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#117 – $1 Amazon returns, foreign tax exemption, & online delivery taxes

by | Apr 17, 2023 | Recent Newsletters

I'm mad this week. Since launching Shopifreaks, I've used a service called Mailerlite to send you these newsletters. For many years they were a reliable service provider, but last year the company abandoned their existing users by launching a “New Mailerlite” and rebranding their existing service as “Classic Mailerlite.”

In order to get new features (which is what I thought we were already paying a subscription for), users would have to upgrade to the more expensive New Mailerlite, of which there wasn't an automated way to transition from one service to the other at the time of launch. Many of us stayed with Classic Mailerlite to retain our pricing and maintain stable service.

Mailerlite promised that they'd continue to support and maintain Classic Mailerlite for years to come. 

Well, flash forward a year and Mailerlite has broken that promise to users. Core functionality of their legacy service has been broken for months, and while aware of the problems faced by many users, they've made no attempts or progress at fixing the issues.

I shared my frustration on Twitter and LinkedIn if you'd like to read more about that. 

I'm backed into a corner to either spend more money for New Mailerlite to obtain the features and functionality that are already included with my current legacy plan, or switch e-mail newsletter services. 

I'm going to do my best to switch newsletter services in a timely manner, because I can't in good conscious continue to do business with a company that breaks promises to its users and operates in this manner. 

I apologize in advance if there are any technical hiccups with my newsletter distribution or our rewards program in the coming weeks as I transition to a new e-mail service, but I'll do my best to prevent them. I'll keep you posted. 

Moving onto this week's e-commerce news…

I cover Amazon's new $1 fee on UPS returns, Best Buy's questionable move towards e-commerce, and Substack's new Twitter-clone (even though they deny it). 

I also share stories about Brazil ending its long abused tax exception on foreign consumer goods, Square's 100 new features, and Andy Jassy's vision for Amazon. 

All this and more in this week's 117th Edition of Shopifreaks. Thanks for subscribing and sharing!

Poll of the Week 🗳️

💰 Would you support an online delivery tax to offset carbon emissions associated with order fulfillment?

🗳️ Take the Twitter poll.


Last Weeks Poll Results: I asked if you'd bought or sold apparel items on a secondhand marketplace in the past 12 months? 24.1% had bought items, 3.7% had sold items, and 14.8% had both bought and sold items. However over half had never done either. Is the circular economy as big as we've been reading? [View Poll]

Stat of the Week 📈

India shipped over 4 billion e-commerce parcels in its most recent fiscal year. This number is projected to surpass 10 billion in the next five years, riding on growing e-commerce penetration in Tier 2+ towns. – According to Business Today

This is why Amazon and Walmart and other major international retailers so desperately want a piece of that market!

Share this week's stat on Twitter & LinkedIn.

1. Amazon charging $1 for UPS drop-offs

Amazon is now charging a $1 fee on return drop-offs to UPS stores if there is an alternative like a Whole Foods, Amazon Fresh, or Kohl’s location within the same distance (where you'll still be able to drop off returns for free).

Some industry experts believe this small change is the beginning of the end for the free returns, and the move with UPS is simply Amazon dipping their toe in the water.

However I think it simply comes down to economics and optimizing a free returns process that has historically left margin on the table.

Shipping products back to Amazon is cheaper at these in-store return locations because the customer service desk can aggregate an entire day's worth of returns and ship them back at once. Or alternatively, Amazon can send one of its delivery drivers to pick up the returns, avoiding UPS or another courier altogether.

Plus bringing customers into the door of one of those stores can equate to revenue for Amazon, whereas they have no upside to bringing a customer into a UPS location. I'd bet that a statistically relevant portion of customers end up buying something when they enter  a Whole Foods or Amazon Fresh to return an item they bought online. And why not? Their cookies are delicious!

A few years ago, Amazon cut dies with FedEx, ending its contracts completely. It hasn't done the same with UPS, but has significantly lowered its overall exposure. This new $1 fee is one more step towards pushing customers into Amazon's own internal retail and distribution networks — a small change that can have a sizable impact when it comes to reshaping customer habits.

