Did you see our 2023 E-Commerce Predictions special edition last week? It includes predictions from 20+ e-commerce leaders.
If not, check it out and let me know what you think. Next year at this time, we'll take a look at who was right and who was wrong!
🎉 Let's celebrate…
Guess what? This is the 100th Edition of the Shopifreaks E-commerce Newsletter!
Two years ago, I couldn't find a newsletter that catered to the type of e-commerce news I was interested in keeping up with.
Other popular newsletters did a great job of keeping up with big tech and major business news, but they rarely covered the smaller e-commerce stories that were important to my business.
To fill this gap in the market, I launched Shopifreaks.
What started out as a side project has blossomed into an industry leading weekly curation of e-commerce news that has grown beyond my expectations. And I'm just getting started! Thanks for your support with the project.
This week I've got stories for you about open source map projects, text messaging-based e-commerce, and banning Chinese / Russian apps.
I also cover Amazon's secretive plastic pollution numbers, Shopify's major lease break, and FedEx's new Happy Returns competitor.
All this and more in this week's 100th Edition of Shopifreaks. Thanks for subscribing and sharing!
Poll of the Week 🗳️
“How much more would you pay for shipping online orders to avoid using plastic shipping materials?”
➡️ Click here to take the poll. ⬅️
Last Weeks Poll Results: I asked if Shopify should ban Libs of TikTok from selling on its platform, and 71.8% of survey respondents voted, “No, let them stay.” Results of his small poll could definitely have been influenced by who initially discovered and retweeted it. [View Poll]
Stat of the Week 📈
99% of Amazon sellers intend to sell on other marketplaces in 2023, including Google Shopping, Facebook Marketplace, and Walmart. — According to Capterra's 2022 Amazon Seller Survey.
Amazon has increased their fulfillment fees by over 30% since 2020, which is causing some sellers to search for greener pastures, while others are simply betting that they will be able to grow more quickly if they sell through other marketplaces.
Share this week's stat on Twitter & LinkedIn.
1. Watch out Google Maps!
Microsoft, Amazon, Meta, Linux, and TomTom are teaming up to create a map solution that they hope will rival Google Maps.
The project, known as Overture Maps Foundation, aims to allow companies to contribute to develop interoperable open map data that is “complete, accurate, and refreshed as the physical world changes.”
Most third-party developers rely on Google Maps data for their projects, and companies recognize that Google's domination is a problem. The world needs a high quality open source alternative.
The Overture Maps Foundation will use existing data from OpenStreetMap (an established community-created alternative to Google Maps) and city planning departments, as well as employ machine learning and AI to develop high quality, open map data.
If successful, the implications could be huge in regards to leveling the playing field for small projects and startups who rely on mapping data to power their feature sets.
Overture will release its first map in early 2023, which will include basic layers like buildings and roads. From there, they'll work to improve coverage, resolution, and accuracy of existing data, as well as introduce new layers like places, routing, and 3D building data.
Neither Google or Apple are part of the project, which both offer their own mapping services.
2. Text to shop on Walmart
Last week Walmart launched a new Text To Shop feature for iOS and Android phones that allows customers to text the retailer and shop via SMS with their Walmart account.
After enrolling in the service, Walmart initiates a text chat on their phone explaining how to get started. From there they can add items from Walmart's full product selection to their cart directly in the chat, swap out items, and repurchase products they buy frequently.
Once they're ready for checkout, the customer can pick a time for pickup or delivery, all within the text chat, unless they opted to switch over the the traditional checkout experience on the app.
Currently the service is only offered through SMS, however I could certainly see them integrating the feature into other messaging apps like WhatsApp or Telegram in the future.
The service was built by Walmart's incubation division Store No8, in partnership with Walmart's Global Tech team.
I tried it out on my Android phone via Google Voice (which I use for SMS), and it works pretty well. Would I use it moving forward instead of searching for products directly on the app? Probably not. But to be fair, I hate texting.
However I can see how the feature is a step in the right direction of familiarizing customers with interacting with Walmart's chat bots, which can open a lot of doors in the future.
Alexa did not comment on the news.
3. BigCommerce News (Sponsored)
BigCommerce announced its plan to reduce its cost structure and accelerate its path to profitability. The planned restructuring aims to move forward its adjusted EBITDA breakeven timeline from mid to late 2024 to the fourth quarter of 2023.
BigCommerce will prioritize its strategic focus, investments and resources to build upon its expanding leadership position in enterprise ecommerce. Already recognized as a leader in composable commerce and omnichannel selling with a full-featured enterprise B2C and B2B offering, BigCommerce will focus its go-to-market efforts on the enterprise business, where it sees the strongest unit economics and the opportunity for long-term, profitable growth.
As part of this restructuring plan, BigCommerce will reduce its sales and marketing expenditures in non-enterprise initiatives and its total workforce by approximately 13% across employees and contractors.
