Thanks for being a loyal reader of Shopifreaks. As 2022 comes to a close, Shopifreaks is approaching TWO FULL YEARS of weekly publications!
Here are a few milestones to celebrate from this past year:
- Subscriber count grew by 375% from the start of the year.
- Open rates hovered between 40-50%.
- We partnered with BigCommerce in June as our exclusive sponsor. Thanks guys!
- We launched a Rewards Program in October. Which btw, thanks everyone for sharing your referral links and helping us grow. Here's yours: {$rh_reflink}
- I was able to connect with various members of the Shopifreaks community to guest on their podcasts and support their projects.
- This year we're doing the first-ever E-Commerce Predictions 2023 edition — which I hope becomes an annual tradition. If you're planning on submitting predictions this year, please do so soon. I'll start putting together the full article mid-December.
Overall it's been a great year for Shopifreaks, and I hope that you can say the same for your business. I look forward to growing the newsletter and our community together in 2023.
If there's anything I can ever do for you, give me a shout anytime or hit reply to any of my e-mails. Thanks again for being a Shopifreaks reader.
-PAUL
Intro
Media and big tech often paint a glowing portrait when it comes to reporting sales figures — but are this year's numbers actually something to be excited about?
In this week's edition I share newly released Black Friday results, big milestones reached by Walmart's e-commerce efforts, and more good news for Temu.
I also cover stories about Target's new e-commerce focused store formats, Amazon shutting down four of its recently launched services, and Etsy's upcoming category-specific domination plans for 2023.
All this and more in this week's 97th edition of Shopifreaks. Thanks for subscribing and sharing!
Poll of the Week đłď¸
“Will Chinese marketplaces give Amazon and Walmart a run for their money in 2023?”
âĄď¸ Click here to take the poll. ⏠ď¸
Last Weeks Poll Results: 68.8% of respondents believe that Twitter will finally conquer e-commerce under Elon Musk's leadership. [View Poll]
Stat of the Week đ
Consumers spent a record $9.12B online on Black Friday — up 2.3% from last year. — According to Adobe Analytics
So adjusted for inflation, it wasn't as good of a year? More on that in story #1.
Share this week's stat on Twitter & LinkedIn.
1. Black Friday Results
You saw from the Stat of the Week above that Black Friday sales produced some big numbers. Here are some other recently released figure from the holiday shopping weekend.
- Adobe reported that consumers spent a record $9.12B online on Black Friday — up 2.3% from last year.
- Online sales of electronics rose 221%, compared with an average day in Oct 2022.
- Smart-home items rose 271%.
- Audio equipment was up 230%.
- Sales of toys jumped 285%.
- Sales of exercise equipment increased 218%.
- BNPL purchases rose by 78% compared to the previous week.
- 48% of online sales came from smartphones, up from 44% in 2021.
- The most-purchased items on Black Friday included toys related to Fortnite, Roblox, Bluey, Funko Pop!, and Disney Encanto.
- Adobe Analytics expects the five days from Thanksgiving Day through Cyber Monday to generate $34.8B in online spending, up 2.8% from 2022
- Shoppers were predicted to have spent an additional $4.52B on Saturday, and $4.99B on Sunday.
- Adobe expects Cyber Monday (today) to be the seasonâs biggest online shopping day again — driving $11.2B in spending.
- Shopify reported a record-setting Black Friday with sales of $3.36B, a 17% increase over 2021.
- Mastercard reported that U.S. retail sales on Friday were up +12% YoY excluding automotive.
- And that in-store sales increased +12% YoY while e-commerce sales experienced sustained growth up +14% YoY.
- Sources: MediaPost, Shopify, Mastercard
The issue I have with the excitement around the figures above is that they do not account for inflation.
Just for fun I input the $9.12B figure being floated around by Adobe into the US Inflation Calculator, and when adjusted for inflation between now and last year, the figure comes to $8.29B…. which is shy of last year's $8.9B.
So did Black Friday sales grow by 2.3% or drop by 6.8%? I guess both are technically true depending on how you're selling it.
Either way — sales so far have been higher than I predicted, even when adjusted for inflation. I was doomy gloomy this year!
What other stats / reports have you seen? Hit reply to this e-mail or post them on the subreddit.Â
2. Target's new large-format stores
Target is introducing a new large-format store to better support the company's same-day omnichannel services like Order Pickup and Drive Up.
