Digital innovation and technology trends in retail

TikTok is back in the hot seat — not that it ever really left — again facing threats of a nationwide ban in the U.S. under a proposed bill now in the hands of the Senate. The bill, which would force a sale of the app if it wishes to remain in the region, raises questions of how an evolving social media landscape could play into TikTok’s fate and what the impact may be for marketers.

The latest bill against TikTok comes as the ByteDance-owned platform continues to stoke national security concerns stemming from its Chinese ownership and handling of U.S. data. The bill, dubbed the Protecting Americans from Foreign Adversary Controlled Applications Act, was passed rapidly by the House in a landslide 352-65 vote last week and now heads to the Senate. If the bill progresses, President Joe Biden has already stated that he would sign it into law, giving TikTok 165 days to sell or be banned in the U.S.

“The bill’s progression to the Senate with the overwhelming support from the House and as Biden has voiced that he backs the bill is what makes this one feel more real — but it’s still not time to panic,” said Ed East, co-founder and group CEO of Billion Dollar Boy, in emailed comments. East noted that ultimately, he doesn’t expect a total ban to go into effect given that the Senate’s decision is still up in the air and TikTok would have time to sell if the bill becomes law. 

While the Senate has also indicated that there will be some down time before a decision is made, questions have understandably surfaced as to what makes this ban attempt different, who could stand to benefit and where social media ad dollars may shift. 

The making of a ‘perfect storm’

TikTok has repeatedly found itself in political crosshairs since its Western emergence — the app is already banned on most U.S. government devices — but arguably the most serious threat to its existence beyond that of the present day came in 2020 under former President Donald Trump, who attempted to ban the app via a since-revoked executive order. At the time, multiple parties hoping to buy the app came forward, including Microsoft, Walmart and Texas-based tech firm Oracle, which now helps store U.S. TikToker data. Trump has since changed his stance and come out against the current push for a ban.

While the latest ban attempt is in some ways reminiscent of those of the past, the key difference in the current debate is the passing of time, which has allowed for a wider awareness and aperture around the issues surrounding TikTok, according to Mike Proulx, vice president and research director for Forrester. The years since 2020 have seen a rise in questions around social media’s impact on aspects like mental health, misinformation and children’s safety while consumer privacy concerns and antitrust legislation have reached a boiling point. 

“All of these things together equate to the perfect storm of government needing to take some type of regulatory action with regards to social media,” Proulx said. “This is something that has been brewing for some time and the conditions just happened to be ripe at the moment for heightened action.” 

There’s no shortage of instances that demonstrate the growing desire by the government to regulate social media. In January, a Senate hearing discussing apps including TikTok, Snap, Meta and X (formerly Twitter) and their ability — or lack thereof — to keep children safe saw Republican Sen. Thom Tillis of North Carolina decrying to top social executives that, “We could regulate you out of business if we wanted to,” painting a tense picture of Congress’ current regard for the platforms.

The protection of data has also been a hot-button topic across the board. In the U.S., TikTok has attempted to address concerns about its data practices with Project Texas, its billion-dollar U.S. data separation project. However, damning findings from The Wall Street Journal in January based on information from internal documents and current and former employees found that TikTok still is sharing U.S. user data with its parent company in China, something that Project Texas was put in place to avoid. 

Beyond social itself, the broader economic landscape has shifted. President Biden has been more comfortable imposing trade sanctions on China than former President Trump. In a potential push to combat China’s attempts for economic dominance, Washington could be more likely to go through with a TikTok ban if ByteDance refused a sale. 

Picturing a potential suitor

Though a big “what if” remains as to whether or not the bill banning TikTok would pass, an even greater speculation is whether or not ByteDance would agree to divest and if its highly praised algorithm would be part of the deal. In response to the news, TikTok released a statement claiming that “the bill was jammed through for one reason: it’s a ban,” going on to say that it hopes the Senate will consider the facts and realize the economic opportunity offered by the app, which touts 170 million American users and supports 7 million small businesses.

Still, a small handful of interested buyers have reportedly already come forward, among them “Shark Tank” star and businessman Kevin O’Leary and Bobby Kotick, the former CEO of Activision. Following the passing of the bill by the House last week, former Treasury Secretary Steven Mnuchin also announced that he was establishing an investor group to try to buy the app. Mnuchin, who chaired the Committee on Foreign Investment in the U.S., is the founder of Liberty Strategic Capital, which has made a number of investments, including with cybersecurity firms, angling the exec as a strong potential prospect. 

Whoever might attempt to purchase TikTok would need a lot of capital. The app, a favorite among younger audiences, was reportedly valued internally at $268 billion in December.

“If, and that is capitalized in italics, ByteDance were to decide this, there is momentum already brewing on potential buyers because of the impact that TikTok as an app has had on culture, society, demographics, creativity, all sorts of aspects of daily lives for nearly half of the country,” said Proulx.

During 2020’s ban attempt, hopeful TikTok buyers came forward for various reasons. Walmart hoped to boost its advertising business while Oracle wanted help bolstering its data services. TikTok in the years that followed has matured into a powerhouse, building out a strong advertising business while also extending into areas like social commerce. Accordingly, interest from potential suitors this time around could take a new form.

“The conversation might be different this time around than it was in 2020, when it just seemed like a startup social network,” said David Tiltman, senior vice president of content for WARC.

U.S. advertising spend on TikTok was estimated to be $8.7 billion in 2023 and is expected to grow to $10.9 billion this year, according to WARC Media findings. For perspective, in 2020 and 2021, spending in the U.S. on TikTok was smaller than that for Snap, per WARC data. Because of TikTok’s widespread growth, interested buyers could envision the app’s future in multiple ways, Tiltman noted. In addition to potential interest around existing aspects of TikTok’s business like commerce, he expects questions to rise around the app’s potential to mesh with ongoing hype around AI. 

“What is the AI play around TikTok? I don’t have an answer for that, but that is a question that will be asked,” Tiltman said.

Given the context of the latest ban attempt, it’s critically important that any potential buyer has both the credibility and public perception of standing for consumer privacy rights, according to Proulx.

“It would have to be a company that both the government and consumers trust as an objective, honest, third-party broker in the mix, or else you end up trading one problem for another, or even worse, exacerbating the problem that already exists,” Proulx said. 

Where the dollars could shift

Beyond regulation, social media more broadly has evolved greatly since 2020. Instagram Reels, Meta’s answer to TikTok, launched in August of that same year. Since then, some findings have indicated that branded video content on Instagram Reels outperforms that on TikTok and Facebook. 

If marketers were to shift their budgets away from TikTok, Proulx believes the dollars would flow to Reels. Amid the government’s antitrust crackdown, that may bring with it adverse consequences.

