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Returns Are No Longer a CX Feature – They’re a Balance Sheet Liability

E-commerce returns have exploded in scale, and retailers are grappling with the cost. What was once a customer-friendly “free returns” policy is now being reined in: major brands are imposing flat fees or stricter rules. Industry data show this is no flash in the pan. For example, the National Retail Federation (NRF) and Happy Returns report finds 72% of U.S. retailers now charge customers for at least one return method, and nearly three-quarters of all stores levy some kind of return fee. In practice, major retailers have quietly added fixed costs to returns: Marshall’s and T.J. Maxx each deduct $11.99 per returned package, Macy’s charges $9.99 per return, and JCPenney and J.Crew roughly $8. In short, returns have shifted from being a cost of customer service to becoming a line item on the balance sheet.

Industry Benchmarks: ~72% of retailers charge for at least one return method; nearly 75% of stores have return fees (NRF).
Retailer Examples: Marshall’s/TJ Maxx – $11.99 per return; Macy’s – $9.99; JCPenney – $8; J.Crew – $7.50.

These figures mark a sharp change. Consumer shopping sites and news outlets report that many leading chains introduced return fees in late 2024/2025. ABC News (via ABC15) confirms that “J. Crew, Macy’s, JCPenney and more have fees for some returns on holiday gifts”. Similarly, a Money magazine analysis notes that over the past year “retailers have slowly been rolling back one of online shopping’s biggest perks: free returns,” as nearly three-quarters of retailers now charge for returns. These fees include shipping surcharges, restocking charges, and other handling fees, all aimed at recouping the hidden cost of returns.

Ecommerce Returns: Why Free-Returns Policies Broke at Scale

The U.S. online shopping boom has made ecommerce returns a massive operational burden. During the pandemic and beyond, consumers ordered more and returned more. According to the NRF/Happy Returns 2025 report, the average ecommerce return rate was 16.9% in 2024, as reported by the National Retail Federation, and is estimated to reach 15.8% of annual sales in 2025—roughly $850 billion of merchandise. The NRF report also notes that collectively, consumers returned products worth a staggering $890 billion in 2024. The average ecommerce return rate can vary significantly by product category, with clothing and shoes typically having higher rates. (For perspective, returns accounted for 10.6% of U.S. retail sales in 2020 and jumped to 16.6% in 2021.) Handling this torrent of returned goods has become expensive. In 2025, approximately 19.3% of all online sales are expected to be returned, making effective management essential for protecting profit margins and maintaining customer loyalty.

Returns impose multiple overlapping costs on retailers. Transportation and logistics are especially costly. As one analysis notes, each $100 returned item costs a retailer about $32 to process and resell. Retailers effectively pay twice to handle the same item: they ship it to the customer, and then pay again for the return transit and processing. Warehouse labor, inspection, and repackaging add more expenses. In the aggregate, the NRF estimates returns now cost “almost $890 billion each year” to U.S. retailers. Retailers are predicted to spend 8.1% of total sales on reverse logistics. Even that colossal figure likely understates the burden, since many returned items cannot be sold at full price. Returns often incur additional markdowns or liquidations, eroding margins further. In fact, studies show a significant share of returned merchandise (often cited around 10–25%) cannot go back to inventory at full value. The environmental impact from high return volumes also contributes significantly to carbon emissions and landfill waste, especially in fast fashion and electronics.

In summary, free returns became unsustainable once volumes grew large. Retailers report that the principal drivers of new fees are soaring carrier costs and the expense of reverse logistics. One supply-chain analysis observes, “Returns also drain resources because they require reverse logistics: shipping, inspecting, restocking, and often repackaging items”. Third-party logistics (3PL) providers can handle the entire order fulfillment process, including returns, to help streamline operations. The result is that retailers can no longer absorb returns as a marketing perk without jeopardizing profitability. As Happy Returns CEO David Sobie puts it, “Return policies and their overall process have transformed into a strategic touchpoint”, forcing retailers to modernize how they manage returns. A clear and generous ecommerce return policy, including a well-defined return window and specifying the purchase date, can increase sales without increasing the volume of returns. Retailers may also implement restocking fees to recover costs for large or costly items. Ecommerce return fraud is a growing concern, making it critical for online retailers to monitor customer returns closely. Many customers, especially online shoppers, review return policies before making online purchases, and making returns easy builds trust and encourages repeat business. Many customers prefer to return items in-store if a physical or brick and mortar store is available, which can enhance their shopping experience and lead to additional in store sales. Returns can be an opportunity for more business if handled well, as customers may return to shop again after a positive return experience, supporting customer loyalty and future sales. The evolution of return policies now trends toward a generous ecommerce returns policy, which is key to attracting potential customers and maintaining a competitive edge, especially during the holiday season when ecommerce sales and customer returns surge.

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Returns and Customer Satisfaction Are a Balance-Sheet Liability

For retailers (and Shopify brands), returns are a balance-sheet liability, not merely a customer-experience feature. Every return ties up inventory and triggers costs: outbound shipping credits to the customer, inbound transportation for the return, labor to sort and inspect the item, and restocking or writing it off. Among these, transportation is a “biggest expense”. As one logistics executive observes, retailers are seeing “about 20 to 25% more” of them charge for returns this year – explicitly as a way to recoup these mounting costs.

A key step in the ecommerce returns process is the return merchandise authorization (RMA), which allows retailers to manage and track returns efficiently. The RMA process often includes generating a return shipping label and ensures that each return is properly documented, helping streamline operations and improve customer satisfaction. The return process typically begins when the customer initiates return through an online portal or help form, making a seamless experience essential for customer retention. Implementing self-service online returns portals can reduce customer service workload and increase processing speed, while returns management software and returns platforms automate the process, including label generation, approval workflows, and inventory updates. Automation and data analytics further help solve operational challenges, flag return abuse, and provide flexible options for loyal and honest customers, ensuring that fraud prevention measures do not unfairly penalize good shoppers.

Returns also carry hidden capital costs. While cash may be refunded to the customer immediately, the item often requires new handling. Many returned products are not in pristine condition: they need relabeling, repackaging or even discounting. When managing refunds, offering alternatives like store credit instead of cash refunds can help prevent fraud and retain value. Industry analysis finds that processing returns adds both labor and operational expenses. Retailers are adapting by dedicating more resources to returns: NRF data show 49% of retailers plan to rely more on third-party logistics providers for returns, and 43% plan to hire extra seasonal staff to handle the volume. All of this indicates that returns impact inventory, headcount, and cash flow – hallmarks of a balance-sheet liability.

Key cost factors include:

Reverse logistics costs: Inbound shipping, return shipping labels, and handling fees (often 20–30% of an item’s price).
Labor and facilities: Sorting, inspection and repackaging by warehouse teams, plus administrative handling.
Inventory recovery loss: A portion of returned goods can’t be resold at full price, necessitating markdowns or liquidation.
Fraud prevention and overhead: Although not shopper-blame, retailers note return fraud adds to the cost base (roughly 9% of returns) and must be countered with systems or policies that balance fraud prevention with not penalizing honest customers. Data analytics can help identify serial returners while providing flexible options for loyal customers.

As a result, retailers are explicitly factoring online returns into margins. For example, one study reports that 40% of merchants cite operational costs of processing returns as a reason to start charging fees, and another 40% cite carrier shipping costs. In other words, return fees directly offset the very expenses incurred on the balance sheet.

Accurate product descriptions, high-quality images, AR/VR tools, and authentic customer reviews with real-life photos and videos are crucial in reducing returns, especially since fit-related issues account for approximately 67% of fashion returns. Leveraging these strategies, along with collecting and analyzing feedback on return reasons, helps retailers identify trends, improve product offerings, and enhance trust among potential buyers. Providing tracking information for return shipments and a hassle-free return process—something 58% of customers want—can significantly improve satisfaction and loyalty. Notably, up to 23% of customers who receive instant refunds will shop again immediately, and many expect their credit processed within five days. Clear and accessible return policies further enhance trust, satisfaction, and repeat business.

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The Role of Reverse Logistics

Reverse logistics is the backbone of ecommerce returns management, encompassing every step required to move products from the customer back to the online retailer. When a customer initiates a return, the reverse logistics process begins: items are received, inspected for quality, and processed for either restocking, refurbishment, or disposal. Depending on the retailer’s return policy, customers may receive a cash refund, exchange, or store credit—each requiring precise coordination behind the scenes.

For online retailers, a streamlined reverse logistics process is essential to meet customer expectations for a hassle free return policy. Shoppers today expect a smooth, transparent return process, whether they are seeking a replacement, store credit for future purchases, or a prompt refund. Efficient reverse logistics not only helps manage costs by minimizing unnecessary shipping and labor expenses, but also plays a direct role in customer satisfaction and loyalty. When returns are handled quickly and fairly, customers are more likely to become repeat customers and leave positive online reviews, boosting the reputation of the ecommerce store.

Moreover, effective reverse logistics allows ecommerce businesses to recover value from returned merchandise, whether by restocking items for future inventory or offering them at a discount. This capability is especially important during peak periods like the holiday shopping season, when return volume surges and customer expectations are at their highest. By investing in robust ecommerce returns management and leveraging technology such as returns software and online portals, online merchants can save time, reduce hidden fees, and ensure that the returns management process supports both operational efficiency and customer retention.

In today’s competitive online shopping landscape, reverse logistics is no longer just an operational necessity—it’s a strategic differentiator that helps online retailers manage returns, control costs, and deliver the level of service that customers expect.

Major Retailers’ Return Policy and Fee Policies

Today’s return fee policies are often spelled out on retailer websites. Having a clear and accessible ecommerce return policy is crucial, as half of online shoppers review a retailer’s returns policy before buying. Recent policy language confirms the new charges:

Macy’s: Store returns remain free, and members of its Star Rewards program get free return shipping. All other customers have a $9.99 return shipping fee (tax added) deducted from their refund. In short, only loyalty members or in-store returns are truly free – mail-in returns for other shoppers incur the fee. Macy’s ecommerce return policy also clearly defines the return window for eligible items.
JCPenney: Its online return portal clearly states a flat $8 UPS fee for any mail-in return, streamlining the process by allowing customers to generate return labels and manage returns easily. (In-store returns remain free.) The return window and any applicable restocking fees are outlined in their ecommerce return policy, helping set clear expectations for customers.
J.Crew: The official returns FAQ notes that using the prepaid return label costs $7.50 for any number of items, which is deducted from the refund. Exchanges, however, are offered at no charge. Their policy details the return window and any restocking fees for certain items.
T.J. Maxx/Marshalls: Both retailers’ sites say that any return by mail incurs an $11.99 shipping-and-handling fee (per package). Again, in-store returns for online orders remain free of charge. Their ecommerce return policies specify the return window and clarify when restocking fees may apply.

In each case, the flat fee mirrors the amounts reported in the press. For example, ABC News notes “Marshall’s and T.J. Maxx charge $11.99 per package… Macy’s charges $10” (the $9.99 is often rounded to $10 in coverage). These updated policy details illustrate how return fees have moved from rumor to reality. (Retailers emphasize that avoiding the fee is possible by returning in-store, but that still means accepting returns as a cost of operations. Clear policies on when and how merchants accept returns, including any restocking fees, are essential for compliance and customer trust.)

Industry Outlook: Retail and logistics surveys indicate this trend will continue. In a recent NRF report summary, 64% of merchants said updating their returns process is a priority. Retailers are striking a new balance: maintaining customer goodwill while protecting their margins. For mid-market brands, the lesson is clear: treat returns as a cost center, not a free bonus. Expect return fees, tighter deadlines or other policies such as clearly defined return windows and restocking fees to roll out as standard practice, and plan your operations accordingly. Having a return policy that is easy to find and understand can reduce customer frustration and increase sales. Clear return policies that are easy to find and understand improve customer experiences, build trust, and encourage repeat business.

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Frequently Asked Questions

Why are returns costly for retailers?

Returns touch almost every part of the retail operation. Every return generates a host of expenses before a refund is even issued. Key cost components of handling a return include:

Return shipping: Even if retailers use a prepaid label, they ultimately pay the carrier. This often runs on the order of $7–$15 per package, depending on weight and distance.
Processing labor: Warehouse teams must unpack, verify, and inspect returned items. Typical labor costs add roughly $5–$9 per return (about 12–18 minutes of work).
Restocking and materials: If original packaging is damaged, retailers spend on replacement materials, labels, and packing (often $1–$3 extra). Even time spent relabeling or condition-checking adds to cost.
Inventory impact: While an item is being returned (often 7–14 days in transit and processing), it sits off the market and cannot generate new sales. This delay can mean lost revenue—imagine a dress returned at Christmas, which might have sold again if it were immediately available. One analysis quantified this “down time” cost as tens of thousands of dollars in foregone margin for a mid-size retailer.
Markdowns and write-offs: Not all returns can be resold at full price. Studies show 15–25% of returned goods require discounting or disposal. At a 40% markdown, a $45-margin item loses $18 margin; at worst it loses the full $45 if unsaleable. Over a year, markdowns can add hundreds of thousands in hidden losses for a mid-sized retailer.
Refund fees: The financial transaction itself has a cost. Returns incur payment processing fees (around $2–$3) since the retailer is refunding money and still paying credit-card networks.
Customer service: Each return can spawn multiple service interactions. Industry benchmarks suggest 2–3 inquiries per return (authorization, status check, refund query), with up to 10–12 minutes of support time each. This represents a non-trivial operational expense.

When tallied together, these costs convert returns from a small blip into a significant drag on profits. Bizowie’s breakdown demonstrates how the “gross margin” on a sale can evaporate once reverse logistics are factored in. Retailers might earn a 45% margin on a fashion item, only to see it cut by 55–65% after return handling, markdowns, and fees. In balance-sheet terms, returns directly shrink net revenue and increase selling expenses.