The new stores also includes five times more space for backroom e-commerce fulfillment than its traditional stores, as well as room for an expanded food and beverage selection.
The new large-format stores will stand at around 150k sq.ft., roughly 20k sq.ft. larger than its average store.
Earlier this year I reported that Target wants a bigger piece of the e-commerce pie. At the time, in June, e-commerce was responsible for around 20% of Target's sales, with more than half of that coming from same-day services like curbside pickup and the rest from shipping to homes.
However those sales were less profitable for the company than in-store visits, so target began making moves to chip away at the costs of fulfilling online orders including:
- Opening three more sortation centers
- Turning store backrooms into warehouses. (The new large-format stores builds on this.)
- Acquiring the delivery startup Shipt in 2017.
- Bringing down the average per unit digital fulfillment cost.
- Shortening the distance packages travel.
- Using delivery vehicles that can hold 8x more packages.
Basically Target is following in Walmart's footsteps of turning every location into a fulfillment center — which it should. Target and Walmart's existing retail locations are its biggest advantage against Amazon when it comes to winning at last mile delivery.
3. BigCommerce News (Sponsored)
Early holiday shopping trends to keep an eye on:
- Holiday sales are expected to grow 7%, surpassing $1 trillion for the first time
- 34% plan to use social media for holiday shopping
- 25% plan to use services like BNPL
Read more from BigCommerce's Early Ecommerce Insights.
BigCommerce Partner Awards celebrate our global community of partners for their impressive builds and excellent services and recognize top performing agency and technology partners for their extraordinary and innovative work for BigCommerce merchants.
The partner awards are a blend of application and data based categories evaluated by a team of BigCommerce judges. Award recipients are selected based on their commitment to customers, the impact of their solutions, and the exemplary use of the BigCommerce platform.
4. Temu is crushing it
In September, I reported that Pinduoduo launched its new U.S. online shopping site, Temu. The marketplace employs a cross-border model in which most products will ship from overseas, primarily from China, and take about 7-15 days to arrive.
Two weeks later I reported that Temu became the most widely used Android shopping app, ranking first among shopping apps in the Google Play Store, followed by Amazon and Shein.
Since then Temu has continued to crush it with more than 5.2M installs in the U.S., which represents its biggest market by a landslide at 97% of its users.
After becoming the #1 shopping app in the U.S., it then took the crown of #1 free U.S. iPhone app across all categories on November 12 and has since held onto the top seat, as well as the top free Android app in the U.S. for two weeks.
In addition to its cheap factory-direct prices which attract consumers, Temu has grown partially due to the apps gamification tactics. Users are encouraged to play games in the app, such as its viral fruit-growing game, and are encouraged to share deals with friends in exchange for free products.
The app also employs social cred strategies including displaying how many of a product has been ordered in total and in the last 24 hours. Walmart recently added a similar feature called Dynamic Search Results which indicate the most viewed and purchased items.
Last but not least, Temu shoppers can join group deals with strangers to secure deep discounts on premium items like expensive skincare products and iPhones — something they pulled from their parent company Pinduoduo's model — and partially what inspired the appâs name Temu, which is roughly short for âteam up, price down.â
Do you Temu? (Pronounced “tee-moo”.) Hit reply and let me know what you thought about the shopping experience and the products themselves.
I've not purchased anything on it yet, but I've been in Ecuador since it launched. However I'll probably order a few items in time for my December visit to the U.S. so I can judge firsthand.
So far I'll say that I'm impressed with the app's UI — from the full-size images that fill the guts of the product pages and the carousel style product variants and shipping options to the infinite scroll recommended products underneath and free shipping progress bar.
btw – Don't forget to take this week's poll and let us know if you think Chinese marketplaces will give Amazon and Walmart a run for their money in 2023.
5. Amazon shuts down four services
Amazon announced that it's shutting down three of its initiatives in India and one global project.
1) Amazon Food, the food delivery business it was trialing in the southern Indian city of Bengaluru, will be discontinued from Dec 29 onwards. The service launched in May 2020 and allowed customers to order from handpicked local restaurants and cloud kitchens.
2) The second service being scrapped in India is Amazon Academy, an online learning platform it launched for high-school students last year. The company said that it will wind down the edtech service in the country in a phased manner starting August 2023, and that those who signed up for the current academic batch will receive a full refund.
