#102 – Amazon’s shrinking, India’s burning, & TikTok is on your fridge

by | Jan 2, 2023 | Recent Newsletters

Happy New Year! I hope that it's already starting out great!

In case you missed it, here's my annual 2022 E-Commerce Recap – a mega resource featuring 829 of the biggest stories from last year.

At over 20,000 words, it's not necessarily something you'll want to open and read start to finish, but it's a great resource to scroll through and get a reminder of what happened last year and/or see what you missed. You can Ctrl+F a keyword or company name to hop through the year's news around that subject. I find myself referencing these annual recaps throughout the year when putting together these newsletters to quickly find old stories. Enjoy!

Now onto 2023…

The week between Christmas and New Years is always a bit slower in our industry. You should see how many “Out of Office” auto-replies I received on my special edition e-mail two days ago!

So while this is going to be a shorter edition than usual, I do have some interesting stories for you this week about Amazon's challenging year, smart fridges with enormous vertical screens, and India's plastic burning problem. 

I also share news about Google price tracking, Chinese metaverses, and sports streaming apps. 

All this and more in this week's 102nd Edition of Shopifreaks. Thanks for subscribing and sharing!

Poll of the Week 🗳️

Amazon accounted for 56.7% of U.S. online sales in 2021, up from 28.1% in 2014 — but now competition is fierce! Will Amazon still command MOST of online sales in 5 years or will competitors bring them back to 2014 levels?

🗳️ Take the Twitter poll.


Last Weeks Poll Results: In response to the newly passed Inform Act, I asked if you thought online marketplaces should be required to verify sellers. 75% of you voted that marketplaces should verify ALL sellers, while 7.5% felt that only HIGH VOLUME sellers should be subject to verification. Another 7.5% didn't think seller verification was important and 10% didn't care either way. [View Poll]

Stat of the Week 📈

IPO deal proceeds plummeted 94% in 2022, following a record-smashing tech IPO year in 2021 that included Rivian, Toast, GitLab, & Robinhood. – According to Ernst & Young

Share this week's stat on Twitter & LinkedIn.

1. Amazon's difficult year

2022 turned out to be a difficult year for Amazon, as the company dealt with high inflation and slowing e-commerce sales. 

Experts told Modern Retail that Amazon has had to switch gears from hyper-growth mode to cost optimization mode.

Vidhi Choudhary of Modern Retail covered Amazon's recent changes and challenges, which I'll summarize below: 

  • Revenue from its online stores dropped from $60B in Q4 2021, to $51.1B and $50.8B at the end of Q1 an Q2 2022.
  • Amazon became stuck with too much warehouse space, after adding more than 450 facilities during the pandemic.
  • This was Amazon’s first full year without founder Jeff Bezos at the helm. 
  • Prime's recent price increase made the offering more unaffordable for some people.
  • Prime Day was less potent in terms of sales boosts.
  • In September, Amazon launched a paid service to let sellers use its fulfillment centers and warehouse space for long-term stockpiling.
  • Inflation led people to pull back spending in certain categories like groceries, which Walmart sold more efficiently than Amazon.
  • A combination of rising brick-and-mortar sales and a significant shift in purchase behavior towards essentials hurt Amazon’s retail marketplace.

Jason Goldberg at Publicis said, “This year, when your CEO or founder retires, it’s hard to maintain that narrative that you’re still a Day One company. And so a lot of us would look at this and say, 2022 was the year that Amazon efficiently shifted from being a Day One company to a Day Two company.”

Miya Knights of Retail Technology said that Amazon’s pivot toward trying to squeeze more revenue out of its advertising business could be potentially “dangerous territory, because they’re starting to mess with the customer experience.”

Amazon's stock tumbled 51% in 2022, marking the biggest decline since 2000, when it plunged 80%. Only Tesla (down 68%) and Meta (down 66%) had a worse year among the most valueable tech companies.

Will Amazon regain its market dominance during the next 5 years, or will competitors bring them back to 2014 levels?

Don't forget to take the Twitter poll and discuss. 

2. Taobao's First Livestream Metaverse

Aww, it's cute right? Kind of like a baby taking its first steps?

Taobao, the Chinese online shopping platform owned by Alibaba, conducted final tests before making its first metaverse live-streaming product debut.