What sources were leveraged for return policy and cost data?

The information above is drawn from official retailer sites and industry reports. For example, Macy’s, JCPenney and J.Crew customer-service pages explicitly show their return shipping fees. T.J. Maxx and Marshalls policy pages list the $11.99 return fee. News coverage and industry surveys provide context and stats: Good Morning America (via ABC15) reports retailer fees for Macy’s, JCPenney, J.Crew and others; and CBS News cite NRF/Happy Returns data (72% of retailers charging fees, cost breakdowns); and a Supply & Demand Chain Executive summary of the 2025 NRF returns report provides detailed percentages on return costs and policies.

https://www.abc15.com/news/smart-shopper/what-to-know-about-new-return-fees-timelines-from-retailers-for-holiday-gifts#:~:text=This%20holiday%20gift,fee%2C%20which%20is%20money%20custom
https://www.cbsnews.com/philadelphia/news/holiday-shopping-extended-return-policy/#:~:text=Return%20and%20restocking%20fees
https://www./news/saving-smarter/holiday-shoppers-face-growing-return-fees-as-retailers-cut-back-on-free-policies#:~:text=A%20new%20National%20Retail%20Federation,items%20back%20in%20many%20cases
https://online-shopping-free-return-policies/#:~:text=According%20to%20a%20report%20released,last%20year
https://www.modernretail.co/operations/the-case-for-and-against-return-fees/#:~:text=One%20of%20the%20biggest%20reasons,19%20pandemic
https://erp-for-high-return-ecommerce-managing-reverse-logistics-without-margin-erosion#:~:text=The%20economics%20are%20sobering,attributable%20to%20reverse%20logistics%20costs

Written By:

Manish Chowdhary

Manish Chowdhary is the founder and CEO of Cahoot, the most comprehensive post-purchase suite for ecommerce brands. A serial entrepreneur and industry thought leader, Manish has decades of experience building technologies that simplify ecommerce logistics—from order fulfillment to returns. His insights help brands stay ahead of market shifts and operational challenges.

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TikTok’s USPS Label Requirement Is Not a Carrier Change. It’s a Control Shift

TikTok USPS Shipping: New Label Rule (Effective Jan 1, 2026)
Why Is TikTok Forcing In-Platform USPS Labels?
How Different Players Are Affected: An Ecosystem Vibe Check
The Bigger Picture: Marketplace Control and the Future of Shipping Software
Implications for E-Commerce Operators
Managing Shipping Services
Preparing for the Change
Conclusion and Next Steps
Frequently Asked Questions

TikTok Shop is ending an era of seller-controlled shipping – at least when it comes to USPS. Starting January 1, 2026, any order shipped via the U.S. Postal Service on TikTok’s marketplace must use a postage label purchased through TikTok’s own shipping system. In other words, if a seller tries to use a USPS label from outside TikTok (say via Shopify, ShipStation, or their own USPS account), TikTok will reject it. This isn’t a new postal regulation or a change from USPS at all; it’s a TikTok policy shift designed to pull the shipping process under the platform’s roof. The result? Broken integrations, scrambling warehouses, and a clear message to merchants that fulfillment is no longer entirely on their terms inside this marketplace.

This move has caused a stir among ecommerce operators trying to understand the implications. Why would TikTok impose such a rule? How will it affect shipping costs, software integrations, and day-to-day fulfillment operations? This article dives into TikTok’s USPS label requirement – explaining what’s changing on January 1 and why it’s happening – and offers a “vibe check” on how different stakeholders (from sellers and shippers to postal carriers and third-party logistics providers) are reacting. We’ll also explore what this signals for the future of shipping software and marketplace control. Spoiler: It’s not just about USPS or one social commerce platform; it’s about marketplaces building closed ecosystems where they dictate the logistics playbook.

TikTok USPS Shipping: New Label Rule (Effective Jan 1, 2026)

TikTok Shop notified sellers in November 2025 that any USPS shipping label used for a TikTok order must be purchased and generated through TikTok Shipping as of January 2026. All USPS shipping labels for TikTok Shop orders must be purchased and generated through TikTok Shipping, and USPS shipping labels from other sources will not be accepted.

It’s important to clarify that this is not a USPS-driven change. The United States Postal Service hasn’t changed its services or policies for marketplace sellers. In fact, USPS declined to comment on the TikTok Shop decision when asked.

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Why Is TikTok Forcing In-Platform USPS Labels?

On the surface, TikTok’s rule seems like a mere technical integration change – but the motivations run deeper. This isn’t about USPS changing anything; it’s about TikTok asserting more control.

Marketplace Control & Compliance: TikTok gains end-to-end shipment visibility.
Data and Visibility: TikTok captures logistics performance data.
Buyer Experience: Centralized tracking and shipping protection.
Monetization: TikTok may capture margin on postage.
Fraud Prevention: Reduced fake or reused tracking numbers.

How Different Players Are Affected: An Ecosystem Vibe Check

TikTok Shop

TikTok is positioning itself as a logistics orchestrator, tightening fulfillment standards and asserting platform-level control.

USPS

USPS continues delivering packages but becomes gated behind TikTok’s shipping system.

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Shipping Software & Integrations

Shipping software providers must now integrate directly with TikTok’s APIs or risk losing relevance for this channel.

3PLs and Fulfillment Centers

3PLs face workflow disruption and may charge more or shift carriers to avoid TikTok Shipping.

The Bigger Picture: Marketplace Control and the Future of Shipping Software

This policy reflects a broader ecommerce trend: marketplaces building closed logistics ecosystems and limiting seller autonomy.

Implications for E-Commerce Operators

Audit fulfillment workflows
Coordinate with 3PL partners
Recalculate carrier costs
Prepare systems for compliance

Managing Shipping Services

Sellers must actively manage carrier options within TikTok Shipping while monitoring cost and delivery performance.

Preparing for the Change

Testing workflows early and training staff is critical ahead of January 1, 2026.

Conclusion and Next Steps

TikTok’s USPS mandate signals a new era of marketplace-controlled fulfillment. Sellers that adapt quickly will maintain access to the platform’s growing audience.

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Frequently Asked Questions

Why is TikTok requiring USPS labels through TikTok Shipping?

To enforce compliance, reduce fraud, improve tracking, and centralize logistics control.

Written By:

Rinaldi Juwono

Rinaldi Juwono leads content and SEO strategy at Cahoot, crafting data-driven insights that help ecommerce brands navigate logistics challenges. He works closely with the product, sales, and operations teams to translate Cahoot’s innovations into actionable strategies merchants can use to grow smarter and leaner.

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Why the Auctane-WWEX Merger Redefines the Future of Ecommerce Logistics

Introduction

The $12 billion merger of Auctane and WWEX Group is poised to reshape how ecommerce brands manage shipping and logistics. By combining a leading shipping software platform with a major third-party logistics provider, this deal signals that software alone is no longer sufficient to stay competitive in the evolving fulfillment landscape. The Auctane–WWEX merger isn’t about adding warehouse space or trucks for the sake of scale—it’s about software moving closer to physical operations. As shipping profit margins shrink and every provider offers similar basic tools, Auctane’s union with WWEX hints at a new strategy: integrate technology with logistics services to gain an edge. This article will explore who these companies are, why private equity is driving this convergence now, how the buzz around AI fits in, and what it all means for ecommerce brands choosing their shipping solutions.

Meet the Players: Auctane and WWEX

Before diving into the implications, it’s important to understand the two companies involved. Auctane (formerly Stamps.com) is a leading provider of ecommerce shipping software solutions. If you’ve printed USPS or UPS labels online for your business, there’s a good chance you’ve used an Auctane product. Auctane operates a family of well-known platforms including ShipStation, Stamps.com, ShippingEasy, ShipEngine, ShipWorks, Endicia, Metapack, and others. These tools help online sellers manage orders, compare carrier rates, print labels, and track shipments across multiple sales channels. In fact, Auctane’s software powers billions of shipments each year for businesses around the globe. Thoma Bravo, a private equity firm, took Auctane private in 2021 by acquiring Stamps.com for about $6.6 billion, reflecting the high value of these shipping software platforms during the ecommerce boom.

WWEX Group, on the other hand, is a logistics powerhouse built from the merger of Worldwide Express, GlobalTranz, and Unishippers. WWEX isn’t a warehouse operator in the traditional sense—it’s a third-party logistics (3PL) services platform that specializes in parcel and freight shipping solutions. Worldwide Express (together with its franchise network Unishippers) has long been one of the largest authorized UPS resellers for small and mid-size businesses, while GlobalTranz brought strength in freight brokerage (LTL and truckload) for larger shippers. Today, under the WWEX Group banner, the company serves over 121,000 customers with a broad suite of shipping options: small package delivery via UPS, LTL freight, full truckload brokerage, and more. WWEX Group is the second-largest privately held logistics company in the U.S., with an annual system-wide revenue nearing $5 billion. It’s also the largest non-retail UPS Authorized Reseller in the country, meaning it leverages huge volume to secure discounted shipping rates for clients. WWEX Group is headquartered in Tempe, Arizona. In short, WWEX is a major 3PL intermediary that uses technology (like its SpeedShip platform) and a network of carrier relationships to help businesses ship smarter. By late 2025, WWEX Group reported roughly $4.4 billion in revenue for 2024, highlighting its significant scale in logistics.

Bringing these two players together means uniting Auctane’s software capabilities with WWEX’s physical carrier network and operational know-how. Auctane excels in the “digital” side of shipping—order data, label generation, and automation—while WWEX excels in the “physical” side—getting packages picked up, consolidated, and delivered via carrier partners. Each on their own is a leader in its niche; together, they form a more vertically integrated shipping solution. The merger will result in the formation of a new company, with strategic investors including Ridgemont Equity Partners and Providence Equity Partners. As we’ll see, this marriage is being driven by forces that are reshaping the logistics industry.

Private Equity’s Push for Software–Logistics Convergence

It’s no coincidence that this merger is happening under the guidance of private equity investors. Thoma Bravo, which owns Auctane, is spearheading the plan to merge Auctane with WWEX Group into a single company valued around $12 billion, creating what competitors are calling a 12 billion shipping technology powerhouse. Talks to merge the two companies began as early as December, with ongoing discussions and a formal proposal being considered as of 12 2025. This matter is significant, as the transaction is worth billions and will result in the merging of software and logistics units. In doing so, Thoma Bravo isn’t just merging two companies—it’s merging two historically separate parts of the ecommerce supply chain (software and logistics) under one roof. The combined company will leverage Auctane’s cloud-based software and WWEX Group’s extensive agent network for enhanced supply chain visibility and analytics. The merger aims to create a vertically integrated supply chain entity linking e-commerce shipping with a large agent-based brokerage network. This kind of convergence has a clear financial logic. By combining Auctane’s high-margin software business with WWEX’s extensive logistics volume, the new entity can offer a one-stop solution and potentially unlock cost efficiencies that neither could achieve alone. Thoma Bravo has signaled its commitment by planning a $500 million new equity investment into the combined company and intends to raise a direct loan of $5 billion to finance the merger. Thoma Bravo’s plan includes refinancing Auctane and WWEX’s existing debt with this $5 billion direct loan, utilizing private credit as a flexible alternative to traditional bank loans. In other words, the private equity firm is literally betting half a billion dollars of its own capital (and leveraging private credit markets for more) on the idea that an integrated shipping-tech company will be more valuable than the sum of its parts. The deal is expected to be completed following the finalization of ongoing talks and approval of the proposal.

Why are investors pushing this now? Private equity firms like Thoma Bravo specialize in accelerating growth and creating value, often through strategic mergers. In this case, they see operational synergies in uniting a software provider with a logistics provider. The goal is to create a vertically integrated platform capable of optimizing end-to-end supply chain operations. Instead of Auctane just providing the software that prints a shipping label and then handing off to a third party, the merged company can potentially handle the entire shipping process from order through delivery. This could mean streamlined services for customers (e.g. automatic selection of the best carrier or service for each order, guaranteed capacity during peak seasons, integrated parcel and freight solutions) that a standalone software firm couldn’t easily offer. It also means the combined company can capture more of the economic value of each shipment—software fees and a slice of the shipping spend—rather than each business taking only one piece.

Private equity’s playbook here also reflects a broader trend of consolidation in a fragmented market. The shipping software space has many competing tools, and the third-party logistics space has many regional players; both arenas have been ripe for roll-ups. By merging Auctane and WWEX, investors aim to create a dominant one-stop shop. This isn’t a growth-at-all-cost tech merger of two unprofitable startups—it’s a calculated combination of mature businesses to squeeze out inefficiencies and boost margins. Notably, the financing structure (heavily using private credit from firms like Blackstone) indicates confidence that the merged entity will generate strong, stable cash flows to service debt. In a high interest rate environment, private credit has become a key enabler for such large PE-driven deals, offering more flexible terms than traditional banks. The willingness of lenders to back a $5B direct loan for this merger underscores an expectation that together, Auctane and WWEX will be financially stronger than they were separately. Private equity firms share resources and relationships to achieve these ambitious investment goals.

Post this strategic and financial rationale, we’ll examine the market realities driving this convergence. The timing of this merger is a response to mounting pressures on standalone shipping businesses.