3) The third service being shut down in India is Amazon Distribution, its wholesale e-commerce website available to help kiranas (neighborhood stores), pharmacies and department stores secure inventory in Bengaluru, Mysore and Hubli. They didn't say precisely when the service will be discontinued.
4) Last but not least, Amazon is shutting down Wickr Me, the free encrypted messaging app that it acquired in June 2021 for an undisclosed amount. The services will end registrations for new users at the end of the year and cease operations on Dec 31, 2023.
Many are speculating that Amazon, which has deployed over $6.5B in its local business in India, is slowly scaling down its operations in the market.
Perhaps they see the handwriting on the wall in regards to what the Open Network for Digital Commerce (ONDC) and new regulation will bring to the e-commerce landscape in the future, and are hitting the breaks on their investment in the country now to avoid inevitable regulatory action in the future.
However it's also not unusual for Amazon to trial and scrap projects. In the past year alone, they've ended support for their bookstores, consumer cloud storage, primary care service, fabric shop, Alexa.com, Shopify competitor, and multiple upcoming fulfillment centers.Â
6. Walmart overtook Amazon for Black Friday discount searches
Some more unfortunate news for Amazon, Walmart took the top spot this year among shoppers who were searching online for Black Friday discounts.
According to advertising technology company Captify, which tracks more than 1B searches a day from websites globally, searches for Black Friday discounts on Walmart surged 386% YoY, pushing it ahead of Target, Kohl's, and Amazon.
Amazon was top of the list last year, but fell to fourth place this year as of Friday morning.
However this statistic isn't an indication that Amazon did any better or worse over holiday week than last year. The stat only has to do with the amount of discount searches on each retailer.
Last week I reported that Walmart has been on a rampage this year with developing its e-commerce including adding new shopping features, revamping their affiliate program, adding cashback for Walmart+ members, integrating AI-powered try-on tech, and more.Â
7. Etsy goes vertical
Etsy revealed that it is now big enough to take a more “vertical strategy” in 2023.
According to the company's CEO Josh Silverman, that means “treating certain types of products differently, as opposed to all categories having the same features, policies, and level of marketing attention.”
The strategy announcements were made during a Wall Street presentation last week during the 2nd Annual Needham Consumer Tech / E-Commerce Virtual Conference.
He went on to say, “I think we'll find that there are some areas where building category-specific features are going to be valuable. And we're now big enough. We've had so much opportunity in these horizontals that it's hard to prioritize anything for a vertical, but Home Furnishings alone is billions of dollars of sales on Etsy now. So just making Home Furnishings better starts to be worth investments in verticals.”
He mentioned features like taxonomy and browse views getting an upgrade.
EcommerceBytes noted that eBay has been taking a vertical approach for several years with focus categories in trading cards, sneakers, handbags, jewelry, and watches, while also developing category-specific features like its Authenticity Guarantee and the eBay Vault.
8. New e-commerce review rules in India
The Indian government released a new framework to curb fake and misleading reviews on e-commerce platforms, travel services, restaurants, and consumer durables.
Under the new rules:
- Platforms will be required to set up review administrators to moderate reviews, either manually or with automation, to filter out biases and restrict fraudulent reviews.
- Reviews will need to include the publishing date and star rating.
- Consumers should not be allowed to edit their reviews.
- Foul language is not permitted.
- Platforms should restrict authors giving fraudulent reviews from publishing reviews in the future.
- Authors submitting reviews will be required to verify their identity.
- Platforms will verify consumersâ identity from their email addresses, phone numbers, IP addresses or by using a Captcha system. (Not sure what that last one has to do with identity verification?)
- The newly released guidelines will also apply to third parties conducting reviews on the web.
The plan is first to start with voluntary moderation, and then progress to mandatory requirements if the growth of fake reviews continues
The guidelines are an outcome of a committee that the consumer affairs department constituted in June to develop the framework, which included input from e-commerce companies, industry associations, consumer organizations and law chairs.
How are e-commerce companies reacting?
- Zomato welcomed the guidelines.
- Flipkart already enabled a model under which only a verified buyer can post a review of the product.
- Amazon is expanding its legal efforts to shut down fake review brokers.
I applaud the efforts of the Indian government to crack down on fake reviews. They are bad for consumers and create an uneven playing field for small businesses who choose to play by the rules.
btw – speaking of honest reviews, if you're enjoying the newsletter, can you leave me one on Google? Thank you!