2. Substack launches Twitter-clone

Substack launched a Twitter-like feature called “Notes” to the public, just days after Twitter throttled Substack links (which they later walked back).

Notes will appear in their own separate feed (separate from the full newsletters readers subscribe to), where users will be served a mix of For You and Subscribed content.

Notes won’t go to subscriber inboxes; they’ll exclusively live on the Substack website and app. Readers can interact with Notes by Liking, Replying, or Restacking (ie: retweeting) them.

Substack believes that Notes will reach audiences who are “already invested in the Substack ecosystem and are just one click away from a subscription.”

I listened to a podcast episode where The Verge's Nilay Patel interviewed Substack CEO Christ Best, and I can't tell if Substack actually believes what they've been spewing lately regarding Notes, or if it's just PR.

Substack wrote about their longtime mission, “We turned away from advertising and the attention economy and toward subscriptions and direct relationships.”

And then later about Notes, “While Notes may look like familiar social media feeds, the key difference is in what you don’t see. The Substack network runs on paid subscriptions, not ads. This changes everything.”

But does it? Or is it the same attention economy simply housed within the walls of Substack's own ecosystem?

With Notes, writers can publish short form content available for free to readers to follow (*cough* I mean “subscribe”).

That's also been the model for the traditional long-form Substack content, meaning writers have always been able to offer a mix of both Free and Paid newsletters.

So what's so different about Substack over other social media or blogging sites other than that they built a paywall feature into their core product?

If writers are still publishing free content with the hopes that they garner enough attention from Substack readers to subscribe to their paid content, how is that much different than the attention economy that Substack claims to be the antithesis of?

It feels like Substack is being pedantic with the word “subscription”.

Substack is subscription-based in the same way that Facebook used to be Like-based. It’s just words that all have the same action.

I do understand that you can take your readers with you on Substack, but how many readers are going to want to continue to subscribe via e-mail to a writer's tweets (I mean Notes) if the writer left the Substack platform?

Lastly, Substack wrote in their Notes FAQ page:

“Can I post a note just for paying subscribers? No, notes are public and available for anyone in the Substack network to view.”

Just say you built a Twitter-clone that integrates nicely with the rest of Substack's network!

The way Substack has been describing Notes feels a bit off-putting and disingenuous, as if they don't have much respect for the intelligence of the writers and readers they claim to serve.

In the words of Jo Bennett, “You can’t give me gravy and tell me it’s jelly, because gravy ain’t sweet!”

3. BigCommerce News (Sponsored)

BigCommerce's Stand With Ukraine app is now available to all merchants, no matter what e-commerce platform you use. Add the widget to your site today to give your shoppers an easy, secure way to support organizations in Ukraine. standwithukraineapp.com


Influencer marketing has been hailed as the go-to tactic for earning awareness and trust for many ecommerce brands. But even in the last year, a lot has changed in the world of influencers and brand partnerships. Join BigCommerce brand marketing manager Leah Spector and Impact.com CMO Cristy Garcia this Wed, Apr 19, 2023, 1:00 PM (your local time) as they discuss how the influencer industry has evolved and where it's going in the future. Click here to RSVP.


Meghan Stabler, SVB at BigCommerce, shared the incredible opportunity for retailers to modernize their e-commerce with composability from BigCommerce and their amazing technology partners in her latest article on Total Retail entitled, Why Retailers Need To Adopt Composable Commerce.


Tune into the recent webinar with BigCommerce and Loan Laux, Director of Headless Engineering at Trellis, to talk about what is headless architecture, its benefits, and how it is different from composable commerce.


Join BigCommerce, Google, and Nike at Smart Retail US – the place to discover the latest tech to attract, inspire & retain customers in the age of new retail! Get FREE registration with promo code RETHINK100.

4. Best Buy's questionable shift towards e-commerce

Best Buy is cutting hundreds of store jobs across the US as it looks to trim costs and shift its business more towards e-commerce.

Store workers who specialize in selling complex products like computers and smartphones were most impacted by the layoffs. Laid off employees can reapply for open positions within the company or receive severance. 

“Guess what Apple expert, you can now apply for a position in our warehouse!”