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Why Now? Shrinking Margins and the End of the “Standalone” Moat

Several industry pressures have set the stage for why this merger is happening in late 2025. The merger talks and deal announcement occurred in December, highlighting the immediacy and strategic timing of the move. One major factor is margin pressure in shipping and fulfillment. Over the past few years, carriers like UPS, FedEx, and USPS have steadily raised rates and surcharges. Ecommerce merchants, in turn, are extremely sensitive to shipping costs and transit times. This squeeze means that intermediaries – whether shipping software providers or 3PL resellers – have less room to take a cut. Auctane’s platforms historically earned revenue through subscriptions and by facilitating discounted postage (for example, Stamps.com resells USPS postage at a small margin). As carriers tighten discount programs and more merchants demand lowest-cost shipping, the profit margins on simply providing labels or API access have been compressing. In short, printing postage has become a commodity service; everyone expects cheap labels and good rates. The differentiation that standalone shipping software once had (like a nicer user interface or easier integrations) has narrowed as well. Competing platforms now offer very similar features – rate shopping, order management, bulk label printing, returns processing, etc. It’s hard to stand out on software features alone in 2025, because even ecommerce platforms like Shopify and marketplaces like Amazon offer built-in shipping tools to sellers.

WWEX faces a similar commoditization challenge on the logistics side. As a UPS reseller and freight broker, WWEX’s value to customers is to negotiate better rates and provide service. But digitalization in freight and small parcel is bringing more transparency. Small businesses can get instant shipping quotes online from multiple sources. UPS itself launched digital access programs that give platforms like Shopify and WooCommerce negotiated rates, which can bypass traditional resellers. To stay relevant, a 3PL like WWEX needs more than just a salesforce – it needs unique tech and data offerings.

This is why combining software with logistics is a timely defensive move. By merging, Auctane and WWEX can create proprietary advantages that neither could alone. For instance, the combined entity could use WWEX’s massive shipping volume data to feed into Auctane’s software, giving merchants smarter recommendations (like flagging the cheapest or fastest option across carriers based on real-time network conditions). It could also leverage Auctane’s integration into shopping carts and marketplaces to funnel more shipping business directly into WWEX’s network. Essentially, they want to move up the value chain from just providing labels or rates to actually controlling the shipping flow. This deeper operational involvement is harder for a new startup or a single-feature tool to replicate, thus rebuilding a “moat” against competition.

Another reason this is happening now is the pervasive narrative around AI and automation in logistics. 2023–2025 has been an era where every logistics tech company is touting AI-driven optimization, predictive analytics, and end-to-end visibility. To be sure, there are real gains to be had here: automated decision-making can route packages more efficiently, and machine learning can help predict shipping delays or choose optimal warehouse locations. Thoma Bravo itself has pointed to the importance of tech – the firm noted that logistics is undergoing a “tech-led transformation” with an emphasis on automation, real-time tracking, and predictive analytics to reduce costs and improve efficiency. In pitching the Auctane-WWEX deal, there’s been talk of creating data-driven logistics solutions and leveraging AI to disrupt old-school shipping processes.

However, it’s important to separate the AI hype from the core drivers in this merger. The reality is that AI alone isn’t a silver bullet for what ails shipping software companies. Yes, the combined Auctane/WWEX entity will surely use AI for things like dynamic pricing, delivery route optimization, or customer analytics. But those features are increasingly expected in modern software – competitors can often implement similar algorithms or use third-party AI services. What truly sets the stage for this merger is not a fancy new AI model, but the old-fashioned economics of scale and integration. When shipping volumes are high and margins per package are slim, controlling more of the supply chain is the surest way to squeeze out cost savings. For example, by integrating operations, the merged company might reduce duplicate overhead (one IT system instead of two, one support team, etc.) and negotiate even better carrier contracts by combining volume.

AI is thus part of the story, but it’s more of an enhancer than the foundation. Think of AI as the icing on the cake: it can make the combined platform smarter and more attractive, but it’s not the cake itself. The real “cake” here is the merging of physical logistics capabilities with software, creating a platform that can actually execute on the insights that AI might provide. Without trucks, planes, and carrier contracts, even the best shipping algorithm is just advice on a screen. Competitors in shipping tech can copy each other’s software features and AI tools relatively quickly, but they can’t overnight replicate a nationwide logistics network or a base of 100,000+ shipping customers. This is why Thoma Bravo is betting on a strategy that goes beyond software. As one analysis noted, the success of this deal will hinge on integrating systems and realizing cost synergies in operations, not just on any single technology trick.

In summary, the timing of the Auctane-WWEX merger comes as: (a) shipping software is becoming commoditized and needs a new edge, (b) logistics providers are seeking tech integration to stay competitive, (c) economic pressures (inflation, high interest rates) reward those who can cut costs via scale, and (d) the industry is buzzing about AI, providing a convenient narrative to package the deal as forward-looking. The next question is what this all means in practice for ecommerce businesses that rely on these kinds of services.

What the Auctane–WWEX Merger Means for Ecommerce Brands

If you’re an operations or logistics leader at an ecommerce brand, you might be wondering how this big merger in the shipping world will trickle down to you. On the surface, it might not cause any immediate changes—after all, it’s a merger of two vendors behind the scenes. But over time, a combined Auctane-WWEX could impact the options and value you get when choosing shipping software or services.

For one, expect more “all-in-one” shipping solutions to be offered. Traditionally, an online seller might use Auctane’s ShipStation (software) to manage orders and print labels, and separately use a 3PL or carriers for fulfillment and transport. Going forward, those lines will blur. The merged company will likely pitch ecommerce brands a unified package: use our platform to manage orders and access discounted shipping rates and get logistics support like pick-ups or freight quotes. For some brands, this could be very convenient. You might get a single point of contact and a single bill for software + shipping. There could be cost incentives too. For example, the combined firm could afford to offer the software at a low cost (or even free) if you commit to shipping volume through their logistics network – effectively bundling the service. This model is already seen in other areas (e.g. Amazon’s Seller Central provides free tools but makes money on fulfillment fees). Ecommerce companies should evaluate these bundles carefully: you could save money and hassle with an integrated solution, but you’ll want to ensure the shipping rates and service quality remain competitive.

The new entity aims to provide a premier customer experience with digital platforms and local agent support. People with knowledge of the deal expect these improvements in customer experience to be a key outcome of the merger.

The merger also means there may be fewer independent software choices over time. If shipping software alone isn’t a sustainable business, we might see more consolidation or partnerships in this space. Smaller shipping app providers could get acquired by logistics companies or shut down if they can’t differentiate. For brands, this consolidation can be a double-edged sword. On one hand, the remaining platforms will be more robust and feature-rich (since they’re backed by larger organizations). On the other hand, reduced competition can sometimes lead to higher prices or less flexibility. Brands should keep an eye on whether the merged Auctane-WWEX entity changes its pricing structure or pushes users into long-term agreements. Competition from alternatives (like Shopify’s native shipping features, or other 3PLs with tech platforms) will act as a check, but if the whole industry moves towards a few big integrated players, negotiating power may shift away from small customers.

Importantly, ecommerce leaders will need to consider how neutral their shipping software is. One advantage of using a standalone tool was that it was carrier-agnostic – the software would show you rates from USPS, UPS, FedEx, etc., and you choose what’s best for you. With a 3PL-owned platform, there could be a tilt. For instance, WWEX has a strategic relationship with UPS. If you’re on their platform, will it favor UPS services in the interface or offer better incentives for using UPS over FedEx or USPS? It’s possible. The merged company will of course claim to remain objective and give customers choices, but naturally they’ll want to steer volume to their preferred partners (that’s how they maximize their margins). As a brand, you should stay savvy: continue to compare offers and performance across carriers periodically, even if you’re getting comfortable with one integrated solution. The good news is that WWEX’s business model is built on offering multi-carrier options (UPS for parcel, a whole roster of LTL carriers for freight), so a tool like ShipStation under WWEX would likely still support many carriers – but the depth of integration or discounts might differ.

Another implication is the potential for improved support and innovation. A larger combined company can invest more in R&D. Ecommerce brands might see faster feature development in the shipping platforms – for example, more advanced analytics (combining operational data with your order data) to give insights like “ship-from locations that could save you time and cost” or proactive alerts about supply chain disruptions. The merger press releases talk about “data-driven logistics solutions” – if that materializes, merchants could benefit from smarter recommendations (like automatically splitting an order to ship from two warehouses because it’s cheaper, or suggesting switching carriers due to a service delay). Also, WWEX’s army of shipping consultants and agents could be at your disposal alongside the software. Some growing brands may appreciate having a human logistics expert who can help optimize their shipping strategy – something that pure software companies typically don’t provide. On the flip side, very small sellers who just want a self-serve app might feel a big organization is less personal or flexible than a niche software vendor was.

Finally, consider the resilience and roadmap of your shipping solution. The fact that Auctane felt the need to merge might indicate that the standalone software model has limitations in the long run. If you’re using an independent platform today (not Auctane’s), ask whether that provider has a path to stay competitive – will they partner with carriers or 3PLs, or could they be left behind? This doesn’t mean you should abandon ship immediately, but it’s wise to ensure any critical software you use is financially healthy or has strong backing. The last thing you want is your shipping software provider going under or being acquired suddenly without a plan, potentially disrupting your operations. In the coming years, we may see a tighter ecosystem where shipping tech and logistics services are intertwined. Brands should be prepared for that and focus on partners that offer real operational leverage, not just fancy tech demos. The Auctane-WWEX merger is a bellwether: it tells us that to truly reduce shipping costs and improve reliability, providers are willing to fundamentally change their business models and unite forces.

In conclusion, the Auctane–WWEX deal marks a shift in ecommerce logistics from siloed software or services toward integrated platforms. It highlights that as an ecommerce business, you should look for solutions that not only have sleek software features but also the physical network and leverage to back those features up. While we watch how effectively Auctane and WWEX execute this integration (and it’s by no means guaranteed success—combining two big companies is always tricky), the rationale behind it is clear. Shipping software on its own isn’t a moat anymore, and logistics services without top-tier software leave value on the table. The future belongs to those who can blend the two seamlessly.

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FAQ

Who is Auctane and what do they do?

Auctane is the parent company of several popular ecommerce shipping software brands, including ShipStation, Stamps.com, ShipEngine, ShippingEasy, Cahoot, and others. Formerly known as Stamps.com, Auctane’s platforms help online businesses compare carrier rates, print shipping labels, and manage order fulfillment across marketplaces and websites. In 2021, private equity firm Thoma Bravo acquired Stamps.com (Auctane) for about $6.6 billion, underlining Auctane’s status as a leader in shipping software.

Who is WWEX Group?

WWEX Group (Worldwide Express group) is a large third-party logistics provider that encompasses Worldwide Express, GlobalTranz, and Unishippers. It specializes in small-parcel shipping (especially through UPS) and freight services (LTL and full truckload) for over 121,000 customers ranging from small businesses to enterprises. WWEX Group is the second-largest privately held logistics company in the U.S., with annual revenue around $4–5 billion. Essentially, WWEX acts as an intermediary that gives businesses access to discounted shipping rates, logistics expertise, and a technology platform (SpeedShip) to manage shipments.

Why are Auctane and WWEX merging?

The merger is driven by a need to combine strengths as the market changes. Auctane brings best-in-class shipping software, while WWEX brings physical logistics networks and carrier relationships. Standalone shipping software tools are facing margin pressures and competition – many offer similar features and carriers have tightened discounts – so software companies like Auctane seek deeper integration with operations to stay competitive. Meanwhile, logistics providers like WWEX see value in offering a superior tech platform to their clients. By merging, they aim to create a one-stop shipping solution that can handle everything from order management to delivery. Private equity backer Thoma Bravo is facilitating the $12 billion deal, investing new equity and leveraging private financing to combine the companies. The expectation is that the merged firm can reduce costs, improve service via integration, and capture more of each transaction’s value than the two could separately.

What role does AI play in the Auctane-WWEX merger?

AI is a consideration but not the primary reason for the merger. Thoma Bravo and the companies have mentioned using data analytics and AI to optimize supply chains – for example, using predictive algorithms to choose the best shipping method or to streamline routes. However, the core motivator is operational synergy, not any specific AI technology. In other words, Auctane and WWEX are merging to combine software and logistics capabilities; AI will be a tool they use within that combined platform (to enhance automation, forecasting, etc.). It’s part of the broader industry trend of tech-enabled logistics, but the merger would likely be happening even without the AI hype. The real differentiator they seek is owning both the digital and physical aspects of shipping, which AI can help improve but cannot replace.

How will this merger affect ecommerce brands that use shipping software?

In the near term, brands using Auctane’s tools (like ShipStation) or WWEX’s services shouldn’t see immediate changes – you can continue shipping as usual. Over time, though, ecommerce sellers might be offered more integrated services. For example, you might get an option to use a unified platform that handles your order shipping and gives you WWEX-negotiated rates on UPS or freight, all in one place. This could simplify operations and possibly reduce costs if the combined company passes on savings. On the flip side, there may be fewer standalone software choices in the market as consolidation increases. Brands should remain vigilant about service quality and pricing. If you prefer a neutral multi-carrier approach, ensure that any platform you use continues to support all the carriers and methods you need. The merger is a sign that the industry is shifting toward consolidated solutions, so ecommerce companies should evaluate offers based on both software capabilities and the underlying logistics support. Always consider whether a provider has the network reach and leverage to truly help you save on shipping, beyond just providing a user-friendly interface.

Written By:

Rinaldi Juwono

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Shipping Surcharges Ecommerce: Why Rising Carrier Surcharges Are Quietly Rewriting Margins in 2026

The Rise of Shipping Surcharges as a “Margin Tax”
Common Carrier Surcharges and Their Impact on Ecommerce Shipping
Why Carrier Surcharges Keep Climbing – And Aren’t Going Away
The Quiet Impact on Ecommerce Margins (Hidden Fees Eroding Profit)
The Visibility Gap: Why Many Brands Are Flying Blind on Surcharges
Shipping Companies and Their Role in the Surcharge Landscape
Ecommerce Business Models: Who Gets Hit Hardest by Surcharges?
Strategies to Mitigate the Surcharge Squeeze
Frequently Asked Questions

Introduction: In 2026, shipping surcharges are emerging as a permanent “margin tax” on ecommerce operations, quietly eroding online retailers’ profit margins. Once considered edge-case fees, carrier surcharges like fuel, residential delivery, and seasonal peak charges have become routine – and many brands lacking real-time visibility are blindsided by these extra costs.