9. Other e-commerce news of interest
eBay sellers are reporting that local pickup is being offered as a delivery option in their listings even though they didn't turn on the setting. Sellers are having to create new listings to remove the shipping method, which costs them additional listing fees, however they do so because otherwise they'd be obligated to fulfill local delivery, which is impossible.
Hestia Capital Partners LP is pushing Pitney Bowes Inc to re-evaluate its capital allocation and e-commerce strategy. The hedge fund, which owns a 6.9% stake in the company, has suggested a possible sale of an underperforming segment to focus on cash-generating segments like Presort Services, its mail aggregation business, and SendTech Solutions, its postage meter business.
New research from the University of Florida revealed that many consumer products sold on Amazon have used deceptive marketing practices to raise prices while pretending to offer a discount. (It took a study to determine that? I thought everyone already knew that went on.) Regulations prohibiting deceptive pricing require that sellers use truthful price comparisons, and consumers have won class-action lawsuits against other retailers in the past for similar tactics.
Amazonâs UK tax bill jump could jump ÂŁ29M next year due to changes to business rates in the country that are scheduled to hit warehouses and online retailers the hardest. New rates will be based on property values, which means that online retailers will see a tax rise while taxes could fall for physical stores.
Shopify is under heat for resisting calls to cut ties with Libs of TikTok, a controversial site accused of being anti-LGBTQ2 that sells merchandise plastered with allegations of grooming children. A Shopify spokesperson said that the merchant is not currently in violation of Shopifyâs Acceptable Use Policy.
Bold Commerce appointed Peter Karpas as their new CEO. Karpas joins Bold with over three decades of experience in e-commerce, payments and fintech, having most recently served as SVP, Global Head of SMB Products at First Data (now Fiserv).
JD.com is cutting the salaries of more than 2,000 senior leaders by up to 20% in order to allocate $1.4B to help rank-and-file employees buy homes. The move is part of China's “common prosperity” campaign to reduce economic inequality in the country.
WooCommerce and Coinbase are teaming up to allow merchants to accept crypto payments through Coinbase Commerce. Woocommerce merchants are now able to accept Bitcoin, Bitcoin Cash, DAI, Ethereum, Litecoin, Dogecoin, or USD Coin.
Amazon's customer satisfaction has slipped with shoppers, according investment firm Evercore ISI who conducts yearly surveys. The number of Amazon customers who said they were âextremelyâ or âvery satisfiedâ with the company in a recent survey fell to 79% in 2022 from its peak of 88% a decade ago. I think that what actually happened is that Amazon set the bar so high that customers became entitled. 88% satisfaction represented the novelty shopping experience that Amazon offered a decade ago — which has now become the norm across most major retailers.
10. Seed rounds, IPOs, & acquisitions
Popup, a no-code platform for the creation, management and hosting of online stores using a drag-and-drop visual editor, raised $3.5M in a pre-seed round led by Accel. The platform, started by two former Shopify employees, launched in beta in September and will be open to the public in Q1 2023.
PayZen, a healthcare financing platform that pays hospitals upfront for patient invoices and offers patients zero-interest, fee-free payment plans, raised $20M in equity and $200M in credit facility led by 7wireVentures. The company will use the funds to scale its operations and product development.
Atoa Payments, a London-based payments startup that helps UK merchants cut down on card processing fees, raised $2.2M in pre-seed funding in a round led by Leo Capital and Passion Capital. Atoa charges a fixed percentage fee billable to merchant each months that is up to 70% lower than debit cards and does not have hardware rentals, service fees or PCI attestation of compliance charges.
PhonePe, an India-based payments company, will acquire ZestMoney, a BNPL provider that has struggled to raise fresh funds from investors. The size of the deal was not reported, but it's likely to be a distress sale that could value ZestMoney much lower than its previous financing round in 2021.
What'd I miss?
Shopifreaks is a community effort and I appreciate your contributions to help keep the rest of our readers in the know with the latest happenings in e-commerce. Whenever you have news to share, you can e-mail [email protected] or hit reply to any of my newsletters.
You can also mention @shopifreaks on Twitter or submit posts to r/Shopifreaks on Reddit, and I'll curate the best submissions each week for inclusion in the newsletter.
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See you next Monday,
PAUL
Paul E. Drecksler
www.shopifreaks.com
[email protected]
PS: What do you call a factory that produces quality goods? … A satisfactory.