If the test goes well, the project is expected to go online during the upcoming New Year’s shopping festival.

Alibaba has been pushing into the metaverse since the beginning of last year:

  • During last month’s Double 11 Shopping Festival, Taobao and Diantao jointly built a virtual space called TaoLive City where users can go shopping, win prizes, and interact with strangers.
  • Also during the shopping festival, Alifish, an online copyright trading services platform launched by Alibaba Pictures launched a virtual IP scenario driven by VR technology through Taobao’s “IP New Power”.
  • Baidu AI Cloud promotes its own metaverse solutions in the clothing, home, digital and other industries.
  • NetEase‘s Metaverse Department is expected to launch Yaotai, a metaverse app similar to Baidu‘s XiRang, in the near future.

“Taobao” loosely translates to “seeking treasure” in English, and competition is heating up over the word. Alibaba has applied for the registration of multiple “Taobao Yuan Universe” trademarks, and several other companies have applied to register the trademarks of “Taobao Yuanyu” and “Yuanyu Taobao”.

Alibaba is obviously not the only Chinese company entering the metaverse. Last May I reported on TikTok's parent company, ByteDance, assembling a metaverse hardware, content, software and platform to compete in the space.

You can build them, but will they come? The trillion dollar question is whether there are enough consumers and metaverse users to support these new projects, or will all these metaverses turn out to be ghost towns like their predecessors?

3. BigCommerce News (Sponsored)

Listen to our latest episode of the Make it Big Podcast where Greg Phipps, Head of Digital Performance and Growth at Gap, joins Liz O'Neill to break down the basics of Web3 for brands.


From fundraising with Mira Commerce to creating an app, learn how our teams have come together to #StandWithUkraine.


BigCommerce is returning to NRF: Retail's Big Show this Jan 15-17, 2023. Schedule time with our e-commerce experts at Booth #5756 and catch our Big Ideas session. 

4. Ads took over shopping in 2022

Major marketplaces aren't shy to tell you that ad revenue offers huge upside with high margins, cloaked in a win-win facade for sellers. 

While we're all familiar with ads being shoved down our faces for years in every direction, Shira Ovide of The Washington Post argues that, “2022 was the year when paid persuasion invaded more places you shop.”

  • In November 2022, The Washington Post highlighted just how much of Amazon's product results had become ads. 
  • Last year Amazon reported $8.7B in ad revenue for the most recent quarter, up 18% from the same period last year, making it the third largest digital ads network, after Google and Facebook.
  • Uber launched a new advertising unit in October that will enable brands to deliver ads to their 122M monthly active users.
  • Amazon announced new advertising capabilities at its Unboxed event in New York which included rewarded sponsored display, ads for brands that don't sell on Amazon, display video creatives, and more.
  • Walmart CEO Doug McMillon recently said that he feels that e-commerce and ads are “mutually reinforcing.” The company recently launched advertising technology in 2021 that lets brands use Walmart data to buy ads outside its digital platforms.
  • Faire has even begun exploring the idea of introducing ads to better monetize the sellers on its platform, which could include featured placement for products through search, related product suggestions, or display ads.
  • Heck, even I started accepting ads last year in this newsletter you're reading! (Although I try to keep them streamlined and relevant.)

For the first time in years, Google and Meta grabbed less than half of the digital marketing money spent in the US in 2022, while Amazon took more than 11% of all digital ads purchased.

5. Amazon packages burn in India

A report by Bloomberg revealed that about 80 miles north of New Delhi lies the graveyard for Amazon.com shipping envelopes thrown out by US and Canadian customers 7,000 miles away. 

Plastic that enters the recycling system in North America isn’t supposed to end up in India, which banned almost all imports of plastic waste in 2019.

It turns out that the culprits were American consumers who incorrectly thought that they were recycling their trash.

Here's what happened…

Paper factories in India rely on imported waste paper, which is cheaper than wood pulp, so they import around 6M tons a year to meet demand, mostly from North America.

This sounds like a recycling success story on paper, until you discover that hidden within those recyclables are tons and tons of unrecyclable plastics like bottle wrappers, food packaging, and shipping envelopes. 

It's estimated that India may be bringing in as much as 500,000 tons of plastic waste hidden within paper shipments each year. 

While the government allows up to 2% contamination in recycled paper, lax enforcement at ports means that no one's checking. I also imagine it's a hard thing to check for at the port.