Operations and logistics leaders can no longer treat surcharges as a minor nuisance; they now demand strategic attention. This article frames how rising carrier surcharges are rewriting ecommerce margins in 2026 and why it’s crucial to detect, forecast, and control these fees. We’ll dive into the types of surcharges impacting shipping costs, explain why they keep climbing, show the hidden impact on profit, and provide practical strategies (from packaging tweaks to carrier negotiations) that experienced operators use to defend their margins.

The Rise of Shipping Surcharges as a “Margin Tax”

Carrier surcharges have shifted from occasional add-ons to a significant, permanent cost factor in ecommerce shipping. In fact, accessorial fees and surcharges have become the real engines of parcel cost inflation, often exceeding the well-publicized annual rate increases. For example, UPS and FedEx announced a “standard” 5.9% General Rate Increase (GRI) for 2025 and 2026, but many shippers saw actual costs climb far higher once surcharges were factored in. The base shipping cost—the standard fee charged by carriers before any surcharges or additional fees—serves as the foundation for calculating total shipping expenses, but surcharges are now layered on top, making it crucial for ecommerce businesses to understand both components. Carriers have been leaning into surcharges to protect their own margins, treating these fees almost like a tax that e-commerce merchants must pay on each shipment.

Consider some trends from the past year alone: fees on large packages, oversize items, and additional handling jumped 20–30% in 2025, far outpacing the base rate hike. Delivery Area Surcharges (for remote or out-of-zone deliveries) rose about 7–10% as carriers refined pricing by geography. UPS even adjusted its fuel surcharge tables over seven times in one year (2024) to respond to fuel price swings. These frequent adjustments and new fees mean that the published rate increase is just the tip of the iceberg – the real cost increases are embedded in a myriad of “extra” charges that now accompany almost every package.

From the carrier’s perspective, surcharges are a strategic tool. When base shipping volumes stagnated or dipped, carriers made up the difference by raising surcharges and tightening rules. In Q2 2025, UPS’s U.S. daily package volume fell 7.3%, yet its revenue declined only 0.8%, indicating it extracted more revenue per shipment through higher fees and surcharges. Operational fluctuations, such as labor shortages, also impact carriers’ standard rates, leading to even greater reliance on surcharges to offset these unpredictable costs. In short, carriers have grown adept at using surcharges to maintain their profitability, effectively passing higher operational costs (fuel, labor, capacity constraints) onto shippers in the form of extra fees. For ecommerce businesses, the result is that these surcharges are no longer rare surprises – they’re a persistent and growing slice of the cost of doing business, quietly taxing each order’s margin.

Common Carrier Surcharges and Their Impact on Ecommerce Shipping

To grasp why surcharges are rewriting margins, it’s important to understand the common shipping surcharges and how they drive up shipping costs. In this section, you’ll find shipping surcharges explained: these fees cover a range of scenarios beyond the basic transport of a package, and each comes with a price tag that can erode profit if not managed. Here are some of the key surcharges hitting ecommerce shippers in 2026:

Fuel Surcharges: Virtually all carriers add a fuel surcharge, typically as a percentage of the base rate, to account for fluctuating fuel prices.
Residential Delivery Surcharges: Delivering to a home address costs carriers more, so an extra flat fee is applied per package.
Delivery Area & Extended Area Surcharges: Extra fees for rural, remote, or out-of-zone deliveries.
Additional Handling Surcharges: Fees for packages that are heavy, large, or require special handling.
Oversize / Large Package Surcharges: Significant charges for packages exceeding carrier size or weight limits.
Address Correction Surcharge: Fees applied when carriers must correct or complete an inaccurate address.
Peak Season and Demand Surcharges: Temporary surcharges during high-volume shipping periods.
Other Accessorial Fees: Including Saturday delivery, signature required, insurance, expedited, and freight-related fees.

As we can see, surcharges cover a wide range of scenarios – and they are no longer trivial. For many ecommerce shipments, one or several of these fees will apply, adding significant cost beyond the base rate.

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Why Carrier Surcharges Keep Climbing – And Aren’t Going Away

It’s reasonable to ask why carriers charge so many surcharges and why those fees keep rising every year. The answer lies in cost pressures, market dynamics, and strategic pricing decisions by major shipping companies.

Carriers use surcharges to pass variable costs directly to shippers, raise revenue per package, and normalize what were once temporary fees into permanent pricing structures.

The Quiet Impact on Ecommerce Margins (Hidden Fees Eroding Profit)

Carrier surcharges quietly erode ecommerce margins by adding unforeseen costs after a sale is completed. Without proactive tracking, these hidden fees can turn profitable orders into losses.

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The Visibility Gap: Why Many Brands Are Flying Blind on Surcharges

Most mid-market ecommerce brands lack the tooling and processes to detect and manage surcharges in real time, leaving them reactive rather than proactive.

Shipping Companies and Their Role in the Surcharge Landscape

Shipping companies define and enforce surcharge structures to offset operational costs and manage demand across their networks.

Ecommerce Business Models: Who Gets Hit Hardest by Surcharges?

Brands offering free shipping, shipping oversized products, or relying on expedited delivery are disproportionately affected by rising surcharges.

Strategies to Mitigate the Surcharge Squeeze

While surcharges cannot be eliminated entirely, businesses can mitigate their impact through packaging optimization, carrier diversification, negotiation, and data-driven decision-making.

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Frequently Asked Questions

What are shipping surcharges and why do carriers charge them?

Shipping surcharges are additional fees added to base shipping rates to cover extra costs such as fuel volatility, residential delivery, remote locations, or special handling.

How can ecommerce businesses manage carrier surcharges?

Businesses can manage surcharges by optimizing packaging, validating addresses, using multiple carriers, negotiating contracts, and leveraging analytics tools.

Written By:

Manish Chowdhary

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The Ecommerce Playbooks That Broke in 2025 (from Ugly Talk NYC)

This piece is a field guide to what stopped working and what operators are doing instead in 2025. It’s tough love, drawn from the Ugly Talk NYC session, “Building Profitable Ecommerce in a Downward Market”, held at NomadWorks in Times Square, New York, in August 2025, and validated with industry data, so founders can course-correct in a market that’s very different from five years ago.

Speakers at Ugly Talk NYC — Meet the Panelists Featured Here

Manish Chowdhary — Founder & CEO, Cahoot (panel moderator)
London Glorfield — Founder, Kickback (screenless electronics)
Maya Juchtman — Senior Director, Marketing & Partnerships, Roswell NYC
Sabir Semerkant — Founder, Growth by Sabir, helped drive $1B+ in ecommerce growth

(Detailed bios appear at the end of this article.)

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1) Meta Over-Reliance Collapsed

The narrative is overly simplified to “iOS killed Facebook tracking.” The real story: compounding privacy changes across devices and browsers eroded deterministic tracking and last-click storytelling:

Apple’s App Tracking Transparency (ATT) made cross-app tracking opt-in in 2021, permanently constraining the signal from iOS users. Meta publicly acknowledged conversion under-reporting after ATT (roughly ~15% at first, later ~8% as fixes rolled out).
Browser defaults now block cross-site tracking whether you run apps or not: Safari’s Intelligent Tracking Prevention has fully blocked third-party cookies since 2020; Firefox’s Enhanced Tracking Protection blocks cross-site tracking by default (with Total Cookie Protection rolled out to all users in 2022).
Chrome in 2025: After years of Privacy Sandbox testing, Google pivoted: Chrome is not proceeding with a one-size cookie phase-out, moving instead to a user-choice model, removing the “hard stop” many hoped would normalize alternatives. Regulators also signaled they no longer need ongoing commitments tied to deprecation. Translation: third-party cookies persist, but fragmentation is the new normal.

When you depend on one channel’s pixel to tell you the truth, you get whipsawed by platform and policy shifts. As Sabir framed it, treat channels like a diversified portfolio, shift dollars in real-time as signal or platform risk changes, not months later.

“Remember that right after the election, right, that weekend, there were so many creators in tears saying goodbyes on TikTok. And then that Saturday night into Sunday, it was turned back on, right? So that kind of stuff, your business cannot rely on those kinds of things. If that were to happen to me, I would say, ‘Okay, you know what, doesn’t matter. I’m gonna shift my attention over here, right, and I’m gonna just reallocate my time, my energy, my budget towards this, this other set. I don’t have to worry about this one issue that’s happening because it doesn’t have to be a full-on shutdown like TikTok, right? It could be just TikTok rolled out an update, and there was a problem. — Sabir.

What replaces Pixel-only?

A hybrid tracking stack: platform pixel + server-side signals.

Meta Conversions API (CAPI): Send deduplicated events server-to-server with event_id so the same conversion isn’t counted twice. This is now baseline, not “advanced.”
Google Enhanced Conversions / offline imports: Hash first-party emails/phones when a purchase happens to improve match rates and bidding; Google is continuing to add flexibility to conversion imports. If you target the EEA/UK/CH, Consent Mode v2 (with a certified CMP) is required to maintain ad features.

Also, remember the baseline privacy gap; roughly a third of internet users use ad blockers at least sometimes, further degrading client-side measurement.

Bottom line: You can’t manage what you can’t measure. Build server-side redundancy, deduplicate, and expect platform models to “fill in” gaps, then validate with lift tests and surveys.

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2) Email Marketing’s Illusion

Email is still a profit engine, but the scoreboard you’ve been staring at is broken.

Apple Mail Privacy Protection (MPP) preloads tracking pixels regardless of actual opens, thereby inflating open rates and obscuring location and timing data. Apple’s own documentation and reputable email firms agree that opens are no longer a reliable metric. Litmus estimates that over half of opens happen on devices with MPP enabled.
That’s why operators see 30 – 35% “opens” but real engagement is more like ~10%, exactly what came up at Ugly Talk. The fix: stop optimizing to opens, and tighten to engagement segments.

What to do instead:

Track clicks, placed orders, and revenue per recipient; use click-to-delivered and unengaged suppression to protect deliverability. Postmark and Constant Contact both emphasize the shift away from open-driven automations.
If your ESP supports it, use first-party events (add-to-cart, checkout started) as triggers and zero-party data to personalize; no pixel required.

Spray-and-pray is a deliverability death spiral. Trim dead weight and measure behavior, not proxy opens. (Learn more about retention math and LTV/CAC loops.)

3) SKU Bloat Drains Cash and Focus

In a world of higher shipping, tariffs, and tighter cash, SKU creep kills margins and operational agility. The panel’s blunt take: brands with 30 orders and 300 SKUs are waving red flags, and “16 colors doesn’t make you a better parent.” Focus on a hero, then earn the right to expand.

“If you have a brand that you think that, oh, I should have 16 colors, like, why. Why would you? Oh, because I did Semrush and my competitive Google shopping. The intern I hired gave me a report stating that we have three colors, while our competitors have 16 to 32 colors. On average, they have about 24 colors. We have only three. Maybe that’s the problem. So, let’s add 16 other colors to our list to at least be in the playing field. It’s like having 16 more children, but you think that’s going to make you a better parent? It doesn’t make you a better parent at all. In fact, the unit economics: now you have to pay square footage to put that inventory in a warehouse. You have to pay for fuel to transport it from its source to the transfer point. And now, what did you do? You went, you took out a loan to buy that inventory, and now that inventory is dead, sitting over there with nobody buying it. Nobody cares. Remember, there’s one great quote by Henry Ford, the founder of the car company: “The consumers can have any color car they want as long as it’s black”. — Sabir.

Why the old playbook broke:

Fragmented demand inflates MOQs, inventory carrying, returns complexity, and content ops (photos, PDP copy, reviews).
Stockouts reset ad learning and nuke momentum; you pay twice when campaigns relearn.

What to do instead:

Ruthless SKU rationalization: keep hero velocity > everything. Tie launch cadence to supply certainty and gross margin thresholds.

4) AI Content Flood = Diminishing Returns

London pointed out: “More posts” is not the strategy. Consumers, especially Gen Z, spot AI instantly and are rewarding thoughtful, crafted pieces over volume. One handcrafted video outperformed 300 AI-generated videos by 100 times in the panel’s experience.

AI is an accelerant, not an autopilot. Sabir advises sellers to treat it like brilliant interns from MIT, who still need direction. Use AI to draft, summarize, and QA, but creative judgment, community intimacy, and context are the moat.

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The New Playbook: Measurement and Focus

Here’s the operator checklist our team sees working right now:

A. Rebuild tracking for reality

Meta: Pixel + CAPI with event_id deduplication; maximize Event Match Quality.
Google: Turn on Enhanced Conversions (account-level now supported); if you have EEA/UK/CH traffic, implement Consent Mode v2 with a certified CMP.
Channel diversification: Shift budgets when platform risk arises (policy shifts, bugs, legal issues). Manage channels like a portfolio—reallocate, don’t react months later.

B. Replace “opens” with engagement

KPIs: unique clicks, placed orders, rev/recipient, unsub rate, inbox placement.
Maintain unengaged suppression and sunset rules; rebuild win-backs around clicks or site behavior, not opens.

C. Fewer, better SKUs

Tie assortment decisions to fully loaded unit economics (landed cost, packaging, mailers, warehouse space). Kill variants that stall; scale what compounds.

D. Aim content at “would-watch even if it wasn’t branded”

Scripted, functional pieces beat floods of AI filler. Utilize AI to expedite specific parts of the workflow.

E. Validate beyond platforms

Use post-purchase surveys, geo-lift, and holdout tests where possible to sanity-check modeled platform ROAS.

Frequently Asked Questions

Did iOS “kill” Facebook ads?