“Meta becomes the benefactor in all of this, and while it’s good for Meta as a company, both from the standpoint that they will likely see a material increase in both users and advertising revenue, it now strips the marketplace of competition,” Proulx said.

Other competitors have also appeared, including YouTube Shorts, which YouTube has continued working to monetize. Among platforms, advertisers in North America this year plan to increase their budgets on TikTok, YouTube and Instagram, in that order, per WARC’s recent Marketer’s Toolkit findings, indicating that the latter two are the likely benefactors of any potential ban. 

Still, any action against TikTok is likely to send marketers into something of a scramble — 67% of U.S. business-to-consumer marketers report that their organization plans to increase investment in TikTok this year, per Forrester’s 2024 Marketing Survey. As a decision on the app looms, Proulx advises beginning to plan around the potential outcomes. 

“Every marketer needs to be contingency planning now, and if they aren’t,” Proulx said, “they’re already behind the curve.”

Ikea Retail has set a goal of providing AI literacy training to 3,000 workers and 500 leaders across the organization, according to an April 12 announcement from Ingka Group, the Ikea retailer that represents about 90% of Ikea retail sales.

The initiative offers tailored training based on workers’ roles and levels in the company. For instance, all workers can learn AI fundamentals, while other targeted courses focus on topics such as responsible AI, mastering GenAI, and algorithmic training for ethics. In addition, leaders can participate in programs such as AI Exploration Days to align AI potential with Ikea business priorities.

“We are providing a blended experience for learning, and doing it in a way that future-proofs our workforce to ensure we remain at the forefront of innovation,” Francesco Marzoni, global data and analytics officer for Ikea Retail at Ingka Group, said in a statement.

Ikea is working with various AI tools developed by the organization or in collaboration with suppliers, according to the announcement. The Hej Copilot, for instance, was launched recently with Microsoft as a GenAI tool to help workers with numerous tasks, including image creation, idea generation and presentation design.

Amid this time of rapid technological change, Ikea emphasized that the “future of AI is human at the core,” noting the importance of its digital ethics policy and a commitment to put workers “at the forefront of all technological adoption.” The AI literacy training programs, for instance, are intended to not only prepare workers but also empower them to lead in a new age of AI, according to the announcement.

In early April, a Cisco-led consortium with major tech companies — such as Google, Intel, IBM, Microsoft and SAP — announced an initiative to train 100 million technology workers during the next 10 years to prepare for AI disruption across the workforce. The group will evaluate AI’s impact across information and communication technology jobs, identify skills development pathways and release a report with practical insights and training recommendations for employers.

Although AI training recommendations may vary by company and job role, employers should keep the employee in mind when considering the best upskilling or reskilling options, stakeholders previously told sister publication HR Dive. Most of all, leaders should communicate what the future looks like at the company, address any fears and ensure employees receive the skills they need, the experts said.

At the same time, leaders have said it’s never been harder to plan for future talent requirements and they can’t train workers quickly enough to keep up with AI and tech developments, according to a report by the World Employment Confederation. Most senior executives said they’ll need a more flexible workforce, which they’re building through sectoral talent pools, skills-based hiring, online talent platforms, contingent workers, internal flexibility and talent from other countries.

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By VMware

New retail challenges and opportunities

Expectations have changed for brick-and-mortar retail organizations. Today’s sophisticated consumers expect not only personalized service when they visit a store, but also the fast, convenient, informed experience they enjoy with online shopping. 

As their customer preferences evolve, retailers are transforming their operations with new applications at the store edge to better understand consumers’ behavior, anticipate their needs, and bring together the best of in-person and digital shopping. They are exploring ways to engage store visitors with promotional offers on their mobile devices, QR codes with additional product information, and even augmented reality (AR) mirrors that let them virtually preview clothing before they purchase. 

These capabilities require serious compute power, but it’s cost-prohibitive and impractical to bring a data center into thousands of stores. Advanced rich media, AI, and AR applications are also bandwidth and latency intensive. Performance and availability are critical, and it’s unacceptable if excess data overwhelms the network, slows response times, and interrupts sales processes. 

Edge applications are also challenging to manage and keep current across retail enterprises. Whether it’s a DevOps organization updating multiple applications at each store, or infrastructure teams securing and optimizing them, supporting applications at scale can be slow and labor-intensive. 

In a changing threat landscape, now that retailers are collecting data at the store edge and sharing back to clouds or data centers, cybersecurity is essential. Vast amounts of sensitive consumer and business data can be potentially exposed to bad actors.

To seize the retail opportunity and meet today’s challenges, retailers need a light-touch platform that enables them to deploy, manage and connect edge-centric applications—and future applications and updates—quickly and easily, with few IT resources. 

Empowering retail operations at the edge

The VMware by Broadcom software-defined edge portfolio brings a right-sized edge computing infrastructure to dispersed retail locations, close to where endpoints generate and consume data. It links next-generation edge applications with programmable connectivity,  provides each distributed workload with the compute and connectivity it needs and manages everything as a software-defined overlay. 

VMware software-defined edge provides a platform for retailers to deliver the advanced technology and edge-powered experiences consumers expect—and achieve it in a low-cost, efficient way. It enables:
 

• Right-sized infrastructure enables retailers to efficiently incorporate new AI/ML workloads on small servers across many sites. 
•  Zero-touch orchestration provides effortless deployment and lifecycle management of edge applications, infrastructure, and services.
• Programmable connectivity, linking distributed edge sites with varied connectivity options - from wireless or fixed line, broadband and more - to allow applications to directly program the optimal connectivity they need in real time. 

Unlocking retail outcomes

With VMware software-defined edge solutions, retailers can support the next wave of digital transformation across every site, to unleash powerful outcomes. 

Enhanced security and loss prevention

Concerns about theft are growing in the retail industry. According to a survey by the National Retail Federation (NRF), retail shrink grew 53% from 2019 to 2021. VMware software-defined edge solutions provide the overlay intelligence and performance at the edge to support AI-enabled computer vision for loss prevention, real-time inventory monitoring, customer heat maps, and safety.

A consolidated solution

VMware software-defined edge solutions help organizations reduce in-store infrastructure by consolidating POS and back-office systems together with new AI/ML powered applications. Instead of separate systems for IoT devices like cameras, point of sale systems, and environmental systems, security alarms or RFID apparel tags, retailers can consolidate IT and OT under a single unified platform.

