresses.
New PayPal Options
Earlier this year PayPal introduced in the U.S. PayPal Checkout with Smart Payment Buttons to allow consumers a greater range of alternatives in how they can pay for goods and services. This month PayPal launched these payment buttons in Europe.
With this new option, the checkout page dynamically shows the most relevant payment methods, including PayPal, PayPal Credit, and Venmo. The European version has a new twist: It shows country-specific local alternative payment systems.
PayPal Checkout includes One Touch, an opt-in tool that lets customers check out with millions of businesses without having to enter user names, passwords, or payment information. Through another feature — One Touch Acquisition — shoppers can create accounts and set up payments with a business without having to type in all of their information, which PayPal says boosts conversion and repeat purchases.
As reported in The New York Times earlier this month, Amazon is turning its attention to a very lucrative market: the $88 billion online advertising industry. In a short period, Amazon has become a major competitor to Facebook and Google. In Amazon’s first quarter of 2018, the sales of banner, display, and Sponsored Products ads grew by 139 percent compared with the same period in 2017.
Normally consumers who pay for access to a website or a subscription are not subjected to ads. However, according to The New York Times, even Prime subscribers — who pay $119 a year for various Amazon benefits — will be served ads in places that are now ad-free.
Many companies that also advertise on Facebook and Google intend to increase ad spending on Amazon. Also, many are switching ads from YouTube to Amazon because of continuing problems with the former platform. Automated YouTube ads have been appearing on extremist or inappropriate channels for over a year. As a result, companies such as Adidas, Cisco, Hershey, Netflix, and Under Armour have pulled their ads.
YouTube has acknowledged the problems with “inappropriate ads and concerns about how we’re enforcing our monetization policy.” However, it has been unable to adequately fix the problem. Amazon is poised to take advantage of YouTube’s failure. Expect an aggressive effort by Amazon to increase ad revenue.
As an aside, earlier this month Amazon became the second American company to reach the $1 trillion market cap after Apple achieved that value in August. While Amazon is now below that threshold, Apple continues to be worth more than $1 trillion.
Ecommerce initial public offerings have been sparse lately. Farfetch, a U.K.-based luxury fashion ecommerce vendor, went public on September 21. Initially priced at $20 a share, the company opened trading on the New York Stock Exchange at $27 and closed at $28.45. The company is not yet profitable.
Farfetch started out by working with boutiques and fashion houses that had no online presence of their own. As of July 1, Farfetch had 989 luxury sellers on its marketplace, of which 614 were retailers, and 375 were brands. The marketplace has about 1.3 million active customers.
The luxury goods industry is estimated to be worth $307 billion in 2017 and projected to reach $446 billion by 2025, according to consulting firm Bain & Company. Only 9 percent of luxury sales occur online.