Whether intentional or not, the result is the same. The amount of plastic trash coming into India in waste paper is now almost double the 264,000 metric tons that was legally imported in 2019 prior to the country initiating the ban.

Most of that plastic waste inevitably gets burned, which results in microplastic ash and toxic emissions to rain down on the neighboring cities. Residents in the area can't escape the smell of burning trash. 

Why is it getting there in the first place?

Most consumers have been fooled into thinking that the three-chasing arrows, a marketing symbol created by the petrochemical industry, found on many packages means it's recyclable. When in fact, it simply indicates which type of plastic it is.

Amazon’s bubble-lined plastic bags are a common type of packaging that carry the recycling logo that’s criticized for confusing consumers into thinking its easily recycled. 

Read the full story on Bloomberg. 

6. Millennial and Gen Z Debt

Millennials and Gen Z aren't doing too well right now — aside from the small percentage earning millions of dollars a year as social media influencers. 

However the rest of us have apparently been going on a credit card and BNPL binges!

PYMNTS.com reports some startling numbers: 

  • The Urban Institute reported that one in five adults between 18 and 24 with a credit file in the US currently have debt in collections.
  • 5% of millennials and 4.5% of Gen Z consumers have credit card debt that is more than 60 days delinquent.
  • Comparatively, just 3.5% of Gen X borrowers and 1.8% of boomers are behind on payments.
  • During the most recent holiday season, 45% of paycheck-to-paycheck consumers leaned heavily on credit and financing to get Black Friday deals
  • 70% of millennials and 65% of Gen Z consumers live paycheck to paycheck.
  • Generation Z living paycheck to paycheck report the lowest average savings at just $1,158.

As for the rest of the country: 

  • The delinquency rate on credit cards at the end of Q3 stood at 2.1%, up from 1.9% in Q2 and 1.6% a year ago.
  • Credit card balances have risen by $38B, a 15% YoY increase and the biggest jump in 20 years.
  • Paycheck-to-paycheck consumers, which account for 83% of Americans, are 3X more likely to revolve credit card debt and carry higher monthly balances.
  • 54% of teens feel they are financially unprepared for the future.

7. Amazon's new streaming sports app

Amazon might soon launch a standalone sports streaming app to strengthen its sports programming offerings through its Prime Video platform.

In September, I reported that Amazon struck a $13B deal with the NFL to make it the exclusive home of Thursday Night Football, following a four year run at FOX, marking the league's first all-digital rights agreement. 

Amazon also recently launched original sports talk shows on both Prime Video and its ad-supported streaming service Freevee.

Last month I reported that YouTube won the bid for the NFL Sunday Night Ticket package, paying $2B after DIRECTV made it clear that it had no intention of renewing its deal. Amazon had also bid on the package.

In addition to YouTube, Amazon would also be competing with Disney in this space, who own ESPN and are currently the market leader in streaming sports.

Sports has become one of the most popular live streaming avenues, and its connection to merch sales is painstakingly obvious.

CEO Andy Jassy recently called live sports “a unique asset” and confirmed that Amazon will continue to invest in it.

8. Watch TikTok on your fridge

Samsung revealed its latest smart fridge called the Bespoke Refrigerator Family Hub Plus which includes a 32″ screen that lets your family watch TikTok videos and buy Amazon groceries. It's the latest addition to Samsung's SmartThings home product line. 

Via its built-in 32″ vertical touchscreen, the new fridge lets users: 

  • Watch TikTok videos
  • Order groceries on Amazon
  • Minimize videos to multitask
  • Link to Google Photos and OneDrive to display personal photos on the screen
  • Watch more than 190 TV channels in the US and 80 channels in South Korea
  • Control air purification and monitor energy use

Are TVs and movie theaters going to have vertical screens in the future? Is this just the start!?

Samsung did not say how much the fridge will cost or when it will be available for purchase, but will be showing it off at the 2023 Consumer Electronics Show on Jan 5th. 

9. Other e-commerce news of interest

Google Shopping is testing a price history chart that shows the lowest verified prices at “positively rated sellers” according to a video posted by Saad AK on Twitter. Google has offered price tracking via notification for several years, but historically hasn't displayed a Camel Camel Camel style price chart publicly. 