No, but it killed the old measurement playbook. ATT cut cross-app tracking; browsers block cross-site cookies by default; ad blockers further reduce client-side signals. Meta added CAPI and modeling to compensate, but you must send server-side events and validate with incrementality tests.

Are open rates dead?

For decision-making, yes. MPP preloads images, inflates open times, and hides geolocation/time. Track clicks, orders, and rev/recipient; rebuild automations around behavior, not opens.

Should I still prepare for third-party cookies to vanish?

You should prepare for fragmentation rather than a single cutover. Safari and Firefox already block cross-site tracking by default; Chrome abandoned a hard deprecation and is shifting to user choice. Either way, hybrid measurement and first-party data win.

Where does CAC fit in 2025?

CAC isn’t one number anymore; it’s layered by funnel position, creative, and channel.

Speaker Bios

Manish Chowdhary — Manish Chowdhary is the Founder & CEO of Cahoot, the most comprehensive post-purchase logistics platform for ecommerce brands. We help merchants scale profitably with a bundled suite of services that includes:

Fast, cost-effective fulfillment (1-day and 2-day nationwide coverage)
AI-powered multi-warehouse shipping software that selects the cheapest label automatically
An industry-first peer-to-peer returns solution that eliminates return shipping and restocking costs

With over 100 warehouses and advanced shipping automation, we help brands maintain control, boost speed, and cut logistics costs without the overhead of traditional 3PLs. I’m passionate about helping ecommerce businesses grow smarter. If you’re looking to improve your margins, delight customers, and future-proof your logistics, let’s connect.

My work has been recognized with multiple industry accolades, most recently winning the SaaStock USA Global Pitch Competition 2024. I’m passionate about leveraging technology and collaboration to push the boundaries of e-commerce and logistics, creating new opportunities for merchants worldwide.

London Glorfield — London is a founder and creative strategist who’s built at the intersection of culture and product his entire career. A former RCA-signed artist, he previously ran a creative direction firm and a Squarespace-style software startup. He is currently reimagining consumer electronics with Kickback.world, a fashion-forward audio brand rooted in youth culture and design.

Maya Juchtman — Maya is a creative marketing strategist and partnerships leader known for blending brand storytelling with performance. As Senior Director of Marketing & Partnerships at Roswell NYC, a Webby Award–winning Shopify Plus agency, she’s helped brands like Brixton, Hyperlite, and Curious Elixirs scale through thoughtful strategy and standout campaigns. With a background in customer experience and leading brands through start-up to acquisition, she brings a human-first, culturally aware lens to every project, building community, driving growth, and pushing the boundaries of what digital marketing can be.

Sabir Semerkant — Sabir is the go-to eCommerce growth strategist, credited with over $1B in revenue for 200+ brands from Canon to Sour Patch Kids. Backed by Gary Vee and Neil Patel, Sabir’s Rapid 2X method delivers 2X growth in 12–18 months profitably. Since 2024, it’s powered 70+ brands across 17 industries with an average 108% lift. His Rapid 2X Protocol is the unfair advantage for any eCom brand with product–market fit, engineered to scale revenue and profit even in down markets. Want real talk? Sabir reveals why most brands will fail in 2025 and exactly how to make sure yours isn’t one of them.

Written By:

Jeremy Stewart

Jeremy Stewart leads customer success at Cahoot, helping merchants achieve high-performance logistics through smart technology and process optimization. With a background in both ecommerce operations and client services, Jeremy ensures that every merchant using Cahoot gets measurable results—whether they’re scaling from one warehouse to many or managing complex returns.

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5 Brutal Truths About Ecommerce Profitability (from Ugly Talk NYC)

Meet the Panelists Featured Here
Brutal Truth #1: The ZIRP Era Is Dead
Brutal Truth #2: Old Tracking Playbooks Are Broken
Brutal Truth #3: CAC Math Is a Lie in 2025
Brutal Truth #4: Less Is More — SKUs, Content, Channels
Brutal Truth #5: AI Will Not Save You Without Context
The Playbook That Replaces the Old One
Full Session Video
Frequently Asked Questions
Speaker Bios

In August 2025, founders and operators packed a standing room only space at NomadWorks in Times Square, New York City for Ugly Talk NYC: Building Profitable Ecommerce in a Downward Market, a panel designed to cut through the noise. No “growth hacks.” No feel-good fluff. Just raw, unfiltered truth about why ecommerce profitability has never been harder, and what you need to do about it now.

If you’re reading this, you’re not looking for theory. You want survival strategies. This article distills the 5 brutal truths shared on stage, each a direct challenge to the old playbooks that no longer work. It distills the sharpest insights from blends them with current data and outside examples, and leaves you with a focused playbook for the second half of 2025. Use it as the pillar article that spawns your clips, carousels, emails, and deep-dives.

Meet the Panelists Featured Here

Manish Chowdhary — Founder & CEO, Cahoot (panel moderator)
London Glorfield — Founder, Kickback (screenless electronics)
Maya Juchtman — Senior Director, Marketing & Partnerships, Roswell NYC
Sabir Semerkant — Founder, Growth by Sabir, helped drive $1B+ in ecommerce growth

(Detailed bios appear at the end of this article.)

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Brutal Truth #1: The ZIRP Era Is Dead

Panel moderator Manish Chowdhary opened with a stark reminder:

“For a long time until very recently we were in a zero interest rate phenomenon and money was easy, money was flowing. When that happens, fundamentals go out the door which means weak businesses thrive or appear to thrive. There are 10 ecommerce darlings … Stitch Fix, Grove Collaborative, even Olaplex are penny stocks. They probably won’t be trading on the New York Stock Exchange for much longer now.”

For a decade, zero interest rates hid a lot of sins. That era really is over. The Federal Reserve kept policy tight through mid-2025 as inflation and growth data stayed mixed; capital is scarce again and the bar for profitability is higher. Translation: if your growth story depends on forever-cheap money, it is not a story anymore.

At the same time, the rules of trade changed. In 2025 the White House directed sweeping tariff actions, including reciprocal tariffs, a new tariff commission, and orders to suspend de minimis entry benefits to certain countries for national security and unfair trade concerns. If you import, your landed-cost model changed whether you noticed or not. Plan pricing, assortment, and cash cycles accordingly.

Panelists underscored how the “free money plus cheap acquisition” era minted fragile brands.

“Weak businesses thrived under cheap money. Today, those same brands say ‘I don’t want to be like me.’” — Manish.

This is a hard reset: brands that looked unstoppable during the ZIRP boom are collapsing. A harsh reminder that product love without durable unit economics does not keep the lights on. The takeaway is not doom; it is clarity. Rebuild your plan around cash margin, inventory turns, and repeat behavior instead of “fundraising as a strategy.”

What to do next:

Re-forecast demand with tariff-inclusive costs, not “last year plus five percent.” Build A/B/C scenarios that stress test your cash conversion cycle under higher duties and slower demand.
Renegotiate with suppliers using tariff math as leverage. Lock freight earlier and shorten cash exposure windows where possible.
Tighten SKU economics: kill long-tail variants that tie up working capital and complicate replenishment. We revisit SKU discipline in Brutal Truth #4.

Brutal Truth #2: Old Tracking Playbooks Are Broken

The story is not “iOS killed the Pixel” and that is the end. It started with Apple’s App Tracking Transparency (ATT) and Mail Privacy Protection, then spread to browser privacy defaults, ad blockers, and a shifting timeline for third-party cookies in Chrome. Treating the Meta Pixel as gospel in 2025 is how you fly blind.

Email metrics are distorted too. The panel called out inflated open rates: those “35% opens” many teams celebrate are not real if a big chunk of your audience is on Apple Mail with MPP. Litmus and others confirm that MPP obscures open behavior and that “open” is no longer a reliable KPI. Expect inconsistent handling of MPP across email service providers and move your reporting toward clicks, conversions, revenue, and deliverability health.

“You need to manage ecommerce like your Charles Schwab or Fidelity account, money management first, not blind ad spend.” — Sabir.

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The fix is a hybrid, first-party stack:

Pixel + Conversions API (CAPI) with deduplication. Send server-side events, include event IDs, and deduplicate against browser events. This is Meta’s own recommendation for restoring signal quality post-ATT.
Aggregated Event Measurement and prioritized web events, plus server-to-server purchase reporting, to stabilize performance reporting.
Email reality check: prune disengaged segments, build exclusion rules, and monitor sender reputation daily. Spray-and-pray is a deliverability death spiral.
Measure beyond last-click. Use modeled attribution and incrementality testing where possible; treat platform-reported ROAS as a directional input, not financial truth.

“I just looked at a few accounts recently…their deliverability [was] horrible. But they came to me and they were like, ‘Oh I’m seeing 35% open rates. 30% open rates, that’s fine, right?’ Actually no. If you’re sending to lists and you’re not doing exclusions and you’re not actually thinking about Apple privacy which auto inflates. So those numbers, that open rate, that’s not real, that’s Apple privacy, Google and Hotmail inflating that. So your open rate is actually probably going to be more like 10.” — Maya.

Why this matters: brands that relied on Meta Pixel lost signal, misallocated budget, and watched revenue wobble when the ground shifted. Hybrid tracking, server events, and healthier email lists (even is leaner) help you defend spend and redirect dollars faster.

Brutal Truth #3: CAC Math Is a Lie in 2025

“CAC isn’t one number anymore, layered strategy required.” — Summary of Maya’s segment.

CAC used to be a single dashboard tile. Now it is a portfolio of acquisition costs across funnel stages and channels. Top-of-funnel stories are expensive and slow, but they seed cheaper retargeting, stronger LTV, and more resilient cohorts. Roswell’s work with Hyperlite illustrates this: brand and experience up top, brand-aware retargeting down-funnel, and a different CAC expectation for each layer.

When you treat CAC as a single number, you are tempted to shut off expensive awareness that actually lowers blended CAC over time. In 2025, the math that matters is blended CAC to contribution margin by cohort, with inventory and cash timing in the same equation.

A tighter model:

Top-funnel CAC: higher; track assist value, search lift, and branded queries.
Mid-funnel CAC: creative-led; expect decays in 3 – 6 weeks as creative burns out. Rotate on a schedule.
Bottom-funnel CAC: cheaper retargeting; cap frequency, and watch saturating segments.
Community CAC: Discord, events, direct mail; small volumes, high LTV, exceptional payback.

Finally, build a channel-shift reflex. If 70% of spend sits on Meta and performance degrades, rebalance to 70% Google, 30% Meta overnight; the panel was blunt that single-platform dependency is a solvency risk now.

Brutal Truth #4: Less Is More — SKUs, Content, Channels

SKUs. The room agreed: assortment bloat is a silent margin killer. If you have “30 orders and 300 SKUs,” you do not have a marketing problem, you have a focus problem. Ship the hero, kill the laggards, and stop coloring the T-shirt sixteen ways.

“If you can’t make your hero product succeed in a big way, these chotchkes are not going to save you. That’s just a pure distraction. And I can tell you from my own personal experience, we throw away that stuff because nobody wants it. We can’t even get pennies on the dollar. The brand may associate such deep emotional and financial value to that, but it has zero or very little value outside. So you have to be very, very consider it in your product skus election. Just because one customer says, I wanted a small burgundy, that is not a reason to produce that in small burgundy.” — Manish.

Outside the room, SKU discipline shows up in the data. Post-pandemic, CPG leaders that rationalized assortments saw service levels recover and productivity improve; fewer SKUs meant fewer changeovers and better on-shelf availability. Ecommerce is no different: fewer variants mean faster replenishment, fewer stockouts, and cleaner creative.

Content. Volume for volume’s sake is out. London put it plainly: Kickback moved from “posting 10 times a day” to scripted, value-driven content, because audiences are saturated and can sniff filler. Manish’s team blasted out 300 AI-generated videos in a week and one handcrafted video outperformed all of them combined by ~100x. That is not a cute anecdote, it is a strategy correction: quality over volume.

Channels. Kickback treats channels like a portfolio. TikTok is growth equity, Instagram is the S&P, email is for committed audiences, Discord and physical mail are VIP touchpoints. That last one matters. London’s team sends text-first emails and literal playlists, and then backs it up with quarterly handwritten notes. Community intimacy beats blast discounts.

Direct mail is back in the mix. Panelists see postcards and letters driving meaningful second-purchase behavior; Sabir cited 14 – 20% response rates in recent campaigns and argued that, for the first time in years, a stamped postcard can be cheaper than a Meta click. Meanwhile, stamp prices rose again in July 2025 to 80¢ for a First-Class Forever stamp, which is still a modest input compared to volatile CPCs. The point is not that mail is “cheap,” it is that it can be predictable, targeted, and human in a way digital often is not.

Brutal Truth #5: AI Will Not Save You Without Context

“AI is like hiring interns from MIT, University of Penn, Harvard, or Yale, really smart, really smart kids, right? Phenomenal. Very intelligent. They have amazing intelligence, but they just don’t know how to use it. It’s my job to guide them.” — Sabir.

Generative tools are incredible force multipliers, and they also flood the feed with sameness. When everyone can ship 100 posts a day, quality becomes the only differentiator. That is visible in search as well. Google’s evolving guidance keeps prioritizing E-E-A-T (experience, expertise, authoritativeness, and trust) and people-first content; gaming systems with AI-written mush is a fast track to nowhere.

London’s read on Gen Z is instructive: they spot AI instantly and reward brands that feel human. Use AI to research, draft, and speed checks, then layer on your voice, data, and video craft. Manish’s 100x lesson is the headline here, and it pairs with a second one from the panel: optimize for AI discovery, not just traditional SEO. Package your catalogs and content so LLMs can “see” them, test queries in AI products, and partner with publishers those models cite. That is the new distribution.