Light touch and zero-touch maintenance

Designed for application management at scale, VMware’s robust software-defined edge solutions enable IT and DevOps teams to update all applications across hundreds or thousands of sites while empowering the applications to administer requirements on an as-needed basis. Apps and devices“phone home” and update themselves for a self-sustaining solution. Organizations can also customize configurations for specific sites. For example, convenience store locations that are open during late hours might have a higher need for physical security and loss-prevention applications. 

More intelligent consumer experiences

Next-gen solutions like real-time AI analysis and decision making, automation, and AR require more advanced intelligence and resources at the edge.  VMware software-defined edge lets retailers offer personalized customer experiences such as real-time targeted marketing and digital mirrors that display product options.

VMware software-defined edge solutions help retailers accelerate the adoption of innovative applications and services, while maximizing ROI. It lets them deliver a superior in-store experience to strengthen their brand and improve customer retention and margins, all from a single, scalable platform. VMware empowers retailers to support today’s needs—and evolve and innovate to meet tomorrow’s.

Ready to explore opportunities at the edge?

Williams-Sonoma, Inc. portfolio brand Pottery Barn Teen expanded May 1 its dorm assortment and added design features to its tech.

The “Build my Bed” 3D visualizer and “Ultimate Dorm Wishlist” features can be accessed on Pottery Barn Teen’s mobile app and website. Customers can also book virtual or in-person appointments with a Dorm Expert designer. 

The brand also announced an expanded assortment of new styles of bedding, headboards and storage. It also announced it expanded its collaboration with fashion brand LoveShackFancy for trendy dorm essentials.

Self-proclaimed as the “largest dorm collection to date online,” Pottery Barn Teen is leaning into tech and experiential retail to enhance its shopping and design services for its targeted dorm customer.  

Select Pottery Barn and Pottery Barn Kids stores will feature a curated “Dorm Shop” starting late spring, according to the release. Pottery Barn Teen is also offering near campus pickup with any items from Williams Sonoma, West Elm, Pottery Barn, Pottery Barn Kids, or Pottery Barn Teen stores near their university.

“We want to make outfitting a dorm a seamless and enjoyable experience,” Pottery Barn Teen President Jennifer Kellor said in a statement. “With the launch of our new digital functionalities and services, we are proud to offer our customers an enhanced dorm shopping experience from start to finish.”

In the app, the brand’s “Build my Bed” 3D visualizer takes the user through each layer of a 3D-rendered Twin XL bed, made with proprietary augmented reality tech. Here customers can choose their sheets, pillows, headboard and more from the expanded assortment. Users can spin and zoom on the bed from each angle and see different design options before purchasing.

Pottery Barn Teen is adding a wishlist function to both its app and website.  “The Ultimate Dorm Wishlist” has a collaborator feature allowing roommates, for example, to add items and offers the option to share the wishlist with gift givers.

Pottery Barn Kids and Pottery Barn Teen first launched their apps for iOS early last year, allowing users to view and purchase items from 3D rooms, book appointments and more. This week the company released another app for its sister brand Williams Sonoma and Williams Sonoma Home. The app hosts recipes, tutorial videos, shoppable content and the option to book design appointments alongside other relevant features.

At the end of April, former Pottery Barn Brands CEO Marta Benson officially stepped down after about 13 years with Williams-Sonoma, announcing her departure in January. Monica Bhargava, Pottery Barn president and Jennifer Kellor, president of Pottery Barn Kids and Pottery Barn Teen, will assume CEO responsibilities.

As Walmart places growing emphasis on digital innovation, the company’s CFO and head of investor relations outlined how supply chain automation, in-store technology and remodels are impacting labor, sales and consumer behavior. 

Executive Vice President and CFO John David Rainey and Senior Vice President and Head of Investor Relations Stephanie Wissink shared details about what the mass retailer is doing while at investment banking advisory firm Evercore Inc.’s conference on June 14.

Customers who have a very good experience with e-commerce are more likely to come back, Rainey said, noting that as they become more accustomed to the online experience for grocery shopping, they mix in general merchandise to their baskets. Digital upgrades for its supply chain and stores are changing how workers do their jobs, Wissink said, according to a Seeking Alpha transcript of the Evercore ISI Consumer & Retail Conference. 

Supply chain and store tech investments

Walmart is looking to make its stores more efficient by using micro-fulfillment centers and automated storage and retrieval systems in its facilities, according to Rainey. “We're making a tremendous investment in our supply chain,” he said.

In October, the retailer announced plans to buy MFC developer Alert Innovation for an undisclosed amount. Walmart President and CEO Doug McMillon said at a conference in December that Walmart is working with four different partners on four types of fulfillment centers along with using store-level fulfillment. Walmart has also worked on outfitting its existing distribution centers with automated storage and retrieval systems, McMillon said.   

These efforts to create an automated supply chain are “making it a lot more efficient for us and enabling us to better serve our customers, reduce wait times, have more accuracy in terms of the items that we're picking for that basket because we're continuing to see consumer behavior shift in that direction where they recognize that it is a very convenient process,” Rainey said during the Evercore event. 

Walmart is expecting the unit economics around fulfillment to improve by roughly 20% in roughly five years when the retailer has finished its supply chain transformation. 

“We're going to have roughly 65% of our stores that are served by automation,” Rainey said. “And so this provides a better experience, more integrity to the experience with our customers also lowers our unit costs.” 

While the retailer is placing an emphasis on its supply chain technology, investments in electronic shelf labels are saving workers from hours of work, Rainey said. 

The retailer disclosed during its recent Associates Week that some of the remodeled stores are seeing an uplift in sales by as much as 20% after the remodel is finished, Rainey said, noting that the refreshed locations include improved waypoint finding, signage, wider aisles, displays around apparel, more brands that the retailer doesn’t usually carry and overall a “different look and feel.”

“We've seen this historically, when you have a remodel, you're going to get a little bit of an uplift in sales and sometimes that abates over time as that newness wears off,” Rainey said. “The uplift that we've seen around this [remodel effort] is much, much higher than what we traditionally see.”

Rainey continued: “We would again expect it to decline over time. I don't expect any of us to believe that we're going to have a 20% uplift in sales [in] perpetuity. But even if it's a fraction of that, this is a highly accretive ROI initiative for us. And so we're quite excited about it.”

Rethinking labor allocations

As Walmart continues to automate its supply chain and also revamp its stores, Wissink said the company is reconsidering how to integrate its associate workforce. 

Walmart does not expect to make major changes to its associate headcount and is planning for that workforce to stay relatively flat over the next several years, Wissink said.

“It's redeploying each individual person to do different jobs and upskilling a good majority of our workforce into places that they're serving the customer or more close in proximity to the customer or doing things within the automation sequence where they're serving and contributing to the overall technology,” Wissink said.

