This week's edition covers all the major players:
- Amazon's deal with Facebook and Instagram
- TikTok sunsetting its Creators fund (and what's to replace it)
- Google's new deal hub & discount code feature
- Q3 earnings reports from your favorite e-commerce platforms
- Wix's new AI chatbot and SEO tech
- The launch of Shopify Tax Platform
- OpenAI's new GPT marketplace
- BigCommerce's pivot towards smaller
All this and more in this week's 147th Edition of Shopifreaks. Thanks for subscribing and sharing.
PS: I'm proud to share that Shopifreaks surpassed 7,000 subscribers this week! At the time of sending this e-mail, we're sitting at 7,118 subscribers. Thanks again for sharing this publication with your network and helping us grow.
Stat of the Week 📈
Shopify shared in a recent earnings call that 58% of its merchants prefer to use Shopify Payments, their in-house payment solution. President Harley Finkelstein said that this is an all-time high in penetration rate. – According to Shopify
It's important to note that merchants are charged up to 2% per transaction if they choose (or are required in some cases) to use a third-party payment processor.
1. Buy Amazon products without leaving Facebook or Instagram
Amazon partnered with Facebook and Instagram to enable on-platform commerce, and share data for ad targeting.
I'm surprised this hadn't happened years ago, but here goes…
➡️ OLD WAY: Meta ads would link to an Amazon product page. The purchase would happen on Amazon.com‘s website or app.
➡️ NEW WAY: User clicks on Amazon ad and is shown a stripped-down version of the Amazon product page with a prominent “Buy with Amazon” button.
Other things to note:
1) The new experience includes brands using Buy with Prime.
2) Customers can connect their Amazon accounts to Meta to bring all their saved info (payment info, shipping, etc) to the transaction without ever leaving Meta's platform.
3) It's optional. Customers can also continue to Amazon's website or mobile app if they choose.
An Amazon spokesperson said in a statement, “For the first time, customers will be able to shop Amazon’s Facebook and Instagram ads and check out with Amazon without leaving the social media apps. Customers in the U.S. will see real-time pricing, Prime eligibility, delivery estimates and product details on select Amazon product ads in Facebook and Instagram as part of the new experience. In-app shopping with Amazon is available for select products advertised on Facebook or Instagram and sold by Amazon or by independent sellers in Amazon’s store.”
The move to integrate Amazon into its apps comes at a time when Meta is still seeking to boost its ad revenue following the challenges posed by Apple's iOS privacy changes in 2021.
This integration with Amazon bypasses those Apple restrictions and allows for conversion tracking since the transaction is taking place within the Facebook or Instagram app. It follows a similar integration with Pinterest that has reportedly been going well.
Overall a win-win-win integration for Meta, Amazon, and advertisers. Looks like Team USA Tech is going to have to team up to create a cohesive advertising and shopping experience that TikTok offers on its own. Meta should create a similar integration with Shopify merchants.
2. TikTok shuts down Creator Fund
TikTok’s $1 billion creator fund will come to an end on December 16th for creators in the US, UK, Germany, and France. TikTokers in Italy and Spain aren't' affected by the change for the time being.
The creator fund was originally introduced in 2020, with the company promising to payout $1B over three years to creators making viral content.
TikTok didn't respond to questions about whether it had paid out all of the $1B. However the fund was infamous for its low payouts — sometimes just a few dollars for millions of views. So it definitely begs the question how much of that fund was actually spent.
Monetization isn't over for TikTok creators though just because the creator fund has seen its day. In February, TikTok introduced a new monetization method called the Creativity Program, which it said would result in up to 20x higher payout.
Unlike the original fund, the Creativity Program requires creators to make videos longer than one minute. Earnings are based on views and other engagement metrics.
TikTok also offers an in-house affiliate program for creators to earn revenue on product sales within TikTok Shop on a commission basis.
And of course, creators are free to enter into sponsorship deals with companies on their own accord.
3. Google hub for shopping deals
Google is launching a dedicated hub within Search for shopping deals, designed to help users source the latest shopping deals and bargains from retailers. The hub aggregates discounts from big-box stores, D2C brands, luxury multi-brand retailers, designer labels and local stores.
In a blog post, Google wrote, “We’re introducing new ways to help you shop those great prices: A dedicated deals page now organizes millions of promotions from thousands of brands and retailers in one place, while new features in Chrome and Search can help you easily keep an eye on prices.”
In addition to the deals hub, Google is now offering discount code hunting and price tracking within the homepage of Chrome.
Now when you open a new tab on Chrome in desktop, it'll show you products you recently viewed on shopping sites in a “Resume browsing” card, and let you know if an active promotion is available.
Or when you visit a product page on a shopping site, you can click the new “Discount” tag icon in Chrome to see available coupon codes from the site you're visiting.
