The fun / exciting / empowering / dangerous part of social media is that everyone has a voice — including CEOs of large tech companies.
In this week's 59th Edition of the Shopifreaks E-commerce Newsletter, Bolt founder and CEO Ryan Brewslow puts Shopify on blast via a 50+ tweet storm. Do his arguments have merit or is he playing the victim card to the natural evolution of e-commerce platforms? You be the judge.
I've also got news about Shopify's relationship with THC products, an update to Shopify's piracy lawsuit, new Amazon seller incentives, Walmart's AI try-on tech, and I highlight key points from Shopify's 2022 Commerce Report and Yottaa's 2022 eCommerce Technology Index.
All this and more in this week's edition of Shopifreaks. Thanks for being a subscriber!
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Stat of the Week
56% of Gen Z and Millennial shoppers won’t return unwanted international e-commerce purchases, saying the process was inconvenient (35%), expensive (34%), and bad for the environment (20%), according to ESW's Global Voices: 2022. (Retweet It)
1. Bolt founder Ryan Brewslow blasts Shopify in a tweet storm
Bolt, a one click checkout app that integrates with e-commerce platforms, previously worked with the Shopify platform, but it was shut down in 2017 when Shopify banned all external checkout providers.
In a recent 50+ tweet Twitter thread, Bolt's founder and executive chairman Ryan Breslow shared why he felt that Bolt and other app developers were essentially used by Shopify as free R&D and then thrown to the curb when Shopify took partner-provided features in-house.
Below are some highlights from his Tweet thread:
- “Shopify benefited tremendously from this (app marketplace) ecosystem. Developer partners provided critical functionality since the earliest days.”
- “But as Shopify grew, they had a decision to make: Prioritize openness and commit to empowering the community. -or- Replicate these apps as their own products, sell them, and drive direct revenue.”
- “Effectively, Shopify uses app partners as their R&D engine. Anyone too successful gets cloned.”
- Breslow quotes examples of this in Shopify: Shopping (2015), Capital (2016), Arrive (2017), Fraud Protect (2018), E-mail Marketing (2019), Fulfillment (2020), Subscriptions (2020), Balance (2020), Installments (2021)
- “Few are safe from Shopify cloning their products.”
- “Shopify will rarely ‘kick out' anyone directly due to the PR backlash. Instead, they put restrictions that drive superiority to their own product.”
- “Like many Shopify app startups, we (Bolt) were helping improve the Shopify ecosystem. Checkout was a sore spot of theirs for many years.”
From there he goes on to share a story of how Shopify's COO, Harley Finkelstein, misled him into thinking that in 2017, even though Shopify was banning all external checkout providers, they wanted to make Bolt the only exception, and that a partnership was on the horizon.
So Bolt followed Shopify's instructions by turning off their checkout app for all their Shopify merchants, but claims he was then “ghosted” by Shopify. And when Shopify finally came back into the fold, they offered a partnership with restrictions that did not work for Bolt's core UVP. They wanted Bolt to run as a payment option like Google Pay instead of a checkout experience, which is how Bolt operates.
He ends his tweet storm by saying, “Shopify used their ecosystem to build a big business. Now they're eating the ecosystem that made them.”
In hindsight, Ryan Breslow was naive and partially to blame for the miscommunication. Why agree to shut down your entire Shopify operation before finalizing a formal partnership agreement with Shopify?
However, the termination of external checkout apps was inevitable, even if he had pushed Shopify for details of the partnership ahead of time. And he does make a point about Shopify developing core features that were previously powered by partner apps, and then adjusting their policies or API to make their in-house feature the best, or at times, the only option.
Even I wrote about that back in Sep 2021 when I reported on the Yotpo + Shopify partnership. I wrote:
- Shopify’s app-based ecosystem has its benefits to the platform and their merchants, but it’s a double edged sword because it creates a fiduciary and ethical responsibility to a community of developers that could at times be at odds with the best interest of their bottom line and/or their merchants.
- One of those times is when Shopify chooses to either pick a winner, as is the case with Yotpo, or compete with their developers directly by adding core features to Shopify’s platform that were previously only available to merchants via 3rd party apps — recently such as Shopify Mail & Shopify Chat.