McMillon said at the December conference that Walmart is turning to automation to not only boost productivity but also to cut labor costs. 

Pulling back the curtain on Walmart+

While Walmart has remained tight-lipped about Walmart+, its membership program that launched in September 2020, Rainey and Wissink shone more light on its subscriber base and how the retailer is evolving the offering.

Walmart+ subscribers tend to be more affluent, younger, more tech-savvy and value convenience, Rainey said, adding that roughly 50% of Walmart+ members come through the grocery delivery or pickup channels. The customer lifetime value (CLV) of a Walmart+ member is “appreciably higher” than nonmembers because they tend to spend more and shop more frequently, Rainey said.

Walmart+ allows for more digital engagement with customers, Rainey said: “We better understand them and can tailor our offerings that are most relevant to them versus trying to guess and pick and choose certain things that are really based upon more macro level customer stats.”

To that end, the retailer is “co-creating” Walmart+ with its customers, Wissink said.

“There's a very strong feedback loop embedded in the development of Walmart+ as a platform. ... You're seeing value added to the Walmart+ platform based on the feedback loop we're getting from our customers. Going out to the market and finding things that help them live better and making that available as part of their overall plus experience,” Wissink said. 

Recently, the retailer in August added Walmart Rewards as a new benefit to Walmart+ and a month later, made Paramount+ available to members. 

Scan-and-go is taking off

At Sam’s Club, Walmart has seen consumer usage of scan-and-go serve as a successful digital engagement strategy, Rainey said. 

Scan-and-go dates back to 2013 for the club retailer, which rolled the offering out chainwide in 2016. In 2021, the retailer piloted a Scan & Ship program, which allows customers to place direct-to-home orders in the aisle by scanning merchandise included in the program.

Now, scan-and-go accounts for roughly one in four of our transactions at Sam’s Club, Rainey said. 

“If you step back and you think about that for a second, that's a digital experience in a brick-and-mortar world, right?” Rainey said. 

Gaining goodwill with consumers 

Digital innovation is just one piece of the pie as Walmart looks to stay within the good graces of its shopper base. 

While some shopper behavior trends took off during the pandemic but have since reverted back to pre-pandemic times, the convenience and value of grocery delivery and pickup offerings are sticking with consumers, Rainey said. 

“Convenience is a really important part of where we're going here. I think importantly, when we survey the mind share scores from our consumers, we're rated right now for convenience almost as high as value,” Rainey said. “We've never been there historically. And so I think it suggests ... that what we're doing is working and it's resonating with customers. And we want to continue to do that going forward.”

Wissink noted that Walmart’s focus on its value proposition, such as its “inflation-free” promotion for holiday meals and offering last year’s prices for Easter items, is appealing to shoppers. Consumers can expect to see similar efforts later this year, including ones linked to the return to school at the end of the summer, Wissink said. 

“I think we're gaining some goodwill among consumers right now in addition to overall working very closely with our suppliers to make sure that their dollars are the most effective for them to drive the volume they need as well,” Wissink said.

To celebrate the launch of its spring-summer 2024 collection, Hugo Boss debuted its virtual store Boss House Bali on its website, per a release.

Hugo Boss on April 17 also took over a luxury villa in Bali. The in-person Bali experience will first be available to Hugo Boss Experience members, VIP customers, media and influencers from the Asia-Pacific Region. It features gourmet dining, cooking classes, wellness workshops and active adventures, per the statement. Attendees can also shop the new collection at the resort.

The virtual villa, powered by Emperia, showcases the brand’s menswear, womenswear, footwear, accessory and fragrance collections. Shoppers can purchase items in the virtual store, discover holiday collections and book a stay at the in-person Bali experience.

Hugo Boss launched its virtual store to further its connection with the brand’s audience, per the release, fusing “style, tech, and innovation,” according to Nadia Kokni, senior vice president of global marketing and brand communications at Hugo Boss.

Using a gaming component, users can search for hidden letters that combine to make the phrase, “Boss Bali.” Upon collecting all the letters, players unlock a discount code able to be redeemed on their next purchase.

“We want to be close to our consumers, ensuring our finger is firmly on the ever-changing pulse of relevant, modern retail,” Kokni said. Season after season, we lean into innovation to find new ways to get closer to our consumers as well as to learn more, by offering enhanced shopping experiences that disrupt the norms, merging the essence of our brand ethos with cutting-edge digital advances.”

This isn’t the brand’s first virtual activation in pursuit of loyalty and engagement. To promote its denim-focused line, the retailer launched Planet Hugo on Roblox  with interactive experiences and virtual clothing. 

As retailers continue to find new ways to connect in-person retail to virtual experiences, the online store has popped up frequently in recent years. With the debut of Apple’s Vision Pro headset, brands like Best Buy, StockX and E.l.f. Cosmetics have launched their own experiences. Even with virtual experiences, retailers are still sticking to original store formats by mimicking them virtually, like Crate and Barrel, J. Crew and Elizabeth Arden.

Perfect Corp. this month announced updates to its existing virtual try-on capabilities for jewelry. The update allows for more detailed depictions of items in 3D, according to a company press release. 

The latest update supports Graphics Library Transmission Format 2.0 files, which include more detailed textures and environmental lighting for 3D scenes and models. The technology will enhance brand visuals and reduce the time needed to produce 3D models, according to the company.

Perfect Corp. in late February also made improvements to its AR 3D blush try-on, debuting three-toned blush color virtual try-ons for an expanded range of shades and textures. The update introduces different blush patterns and textures like matte, satin and shimmer.

Perfect Corp.’s latest update to virtual jewelry try-on simplifies the 3D model creation process for brands.

Before the update, the company’s system accepted Wavefront Object files, but the technology, the company said, didn’t fully capture details like environmental lighting and texture. With the update, brands can use Graphics Library Transmission Format files, which incorporate things like wireframe details, texture descriptions, texture maps and environmental lighting maps. 

According to the company, the update “streamlines and accelerates the 3D product SKU creation process, providing brands with a faster and more efficient way to showcase their products in augmented reality environments.”

Retailers have invested in virtual try-on tech across the industry in recent years. Perfect Corp. has acted as a consistent provider of the try-on tech, bringing virtual makeup try-on to Walmart’s app, airports — through a partnership with travel retailer Dufry — and to the aisles of Whole Foods, allowing shoppers to try products from natural beauty company Mineral Fusion. 

The appeal of virtual try-on goes beyond beauty, though. Last month, Walmart added virtual try-on capabilities for eyewear to its app and website. With augmented reality tech, customers can try over 750 options and customize lenses upon uploading a prescription and completing a facial scan. Apparel has been another space for virtual try-on innovation, with companies like Walmart, Google and Men’s Warehouse all experimenting with ways to virtually model clothes.