As of January 2023, Best Buy had more than 90,000 employees in the United States and Canada, including 58% full time, 32% part-time, and 10% seasonal staff.

Best Buy generated $5.14B in online revenue last year, which was a 13% drop from 2021. The company's e-commerce revenue represented 38% of its total domestic revenue in 2022 versus 39.4% in 2021.

They are now projecting a 3-6% drop in total revenue in 2023 from $46.298B posted in 2022.

Best Buy shared in a statement, “We’re evolving our stores and the experiences we offer to better reflect the changes in customer shopping behavior, as well as how we organize our teams.” — LOL because shoppers hated getting in-person customer service at Best Buy?

One of the major things that Best Buy had going for it was its in-person product experts and ability to touch, feel, and try products before you buy. If anything, I would lean towards that differentiator as opposed to moving towards being just another online electronics retailer, much the way Barnes & Noble has done with books in recent years.

5. Brazil ends abused tax exemption on foreign consumer goods

Brazil's government announced that it would end a tax exception on international orders up to $50 as part of its effort to tax purchases from global retail giants like Alibaba, Shein, and Shopee.

The country's revenue service said that the exemption never applied to e-commerce but only to shipments from individual to individual, and had been “widely and fraudulently used for sales made by foreign companies.”

Finance Minister Fernando Haddad said that that “one or two global players” were disguising their e-commerce as person-to-person shipments to avoid paying taxes.

Moving forward there will no longer be any distinction in treatment between legal entities and individuals when it comes to shipments, with all international orders subject to the existing 60% taxation on their value.

The move is expected to benefit local retailers such as Mercado Libre, Lojas Renner, and Magazine Luiza, and comes after complaints from the industry about unfair competition from foreign retailers.

In other Brazil e-commerce news, customers in the country can now pay for purchases online directly through WhatsApp.

Meta first rolled out P2P payments in Brazil in 2020, but that effort was halted due to regulatory constraints, of which they've been able to work through.

Now WhatsApp users will be able to pay for purchases directly through the app using a connected Mastercard or Visa card from participating banks. For businesses to accept these payments, they can link a service provider like Mercado Pago or Cielo to their account.

That's awesome! Bring that feature to Ecuador! We use WhatsApp religiously down here. 

6. Square debuts <100 new features

Square unveiled almost 100 features to help sellers and businesses on its platform grow.

CEO Alyssa Henry said, “For the first time, we’re announcing new features across products all at once, because our strength lies in the integrated ecosystem of software, hardware, and embedded financial services.”

Some highlights from the announcement include: 

  • Waitlists – sellers can now offer waitlists for appointment slots and services
  • Subscriptions – enables buyers to subscribe to items or services on a recurring basis
  • OpenTable integration – lets restaurants leverage reservations within their Square site
  • Busy Mode, Pre-orders, & Pause Order modes – provide more options and control over when and how merchants sell
  • Omnichannel Discounts – to apply automatic discounts created on any POS such as recurring happy hour
  • Free Shipping Progress Bar – gives buyers a clear view of how to earn free shipping on purchases
  • Personalized Order Screens – highlight order histories, item recommendations, exclusive offers, and loyalty reward status
  • Square Reader – began rolling out globally for in-person contactless and chip purchases

You can take a look at the full list of new features here

In a recent survey of over 1,000 Brits, 50% indicated that they would support an online delivery tax to offset carbon emissions associated with order fulfillment.

76% of those surveyed believe that retailers could do more to be sustainable and are willing to put their money where their mouth is.

At the same time, however, 68% indicated that speed of delivery was their top consideration, followed by the cost of delivery not being too expensive (53%) or being free (51%).

So unfortunately Brits don't know what they want (and I'd imagine that surveying other countries would result in similar findings).

Inexpensive delivery or online delivery taxes?

Fast or sustainable fulfillment?

The dichotomy of these two sets of consumer desires is evident, but some brands are working to bridge the gap. 

At the upcoming Retail Technology Show in London, Ikea's former Head of Innovation is joining Rentle, a commerce platform for the circular economy (and also one of our Shopifreaks Rewards Partners), to discuss how retailers can evolve their strategies from a linear to circular to enhance sustainable services and offerings.