- Shopify investing or acquiring apps and positioning them with early access development advantages is comparable to Amazon launching a private label version of their merchants best selling items. It unfavorably benefits the company’s vested interests over that of their development partners in Shopify’s case or merchant partners in Amazon’s case.
Flash forward to today…
Recently, BigCommerce and Bolt announced that they are deepening their checkout partnership. In Oct 2020, the two companies teamed up to offer Bolt's one click checkout service to BigCommerce merchants — however only to their Enterprise customers. Now the Bolt checkout will be available to all merchants on BigCommerce. Bolt is also available on Adobe / Magento, Salesforce, SAP, PrestaShop, and other platforms.
With this news, 2PM is positioning Bolt as the “underdog rising up to fill the spot Shopify once held… the challenger to Big Retail… the platform for the people.”
The 2PM article goes on to say:
“Can Bolt arm the rebels in the same way Shopify did by aligning itself with a mainstream competitor? It’s an approach likely born of necessity. Bolt has a big valuation to meet. It doesn’t have time to slowly build a full response to Shopify. BigCommerce has growing revenue but widening losses. With Bolt as a marketing and sales partner, I can see how management at BigCommerce can envision the checkout solution as meaningful value-add beyond the OpenSaaS philosophy that both share.”
The response to Brewslow's tweet storm was mixed:
Some agreed with him and compared Shopify to the likes of Apple in regards to how they run their app marketplace, or to Amazon in regards to how the company makes their own branded versions of best selling products / apps.
Others thought that Brewslow was being dramatic and playing the victim card, and that developing core features was a natural part of building an e-commerce platform.
What are your thoughts? Hit reply and let me know.
2. Shopify bans sale of cannabinoid products with more than 0.3% THC
Shopify users selling cannabinoid products that contain more than 0.3% of any form of THC must now remove them from their online store, according to Shopify’s Hemp and Hemp-derived products policy
According to Shopify’s policies, all hemp or hemp-derived products sold in the U.S. and Canada must not exceed 0.3% total THC or make any medicinal claims, unless approved by the FDA.
This has been the policy for quite some time. However until recently, many Delta-8 brands have gotten away with selling federally legal cannabinoid products, including Delta-8 THC, Delta-10 THC, THCOa, and HHC, through their Shopify stores — but that grace period seems to be coming to an end.
CBD, the other major active component in cannabinoids, is allowed according to Shopify, however, not all CBD and Hemp products are welcome. There are limitations with those products too.
As far back as I can remember, Shopify has had an ambiguous relationship with cannabinoid products. At one point they were banned completely. Then Shopify started allowing CBD products. Then they started marketing to CBD companies with a special landing page geared towards attracting CBD sellers to their platform.
However all the while, their default merchant provider, Shop Pay (formerly Shopify Payments), did not allow the sales to be processed through their system. So in other words, Shopify is only providing part of a solution — here's the e-commerce website but go find your own merchant processor that caters to CBD (and btw you have to pay our 2% transaction fee on top of your already higher merchant processing fee).
Finding merchant processors that allow CBD has been difficult in previous years. Oftentimes I've worked with clients who found local banks who'd help them process the sales, flying somewhat under the radar, but they kept those banks a closely guarded secret because they didn't want every other CBD seller to jump on board and cause the bank to re-evaluate their CBD policies. These merchants had an on-going fear that they could be shut down any day by their merchant processor. Nothing was guaranteed. Now there are merchant processors who claim to cater to this industry, but their rates are higher due to the increased risk (or so they claim).
Either way, merchants who sell THC or CBD products via Shopify better not zone out quite yet, as staying in business might not be a process that's too chill, man.
3. Shopify says it has removed most pirated content
In early December, I reported that five major publishers were suing Shopify for allowing the sale of pirated textbooks and test materials on their platform and failing to remove stores that violate their trademarks and copyrights.
And in January, Shopify rejected those claims and told a Virginia federal court that it deals with repeat copyright and trademark infringers on its platform properly — claiming that fewer than 2% of the merchants the publishers targeted were still active on the platform.