That's not great news for PayPal's Honey extension or sites like RetailMeNot, which specialize in discount code aggregation.
Other new Google features this week include:
- US businesses can now add a small business attribute within Merchant Center.
- Google updated its knowledge panel in several countries to show additional info on businesses such as current deals, shipping & return policies, ratings, and reviews.
- Merchants can create and manage product images using Google's new AI-powered Product Studio.
4. E-commerce Earnings Q3
Q3 earnings are officially out for most e-commerce companies, and the prognosis is positive. Here's a recap of earnings summaries from major e-commerce players.
- Amazon recorded its highest operating income ever in Q3, growing 343% and bringing in $143.1B.
- eBay revenue grew 5% YoY, up $2.5B from 2.38B in Q3 2022. GMV grew 2% YoY reaching $17.99B in Q3.
- Squarespace reported total bookings of $267M, representing an 18% increase YoY for Q3, as well as an 18% increase in total revenue to $257.1M, compared to $217.7M in Q3 2022.
- Affirm's GMV rose 28% to $5.6B, which allowed net revenue to jump 37% to $496.5M in Q3. The company's net loss narrowed to $171.8M, down 32% from a loss of $251.3M last year.
- Shopify hit $1.7B in total revenue in Q3, a 25% YoY increase that translates to 30% when accounting for the sale of its logistics business. The company posted $718M net income during Q3, compared to a $159M loss during the same period last year.
- Lightspeed saw total revenue climb 25% YoY during Q2 of fiscal 2024 as it pulled in more than $230M. The company also posted a net loss of $42.5M, marking its lowest loss in 10 quarters, and a big improvement to the nearly $80M it lost in the same period last year.
- BigCommerce revenue was $78.0M in Q3, up 8% YoY. Total annual revenue run-rate as of Sep 30th, 2023 was $332.2M, up 9% compared to Sep 30, 2022.
- Wix posted earnings of $1.10 per diluted share, compared with 6 cents per share a year earlier. Revenue for Q3 grew 14% to $394M.
- Other companies should report their Q3 earnings soon including Best Buy (Nov 21), Chewy (Dec 6), Costco (Dec 14), Target (Nov 15), and Walmart (Nov 16).
5. Wix adds new AI tech
Wix released a conversational AI chat that meets users the moment they sign up and collects info about their businesses through dynamic questions and tailored follow-up questions.
New users participate in the dialogue, and then the AI chat formulates recommendations for the essential components required to construct their online business profile, website template, commerce, and other applications.
The level of detail users provide in their responses directly influences the degree of personalization in the final results. For example, the AI chat bot will ask a user about their target audience and then create sample blog posts for them.
In other Wix AI news, the company released an addition to its built-in SEO tools.
The new AI Meta Tag Creator enables Wix users to instantly generate tailored title tags and meta descriptions based on their page data, ensuring each page's content is accurately represented and optimized for search.
The AI Meta Tag Creator offers suggestions for title tags and meta descriptions that adhere to SEO best practices, work well with different Wix page types, and address various types of search intents.
6. Shopify launches Tax Platform
Last year Shopify launched Shopify Tax as a solution for tax collection within the US, but it left a void in international compliance.
To fill that void, the company launched Shopify Tax Platform, an enterprise solution that integrates your preferred tax service directly into Shopify for international compliance.
Shopify wrote on their blog, “In the past, some retailers felt that choosing Shopify to power their business took away the agency to choose the tax service of their choice. Today, we’re bringing more flexibility to the table with the launch of the Shopify Tax Platform.”
Vertex, a Pennsylvania-based global provider of tax technology solutions, was the first service to partner with Shopify Tax Platform, but more partners are on the way.
Bobby Morrison, Chief Revenue Officer at Shopify, wrote, “Together, Vertex and Shopify are expanding on the value we bring to enterprise retailers, empowering companies to transact, comply, and scale with confidence—however and wherever they do business.”
7. OpenAI offers marketplace and cheaper prices
At its recent event in San Francisco, CEO Sam Altman announced that OpenAI is launching a marketplace for GPTs, which are AI agents (apps / plugins) that enhance ChatGPT's capabilities through APIs and allow the large language model to perform specific tasks such as booking flights, teaching math, or designing stickers.
Later this month, the GPT Store will launch where people can share their GPTs and earn money based on the number of subscribers.
It's a renewed effort from the company's attempts to build an ecosystem of ChatGPT plugins earlier this year.
OpenAI did not yet comment on whether developers can set their own prices for GPTs, or how much of a cut OpenAI will take.
In addition to the marketplace, OpenAI announced a new GPT-4 Turbo model that offers APIs with vision and image modalities, as well as answers with context up to April 2023.