Andrew Opie, Director of Food and Sustainability at the BRC, will also be there discussing the key sustainability questions retailers should be asking themselves in 2023 in a separate keynote debate.

You can register for the event here.

8. Amazon CEO's Vision

Amazon CEO Andy Jassy wrote an 11-page open letter to shareholders outlining his vision for the company, which I'll highlight below:

  • His focus is on unproven businesses like Kulper Internet Satellite.
  • Amazon is now working on its own machine learning language model.
  • Amazon is introducing Bedrock, a service that gives developers access to large language models from Amazon and other startups so that they can build their own generative AI tools.
  • Amazon's future will reflect evolving existing businesses such as healthcare.
  • Work from home is not the best long-term approach, and the company is convinced that inventing is easier and mor effective when working together in person.
  • AWS does $85B in revenue, but Amazon still feels that it's early for the service and critical to stay focused on it for the long-haul.
  • Amazon will continue to invest in chip manufacturing to speed up processing and lower the cost of chips.

Jassy also presented four questions that managers must address before proposing new business ideas: 

  1. If we are successful, could it be big and have a reasonable return on invested capital?
  2. Is the opportunity being well-served today?
  3. Do we have a different approach?
  4. Do we have the competence in that area? And if not, can we acquire it quickly?

Fast Company noted that the one thing Jassy's letter didn't mention was warehouse safety. Jassy mentioned in his letter that Amazon has now “scrutinized every process path in our fulfillment centers and transportation network” and used what they’ve gleaned to redo “scores of processes and mechanisms” — however warehouse safety wasn't one of those mentioned processes.

You can read the full 11-page letter here.

9. Other e-commerce news of interest

Twitter's ex-CEO Parag Agrawal is suing Twitter for the $1M he claims that former Chief Legal Officer Vijaya Gadde, former Chief Financial Officer Ned Segal, and himself had to pay out of pocket when they were involved in shareholder lawsuits and government investigations. The trio argues that Twitter has ignored its responsibility to reimburse them for their legal fees.


Walmart is laying off another 953 e-commerce employees, this time at its distribution center in Chino, California. This brings its layoffs to 3,267 in recent weeks.


Amazon is planning to open a second logistics facility in Deltona, FL directly across the street from its existing 1.4M sq.ft. first-mile fulfillment center that it opened in 2020. This new 1M sq.ft. “pre-first-mile” facility will store products before going to fulfillment centers like the one across the street.


Facebook users aren't happy with Meta's new paid verification system, which is forcing them to provide and display their legal names. Particularly influencers who use stage names have legitimate concerns of fans discovering their real name and being able to search for personal details like addresses and public records.


fabric, the headless commerce platform, will now be offering its e-commerce solutions to AWS customers via a new partnership with Amazon. The company will also be joining AWS Marketplace which gives them access to additional resources from AWS like dedicated technical assistance.


ByteDance is offering to pay developers who have made VR software for Meta to bring their apps to its Pico headsets, offering some developers up to $25k per title. The incentives demonstrate the intensifying competition between the two companies in the virtual reality space.


Cash payments represent just 6% of in-person POS transactions in Australia, according to a new report by FIS. In comparison, US consumers still use cash for around 12% of their in-person transactions.


Groupon announced the appointment of Jiri Ponrt as their new CFO, who joins the company from private equity group Pale Fire Capital which holds a 22% stake in the company. Ponrt will be working with the company to execute a new transformation and growth strategy, as well as streamline the company's internal processes.


Affirm is bringing its Adaptive Checkout tool to businesses using Stripe in Canada, which offers more personalized payment options in the checkout flow. The integrated tool will allow businesses in Canada to offer BNPL payment options through their existing Stripe integration.


Whole Foods in Downtown San Francisco shut down just 13 months after it opened due to high theft. A spokesperson for the company said, “If we feel we can be sure of the safety of our team members in the store, we will evaluate a reopening of our Trinity location.”


Amazon unveiled Bedrock, a new cloud service for its AWS platform, that provides developers with customizable AI tools for generating text and images. The service is an alternative to OpenAI's ChatGPT and DALL-E2, catering to businesses and developers looking to build aps using generative AI models.