Last week, Shopify revealed the information filed in documents in a Virginia court, where the company continues to deny all the publishers' claims hat it caused them harms, losses, or damages.
Shopify says it has:
- counted more than 5,000 takedown requests or trademark infringement notices from the publishers
- reviewed more than 50,000 unique URLs involving more than 1,750 merchants submitted by the publishers between October 2018 and January 2022
- removed more than 90% of the URLS, of which 95% were taken down within five business days and over 67% within one business day.
In its court filing, Shopify argued that the case is better suited to go before Congress, which Shopify said has precluded suits for monetary damages against companies that host the infrastructure infringers might use.
4. Should cryptocurrency firms block Russia?
Much of the financial world is scrambling to distance it self from Russia during the invasion of Ukraine, but cryptocurrency exchanges are being more ambivalent. Is that a good thing or a bad thing?
David Penn off Finovate asks:
- “Is this a function of the underlying libertarian spirit that powers much of the enthusiasm for digital assets?”
- “Or is this just a reflection of a relatively young industry that is not yet ready to take on the responsibilities that its growing role in the financial world will eventually demand?”
Binance founder and CEO Changpeng Zhao explained his companies position as, “We are not political, we are against war, but we are here to help the people. There are a few hundred individuals that are on the international sanctions list in Russia, mostly politicians, and we follow that very, very strictly.”
Zhao added that Binance draws a line “between the Russian politicians who start wars and the normal people, many normal Russians do not agree with war.”
Kraken CEO, Jesse Powell tweeted, “I understand the rationale for this request (to block Russians from Kraken’s platform) but, despite my deep respect for the Ukrainian people, Kraken cannot freeze the accounts of our Russian clients without a legal requirement to do so.”
Should crypto remain open to everyone at all costs? Or is that too dangerous? What are your thoughts?
5. Amazon entices new sellers with up to $50k in incentives
Amazon launched a New Seller Incentives program for professional sellers who list their first product on or after January 1, 2022. The program is targeted at new sellers, but existing sellers can receive the incentives if they launch in a new region including US, Japan, and Europe.
Incentives for new sellers include:
- 5% bonus on up to $1 million in eligible branded sales
- $200 in credits for Amazon Vine
- $100 in credits for Transparency
There are also additional incentives for new sellers who use Fulfillment by Amazon (FBA) including:
- $100 in credits in inventory shipping fees for using the Amazon Partnered Carrier program
- $200 in credits in fulfillment fees for using Amazon Global Logistics.
- Auto-enrollment in FBA New Selection, providing free monthly storage, liquidations, and return processing
- $200 in promotional clicks for using Sponsored Products
Amazon is also offering a $50 credit for using Amazon Coupons.
Amazon Vice President of North America Marketplaces, Ben Hartman, said that it was targeting small and medium-sized businesses all over the world who are building and designing new products, as opposed to going after mega brands.
6. Walmart launches AI-powered try-on tech for clothing
Last May, Walmart bought the virtual clothing try-on startup, Zeekit, which shows shoppers how they would look in an item by simulating their body dimensions, fit, size, and even the fabric of the garment itself. Now Walmart is bringing that tech to Walmart.com and its mobile app.
The feature is called “Choose My Model” and allows Walmart customers to select a model that best matches their own appearance and body type. At launch, you can choose from around 50 different models to find one that reflects your own skin tone, height, and body shape. The virtual models range in height from 5'2″ to 6'0″ and in sizes XS through XXXL. Walmart will continue to expand its model selection in time.
The feature will work with thousands of items across Walmart's private brands including Free Assembly, Scoop, Sofia Jeans, ELOQUII Elements, Time and Tru, Athletic Works, Terra & Sky, and more. Over time it will expand to include more national brands, but it started with its own brands because of easy access to the inventory and catalog of items.
I tried Choose My Model on Walmart.com and I'd judge it as — just okay. My expectation was more of an avatar experience. I thought I was going to be creating a digital shopper in a similar way that you create a player on PGA Tour 2K21 and then dressing him. But in actuality, Walmart is simply taking pictures of clothes with a variety of models of different sizes and dynamically displaying those images on the product listing. It's cool! But not revolutionary. Try it out and let me know what you think.