“This focusing of our spending and resources, which impacts all of our teammates, was an incredibly difficult decision to make. We are implementing changes that will enhance the strength of our financial profile against the backdrop of a challenging economic environment. It will also drive focus on the areas we view as having the strongest product market advantage and best long-term financial performance,” said Brent Bellm, CEO of BigCommerce.
“We are sadly parting ways with some incredibly talented people whom we have grown to cherish as friends and colleagues over the years. We will do our best to support them through the transition to find their next opportunities.”
BigCommerce expects the workforce changes to be largely complete by December 31, 2022, and estimates the aggregate costs associated with the reduction in force to be approximately $4.2M to $4.6M. The company will provide detailed revenue and non-GAAP operating loss guidance on its February 2023 earnings call.
4. Office and warehouse space updates
Shopify has decided not to move into its 254,000 square-foot space at The Well, a newly built, mixed-use development in Toronto.
Shopify originally announced its intentions to occupy the space in 2018, with a 15 year lease and an option to expand to 434,000 square feet, but has since shifted toward being a remote-first company.
It's unconfirmed whether Shopify would have to pay a break fee for backing out of the lease in the building co-owned by Allied Properties REIT, where it was set to be the anchor tenant. However I would imagine so.
Meanwhile over in warehouses, Amazon, which dialed back its logistics expansion plans earlier this year, still added roughly half of Walmart's distribution network in 2022 and will keep adding in 2023.
Amazon added roughly 79M square feet of warehouse space this year and plans to add another 63M more next year, according to Wells Fargo analysts and MWPVL International.
Between 2020 and 2022, Amazon added more than 200M square feet of warehouse space, doubling its physical footprint in the U.S. — which resulted in $2B in unused space and another $2B in overstaffing — however CEO Andy Jassy commented that he would do it again in hindsight.
The recent new square footage went mainly to last-mile delivery facilities, which indicates Amazon's desire to work towards faster hyper local fulfillment solutions.
5. Banning TikTok again?
TikTok is currently facing congressional efforts to shut down its operation in the U.S., a bi-partisan effort led by Florida Senator Marco Rubio.
The bill addresses concerns over the app’s ties to ByteDance, its China-based parent company, and the Chinese government’s reputation for surveillance.
The proposed banning law, titled “Averting the National Threat of Internet Surveillance, Oppressive Censorship and Influence, and Algorithmic Learning by the Chinese Communist Party Act (ANTI-SOCIAL CCP Act)” aims to protect Americans by blocking and prohibiting transactions from Chinese or Russian social media companies.
If this sounds familiar, you might recall that the Trump administration attempted to ban TikTok back in 2020 on similar grounds, but a U.S. District Judge ruled that Trump overstepped his authority in using his emergency economic powers to ban the app.
This new bill would attempt to follow through on Trump's desires to ban the app, however, it would go through Congress to do so.
This news isn't slowing down TikTok, which is currently ramping up its e-commerce efforts in the U.S. by inviting more stores to join its marketplace.
In other TikTok news, creators received their first two payments from TikTok's new ad-revenue sharing program Pulse, which splits the ad revenue 50/50 with creators across categories like cooking, fashion, and beauty.
Earnings have been lower than expected for some creators.
RPM resulted in payouts ranging from pennies to $17, according to eight creators who shared their payment information with Insider. Most saw Pulse RPMs in the $6 to $8 range, which is competitive with YouTube, one creator's RPM was closer to $3.
The program is still new, so these anecdotal stories of payments aren't to say that this is what TikTok creators can expect in the future as the company works to improve Pulse and onboard more advertisers.
6. FedEx Consolidated Returns
FedEx is launching a new consolidated returns program in the U.S. as a means of offering a low-priced easy e-commerce returns option for merchants and shoppers.
Customers who purchased from participating merchants will be able to drop off the items they wish to return – without a box or label – at approximately 2,000 FedEx offices, and the items will be consolidated with other returns and sent back to the merchants.
According to data from Forbes, consumers now rank in-person box-free returns as the number one preferred method for online returns, while mail-in returns dropped to the fourth-ranked position.
I can vouch for that as a consumer. I personally find it easier to drop off an item at a nearby return location than find a box, print a label, and mail it — which usually involves dropping the package off at the post office or a FedEx / UPS location anyway.
UPS offers a similar no-box, no label return option for retailers, and has served as a drop-off option for Amazon returns for many years. Amazon also lets consumers return items to Whole Foods, Kohl's, and some Staples locations.
One of my 2023 predictions was that Walmart launches a similar service for retailers to compete with PayPal owned Happy Returns, beginning with retailers who sell on its marketplace.
7. Walmart vs Inflation
Walmart's CEO Doug McMillon said in a televised interview with CNBC that inflation will persist into the new year, especially for food prices.