Amazon announced Tuesday a new grocery subscription available to Prime members and customers using EBT.

The subscription, which costs $9.99 per month for Prime members and $4.99 per month for non-Prime members with an EBT card, provides free grocery delivery on orders over $35 across Amazon Fresh, Whole Foods Market and grocery retailers on Amazon.com such as Cardenas Markets and Save Mart. 

The subscription adds to the string of changes Amazon is making to its grocery offerings as it looks to sharpen its presence as a grocer as well as bolster its Prime membership.

Amazon is positioning its new grocery subscription as a “low, monthly fee” that “pays for itself” after one delivery per month. 

Along with Whole Foods and Amazon Fresh, the free delivery on orders over $35 also applies to retailers including Cardenas Markets, Save Mart, Bartell Drugs, Rite Aid, Pet Food Express and Mission Wine & Spirits.

The new subscription also unlocks free one-hour delivery windows where it’s available, free 30-minute pickup and priority access to recurring time slots for a weekly grocery order. Earlier this year, Amazon Fresh launched the Recurring Reservations feature, which allows customers to slot pickup or delivery orders up to a week in advance.

The grocery subscription is available in more than 3,500 cities and towns across the U.S. Amazon said it tested the offering with Prime members in Columbus, Ohio; Denver; and Sacramento, California, in late 2023.

“Our goal is to build a best-in-class grocery shopping experience — whether shopping in-store or online — where Amazon is the first choice for selection, value, and convenience,” Tony Hoggett, senior vice president of worldwide grocery stores at Amazon, said in an emailed statement. 

“We have many different customers with many different needs, and we want to save them time and money every time they shop for groceries.” 

The new subscription builds on existing Prime benefits, which include member-only deals at Whole Foods and Amazon Fresh. For people receiving government assistance, including SNAP and Medicaid, Amazon offers Prime for about half the price. 

Amazon has made several moves recently to tweak its grocery offerings, including removing Just Walk Out from its stateside Amazon Fresh stores — and two Whole Foods locations that have the technology — and ramping up smart carts in its grocery locations. Earlier this month, the e-tailer announced it has started offering its Dash Cart to other grocers. In the fall, Amazon linked with Weis Markets for its first loyalty program integration on its platform. 

Grocery delivery has been one area in particular that Amazon has grappled with recently. In January 2023, Amazon Fresh raised its threshold for free delivery to $150 but then 10 months later lowered that minimum to $100. A month later, Amazon said it started offering grocery delivery and free pickup to non-Prime members in all markets where its Amazon Fresh stores and online services operate, with plans to expand grocery delivery and free pickup from Whole Foods to shoppers who aren’t Prime members

Last year, non-fungible tokens craze picked up steam and many brands wanted to get in on the action. For the uninitiated, NFTs are defined as digital tokens connected to digital goods such as art or music. 

Though the NFT industry made headlines for generating billions in trading volume, the once-hot NFT market appears to have cooled. NFT trading volume reportedly reached $24.7 billion in 2022 and $11.7 billion in 2021, according to Decrypt and The Motley Fool, respectively. However, a report from Dune Analytics found that NFT trading volume plunged from $17 billion in January to $466 million in September, according to MarketWatch. Citing data from DappRadar, Bloomberg reported earlier this month that the NFT trading volume dropped 81% between January 2022 and July 2023, and other reporting indicates many may now be worthless. 

It’s also unclear how many NFT transactions are genuine. A 2022 report from Chainalysis reportedly found that wash trading, a financial fraud in which consumers sell assets to themselves for a higher price to artificially inflate the asset value, drove $44 billion in sales in 2021.

Still, retailers and brands have ventured into the space to attract shoppers interested in digital goods. Nike reportedly generated more than $185 million from its NFT releases. Many retailers and brands, including Tiffany, Macy’s, Gap and Puma, have jumped on the NFT bandwagon. 

In an October 2022 Forrester report, the Cambridge-based research and advisory firm predicted that NFT projects released from this year on will no longer be considered innovative. 

Instead, going forward, NFTs will be a tool for retailers to attract customers seeking exclusive experiences and incentives, said Martha Bennett, vice president and principal analyst at Forrester. 

Given the fluctuating and possibly overblown value of NFTs, is it worth it for brands to invest in them as part of their marketing strategy? Experts told Retail Dive that the industry may rebound again, but brands must proceed with caution. Additionally, brands and retailers must be aware of scams associated with the space and connect their NFTs with enticing perks to make the tokens worth possessing. 

When NFTs go wrong

Following in the footsteps of other brands and retailers, MeUndies was one of the many companies that decided to experiment with non-fungible tokens. But after the brand experienced swift social media backlash, it quickly retreated from the space.  

In a statement posted on March 9, 2022, on Reddit, MeUndies explained why it canceled its collaboration with Bored Ape Yacht Club, an NFT project involving 10,000 illustrations of personified apes. The company said it “just didn’t do the work we should have to make such an impactful decision” and cited concerns about the cryptocurrency and NFT industry’s environmental impact.

“Since our announcement, we’ve spent time researching and educating ourselves on the NFT space, and most importantly, listening to our community,” the intimates brand wrote on Reddit. “We’re not immune to making mistakes, and we own this one.”

MeUndies didn’t respond to Retail Dive’s request for comment. 

For retailers and brands continuing with their NFT experiments, these projects will only be a fit for a small pool of affluent customers familiar with the NFT industry. 

Kim Grauer, director of research at Chainalysis, a cryptocurrency investigation and compliance firm, said she surmises that the overall bear market is the main driver behind the NFT market drop. Chainalysis’ research has identified many NFT purchases where buyers are rushing to resell their tokens for a markup, but the bear market likely played a role in curtailing that speculation, she said. 

Forrester’s Bennett said that such tokens would be most appealing to a small subset of younger, wealthy cryptocurrency holders who have the funds to spend on NFTs and are interested in digital assets or have become wealthy through technology. The firm’s March 2022 survey found that 72% of U.S. respondents said they have never owned an NFT and aren’t planning to do so. 

To illustrate this point, Bennett offered an example of two car-related NFTs. Lamborghini released an NFT in January 2022. Chevy introduced its own NFT that came with a 2023 Corvette Z06, but it reportedly didn’t receive any bids. The lack of offers for Chevy’s NFT illustrates that narrow pool of high-end consumers who would pay for an NFT, let alone one tied to a luxury vehicle, Bennett explained. 

Younger, tech-savvy, affluent buyers “are a small target audience, but they're a target audience,” Bennett said. “There are people who spend hundreds of thousands of dollars on a rare Corvette because the target audience just isn't a match.” 