Sezzle is now offering customers in Canada the option to build their Equifax credit profile through their BNPL purchases and subsequent on-time payments.


BigCommerce announced that new local payment methods are now available in its Stripe integration, making it easier for merchants to reach more customers globally with payment methods they're familiar with including ACH Direct Debit, BACS Direct Debit, Klarna, BECS Direct Debit, PayNow, and WeChat Pay.


Google settled two more location tracking lawsuits worth $29.5M filed in Washington DC and Indiana over allegations of tracking users' locations without their consent. This settlement followed a historic $391.5M settlement that Google agreed to pay last month to 40 states for tracking users' location data without their consent in the country.


Amazon began delivering orders by drone in Lockeford, CA and College Station, TX, getting a small number of packages airborne just in time for Christmas. They received approval from the FAA last August to use drones for package deliveries up to 5lbs, which Amazon says accounts for 85% of its shipments. 


Instacart lowered its internal valuation to $10B, a reduction that will impact its upcoming stock market listing, which is expected to take place this year. The company was worth $39B after its most recent $265M funding round last year, then later lowered its valuation in March by 40% to $24B, and then further lowered it to $15B, then $13B, and now $10B. Do I hear $9B? $9B? Going once.. going twice…  


Amazon Flex, Uber, Ola, Dunzo, and PharmEasy were criticized in a new study by the research group Fairwork India for failing to provide fair working conditions for their gig employees. The corporations mentioned were found to not give their gig workers fair compensation, fair contracts, fair management, fair representation, or fair working conditions.


Hackers are actively exploiting a critical vulnerability found in the YITH WooCommerce Gift Cards Premium plugin, which is used by over 50,000 websites. The issue was discovered on Nov 22, 2022 and was addressed with the release of version 3.20.0, however thousands of websites are still using the outdated version.


UPS took $1,200 from an eBay Seller's checking account, after the seller didn't enter the package dimensions and weight to calculate the correct shipping cost. The seller purchased the label and shipped the package, later to have UPS factor in the oversized dimensions and weight and retroactively charge the seller. I'm curious to know whether it was an innocent mistake or an intentional attempt by the seller to cheat UPS's system (but they got caught)? 


US retail sales excluding automotive increased 7.6% YoY this holiday season, running from November 1 through December 24, according to Mastercard SpendingPulse. Online sales grew 10.6% compared to last year, with e-commerce making up 21.6% of total retail sales, up from 20.9% in 2021 and 20.6% in 2020.


Major US-listed Chinese companies including Pinduoduo and Full Truck Alliance put discussions about a potential Hong Kong listing on hold, as reported by The Information. Companies like Alibaba and JD.com have moved over the past few years to also list in Hong Kong to hedge the risk of the United States delisting them in the future due to political disputes with China.


Kevin O’Leary is headlining the Miami E-commerce Conference, hosted by Absolute Web this February 23, 2023. Other notable speakers include Sahara Lotti (CEO and Founder of Lashify), Ted Toledano (CEO and Founder of Modloft), Megan Blissick (Head of Global Agency Partnerships at Signifyd), and Kristina Muntean (Strategic Partner Manager at Gorgias).


Supreme has changed its online store to Shopify, which it says has a better bot prevention system than its previous platform. At the same time, they'll be changing from the domain Supremenewyork.com to just Supreme.com on advice of Justin Timberlake who said, “Drop the New York” after an expensive sushi dinner. 


Tata group, the Indian multinational conglomerate, announced that it will transfer the holdings of its Tata UniStore, which runs Tata Cliq, to Tata Digital, making it the sole entity for all of its online shopping ventures. ET reported the Tata group is driving a price war with its rivals, with discounts offered by it in categories like smartphones, electronics or fashion, while also burning through just as much cash. 

10. Seed rounds, IPOs, & acquisitions

PT Akulaku Silvrr Indonesia, a Jakarta-based fintech startup that provides digital banking services including BNPL, virtual credit cards, and an investment platform, raised $200M from Mitsubishi UFJ Financial Group, the largest bank in Japan. The company aims to serve 50M users by 2025 and the new funds will allow it to build new products and services and expand into new markets.


That's it? Just one seed round!? LOL I thought this was the season of giving. Check back next week for more. 

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 saw a man wearing a “no snitching” t-shirt. I asked him where he got it, but he wouldn't tell me.

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