“The reality on the ground is that most brands, they’re so obsessed with paying Meta ads and Google Ads that they’re not focused on the organic strategies where they need to be developing. Especially AI. SEO is a thing right now where you can, you can package your content and actually feed it so that it can get discovered by AI engines. Because that’s where we are going, you know. And if you are optimizing your business based on what worked in 2022, that was a different part, different world at that time, right? It doesn’t exist. That world doesn’t exist right now.” — Sabir.

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The Playbook That Replaces the Old One

1) Operate like a money manager. Review spend daily; shift between channels quickly; protect cash; model tariffs explicitly; keep a rolling 13-week cash forecast.

2) Rebuild measurement. Pixel + CAPI with deduplication; AEM-prioritized events; click- and conversion-centric email analytics; full-funnel blended CAC.

3) Design for repeat behavior. Fewer products, tighter variants, faster replenishments, and community touchpoints that earn a second purchase.

4) Make fewer, better assets. Script, storyboard, and ship formats the audience would watch even if your brand name disappeared.

5) Treat physical mail and in-channel communities as profit centers. When done thoughtfully, they compound LTV while ad channels churn.

Full Session Video

[Embed the full recording here once live on YouTube or Vimeo. Use chapters by question for skimmability.]

Frequently Asked Questions

What is the single biggest profitability mistake brands are making in 2025?

Treating growth like it is still 2019. Cheap money and cheap acquisition masked weak unit economics. Today, you must run a tariff-aware P&L, operate with cash discipline, and design your plan around repeat purchase, not just net-new.

How exactly has Apple changed the way we measure marketing?

ATT and MPP broke legacy habits. App-level tracking is limited; email “opens” are inflated or meaningless. Shift to first-party data, Pixel + CAPI with deduplication, prioritized events, and conversion-level outcomes. Make “deliverability health” and “incremental revenue” your email KPIs.

Are third-party cookies still going away?

Chrome’s timing has been fluid and subject to regulatory review, but the direction is the same: less cross-site tracking, more privacy-preserving APIs. Plan as if third-party cookies are not dependable and invest in first-party audiences and server-side measurement now.

Why is direct mail suddenly on everyone’s roadmap?

Because it creates a human moment, is targetable, and, for many segments, has become cost-competitive with paid clicks again. Stamp prices rose to 80¢ in July 2025, yet response rates on targeted house-file mailings can be multiples of cold digital traffic. Use it for high-value cohorts and second-purchase nudges.

What does “Less Is More” mean in practice?

Cut SKUs aggressively, ship only what you can replenish, and make media you are proud to sign. Treat content and assortments like constrained resources. The panel’s best-performing video was a single crafted piece, not 300 AI clones.

How should I think about CAC now?

Make CAC layered: top-funnel story costs more and pays off in retargeting and LTV; mid-funnel burns out faster; bottom-funnel is cheaper but finite. Report blended CAC to contribution margin by cohort, not a single number.

Is email still worth the work?

Yes, but only if you run it like deliverability-first CRM. Build exclusions, cull dead segments, personalize copy, and measure clicks, conversions, and revenue. “Set and forget” is how you get clipped in 2025.

Speaker Bios

Fast, cost-effective fulfillment (1-day and 2-day nationwide coverage)
AI-powered multi-warehouse shipping software that selects the cheapest label automatically
An industry-first peer-to-peer returns solution that eliminates return shipping and restocking costs

My work has been recognized with multiple industry accolades, most recently winning the SaaStock USA Global Pitch Competition 2024. I’m passionate about using technology and collaboration to push the boundaries of ecommerce and logistics and create new opportunities for merchants worldwide.

Written By:

Jeremy Stewart

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USPS Harmonized Tariff Code Requirement Starts September 2025

Starting September 1, 2025, every U.S. exporter must include a harmonized tariff code (HTS code) or Schedule B number on USPS international shipments. For years, merchants could get away with vague product descriptions, but now the Harmonized System (HS) is the law of the land. This isn’t just bureaucratic red tape, it’s a restructuring of how international trade data flows through customs, taxes, and shipping.

The System Behind the Codes

At its core, the HS code system is a global classification system governed by the World Customs Organization (WCO). The first six digits are universal across all countries. Beyond that, nations tack on their own rules:

The U.S. uses the Harmonized Tariff Schedule (HTS) for imports.
The Census Bureau oversees Schedule B codes for U.S. exports.

The result? Your ten-digit codes must match precisely, or your traded products get flagged. Misclassification leads to delays, penalties, or worse, lost shipments.

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Why USPS Is Forcing the Issue

Other carriers (FedEx, UPS, DHL) have long required these codes, but USPS gave merchants a free pass. That ends in 2025. Why? Two reasons:

Data accuracy: Governments want to tighten control over tariff rates, duties, and economic statistics.
Trade enforcement: From precious metals to musical instruments, if the right code isn’t on the box, customs will block it.

This shift means even small businesses and Etsy sellers must learn the difference between a “scarf” and “silk scarf” in the eyes of the harmonized system.

How to Classify Products Without Losing Your Mind

Here’s the brutal truth: figuring out the particular product classification isn’t straightforward. For example:

A wooden chair: one code.
A plastic chair: a totally different code.
A musical instrument case: not the same as the instrument itself.

The general rules of interpretation guide classification, but they’re dense. Many merchants rely on customs brokers or US International Trade Commission lookup tools. The Census Bureau’s Schedule B search is another option, but it requires patience.

What Happens if You Get It Wrong

Misclassifying products is expensive. You risk:

Delayed shipments stuck in customs limbo.
Fines and back duties when audits uncover mistakes.
Angry customers when orders don’t arrive.

In a world of instant shipping, one wrong tariff code can tank a brand’s reputation overnight.

The Big Picture: Tariffs as Trade Weapons

This isn’t just about compliance. It’s about global trade politics. Tariffs have become the new sanctions, and the U.S. government wants airtight data to enforce them. When the next round of temporary legislation or retaliatory duties hits, officials will lean on the harmonized tariff schedule to target industries. That means your shipment classification isn’t just paperwork, it’s part of trade policy itself.

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Preparing Now: Practical Steps for Businesses

If you export anything, start now:

Identify codes: Use the Census Bureau or a customs broker to nail down the correct HS code.
Update systems: Make sure your ecommerce platform or shipping software captures the digits long field USPS will require.
Train your team: Teach staff how to spot when a new product needs a new code.
Audit your catalog: Don’t wait until September 2025, clean up your classifications today.

Businesses that get ahead will breeze through customs. Those that don’t will face a pile of returned shipments, taxes, and unhappy buyers.

Frequently Asked Questions

What is the harmonized tariff code?

It’s a global classification system run by the World Customs Organization that standardizes product categories for international trade. The first six digits are universal, but each country adds its own rules.

What’s the difference between HTS codes and Schedule B numbers?

Both come from the same HS system. HTS codes apply to imports, while Schedule B codes apply to U.S. exports and are overseen by the Census Bureau.

How long are HTS codes and Schedule B numbers?

Typically ten digits long in the U.S. The first two digits identify the broad product group, with more digits narrowing down to the particular product.

Do I need a tariff code for every product I export?

Yes. Every traded product must be linked to the right code. Even small differences in material or design may change classification.

What happens if I ship without the correct HTS code?

Your shipment can be delayed, rejected, or fined. Customs agencies use these codes to determine tariff rates, duties, and taxes. USPS will no longer accept vague descriptions without a tariff code starting September 2025.

Written By:

Jeremy Stewart

Turn Returns Into New Revenue

Convert returns into second-chance sales and new customers, right from your store.

AI Tools for Ecommerce: Choosing the Right Tech to Stay Competitive

Why AI in Ecommerce Is No Longer Optional
The Power of Data in Ecommerce
Key Areas Where AI Tools Drive Impact
Evaluating the Right AI Tools for Ecommerce
Adoption Challenges: Data Quality and Trust
The Future: Generative AI in Ecommerce
Why Adoption Matters More Than Experimentation
Conclusion
Frequently Asked Questions

Why AI in Ecommerce Is No Longer Optional

AI has become the hidden engine driving the ecommerce industry. From automated inventory management to personalized recommendations, AI tools for ecommerce are reshaping how online businesses operate. Walmart, Amazon, and Shopify have already made AI a core part of their strategies, which means independent ecommerce businesses need to adopt the right AI technology, or risk falling behind.

AI tools are no longer a futuristic add-on; they are essential for analyzing customer data, predicting demand, improving customer satisfaction, and staying competitive in a market dominated by giants. Sellers who fail to implement AI-powered solutions will find themselves reacting to market trends rather than shaping them.

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The Power of Data in Ecommerce

Ecommerce runs on customer data: purchase history, browsing behavior, customer interactions, and even customer feedback. AI tools allow retailers to analyze this data at scale, transforming raw information into valuable insights. These insights power predictive analytics and personalized recommendations that drive customer engagement and loyalty.

For example, using natural language processing, an AI system can analyze customer reviews and social media posts to identify product issues before they spiral into bad ratings. Competitor pricing can also be tracked in real time, helping retailers adjust pricing strategies dynamically.

Key Areas Where AI Tools Drive Impact

Inventory Management

Poor inventory management leads to either excess costs or missed sales. AI-powered inventory management tools use historical sales data and market trends to forecast demand, ensuring retailers avoid both overstocking and stockouts. These systems adapt to consumer demand patterns and can even factor in seasonality and marketing campaigns.

Marketing Strategies

AI marketing tools automate content creation, generate SEO optimized product descriptions, and evaluate messaging performance. For ecommerce businesses competing with retailers that have entire AI-driven marketing departments, tools that improve campaign targeting and analyze customer behavior are essential.

AI also powers personalized marketing. By analyzing transaction patterns and purchase history, businesses can create tailored email marketing campaigns, targeted promotions, and personalized shopping experiences that boost conversion rates.

Customer Experience

Customer experience is now a key differentiator. AI-powered chatbots and virtual assistants deliver real-time customer service, reducing reliance on human customer service agents while still providing seamless support. Personalized shopping experiences powered by AI keep customers engaged and increase satisfaction.

For instance, AI tools can analyze customer preferences and browsing behavior to make real-time product recommendations. Retail websites that fail to offer this level of personalization risk losing customers to competitors who can.

Supply Chain Optimization

Supply chain analytics powered by AI improves operational efficiency across the retail value chain. From supply chain management to store operations, AI tools help forecast demand, optimize logistics, and lower costs. For ecommerce platforms managing complex supply chains, these solutions ensure better supply chain management and keep customers happy with faster, more reliable deliveries.

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Evaluating the Right AI Tools for Ecommerce

Not every tool labeled “AI” provides value. Ecommerce businesses must evaluate AI tools carefully. Factors to consider:

Seamless integration with existing ecommerce platforms
User-friendly interface for non-technical teams
Detailed analytics to drive data-driven decisions
Proven track record with leading retailers
Ability to ensure data quality and protect customer data

Retailers should test AI algorithms against real customer behavior data before fully implementing them. Evaluating AI tools also means comparing ROI across customer retention, sales growth, and operational efficiency.

Adoption Challenges: Data Quality and Trust

AI adoption isn’t without friction. The data retailers rely on often comes from multiple sources, sales data, purchase patterns, social media platforms, and customer feedback. Ensuring data quality is critical. If the data is incomplete or biased, predictive analytics and machine learning algorithms won’t provide accurate insights.

Customer trust is another challenge. Consumers want personalized shopping experiences, but they don’t want to feel surveilled. Retail businesses must balance the use of customer insights with transparent policies around data usage.

The Future: Generative AI in Ecommerce

Generative AI is emerging as the next wave. Gen AI solutions are now capable of writing product descriptions, generating marketing messages, and even designing personalized promotions. Ecommerce platforms that leverage generative AI in content creation and marketing campaigns will have an advantage in producing large volumes of high-quality, SEO optimized content quickly.

Retail companies that adopt these tools now will be positioned to remain competitive as generative AI reshapes the ecommerce industry.

Why Adoption Matters More Than Experimentation

AI tools are only valuable if they’re implemented strategically. Too many ecommerce businesses experiment with pilots but fail to integrate AI deeply into their operations. Leading retailers like Amazon and Walmart aren’t just using AI for marketing, they’re embedding AI across store operations, supply chains, and customer engagement.

Independent ecommerce sellers need to follow suit. Using AI-powered tools for ecommerce isn’t about chasing hype; it’s about survival in a marketplace where data-driven decision making, predictive analytics, and customer-centric strategies are now table stakes.

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Conclusion

The ecommerce sector is being redefined by artificial intelligence. Sellers who embrace AI technologies, from predictive analytics and automated inventory management to AI-powered marketing and generative AI, will stay ahead of consumer demand and competitor pricing pressures. Those who hesitate risk irrelevance.

Adopting the right AI tools for ecommerce allows retailers to gain valuable insights, improve customer satisfaction, and remain competitive against giants like Walmart, Amazon, and Shopify. In the future retail landscape, AI won’t just optimize ecommerce operations, it will decide who survives.

Frequently Asked Questions

What are the best AI tools for ecommerce businesses?

The best AI tools for ecommerce include AI-powered chatbots, predictive analytics platforms, AI marketing tools, and automated inventory management solutions. These tools improve customer satisfaction, boost sales, and optimize retail operations.

How can AI improve customer satisfaction in ecommerce?

AI improves customer satisfaction by analyzing customer interactions, purchase history, and browsing behavior to deliver personalized shopping experiences, real-time customer service, and targeted promotions that meet customer preferences.

How does AI impact inventory management in ecommerce?

AI-powered inventory management tools analyze historical sales data and forecast future customer demand. This ensures ecommerce businesses avoid stockouts, reduce excess inventory, and adapt quickly to market trends.

What role does generative AI play in ecommerce marketing?