 Despite the narrative that NFTs have changed the nature of digital ownership, the brands and retailers offering NFTs must be clear to consumers about the rights associated with the NFT, Bennett pointed out. If a consumer buys NFTs issued by Disney, for example, they don’t own the rights to the artwork, but they may be able to access some sort of content-related perk in exchange for buying the token, she explained. 

“Essentially, an NFT is just a glorified receipt,” Bennett said. “What makes an NFT different from any other receipt is that it's programmable… [for] exclusive access can be to something digital, to something online, to an event or to some preview catalog or whatever it may be, but it can also be a physical access ticket to somewhere. And so it's that utility that you can have as part of that that makes it attractive.”

Can brands be safe in the NFT world?

Though brands and retailers seek to profit from digital goods, the rise of NFTs has also coincided with the rise of NFT fraud and scams. Through a Freedom of Information Act request to the Federal Trade Commission Retail Dive has obtained, 1,478 filed between and September 2017 and December 2022 alleging that consumers have lost more than $809 million NFT scams, ranging from business imposter and investment fraud to online shopping and art, gem and rare coin scams, the data show. 

The majority of the complaints pertain to niche NFT projects and schemes, but some complaints mention notable brands and cryptocurrency companies such as Adidas, Gucci, OpenSea, PayPal, eBay, Coinbase and Bored Ape Yacht Club, the data show. 

As word spreads about the risks of NFTs, can companies engage in the space and keep their brand reputation safe?

Chainalysis’s Grauer acknowledged that there are frauds and scams in the NFT industry, but there are fraud detection tools brands can use to determine whether the funds used in an NFT transaction came from a cryptocurrency wallet containing illicit funds. 

While there's some scamming and fraud in the NFT market, "We can write algorithms that allow us to quantify the wash trading happening in the NFT space based on who the buyers and sellers are. Every time there's a sale, we know the buyer and the seller. It creates an entire new toolkit to analyze and safely interact with the space,” Grauer said.

In light of the fraud allegations arising from the space, brands and retailers have taken various measures to safeguard consumers from unsavory practices happening elsewhere in the space. 

The NFT world has already become infamous for wash trading, rug pulls and other illicit activities, Bennett said. (According to crypto news site CoinDesk, rug pulls are when a new cryptocurrency project solicits funds from investors and suddenly drain the funds from the projects, leaving the initial investors to take the loss.)

Some brands have bypassed public blockchains when issuing NFTs to avoid “any of the things that can go wrong there,” but others want to use a more controlled environment instead of the public blockchains where fraudsters could view the contents of customers’ wallets, Bennett said.  

As brands began partnering with tech firms to release NFTs beyond public blockchains, the consumers who saw the NFTs for loyalty perks continued to engage with the brand, but NFT enthusiasts who wanted to trade those tokens for profit weren't enthused about these assets not being available publicly to being sequestered, she added.

For example, the NBA teamed up with Dapper Labs, a company that uses blockchain technology to facilitate NFT transactions, to debut its NBA All-Star VIP Pass NFT Auction and Giveaway, per a February 2022 press release. As part of the launch, the organization issued 30 NFTs, digital collectibles, VIP passes and other perks. But for clients looking to use its Flow Blockchain, there’s an option to not make the blockchain publicly accessible to anyone. Bennett pointed to the NBA NFTs as an instance in which a brand has turned to a blockchain company to create their own sealed off environment. 

Even for brands that have used NFT technology platforms like OpenSea, an online marketplace for buying and selling NFTs, the experience has been bad, Bennett said, adding that the platform has customer service problems. Though OpenSea appears to be the largest NFT trading company, others have had similar issues, she said. 

Questions also linger about how some NFT platforms operate. In June 2022, the U.S. States Attorney for the Southern District of New York and the FBI indicted Nathaniel Chastain, a former product manager at OpenSea on wire fraud and money laundering charges stemming from NFT insider trading on the platform, according to a statement from the Department of Justice. The DOJ alleged that Chastain used his advanced knowledge of what NFTs would be listed on the OpenSea and exploited that for his financial gain.

Brands entering the space were either looking for a quick profit or to increase brand engagement via collector’s items, but they weren’t aware at first of the theft of digital assets, rug pull scams, money laundering and other illicit activities occurring in the public NFT market, Bennett explained.  

“What a lot of brands weren't really so aware of at the time they got into it [is] that they're actually that they were allowing their customers to get into a shark tank, essentially,” Bennett said. “

Regarding whether the NFT market will return to record highs remains to be seen. Chainalysis was in the middle of compiling a NFT analysis when they spoke with Retail Dive, but Grauer said that NFTs were in decline alongside crypto assets. 

“I think that many of the [decentralized finance] and [cryptocurrency finance] activities move together. When there's a bull market, you'll see a surge in NFT activity and I think that's what's borne out over the past few years,” Grauer said. “It really depends on what happens in the greater market.”

One of the hottest sneakers right now has holes in it.

With a standout footwear design that has caught the attention of runners and office workers, On has successfully grown its business over the past few years to compete with giants in the athletics market.

On sells a variety of sneakers ranging from road running to hiking to tennis, all in the $100 to $200 range. The brand also sells a number of lifestyle sneakers that still incorporate performance elements, even releasing a limited-edition style with fashion powerhouse brand Loewe.

On’s distinctive look has helped it stand out in a crowded field, and the proof is in the numbers.

On’s latest earnings report in August showed its second quarter broke records again, with net sales up 52.3% year over year to 444.3 million Swiss francs ($506.5 million at the time). Its net income dropped 93.3% to 3.3 million Swiss francs, but its gross profit margin jumped to 59.5% from 55.1%.

Its annual fiscal year 2022 also brought the company back into profitability, swinging to a net income of 57.7 million Swiss francs from a net loss in 2021 of about 170.2 million Swiss francs. For the full year, On reported net revenue surpassed a billion Swiss francs.

The brand is expecting to double its net sales by 2026 to at least 3.55 billion Swiss francs, On announced during its investor day earlier this month. As a more long-term target, the company is aiming to grow net sales by 20% to 25% per year.

The Swiss brand isn’t exactly new to the industry, though, as On officially came into existence in 2010 thanks to co-founders Olivier Bernhard, David Allemann and Caspar Coppetti.

There are plenty of other sneaker brands out there sharing the shelves with On, but lately the brand's been on a tear. So what’s contributed to its meteoric rise?

Visible innovation

A major component of that success is the Swiss brand’s innovation, particularly its easily recognizable CloudTec footwear technology.