“Dry groceries and consumables is where we’re seeing the most stubborn and persistent inflation, mid-double-digit inflation, and we’re not hearing from our suppliers, looking forward, that that’s going to come down soon.”
Although it was reported that inflation fell two percentage points from its June peak of 9.1%, the present level is still running at more than 3X the Federal Reserve's long-term target of 2% inflation.
During the last couple of quarters, much of Walmart's growth has come from customers with more than $100k in household income, and the company expects that to be the case for some time as consumers become even more price sensitive.
Shares of Walmart are within 10% of their all-time high set in April, while Amazon's stock has been cut in half and is nearing a three-year low.
8. Plastic Waste & Carbon Removal
Amazon said that it produced 214M pounds of plastic waste last year, but the nonprofit group Oceana says it actually produced more than three times as much.
According to a report by Oceana, Amazon's packaging waste ballooned to 709M pounds globally in 2021 — which is about the weight of 70,000 killer whales — representing an 18% increase over their estimate for 2020.
Historically, Amazon has been secretive about its numbers surrounding plastic pollution and has repeatedly declined to disclose its plastic packaging use, even after investors voted in favor of demanding it — up until last week, two days before Oceana's report came out.
Oceana’s senior VP for strategic initiatives said that Amazon's low estimate is because it only accounts for plastic packaging used for orders sent through Amazon-owned and operated fulfillment centers, which account for a fraction of Amazon’s total sales, whereas Oceana's estimate considers all sales facilitated by Amazon. Two sides of the same plastic coin I guess, although one side looks a lot better in the news.
Meanwhile in the carbon removal space, Stripe and Shopify have committed to spend $11M to support projects to remove carbon dioxide from the atmosphere and oceans in the latest round of the Frontier fund set up to develop the technology.
Frontier was set up by Stripe, Shopify, Meta, Alphabet and McKinsey Sustainability, with the goal of investing $925M on carbon removal credits between 2022 and 2030.
In this latest round, Shopify and Stripe have committed to buy 7,011 tonnes of credits from seven companies for a total of $3.5M, with prices ranging from $227 to $1,318 per tonne depending on the project, and an additional $7.5M contingent on projects reaching technical milestones.
9. Other e-commerce news of interest
Meta was the advertising platform of choice for U.K. online retailers in 2022, according to research by Juni, however that could change in the near future. Facebook and Instagram's position eroded over the year, falling from 70.5% in January to 60.9% in November.
Job postings for Canadian tech roles have dropped 32% since May, according to Indeed. Job postings across all sectors slipped 9% over the summer and increased slightly since September.
PayU, the Netherlands-based payment service provider, is expanding its digital payments business in Central America, with plans to launch in Guatemala, Honduras, El Salvador, and Costa Rica. The company is also exploring how to best offer credit to consumers in emerging markets, potentially through BNPL offerings.
A UK man ordered a MacBook Pro from Amazon and was sent five pounds of dog food instead. 15 hours of calls to Amazon later, he was offered no assistance until the media got hold of the story. Amazon has since apologized and processed a full refund. I'd be invoicing for those 15 hours!
Drupal, the open source CMS popular with enterprise developers, released Drupal 10.0, a version that integrates more than 4,000 incremental improvements that were contributed by over 2,000 individuals working at 600 different companies. The new release benefits from Symfony 6 framework for the open source PHP language, enabling improved resilience and performance.
Hostme, a provider of restaurant management software, launched a new integration with Wix to allow restaurant owners to integrate their automated restaurant reservation and waitlist management system. Hostme's platform helps restaurants manage their tables, reservations, staff, and waitlist, from one central dashboard.
Uber Eats partnered with Cartken, a U.S. robotics company, to provide sidewalk robots to deliver food. The robots are electric, with a trunk that can hold up to two dozen pounds of cargo, and embedded cameras that can detect obstacles in their path.
Gilimex, a Vietnamese manufacturer of warehouse storage systems, is suing Amazon for $280M, claiming that they abruptly scaled back orders after it boosted capacity, leaving the manufacturer saddled with excess production capacity and raw materials. Gilimex said it was a key partner of Amazon for the past 8 years, investing tens of millions of dollars in manufacturing facilities to build the steel-and-cloth storage pods used to organize inventory in Amazon warehouses.
Amazon is making changes to its business practices to resolve two European antitrust investigations next week involving its use of nonpublic data from independent merchants who sell goods on its platform. The investigations concern Amazon using competitively sensitive information to gain advantage over other market participants, which Amazon is agreeing not to do anymore.
Goldman Sachs is planning to layoff thousands of employees in preparation for a difficult economic environment. The company had 49,100 employees at the end of Q3 2022, which they plan to decrease by around 4,000.