7. Highlighting Shopify's 2022 Commerce Report
- The biggest challenge facing e-commerce is the cost of customer acquisition, which is set to rise in the face of increased DTC competition and the increasing cost of advertising.
- ROI on ads is decreasing in turn: “With privacy laws that limit marketers’ ability to target ads and consumers who are better at blocking ad interruptions, it’s becoming tougher to get a decent return on advertising spend.”
- Brands should focus less on short-term returns and more on long-term brand building. (Paul says: Easier said than done sometimes!)
- 52% of shoppers are more likely to purchase from a company with which they share values.
- The overall boom in spending online is continuing. The e-commerce market is expected to grow by almost $11T between 2021 and 2025.
8. Highlighting Yottaa's 2022 eCommerce Technology Index Report
Speaking of annual reports, Yottaa, Inc, a cloud platform for accelerating and securing e-commerce digital experiences, published their 2022 eCommerce Technology Index, which is a report designed to help retailers research new innovative features for their sites and understand the impact 3rd party technologies can have on site performance and digital experience.
Martech Series highlighted some of the report's key findings which I'll summarize below:
- E-commerce is officially a grownup. Brands and retailers have real expectations of their digital stores to contribute a significant share of their sales.
- Site innovation comes with a price. Brands must weigh an important trade-of with leveraging 3rd party technologies, which is that the operations gains will come at a cost of site performance.
- The value of 1 second. The report shows that 1 second slower page loads increased bounce rates by 12% and reduce conversion by nearly 6% on mobile.
- Optimization is key. When 3rd party technologies are optimized and sequenced, brans can deploy any 3rd party regardless of site impact and still provide great digital experiences.
Rich Stendardo, CEO of Yottaa, said, “Now more than ever, brands need to optimize digital experiences to better serve their customers and drive online revenue.”
9. Other e-commerce news of interest this week
- Amazon reduced the credit it offers charities to use their Amazon Web Services from $2000 to $1000. Many charities were unaware of the change, only discovering it when it came time to renew.
- Hepsiburada, a Turkish e-commerce platform, launched the “Women's Cooperatives: Stronger with E-commerce in the Pandemic Project” in collaboration with partners. The project aims to improve the digital and business skills of female entrepreneurs by providing training and mentoring support to women who have ben affected by the pandemic.
- Square Inc. has hired longtime in-house attorney for Amazon, Cameron Cohen, who has worked in the Amazon legal department for the past 12 years.
- A Singaporean man was arrested for involvement in a series of e-commerce scams involving the sale of vaccinated travel lane (VTL) bus tickets. He faces up to 10 years in prison and a fine. Less than I would've expected for Singapore!
- Block is being investigated by the Consumer Financial Protection Bureau and several state attorneys general regarding its Cash App service, which has requested information on their handling of customer complaints and disputes. Block has said that it's cooperating with all parties.
- Very is migrating customer journey to commercetools, as the company moves its tech stack towards a microservices-based, API first, cloud native, and headless architecture (MACH).
- BigCommerce announced the winners of its 2021 Annual Partner Awards where it recognizes top-performing partners. Next year they need to make an E-Commerce News Partnercategory so that I can win it!
- PayPal is being sued in a class action law suit that alleges their BNPL fees target poor people. The plaintiff says PayPal misrepresented the fees for the service, leading customers to being charged excessive fees.
- Jamie Iannone, CEO of eBay, said in an interview with TheStreet.com that they are exploring the possibility of accepting cryptocurrencies as a means of payment.
- Breville, a global equipment manufacturer, launched beanz.com, an e-commerce platform for customers to subscribe to freshly roasted coffee from 5 curated specialty roasters. Everyone's building a marketplace nowadays!
- Amazon launched Amazon Aware, a collection of more than 100 clothing, beauty, bed & bath, and household products designed by an in-house team that use recycled or sustainable materials.
10. This week in seed rounds, IPOs, & acquisitions….
- ICZoom Group, which operates ICZoomex.com, a Chinese B2B e-commerce platform for electronic component products, has filed to raise approximately $25M through a US initial public offering on NASDAQ under the symbol IZM. The company is planning to offer 4.4M shares at between $5 to $6 per share.