CloudTec is a cushioning system on the bottom of sneakers that’s integrated across On’s footwear portfolio. The technology, creating noticeable holes, is meant to absorb impact and reduce strain on runs — all contributing to what On describes as “running on clouds.”

“In everything we create, performance always comes first, whether it’s for an everyday athlete or an Olympian,” Britt Olsen, On’s general manager of the Americas and head of global commercial strategy, told Retail Dive via email. “That focus has helped us continue to build credibility with our fanbase.”

Such features have contributed to the company’s popularity, according to analysts. 

“It comes down to innovation and with On, it’s visible innovation,” Abbie Zvejnieks, senior equity research analyst at Piper Sandler, told Retail Dive. 

Plenty of other performance brands hype up the technology in their shoes, though some of it might be slightly less obvious to the average consumer’s eyes. Depending on the sneaker style, Hoka touts its foot frame, which intends to keep heels in place; Brooks points out its carbon fiber plates; and Nike has created its Flyknit fabric to make more breathable running shoes.

“Where [On was] originally able to take a lot of share was the specialty running channel, which is very important for gaining share with runners,” Zvejnieks added. “Nike and Adidas don't compete as much in that channel as they've tried to go more direct with their businesses. And so that was a clear place for both On and Hoka to gain a lot of share.”

The brand’s balancing act between performance and aesthetics hits the right note with many consumers, according to Cristina Fernández, managing director and senior research analyst at Telsey Advisory Group.

“They've been able to play in the unique case where they are a performance brand, but the consumer has really liked the style of the shoe,” Fernández told Retail Dive. “So it's worked as a lifestyle brand shoe as well.”

With the COVID-19 pandemic, the adoption of more casual footwear grew as people spent less time in office and social environments. However, the trend toward mixing style and comfort has actually been growing over the last 20 years or so, according to Zvejnieks.

“There's that more affluent consumer who's now demanding technical performance capabilities from their everyday shoes, their everyday clothes,” Zvejnieks added. 

And the brand’s famous sneaker innovation isn’t just for runners anymore, as the company officially expanded into tennis in August and is soon to launch its first training sneaker. 

But On’s visible innovation is only well-known thanks in part to its distribution approach, and the company hopes to fuel its growth with various expansion plans.

Heavy on the wholesale

Historically, On has focused on its wholesale distribution channels. 

“Back in 2015, 2016, 2017 — we got so many questions on why we’re doing wholesale,” co-CEO Marc Maurer told Retail Dive in January. “We always said, you know, we’re doing wholesale because it allows us to acquire new consumers in a cheaper way and to scale the brand quite efficiently.”

The foundation that wholesale has built for the brand is enabling the company to grow its direct-to-consumer channel.

During its second quarter, On grew its DTC channel faster than its wholesale business, though DTC only represented a 36.8% share of the business. DTC sales increased 54.7% year over year to 163.5 million Swiss francs while wholesale jumped 51% to 280.8 million Swiss francs.

“They did a very unique thing with the way they thought about distribution,” Fernández said. “Obviously, they did DTC … but they went into wholesale very early and they were very strategic with whom they did wholesale with. Some of the partners entered were probably not your typical partners for performance brands. … I think just winning online is just not enough to get that kind of growth.”

While On does work with specialty running retailers for its wholesale business, it also entered into more fashion-focused doors such as Bloomingdale’s and Nordstrom, Fernández added.

Historically, the brand has entered about 400 to 500 new wholesale doors per quarter, but it expects this rate to drop looking forward, executives said on a call with analysts in August.

Looking ahead, On is trying to continue scaling through wholesale while growing at least two areas of the business: product categories and owned distribution.

On said in its investor day presentation that it is “significantly increasing the pace” of owned store growth, expecting to add 20 to 25 stores per year in the mid-term (with roughly half in China and half outside).

“We want to reach a wider audience of athletes and fans worldwide, so we are expanding our premium multi-channel distribution, growing our own retail presence globally, and increasing our footprint in China,” Olsen said.

Currently, On operates 23 stores worldwide — four of which are in the U.S. — and it has more planned for cities such as Paris, London, Chicago, Austin and more, according to Olsen.

The brand is also working to expand its apparel offerings and grow into new athletics categories, such as training — a plan that will help fill in space at its growing retail footprint. On intends to expand into the category with full head-to-toe looks, according to Olsen.

As a long-term target, On hopes to reach an apparel share of 10% or more. Its Williamsburg neighborhood store in New York City has an apparel share of 16%, whereas its Yitian Shenzhen store has a 26% apparel share.

“Where apparel does help some of the brands is that apparel is a more frequent purchase,” Fernández said. “On — it's still very early on in apparel and to be honest, it's not where it needs to be.”

Specifically in some of its stores, On’s apparel showcasing hasn’t been very strong, according to Fernández.

For fiscal 2022, net sales from apparel for On increased 30.2% year over year to 47.3 million Swiss francs — representing just under 4% of its overall net sales that year.

“While we were founded in running and that will always be core to who we are, we want to inspire people to move, whatever that means to them,” Olsen said. “One way this really comes to life is in our retail stores. In our Brooklyn store, which we opened in June, we group our footwear and apparel together in three areas: running, outdoor and movement.”

The On executive added that this approach shakes up the traditional store model where footwear and apparel are typically displayed separately. Olsen said the approach allows for a more tailored shopping experience for athletes.

“The next step of that will be expanding the assortment to cater to a broader market and part of that is creating price points that are more in line with that of competitors like Lululemon," Zvejnieks said. "So still premium, but at least you're not going to the shelf and seeing a $140 pair of leggings when you know that Lululemon is $90."

As small businesses pursue international expansion, their evolution might involve adopting new payment tools, a recent survey from card network company Visa revealed. 

Small and micro-businesses envision a cashless future, and they’re investing in payment technology as part of their growth strategies, Visa’s survey results showed. In the card network’s global survey of 2,250 small and micro-businesses and 1,500 consumers, more than a third (35%) of business owners surveyed said they are considering accepting new forms of payment as a critical way they can improve their businesses.

About 95% of small business owners planned to become cashless “someday,” and more than half (51%) anticipate going cashless in the next two years.

“Our previous data has shown that small businesses that embraced digital payment technologies over the last few years were more resilient and better able to compete than those who did not,” Jeni Mundy, global head of merchant sales and acquiring at Visa, said in an emailed statement.

To be sure, Visa has an interest in businesses being more digital in their payments schemes because credit and debit cards are often used in those channels. In any case, the COVID-19 pandemic super-charged a worldwide trend toward increased digital payments.