Elon Musk merged Twitter with X Corp on his mission to be an “everything app” of the future. As a private company, Twitter is no longer required to publicly report on major business changes, but the change came into the public eye as part of a lawsuit involving Lara Loomer, a failed congressional candidate.


The FTC is warning advertisers to back up claims about their products, issuing 670 companies last week warning that they could face civil penalties if they make claims in their ads that cannot be substantiated. FTC law requires companies to provide “reliable evidence” to back up product claims, but many sellers continue to make unsupported statements and false claims about the evidence they have.


In other FTC news, the commission approved a final consent order in its first-ever enforcement action over a case involving “review hijacking”, where a marketer steals consumer reviews of another product to boost its own sales. The FTC ordered supplements retailer The Bountiful Company to pay $600k for deceiving customers on Amazon where it used a feature to merge reviews of different products together to make some appear to have better ratings than they actually did.


Brands think that the popular online trend of “quiet luxury” — which refers to subtle but expensive garments offered by high-end brands for the ultra rich — will drive more sales. Zara, Mango, Banana Republic, and Shein are aggressively shifting towards simple yet sophisticated apparel designs, with Shein even launching an entire Quiet Luxury section. (You're making it less “quiet” guys.)


E-commerce prices dipped for seven consecutive months, according to the latest Adobe Digital Price Index, as consumers cut back on discretionary spending. The overall decline was driven by sharp drops in discretionary categories including electronics (down 12%), flowers and gifts (down 24.3%), toys (down 6.6%).


Meta is abandoning its demand that ad agencies commit to increases in spending of 20% or more, as it's typically required in the past, after suffering its first-ever drop in ad sales. Now the company is offering advertisers sweeteners like discounts up to 25% for those willing to spend a certain amount testing different ad products on its Reels.

10. Seed rounds, IPOs, & acquisitions

Walmart sold Bonobos, a menswear brand that they acquired in 2017 for $310M, to WHP Global and Express in a $75M deal. This is the second time this year that Walmart offloaded a D2C brand that it bought under former e-commerce President Marc Lore, having sold Moosejaw to Dick's Sporting Goods in February.


Razor Group, a Berlin-based e-commerce aggregator, raised €80M in a Series C round led by Upper90, at a $1.2B valuation. At the same time, the aggregator acquired Stryze Group, one of its competitors, as part of its bid to be “the consolidator of consolidators.”


DigiAsia Bios, an Indonesian fintech startup, is planning to complete is combination with StoneBridge Acquisition Corporation, a publicly traded SPAC, this April and raise around $200M. The funds will allow the company to expand to other SEA countries with similar demographics and regulations including Vietnam, Cambodia, and the Philippines.


PhonePe, the India-based Walmart-owned digital payments and financial services company, raised $100M in a round led by General Atlantic at a $12B valuation. This is in addition to the $350M raised by PhonePe from General Atlantic this January as part of its ongoing target to raise a total of $1B.


Uni Cards, an India-based BNPL firm, acquired OHMY Technologies (known as OMLP2P), a peer-to-peer lending platform that owns a NBFC-P2P license from the Reserve Bank of India, for an undisclosed amount estimated to be around $35M. Industry officials believe that in the current scenario, owning an NBFC is the only way to go if a fintech wants to build and scale a lending business.


Zeely, a Ukrainian startup app that can generate a web store quickly on mobile and allow a business to promote itself across social media platforms quickly and easily, raised $1M in a round led by Vesna.Capital, Angel One Fund, and others. The company will use the funds to implement its integration with TikTok and payment systems, as well as expand their AI capabilities.


GaeaStar, a Berlin and San Francisco-based startup that 3D prints disposable clay cups and bowls in Germany, raised $6.5M in a round led by Morningside and Dart Labs. The company plans on using the funds to perform a complete life-cycle analysis of the environmental cost of its clay cups. 

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. 

💖 Thanks for being a Shopifreak!

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See you next Monday,

PAUL

Paul E. Drecksler
www.shopifreaks.com
[email protected]

PS:I went to a temporary tattoo parlor and got a tattoo. The next morning it wouldn’t wash off, so I went back to complain, but the tattoo parlor wasn’t there…

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