The Australian government is planning new crypto regulations in 2023 as part of a broader move to modernize local financial and payments infrastructure. A consultation paper will be published early next year, which will determine which cryptocurrencies should be regulated and how.
Rakuten France has unveiled a new integrated payment solution in partnership with Mastercard and Marqeta called Club R Pay, which facilitates purchases for the 12M members of the Club R loyalty program on over 2,000 websites. The solution allows customers to pay for purchases within the ecosystem without entering their card details and automatically receive their Rakuten rewards.
Walmart's drone delivery service is now available for customers at 22 stores in Arizona, Texas, and Florida. This rollout is part of Walmart's plans to expand its DroneUp network to reach four million additional households across six U.S. states.
Couger, a Tokyo-based AI startup, is launching a virtual human agent named Rachel to FamilyMart, with plans to deploy her across 5,000 stores by the end of 2023. Rachel is capable of two way voice communication that is tailored to individual FamilyMart store manager's attributes and characteristics and operates on a tablet device installed in the store.
SoFi, the San Francisco-based fintech and online bank, is rolling out a new BNPL product, allowing members to split a purchase between $50 and $500 into four interest-free payments. The company reported that it has 4.7M members, 61% higher than a year earlier.
10. Seed rounds, IPOs, & acquisitions
Updraft, a UK-based financial app that combines algorithms, open banking, and credit references data to build a complete picture of a person's financial profile, raised £108M in an equity round led by NatWest, and £160M in debt from Hampshire Trust Bank. The company plans to leverage the debt capital to build a £1B business over the next five years, initially focusing on the UK and later expanding into new markets.
Revend, a Belgian startup that offers AI-powered tools to help e-commerce companies monitor, detect and pinpoint revenue-impacting issues, raised €1M in a round led by Pitchdrive. The new funds will be used to expand their team and prepare for a full release to the broader market.
Sileon, a Sweden-based BNPL platform, raised an additional $1M from Visa, in addition to the $1.7M round it announced earlier this year. Through the partnership, Visa can build their own flexible BNPL offering that is not limited to card transactions.
Kuona, a Mexico-based SaaS company that uses machine learning to show businesses which promotions bring the most ROI, raised $6M in a round led by Cometa, bringing its total amount raised to $7.2M. The new funds will be used for expansion of its team and geographical presence in Latin America, the U.S., and Europe.
Sweep, a no-code toolkit for building sales playbooks in Salesforce's CRM software, raised $28M in a round led by Bessemer Venture Partners and Insight Partners. The tools allow users to create and visualize CRM processes, rules and automations with drag-and-drop tools while the platform constructs the necessary backend infrastructure in Salesforce.
Pack, a San Diego-based frontend headless commerce platform that allows brands to optimize their digital storefronts, raised $3M in a round led by Norwest Venture Partners. The company will use the funds to expedite its growth, with a focus on its engineering, product, design, and go-to-market strategies.
Plugo, a Singapore-based e-commerce platform that enables D2C brands to build a website, setup a payment system, and manage marketing, shipping, warehousing, and logistics, raised $9M in a Series A round led by Altos Ventures. The company will use the funds to hire for its R&D team and engineers, adding to its 30 person team, and plans to focus on the Indonesian market before expanding into other parts of SEA.
Beni, a free browser extension that assists shoppers in finding resale listings for items they are looking for, raised $4M in a round led by Buoyant Ventures, bringing its total amount raised to $5M. The company taps into over 30 resale marketplaces to find similar items on resale while a customer is shopping.
MessageGears LLC, a customer engagement startup that provides a platform for brands to send personalized marketing emails, text messages, and push notifications to customers, raised $62M in a round led by Long Ridge Equity Partners, bringing its total amount raised to $80M since launching in 2011. The company will use the funds to develop more features and grow its international presence, potentially through acquisitions.
Fashion Cloud, a German-headquartered B2B data startup that offers a platform for over 600 fashion brands and 20,000 retailers to exchange data and order products, raised €25M. The funds will put towards product development, such as automated reorder suggestions and the ability for brands to share sustainability information, and international expansion.
Contlo, a Delaware and Bengaluru-based customer data and marketing platform for e-commerce and D2C brands, raised $3.5M in a round led by Kae Capital, just 8 months after raising $800k in pre-seed funding. The company will use the funds to strengthen its product capabilities, R&D, expand its go-to-market operations, and also its partnership program.
Checkout.com slashed its valuation from $40B to $11B, reacting to the current macroeconomic conditions and market's sentiment towards big tech. Employees were informed of the internal valuation cut last month in regards to exercising their stock options, which were previously set at $252 per share and have now been reduced to $65.
What'd I miss?
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See you next Monday,
PAUL
Paul E. Drecksler
www.shopifreaks.com
[email protected]
PS: I met an award winning farmer yesterday. He was out standing in his field.