Nearly eight in 10 business owners said they are expanding to new markets to drive growth, Visa said. Among other measures small business owners expect to fuel growth are: bolstering their social media presence (44%), offering new products or services (41%) and increasing marketing investments (40%). 

“It used to be that only big businesses could scale to access customers across the country or around the world, but today’s small business owner can be virtually borderless,” Mundy said in the release. “At Visa, we’re seeing the small business mindset shift from survival mode to growth mode, as SMBs harness the power of digital payments to improve efficiencies, reach new audiences and simply thrive in today’s increasingly digital world.”

The shift toward accepting new payment technology is partly driven by changing consumer behavior, Visa’s survey suggests. More than half (55%) of consumers surveyed said they expect to use digital payments more in the coming year.

Among the factors driving consumers to adopt cashless technology are the convenience and speed they offer as well as the ability to track expenses, Mundy said in the statement. While small and micro-businesses want to integrate new payment forms into their operations, they may face hurdles such as cost, lack of training and security concerns, Mundy added. 

Although nearly half (49%) of consumers told Visa they planned to shop more locally, 72% of shoppers are comfortable shopping with international merchants, the card network reported.

Visa’s latest survey builds upon previous research indicating that small businesses are counting on digital payment acceptance to further growth. The card giant released a survey last year showing that 82% of small and micro-businesses planned to accept digital payment options that year.

Other research has illustrated the decline of cash and the ancillary impact of dwindling cash use. 

A Gallup survey released last year found that 13% of respondents use cash for all or most of their purchases, down from 28% five years earlier. Plus, June data from Euromonitor International indicated ATMs declined to 451,500 last year from 470,000 in 2019.

Though business owners want to transition to cashless, legislators are weighing whether to prevent them from doing so. In June, Congress members introduced bills in the House and Senate to prohibit businesses from refusing to accept cash for in-person transactions.

The legislation is meant to prevent discrimination against unbanked and underbanked Americans who rely on cash to pay for their essentials, according to bill authors Representatives Donald Payne Jr. (D-N.J.) and John Rose (R-Tenn.) and Senators Bob Menendez (D-N.J.) and Kevin Cramer (R-N.D.). 

Meanwhile, local government officials are having a similar debate. In Atlanta, for example, Atlanta City Council members met Wednesday to discuss a proposal that would require retail businesses to accept cash payments, The Atlanta Journal-Constitution reported.

Meta Platforms is introducing new advertising products that use artificial intelligence to help marketers run campaigns more efficiently. The tools, detailed to reporters at Meta’s offices in Manhattan last week, show the Facebook and Instagram owner following its tech peers in investing more heavily in AI as the sector hits fresh peaks of hype driven by the popularity of software like ChatGPT. 

While Meta has leveraged AI for years, its latest moves represent a push into the experimental category of generative AI that can quickly produce images and copy that are more convincingly lifelike. Key to this strategy is a new AI Sandbox tool that will initially offer three functions. Billed as a “testing playground” for generative AI, the feature lets advertisers create multiple variations of text copy and generate background images based on text inputs, along with automatically cropping images to best fit different Meta surfaces, like Stories or Reels. 

Executives acknowledged the popularity of rival generative AI products that have already been on the market for months but suggested that the sophistication and scale of Meta’s ad infrastructure could set it apart. AI Sandbox is being trained on Meta’s internal data, along with information from public sources and data that the company licenses.

“Where we see our unique opportunity is to tightly integrate these features over time into our products, which will allow advertisers to do a number of powerful things,” said John Hegeman, vice president of monetization at Meta, during the event.

AI Sandbox is currently being tried out by a “pretty small” number of advertisers, including the direct-to-consumer cosmetics brand Jones Road Beauty, which was present at the event. Starting in July, availability of AI Sandbox will be expanded.

“We are using it in our business to write copy, we're using it to help with asset production and ideas,” said Cody Plofker, chief marketing officer at Jones Road Beauty, of generative AI. “There's still a long way to go with a lot of the tools, but I'm really excited about the potential ability to produce and create more creative in less time.”

Meta hopes to get buy-in from a diverse range of industry verticals for AI Sandbox, according to Hegeman. The executive also indicated that the capabilities could eventually extend into more complex formats like video. Other aspects of the development roadmap seemed contingent on how advertisers respond to the tech.

“This will be a gradual process where we ramp up to more and more folks over time,” Hegeman said. “The exact timeframe will depend on some of the feedback that we're getting as we continue to evolve and improve the capabilities.”

AI in the spotlight

While AI Sandbox is the flashiest new offering Meta is launching, the company highlighted other AI-powered advertising services. Deeper in the weeds, the firm showed off a system called Meta Lattice that can better predict advertising outcomes and improve optimization without relying on multiple, siloed models, which was common at Meta in the past.

Meta is also building out its Meta Advantage suite of ad products focused on automation that launched last year. Advantage+ Shopping, the program’s commerce-oriented feature, improves cost-per-action by 17% and return on ad spend by 32% on average, according to slides shared during the presentation.

“These sorts of results are really leading to higher adoption,” said Nicola Mendelsohn, head of Meta’s global business group. “We're seeing now three times as many advertisers using [Advantage+ shopping campaigns] weekly than just six months ago.”

Within the next month, brands will be able to switch over their manual campaigns to Advantage+ at the click of a button, a bid to spur even more brands to try out the AI tools. Automated reports that compare the outcomes of Advantage+ campaign to manual sales campaigns are in the process of going live as well. 

Meta Advantage is also trying to help advertisers broaden their reach through Advantage+ audiences. Brands can share their target audience suggestions, which Meta’s system scans to see if it can identify people outside of those parameters who are likely to convert. Other AI perks include the ability to make small tweaks to creative, like adjusting the brightness or text placement in an ad, and a method for picking the best videos to display in Catalog ads.

Meta has put AI front and center in recent months, viewing it as a central pillar to growing its TikTok clone Reels and its longer-term metaverse ambitions. Meta’s revenue grew again in the opening stretch of the year after several consecutive quarters of declines, a bump leadership attributed to the new efficiency enabled by AI. One of Meta’s fastest-growing categories is business messaging on platforms like WhatsApp, where the firm has envisioned the potential for future-facing tech like virtual agents. Customer experience is one of the most valued use cases for generative AI among executive leaders, a recent Gartner survey found.  

“We really see that messaging is the next pillar of our business,” Mendelsohn said. “You’re going to see us investing more in this space.”  

Meta’s ad sales have been hampered by a weak economy and ongoing challenges from Apple’s App Tracking Transparency that have required fundamental aspects of its infrastructure to be reworked. AI is one of the ways Meta is addressing the headwinds, though Hegeman said AI Sandbox and Advantage+ are not specifically responding to ATT.