Generative AI helps ecommerce companies create product descriptions, social media posts, email marketing campaigns, and other marketing materials at scale. These tools allow retailers to optimize marketing strategies and remain competitive.

Why should ecommerce businesses adopt AI tools now?

Adopting AI tools now ensures ecommerce businesses remain competitive as the retail industry embraces artificial intelligence. Early adoption allows retailers to gain valuable insights, improve customer retention, and build sustainable growth strategies before competitors dominate.

Written By:

Jeremy Stewart

Turn Returns Into New Revenue

Convert returns into second-chance sales and new customers, right from your store.

AI in Retail Operations: Reshaping the Future of Retail

Introduction: The Retail AI Paradox

In the retail world, we’re facing a bit of an AI paradox. On one hand, AI in retail operations is a powerhouse for efficiency; it can optimize everything from inventory management to dynamic pricing, making businesses run leaner and smarter. On the other hand, the rise of AI-driven shopping (think intelligent agents making purchases for consumers) threatens to disrupt traditional retail models in ways we’re only beginning to grasp. I’ve been watching this space closely, and the signal is clear: retailers must embrace AI to streamline and survive today, even as they brace for the bigger shifts AI could cause in customer behavior tomorrow.

As one industry observer from AWS (Amazon Web Services) hinted, retailers should “optimize for efficiency, prepare for disruption.” That phrase sums it up nicely. You want to use AI tools to sharpen your operations and improve customer satisfaction, but you also need to keep an eye on how AI technologies are changing shopper expectations and competitive dynamics (the disruption part). Let’s unpack this paradox and explore both sides, the here-and-now benefits of AI and the looming changes on the horizon.

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AI is Everywhere in Retail Operations (and That’s a Good Thing)

First, the obvious part: artificial intelligence is increasingly embedded in nearly every facet of retail operations. We’re well past the days of AI being a novelty or confined to a pilot project. Today, if you’re not leveraging AI in some form, you’re already behind. Here are some key areas where AI is improving efficiency and decision-making in retail:

Demand Forecasting: Gone are the times of forecasting based only on last year’s sales and a spreadsheet. Modern AI systems ingest historical sales data, real-time trends, market trends, even weather and social media cues to predict demand with remarkable accuracy. This means retailers can anticipate how much of each product to have and where, reducing stockouts and overstocks. A 2025 study by OpenText noted that AI-driven forecasts are “far more accurate than traditional methods”, integrating diverse data points to predict demand with unprecedented precision. Fewer stockouts means happier customers and fewer lost sales; less overstock means lower holding costs and markdowns. It’s directly boosting the bottom line.
Automated Inventory Management: Inventory management itself has been supercharged by AI. Machine learning models can determine optimal reorder points for each SKU, triggering restocks automatically. They factor in lead times, current velocity, and even competitor pricing changes. Some large retailers have AI that reallocates inventory across stores. If one location’s stock of an item is moving slowly but another can’t keep it on shelves, an AI might prompt a transfer to balance it out. Computer vision is also used in warehouses to monitor inventory levels (smart cameras that “see” when shelf stock is low) and even in stores (Amazon’s Just Walk Out tech, for example, automatically tracks when items are taken so inventory is updated in real-time). All this reduces labor and errors. It’s not sexy to customers, but operationally it’s a big efficiency gain.
Dynamic Pricing and Markdown Optimization: AI allows truly dynamic pricing strategies that would be impossible to do manually. By analyzing sales patterns, inventory aging, and competitor prices, AI can adjust prices in real time to maximize revenue. For instance, if data shows a certain apparel item isn’t selling as fast as predicted, an AI system might initiate a slight price drop or a promotion to boost demand, rather than waiting for an end-of-season clearance. Alternatively, for high-demand products, AI might inch prices up (within allowed limits) to capitalize on willingness to pay. These pricing strategies are increasingly common in ecommerce but are also hitting brick-and-mortar via electronic shelf labels and apps. The result is higher operational efficiency, you sell products closer to the ideal price point, improving margins without manual intervention on each pricing decision.
Supply Chain Optimization: Retail supply chains are getting smarter through AI analytics. Everything from predicting delays (using AI to analyze weather, political climate, etc.) to optimizing supply chain management (choosing the best shipping routes and methods) can be AI-driven. For example, AI can analyze past shipping data and real-time freight rates to suggest the most cost-effective way to move goods (should I ship by rail or truck for this distribution lane this week?). Supply chain analytics provided by AI also help retailers respond faster, if there’s a hint of disruption (like a factory issue or port delay), AI systems flag it early by detecting anomalies, giving retailers a head start to reroute or adjust orders. This improves resilience and reduces costly last-minute expediting.
Workforce and Task Optimization: Beyond merchandise, retailers use AI to improve store operations and workforce management. AI can forecast foot traffic by time of day, helping set optimal employee schedules (so you’re not overstaffed during lulls or understaffed during rushes). It can also prioritize tasks, for instance, if an AI sees that online orders for curbside pickup are spiking on Monday mornings, it might prompt managers to assign more staff to picking and packing at those times. Some stores even use AI-driven robots to scan aisles for out-of-stock items or misplaced products, freeing up human staff for customer service tasks.

All these examples point to one thing: operational efficiency. Retail is a low-margin game, and AI is helping shave off costs and improve throughput in countless small ways that add up. According to the National Retail Federation (NRF), leading retailers leveraging AI have significantly improved metrics like inventory turnover and markdown rates, translating into percentage points of margin improvement. In fact, top retailers (the Walmarts and Targets of the world) are achieving notable cost reductions; one stat I came across said the top 5% of retailers have 31% lower fulfillment costs through integrated automation and AI, compared to the average. That’s huge in an industry where a 1% margin improvement is celebrated.

From a customer perspective, they might not see these AI tools, but they feel the effects: products are in stock more often, they get what they want when they want it, and even pricing can feel more “right” (no massive end-of-season gluts or mysterious price jumps). Customer satisfaction benefits from these back-end optimizations.

Case in point: Look at how a company like Stitch Fix (an online apparel retailer) used AI. They combined AI algorithms with human stylists to improve customer insights and inventory alignment. The AI would analyze customer profile data (size, style preferences) and purchase patterns to suggest what inventory to buy and how to personalize outfits for each customer. The result was less excess inventory and a more personalized, satisfying experience for the shopper, i.e., operational efficiency meeting customer experience improvement. This dual win is why AI’s ROI in retail has been compelling.

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The Coming Disruption: AI-Powered Shopping Agents and Changing Consumer Behavior

So, everything above is great; AI is making the retail value chain run smoother. Now comes the potentially disruptive part: how AI might fundamentally change how consumers shop and what they expect. This is the side that could catch a lot of retailers off guard if they’re only thinking about internal efficiencies.

The concept of AI shopping agents or AI assistants handling shopping tasks for consumers is gaining traction (sometimes called “agentic commerce”). We touched on this in other discussions: digital assistants that can search products, compare, and even purchase on behalf of someone. This isn’t widespread yet, but the pieces are falling into place quickly. For example:

Personal AI Shoppers: Imagine a busy professional who doesn’t want to manually shop for groceries or even clothes. They might use an AI assistant (maybe through a voice device or chat app) to handle it. “Buy me a week’s worth of keto-friendly groceries” or “I need a black cocktail dress for under $150 by next Friday.” The AI will parse this and engage with retailer systems to find the best fits and execute the orders. This moves the decision process from the person browsing websites to an AI scouring data. If you’re a retailer, suddenly your customer is a bot with a checklist, not a human swayed by branding or emotional advertising.
Close-Up Algorithmic Comparison: These AI agents will compare products in an ultra-rational way. They’ll look at specs, features, price, reviews, warranties, materials, all the quantifiable attributes. Flashy marketing copy like “best ever” won’t register unless it’s backed by data. As a retailer or brand, this means you’d better have your factual ducks in a row. Products need rich attribute data and genuine differentiators. If not, the AI might just choose based on the lowest price or the highest average rating. Think about how Google’s search evolved websites to focus on SEO keywords and structured data; similarly, AI shoppers could birth a whole new concept of AEO (AI Engine Optimization), where brands structure product data to be friendly to AI algorithms.
Changes in Loyalty and Discovery: Today, many shoppers have favorite stores or go-to brands. They might trust Nike for sneakers or always check Target for home goods. But an AI agent might be brand-agnostic; it will just find the product that fits the criteria best. This could erode traditional brand loyalty and retailer loyalty. If Alexa or Siri is placing the order, you might not even know which retailer it used if you don’t specify. The customer experience becomes abstracted away from the retailer’s own interface. This is disruptive because retailers invest heavily in their apps, sites, and branding to create a certain experience. If transactions increasingly happen through third-party AI intermediaries, retailers will have to find new ways to differentiate (perhaps through unique products or ensuring their data makes their items more likely to be recommended by AIs).
Direct-to-AI Marketing: We might see retailers or brands trying to “market” to algorithms. For example, ensuring their products are the ones that AI agents “like” to choose. How do you do that? High ratings, consistent stock, competitive pricing, complete and accurate product info. Possibly even integrating with the AI platforms via APIs, so your products are prioritized. It’s a whole new kind of B2B2C dance. In fact, it’s already starting: some brands are providing detailed product feeds to smart assistants and working on partnerships (we saw Shopify partnering with OpenAI and others, so Shopify merchants’ products appear in AI search results).
Reduced Impulse Buys / Changed Store Formats: If AI agents handle routine purchases, physical stores might shift more toward experiential shopping or immediate need fulfillment. Fewer people might roam aisles for weekly shopping if their AI does it. But they might still go to stores for experiences or immediate gratification. Retailers may need to rethink store layouts, perhaps focusing on showcasing products (for people or for the AI’s “eyes” like scanning QR codes) and offering easy pickup for AI-placed orders. The retail industry could split into two: a highly automated replenishment business vs. experiential retail for discretionary buying.

I find this disruption aspect both exciting and daunting. It reminds me of when ecommerce itself emerged. Initially, it was a small efficiency play (buy from home, ship to door), but it massively changed consumer behavior over time. Now we take online shopping for granted. AI-driven shopping might be a similar wave: small now (maybe a few early adopters letting an AI pick their grocery list), but potentially huge in a decade.

AWS folks (and others in the cloud/AI space) are already talking about this shift. Amazon’s CEO, Andy Jassy, recently predicted that generative AI and agentic AI will change how customers shop and even how Amazon’s own workforce is structured. When the CEO of the world’s biggest online retailer says that, you pay attention. Walmart also isn’t sitting idle; they’ve announced their own AI “super agents” for customers (like a personalized shopping assistant called “Sparky” in their app). They’re essentially trying to build their own AI interface with shoppers to not lose that connection. Walmart’s CTO said they envision these AI agents as “the primary way people engage with Walmart” in the future. That’s a radical statement: it implies that instead of browsing the Walmart app, you might just chat with “Walmart AI” to get what you need.

Bridging the Gap: What Retailers Should Do Now

We have efficiency today and disruption tomorrow, so how do retailers handle both? In my view, it’s not an either/or. You should do both concurrently: double down on AI for operational excellence (because that pays off immediately and gives you the bandwidth to strategize) and start positioning your business for the coming changes in shopper behavior.

Tactically, on the efficiency side: If you haven’t already, invest in AI tools or platforms for the core areas: predictive analytics for demand and inventory, AI-driven personalization engines for ecommerce (making use of all that valuable customer data you have to improve engagement), and even NLP (natural language processing) for things like analyzing customer feedback at scale. Many retailers have data but struggle to use it; AI thrives on data. For example, use NLP to read through thousands of customer reviews or service transcripts to spot pain points or emerging trends (maybe customers are all asking if a product is sustainable, that insight could drive your merchandising).

Also, consider pilot programs with more frontier tech: maybe an AI vision system in your store to optimize product placements or a generative AI tool to create product descriptions and social media content (speeding up content creation in your marketing campaigns). These improve current operations and also get your team comfortable working alongside AI.

On the disruption preparation side: Begin enriching your product data now. If you’re a retailer, ensure every product in your catalog has a thorough, structured dataset (attributes like dimensions, materials, features, etc.). Standardize it in formats that can be easily consumed by AI assistants. Many industry groups are working on data standards for AI consumption; keep an eye on those and adopt them. The term “AI-ready product data” is something I predict we’ll hear a lot. It’s akin to how sites had to implement schema markup for SEO to be “Google-ready.”

Next, think about alliances or integrations with AI platforms. If, say, Alexa, Google Assistant, or some popular shopping app’s AI gets big, how will your products be surfaced? For example, some brands are now creating ChatGPT plugins or integrating with the likes of Instacart’s Ask AI feature, so that when a user asks “I need ingredients for tacos,” their brand products are recommended. Those kinds of partnerships could become the new SEO/ads, basically paid placement for AI recommendations, or at least organic optimization for them.

And don’t forget the human element. Even as AI grows, brands should emphasize what makes them humanly unique: brand story, community, and in-person experiences. Those intangible factors will still matter to consumers on some level and can influence what they tell their AI agents to value. For example, a consumer might instruct their AI, “I prefer sustainable products” or “support local businesses when possible.” If your brand identity includes those values (and you communicate them), you might be the choice an AI makes when those conditions are set.

Culture and talent: Internally, prepare your team for this future. Upskill your employees in data analytics and AI literacy. Encourage a culture that’s not afraid of testing new tech. Many retailers historically have been tech-laggards, which won’t fly in this coming environment. The ones who treat AI as an opportunity (not just internally, but as part of the customer offering) will adapt fastest. We may even see new roles like “AI shopper experience manager” or “algorithmic merchandising strategist” in retail org charts.

One example to emulate is how Target has been investing in its data science and tech teams. They use AI heavily for supply chain and pricing, but they’re also experimenting with chatbots for customer service and visual search (taking a photo of an item and finding similar products). They’re essentially weaving AI into both back-end and front-end. That’s the blueprint: holistic integration.

