Almost three years after the pandemic, some retail tech innovations have hit their expiration dates.
Instagram said earlier this month that it is ending its live shopping feature that lets users tag products in livestreams beginning in March. Around the same time, Walmart also announced that it was closing down its last two pickup-only stores — ending nearly a decade-long experiment. Months earlier, in October, Amazon said that it is putting the brakes on the tests of its home delivery robot Scout.
Retailers heavily invested in these types of technologies over the last couple of years to accommodate the growth of e-commerce and contactless shopping. But when Covid restrictions began easing, people reverted back to their pre-pandemic behaviors, like shopping in stores instead of online. As the pandemic moves away from the spotlight, the development of these trends has fallen on the wayside.
Joel Rampoldt, a partner and manager director in the retail practice at consulting firm AlixPartners said that, in some cases, these tech investments tend to disregard the way people prefer to shop.
“I think the general principle is that you can only change customers’ behavior a little bit at a time,” he said. “The things that naturally fit into the way customers want to shop and interact with your brand and interact with your store are way more likely to stick.”
The hype around e-commerce has settled. E-commerce spending has been growing by single digits up to 10.7% for six quarters in a row — a stark comparison from 2020 when it was growing 45%-50%, a Digital Commerce 360 analysis in February indicates.
“There were a lot of retailers dabbling in things like curbside pickup, or buy online, pick up in-store, but the consumers weren’t quite there yet,” said Suzy Davidkhanian, principal analyst at Insider Intelligence. “E-commerce, in general, didn’t sustain that bump that everybody thought was gonna happen.”
Here’s a look at three pandemic-driven tech trends that are losing steam.
Months into the pandemic, brands were enamored by how the QVC-style live shopping model was taking off in China. Livestream shopping in China generated about $300 billion in sales back in 2021, according to Insider Intelligence. Brands quickly launched their own live shopping shows in the hopes that this method of shopping would gain traction in the U.S.
Macy’s, Nordstrom and Walmart are just some of the many retailers that have debuted live shopping shows in recent years to showcase their products and generate more sales. Walmart’s first shopping event in 2020 even received seven times as many views as it initially projected.
Although retailers have continued to invest in live shopping, consumer adoption is still lagging. In a recent survey, a majority of respondents — or about 78% — said they have never joined a live shopping event, according to Morning Consult. The same survey also indicates that just 31% of respondents have seen, read or heard about these live shopping shows.
Instagram and Facebook’s parent company Meta don’t seem to be that confident in livestreaming’s growth. The live shopping feature on Instagram was made widely available to businesses and creators in 2020 but was just recently axed. Meta also shut down live shopping features on Facebook — such as the ability to create product playlists or tag products. Meta said during the announcement that it instead plans to focus on Reels for Facebook and Instagram because “consumers’ viewing behaviors are shifting to short-form video.”
Trouble also seems to be brewing at the tech companies enabling retailers to hold these livestreams. Live shopping startup Firework, which partners with retailers like The Fresh Market and Walmart, has reportedly laid off 10% of its staff, according to reporting from The Information in November. TikTok’s venture into live e-commerce also appears to be hitting some speedbumps in the U.K. when its livestream shopping project did not meet targets and influencers began dropping out, according to three people interviewed by the Financial Times last year.
Contactless omnichannel services like curbside pickup grew in popularity over the course of the pandemic to limit exposure to Covid. And while the idea of getting products without leaving the car proved fruitful for some, others are beginning to kick curbside pickup off the curb.
Although Walmart still offers curbside pickup in many locations, it appears to have abandoned the pickup-only store concept. In addition to the two locations it closed down this month, there was a third pickup-only store in Metairie, Louisiana, which closed down last year, according to Insider.
With shoppers no longer weary of crowds, the use case for curbside pickup is beginning to dwindle. Costco CFO Richard Galanti said during an earnings call back in September 2021 that the retailer has stopped its curbside pickup tests because it “didn’t really see a lot of traction.” Similarly, a report from Digital Commerce 360 claims that bookstore chain Barnes & Noble doesn’t have designated curbside pickup areas and outdoor signs anymore due to a declining number of customers using the service.
Rampoldt said that some retailers have more to gain from having shoppers enter stores than for them to pick up their orders from their cars.
“It’s going away in soft goods and apparel and textiles for some stores because it just doesn’t make sense,” he said. “You can structure the pickup processes so that they’re likely to buy more items while they’re in the store.”
That, it appears, is what Kohl’s is attempting to do. Kohl’s told Axios that it had paused its curbside pickup operation, which was launched in 2020, in favor of in-store pickup.
Autonomous robotic delivery
The pandemic also triggered a wave of experiments for alternative ways to deliver goods that limits human contact. Companies have been toying with the idea of incorporating autonomous robotic and drone delivery into their operations, but the pandemic was seen as a catalyst for retailers to ramp up testing even further. Although autonomous robotic deliveries haven’t been deployed at a large scale, retailers testing them out quickly ran into some issues.
Amazon’s home delivery robot Scout, which bares some resemblance to a cooler, was made to stop in front of doors and its lid would open so that customers could get their orders. A company spokesperson told Bloomberg that the current iteration wasn’t working and the program wasn’t meeting the needs of customers.
FedEx also said it is shutting down the development of its last-mile delivery robot, Roxo, saying that it “did not meet necessary near-term value requirements,” wrote Sriram Krishnasam, FedEx’s chief transformation officer, per internal emails obtained by Robotics 24/7.
Meanwhile, Save Mart’s partnership with robot delivery company Starship Technologies, which began in 2020, ended in June. The announcement came as a surprise given how the two companies expanded their partnership in months before the split. Starship announced that same month that it was axing its global team by 11%.
What retailers have learned
The pandemic is no longer at forefront of retailers’ decision-making, which is pushing them to offload investments that are no longer serving them well.
“It’s really about making sure that the decisions you make when it comes to technology are brand right,” Insider Intelligence’s Davidkhanian said. She added that retailers have the tendency to jump on the bandwagon, especially during the pandemic, without considering if it fits their brand.
AlixPartners’ Rampoldt said retailers are likely to be more careful about what technology to invest in. He added that retailers are now looking to invest in their capital in technology that could help reduce costs in areas such as labor.
“I think they’re going to be more cautious, particularly about spending capital,” he said. “I respect them for trying it. But that’s an expensive failure.”