Plus, the new version accepts a lot more input. Earlier versions limited you to about 3,000 words, but GPT-4 Turbo accepts up to 300 pages in length, which means you could ask it to summarize an entire book.
At the same time, OpenAI slashed the cost by over 50% for its 2 million developers. GPT-4 Turbo input tokens are 3x cheaper than GPT-4 at $0.01 and output tokens are 2x cheaper at $0.03.
To encourage development, OpenAI matched Google and Microsoft's offers to cover any legal cost incurred by claims around copyright infringement for enterprise users.
ChatGPT launched one year ago and currently has 100M weekly active users, according to Altman.
8. Is BigCommerce SmallCommerce now?
BigCommerce is looking a little smaller in more ways than one.
FIrst off, BigCommerce let go of 7% of its workforce last week across all teams within the company. In their recent earnings call, CFO Daniel Lentz said the will also be cutting back on sales and marketing spending. (That'll help turn things around.)
Share prices fell 12% after the news and have hovered around mid-$8.00s since, down from their high of $130.98 in August 2020.
This is BigCommerce's second major layoff in the previous 12 months. Last December, the company laid off 13% of its workforce.
Aside from getting a little smaller in company size and share price, BigCommerce is also shrinking the size of business it hopes to cater to.
BigCommerce is launching an initiative with SWK Technologies, Acumatia, and Avalara to create a new online business solutions stack aimed at helping small and medium-sized businesses and mid-market brick-and-mortar retailers establish an online commerce presence.
The tech stack combines BigCommerce's e-commerce platform, Acumatica's ERP platform, Avalara's tax automation solution, and SWK's integration expertise to help streamline operations for small businesses.
Is the tech stack alone enough to attract small business owners, or at this point is BigCommerce too far down the pathway of “enterprise / corporate / B2B” branding to resonate with small business owners?
Aside from the messaging, why the shift? It wasn't but one year ago on an earnings call that executives signaled that they will shift sales and marketing dollars to enterprise sales, where BigCommerce said it sees “the strongest unit economics and the opportunity for long-term, profitable growth.”
That didn't last too long.
9. Other e-commerce news of interest
WhatsApp confirmed that it might display ads on the platform alongside the app's Status feature, which is like Instagram Stories, as well as various other places within the app. Whatsapp head Will Cathcart said that the inbox and messaging experience would continue to be ad-free without payment, but that Channels could charge people to subscribe, and the owners could promote ads for it within Channels.
Amazon is offering pre-Black Friday discounts on products from brands like Lancôme, Lego, Peloton and Yeti from Nov. 17 to Nov. 27. Shoppers can receive personalized discount notifications via Alexa up to 24 hours in advance on eligible items within their Wish List, Carts, and Save For Later lists.
Automattic is shifting the majority of Tumblr's workforce to other areas of the company in light of the site's continued financial woes. 139 workers will be moved to other projects at the company including WordPress.com, WP DIP, Day One, Pocket Casts, WooCommerce, and other apps including its recently acquired Texts.com.
According to Shopify president, Harley Finkelstein, Gen Z will be the biggest spenders this holiday season. He noted that Gen Z actually want to complete the purchase right there on the spot, so Shopify is trying to empower that with its tech.
Commercetools and PayPal teamed up to offer a wider range of payment options for customers via payment platform, PayPal Braintree. The new integration allows commercetools' customers to work with multiple payment providers, acquirers, and banks to optimize their customers' experiences.
Temu has overtaken Shein in Japan and South Korea in the shopping app rankings. Temu is now available in 40+ countries and generates more than $1B of monthly transaction value.
When the FTC filed an antitrust lawsuit against Amazon in September, it accused the company of “deliberately increasing junk ads that worsen search quality.” However Insider found that Apple's product pages have been kept relatively clear of unrelated ads, signifying an arrangement between the companies.
TrueLayer, a UK-based open banking payments network, is now available in the Shopify App Store, allowing merchants to integrate instant bank payments into their websites. TrueLayer's payments do not require manual data entry; customers' details auto-populate directly from their bank account, lowing the possibility of payment failure.
Amazon launched a new virtual care service that allows Prime members to get quick access to a health care provider through a program that costs $9/mo or $99/year. The announcements arrives less than a year after Amazon acquired One Medical for $3.9B, which has medical offices in more than 20 markets.
Google Workspace is now charging $7.20 per user per month instead of $6 if you sign up through Squarespace following the acquisition of Google Domains in September. Users can still sign up directly from Google's site for $6/month, and I'm bewildered why anyone wouldn't.
USPS is raising rates for its Connect eCommerce program, which allows platforms like Pirate Ship and marketplaces like Shopify and Etsy to offer discounted shipping rates to their merchants. Effective Nov 18, Priority Mail Flat Rate is increasing up to 6%, Weight-Based Priority Mail is increasing up to 10%, Dimension-Based Priority Mail Cubic is increasing up to 23%, and Ground Advantage is decreasing up to 16%.
