At the onset of this year, we previewed that online retailers and digitally-native brands (DNBs) were likely to have another soft year of growth, with the category overall growing less than 10%. Amazon and Walmart.com have been outperformers, growing dollar volume by +8% and +25% respectively, as they have benefited from having a wide selection of great values by third-party sellers. These two marketplaces give third-party sellers access to an incredibly deep level of consumer buying power in a world where customer acquisition costs have risen to become less economical, meaning that disruptive values can be found. All else equal, a great place to do business. Given these dynamics and Placer visitation data for Amazon’s fulfillment centers, we expect Amazon to again produce high-single-digit dollar volume growth for Q3 2023.
These dynamics have put DNBs and other retailer websites at a relative disadvantage. Another headwind for these is that consumers are being more careful with their money, and that means more spending at off-price, liquidators, and secondhand retailers (A topic that we have written extensively about). It also means that consumers for apparel items want to touch and feel the merchandise vs. purchasing it online, and as such, brands like Anthropologie and Abercombie & Fitch have seen solid results at their physical stores. We’ve written about Revolve's difficult year, and that looks to have continued, based on the slow traffic at their fulfillment center in Cerritos, CA. (Shein has also had a very challenging year.)