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Summary: Embrace the Paradox for Retail Success

The AI retail paradox, optimizing for efficiency while preparing for disruption, isn’t something to solve, but rather a dual mandate to embrace. Retailers who harness AI to streamline operations will enjoy immediate gains: lower costs, better customer experiences through personalization, and data-driven decision-making that outpaces gut instinct. These improvements are becoming the price of entry to stay competitive (as a recent Chain Store Age article put it, AI has moved from “experiment to expected” in retail). At the same time, those same retailers must keep their gaze on the horizon. The very AI tools making life easier inside the business are empowering entirely new consumer behaviors outside it.

It reminds me of a chess game where you have to think a few moves ahead. You make your current move (deploying AI for efficiency) while anticipating your opponent’s response (how AI will alter the market landscape). The retail industry players that will “win” in the coming years are likely those treating AI as both an operational tool and a strategic disruptor. They’ll squeeze every drop of ROI from AI in the present (from predictive analytics and automation) and invest in the capabilities to serve AI-driven shoppers of the future (through data quality, integration, and maybe even their own consumer-facing AI features).

We stand at a point where AI technologies can boost our profit margins and potentially erode certain revenues (like if an AI always finds a cheaper competitor product). It’s a bit of a tightrope walk. But retailers have walked similar tightropes before: ecommerce, mobile commerce, and omni-channel integration; each time, the key was to adapt rather than resist. AI is just the next evolution.

Ultimately, the retailers that lean into this paradox, leveraging AI for all its worth internally, while radically open-minded about reimagining their customer approach, will not just remain competitive; they’ll set the pace. Efficiency and disruption don’t have to be opposites; used wisely, they can be complementary. Efficient operations free up resources to experiment with new models; disrupted markets reward the most efficient and innovative players.

In my own work with retail clients, I often say: use AI to run better, and be ready for AI to change the game. Do both with equal zeal. Those who do will find that when the dust settles on this next wave of retail transformation, they’ll be ahead of the pack, having turned a paradox into a strategy.

Frequently Asked Questions

What is the AI paradox in retail?

The AI paradox refers to the tension between AI’s promise of efficiency and the disruption it causes by reshaping customer expectations and competitive dynamics.

Why is retail adoption of AI more important than efficiency?

Efficiency gains help retailers cut costs, but without adoption, they risk being overtaken by competitors using AI to reinvent entire customer journeys.

What are the risks of delaying retail AI adoption?

Retailers that delay adoption risk falling behind as competitors capture market share with AI-driven personalization, predictive logistics, and seamless shopping experiences.

How can retailers start adopting AI effectively?

Retailers can begin by investing in AI literacy, modernizing data infrastructure, piloting customer-facing use cases, and aligning with partners who understand retail’s unique challenges.

What role does culture play in AI adoption?

Culture is critical. Organizations that encourage experimentation and accept fast iteration adapt more quickly, while rigid, risk-averse cultures struggle to integrate AI meaningfully.

Written By:

Jeremy Stewart

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AI Shopping Assistant Revolution: Shopify’s Big Bet on Agentic Commerce

Why AI Shopping Agents Are Suddenly Everywhere

Just a couple of years ago, “AI shopping assistant” sounded like a gimmick. Today, it’s feeling like the future of online shopping. Shopify’s latest earnings blew past expectations (31% revenue growth year-over-year), and the company’s leadership credited much of that success to investments in AI-powered shopping. In Shopify’s Q2 2025 call, president Harley Finkelstein talked up “agentic commerce” as the next big thing, saying Shopify’s unique position with brands gives it an edge in this emerging online retail industry. In plain English: AI shopping assistants and AI agents are moving from tech demo to core business driver. And the results are already showing up in Shopify’s bottom line.

From my perspective, this isn’t just Shopify hyping new tools; it’s a sign of a broader shift in how shoppers and retailers interact. AI agents (essentially smart algorithms often powered by large language models like GPT-5) can now handle tasks that used to require a human. They can track price drops, compare features across dozens of products, answer detailed questions about specs or reviews, and even complete purchases on behalf of a user. All automatically. We’re witnessing the rise of the agentic AI era, where consumers might simply tell their phone or smart assistant, “Find me the best budget 4K TV and buy it,” and an AI agent does the rest. That might have sounded sci-fi, but Shopify’s saying it’s just about here.

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Shopify’s AI Playbook: Building the Agentic Commerce Infrastructure

Shopify isn’t sitting around. They’re actively opening the door for these AI shopping agents to drive sales on their platform. In fact, Shopify just rolled out a comprehensive suite of tools enabling AI agents to execute complete shopping transactions. Let’s break that down:

Shopify Catalog – A giant database that lets AI agents instantly search hundreds of millions of products with real-time inventory and pricing. Basically, an AI assistant can see what’s in stock across Shopify’s network and at what price, so it knows where to find the best deal or quickest ship time for you.
Universal Cart – This one blew my mind a bit. It lets an AI agent hold items from multiple different stores in one cart. Imagine you’re chatting with a generative AI shopping bot that recommends a shirt from one Shopify store and sneakers from another. Normally, you’d have to check out twice. But with Universal Cart, the AI can lump them together and handle all the complexity in the background. One shopping journey, one checkout, even though the products are from different businesses.
Checkout Kit – The final piece: when it’s time to buy, the AI agent can seamlessly initiate the purchase through each store’s checkout flow, while keeping the experience within the assistant interface. In practice, that means the end customer doesn’t feel like they left the chat or app to go fill out forms on a website. The AI handles it, maintaining the assistant’s “branding” or interface. Smooth.

Shopify basically built the plumbing so that any AI, whether it’s Shopify’s own assistant, or a third-party AI agent like something running on Google’s Gemini or OpenAI, can plug into Shopify stores and transact. It’s a bold move to position Shopify as the behind-the-scenes infrastructure for AI-driven shopping. Harley Finkelstein even said Shopify’s ahead because of their relationships with AI companies (they’ve partnered with OpenAI and others). The message: if brands want their products found and purchased by the coming wave of AI assistants, they need to be on platforms (like Shopify) that are ready for it.

And it’s not just Shopify. Amazon and Walmart are experimenting with their own AI shopping solutions. (Amazon recently piloted a “Buy for Me” feature where their app’s AI will literally purchase items from other websites for you, wild.) The future of e-commerce might not be customers browsing websites at all; it could be AI agents doing the browsing based on our preferences and instructions. Consumers might simply say what they want, and AIs will do the searching, vetting, and buying.

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A New Type of Customer Experience, Powered by AI

If you’re wondering why anyone would use an AI agent instead of going to a store website or app themselves, here’s the appeal: efficiency and personalization. A good AI shopping assistant can instantly filter through thousands of options across the web, taking into account your specific preferences, past purchases, and even pulling in reviews or expert data. It’s like having a personal shopper who knows everything about every product ever made, available 24/7. Busy buyers love anything that saves time and makes life easier. If an AI can find the exact product that fits my needs (cheapest price, highest rated, arriving tomorrow), why would I slog through multiple websites and read endless reviews myself?

These agents can also answer questions in real time, “Does this laptop support 32GB RAM? What’s the return policy? Is there a warranty?”, without me having to dig through FAQ pages. They can compare and find products that meet very specific criteria (e.g., “find me a dining table under $500 that’s solid wood and has at least 4-star reviews”). That’s a level of service traditional search or e-commerce interfaces haven’t delivered. Generative AI and LLMs are making the experience more conversational and human-like. It feels less like using a search engine and more like chatting with a super knowledgeable sales associate.

However, this shift has huge implications for brands and online retailers. If customers start delegating their purchase decisions to AI agents, the online shopping experience changes fundamentally. Product recommendations might be coming from an algorithm that doesn’t care about flashy marketing; it cares about data and facts. That’s a bit of an AI retail paradox: on one hand, AI-driven personalization can boost customer satisfaction by surfacing exactly what people want; on the other hand, it could disrupt the traditional notions of brand loyalty and impulse buying. Consumers might rely on cold, hard facts from an AI (specs, price, reviews) more than brand image or emotional ads. As an industry colleague of mine noted, things like emotional ad copy and lifestyle photos may lose punch, while verifiable data on materials and performance become more critical. In a world of AI agents, your product descriptions, specs, and reviews (essentially, your data) matter more than shiny marketing.

Another consideration: secure shopping experiences. AI agents will need access to a lot of information to do their jobs, including product feeds, inventory levels, and maybe even your past purchase history (if you allow it). Platforms like Shopify are focusing on ensuring these integrations are secure and privacy-compliant. Trust is key: both retailers and shoppers need to trust the AI systems. Shopify has even tweaked its code to manage how third-party AI scrapers or bots interact with stores, likely to prevent abuse while still enabling genuine assistants. It’s a delicate balance of opening up for new opportunities (AI-driven sales) without losing control of the customer relationship.

What It Means for Retailers and Brands

So, what should business owners and brand operators take away from this? I see a few immediate action items:

1. Optimize Your Product Data for Machines: In the same way we all learned about SEO (Search Engine Optimization) to rank on Google, now we have to think about “AEO” – AI Engine Optimization. AI shopping agents don’t “see” your pretty web design; they consume your data. Are your product titles, descriptions, specs, pricing, and stock info easily readable by a machine? Are they comprehensive and accurate? If your listings aren’t structured for machine readability, you’ll be invisible to these assistants. This might mean adopting structured data standards, improving your product information management, and syncing inventory in real-time. Brands should audit their catalogs and ensure everything from size dimensions to materials to customer ratings are correctly exposed. An AI can’t appreciate your lifestyle imagery – it’s parsing text and numbers. Make those count.

2. Embrace AI Tools Yourself: Just as consumers will use AI, brands can leverage AI-powered tools on their end. For example, AI can help write better product descriptions (tailored to what consumers ask about), manage customer service chats via chatbots, and analyze customer behavior patterns to see what factors influence purchase decisions. Many ecommerce businesses are already using AI for things like dynamic pricing, personalized email marketing, and inventory forecasting. These improve the shopping journey for customers (through more relevant recommendations, etc.) and improve operations for you (through efficient stock management and pricing). If your competitors are using AI to create a smoother shopping online experience and you’re not, you’ll fall behind.

3. Prepare for New Customer Journeys: The purchase decisions of the near future might not involve a customer slowly meandering through a site and adding things to the cart. It could be an AI agent presenting 2 options to the customer for instant approval. Or an AI just orders refills of a product for a subscriber without them even asking (based on preset preferences). Retailers need to anticipate these flows. That could mean focusing more on subscription models, direct integrations with assistant platforms, or ensuring your brand is recommended by the algorithms (possibly via great reviews, or partnerships, or by having unique products an AI can’t find elsewhere). It’s a new kind of marketing: instead of appealing solely to consumers, you’re also appealing to the logic of AI systems. For instance, if sustainability or warranty length becomes a key attribute that AIs consider (because consumers expect those factors), brands might highlight those more. I’m curious which product attributes will matter most to the “AI shoppers”; it could be sustainability, warranty, reviews, origin, etc., as speculated by industry observers.

4. Don’t Ditch the Human Touch: Even as technology takes over routine interactions, there’s still a role for human-centric branding and community. AI assistants might handle transactions, but brand discovery can still happen through content, social media, and real-world experiences. Smart retailers will use AI for what it’s good at (speed, data-crunching, automation) while continuing to invest in brand storytelling and customer relationships. The end customer ultimately benefits from AI efficiency, but they’ll still connect with brands that stand for something relatable. In short, let AI handle the tedious stuff so you can focus on higher-level value and creativity.

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Conclusion: Adapting to an AI-Driven Commerce Era

The rise of AI shopping assistants is not a far-off fantasy; it’s here, and it’s accelerating. Shopify’s big bet on agentic commerce is a wake-up call across the commerce space. They’re effectively saying: the way people shop online is evolving, and Shopify intends to be the backbone powering those AI-mediated experiences. For consumers, this promises more personalized, efficient shopping journeys where an AI does the heavy lifting of finding deals and making sense of endless options. For retailers and brands, it means now is the time to ensure your data and systems are ready for algorithmic scrutiny. Embrace the change rather than fear it. Much like the early days of ecommerce itself, there will be winners and losers in this transition. The winners will be those who see AI not as a threat but as a tool, one that can create new opportunities for engagement and growth.

From secure shopping experiences and streamlined checkouts to AI-driven product recommendations, the pieces are falling into place for a new era of ecommerce. I won’t pretend there aren’t challenges (privacy, maintaining customer loyalty, and the sheer unpredictability of letting robots do the shopping). But one thing’s clear: online retail is headed into an AI-driven future, and it’s better to expect and prepare for it than play catch-up later. As Shopify’s leadership hinted, the brands whose products are “front and center” in AI workflows will have a huge advantage. It’s time to focus on that future now. The checkout bots are coming, and they might already have your site in their cart.

Frequently Asked Questions

What is an AI shopping assistant?

An AI shopping assistant is software that helps shoppers find products, compare prices, and make purchase decisions using generative AI and large language models.

How do AI shopping agents work?

They pull product data, reviews, and prices from retailers, then use AI to filter, rank, and recommend the best options based on customer preferences.

Why is Shopify betting on AI agents?

Shopify believes agentic AI commerce will dominate online shopping and is building tools like Catalog and Universal Cart to connect brands with AI-driven purchase decisions.

How will AI shopping assistants change online shopping?

They’ll make shopping faster and more personalized, offering product recommendations, price tracking, and even automated checkout.

How should retailers prepare for AI-driven shopping?

Retailers should optimize product listings with structured data, maintain strong reviews, and embrace AI-friendly platforms to stay visible to shopping agents.

Written By:

Jeremy Stewart

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