Sony is terminating PlayStation 5 and PlayStation 4's integrations with X this month, which means gamers will no longer be able to publish video game clips and other content directly from their consoles. PlayStation users will still be able to manually clip gameplay moments, transfer the content to their computer or phone, and then post the content from the X app. Sony did not say for sure, but the decision likely follows X's new API pricing model which charges a minimum $42,000/month for access.
Rivian is ending its electric van exclusivity agreement with Amazon, which owns 17% of the company since its investment in 2019. The vans will now be available for other businesses to order. In March I reported that the two companies were in talks to end their exclusivity because Amazon had only placed an order for around 10k vans versus the 100k it said it would buy, but now the two companies say that decoupling has been part of the plan the whole time.
Alibaba is piloting Aidge, its first AI-powered suite of APIs designed to help boost conversion rates and cut costs. Aidge is built on Alibaba's proprietary LLMs and computer vision models trained on the company's expertise in e-commerce.
eBay revealed that it has 16M “enthusiast buyers”, which is a term it uses to describe the shoppers who spend the most time and money on the site. That number is flat from the last three quarters, but down from 17M in 2022 and 18M in 2021.
65% of consumer in the US and UK are planning to leverage loyalty programs to save money during the 2023 holiday shopping season. Millennials and woman across all ages are most likely to shop with loyalty programs, with 71% responding yes.
Consumers drove a record-breaking $76.8B in online sales in October, up $4.3B from last year, according to a report from Adobe Analytics. Mobile shopping saw a 46.7% YoY jump to $35.9B, while BNPL transactions saw a 6% jump to $6.4B for the month.
Q3 saw investment in private fintechs fall 46% compared to the same period in 2022, the Wall Street Journal reported, dropping to 2017 levels. Companies that are raising money are doing so at reduced valuations, leading many fintechs to sell off assets or cut jobs to reduce costs.
Amazon, Google, Snap and Zillow are all cutting staff. It's also rumored that Google has paused filing PERM certificate applications to the US Dept of Labor until the first quarter of 2025, signaling that the company is unwilling or unable to convince US officials that it needs to bring in foreign talent and can't hire US persons to fill open roles.
10. Seed rounds, IPOs, & acquisitions
Shein is targeting a $90B valuation in its potential US IPO, up from the $64B it valuation it was given in a funding round earlier this year, but down from its all time high. The company says there is still no timeline for its IPO plans.
ReturnGO, a platform that provides return options and a “post-purchase operating system” that aims to reduce the reverse logistics costs for online retailers while making the process more sustainable, raised $4.8M in a round led by Trestle Partners. Along with the funding round, the company announced a partnership with Amazon Multi-Channel Fulfillment where ReturnGO will provide its return and exchange process for the 300k merchants using the logistics platform.
Refurbed, an Austrian-founded marketplace for refurbished and upgraded electronics, raised $57M in a Series C round led by Evli Growth Partners and C4 Ventures. The company is profitable in two countries, Austria and Germany, and plans to use the funds to expand deeper into the wider European market.
Authentickator, a platform for exploring, buying, and validating digital collectibles (dare I say NFTs?), raised $4M in a round led by Menyala. Alongside the funding, the company announced its strategic partnerships with Lazada, TikTok, and Shopify.
Udaan, the Indian e-commerce startup that aims to be the go-to platform for smaller merchants seeking goods, is gearing up for its IPO in 2025 by focusing on cost reduction and establishing partnerships with consumer brands. The company is determined to achieve operating profitability within the next 18 months to coincide with its IPO.
Enable, the creator of a rebate management software platform that helps manufacturers, distributors, and retailers use rebates as a lever for growth, raised $120M in a Series D round led by Lightspeed Venture Partners, bringing its total amount raised to $276M and its valuation to $1B. The company is on trajectory to double its revenue by the end of the financial year, having had triple-digit growth every year since it launched in 2019.
Getir, a Turkish food delivery company, acquired FreshDirect, a New York-based grocery delivery service, from Ahold Delhaize USA for an undisclosed amount. The company reports having 3,200 employees and was acquired by Ahold in early 2021 for around $300M.
Qomodo, an Italy-based fintech startup that aggregates payment systems to allow merchants to protect and amplify their cash flow and allow customers to pay in interest-free installments with BNPL, raised €34.5M in a pre-seed round led by Fasanara Capital and Plug&Play. The fintech said that it's developed a new product that offers POS, BNPL, Pay-by-Link, and Tap-to-Phone solutions for merchants.
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PS: My friend's husband has been very romantic lately, sending her poems every day, but she can't figure out why he signs each one “Regenerate Answer”.