- tabby, a UAE-based BNPL startup, raised $54M in a Series B extension round to its initial $50M Series B close in August last year, bringing their total amount raised to $180M. The round was led by Sequoia Capital India and STV, and the funding will be used to support the startup's expansion across the region, starting with Egypt.
- Convelio, a shipping automation platform for luxury goods, raised $35M, bringing its total amount raised to $45M. Convelio was responsible for 14k shipments last year with a cumulative value of $265M. It plans to use the fresh funding to explore other market segments in the world of bulky, valuable, and fragile items.
- E2open, a supply chain management software vendor, acquired Logistyx Technologies, a shipping and fulfillment technology firm, for $185M. E2open said that the deal enhances its global footprint for multi-carrier e-commerce shipping management and will expand their reach by adding Logistyx customers, which includes retailers, manufacturers, and logistics providers.
- 1WorldSync, a provider of omnichannel product content solutions, acquired Swogo, an e-commerce bundle technology that helps retailers drive profitable growth. The acquisition will allow 1WorldSync to introduce Swogo's upsell and cross-sell revenue to their clients, as well as expand their footprint in Europe.
- Zaapi, a Thailand-based app that enables small businesses to launch e-commerce platforms, raised $4M in funding in a round led by GFC, Flourish Ventures, and Partech. The new funding will allow the company to increase their efforts to build and scale their product regionally.
- MyPlace, a New York-based social network designed to help friends share their private homes, raised $5.8M in a round led by Freestyle Ventures. MyPlace has a running beta community of over 3k members and a waitlist of over 7.5k people. The company will use the funding to bring its product out of beta and launch an iOS app.
- Perfect Corp, a Taiwan-based virtual beauty try-on app developer, is merging with a blank check company to go public in the U.S. at a $1B valuation. Perfect Corp's technologies have been deployed by more than 420 brans in over 80 countries, and partners with Meta, Snap, and Alibaba to offer try-on tools to their users.
- Chari, a Moroccan B2B e-commerce platform, acquired Axa Credit, the credit branch of Axa Assurance Maroc, for $22M, following Chari's recent $100M seed round extension. The acquisition makes Chari one of the only startups to acquire a local branch of a global bank, and is subject to approval from the Moroccan banking, insurance, and antitrust authorities.
- AgriAku, an Indonesian B2B marketplace for farmers, raised $6M in a Pre-Series A round led by Go-Ventures. The funding will be used to expand their team and increase their market penetration. AgriAku launched in May 2021, has 10k registered farmer stores, and has seen month-to-month GMV of 200% over the past four months.
- 99minutos, a provider of logistics services for e-commerce vendors in Latin America, raised $82M in a Series C round led by OAK HC/FT. The company will use the new funding to upscale new business models, expand further into Latin America, and invest into new sustainability initiatives in line with their low-carbon goals.
- Fanatics Inc., a sports merchandising platform, raised $1.5B in a round led by Fidelity Management & Research Co and MSD Capital LP, bringing their valuation to $27B. The company said that an IPO is likely but that it remains focused on building the business for now.
- Zeller, an Australian bank for SMBs, raised $100M AUD in a Series B round led by Headline, doubling its valuation to more than $1B AUD. The company announced a pre-launch Series A in March 2021 and has since signed up over 10k Australian businesses.
- SoBanHang, a Vietnamese e-commerce platform for small businesses, raised $2.5M in a round led by FEBE Ventures, Class 5, Trihill Capital, and AlleyCorp, bringing its total amount raised to $4M. The company wants to focus on serving the nano and micro segment of household businesses and solo sellers that cannot afford to invest in POS software and other online infrastructure.
- Dianxiaomi, a China-based cross-border e-commerce solutions firm, raised $100M in a Series C round led by Tiger Global Management and Huaxing Growth Capital. The company will use the new funds for talent acquisition, product development, service upgrades, and global expansion.
- Cococart, a Singapore-based e-commerce startup, raised $4.2M in a round led by Forerunner Ventures and Sequoia Capital. The new funding will be used to grow their team, accelerate product development, and expand to other countries.
- WeCommerce, a Canadian holding company, is set to acquire KnoCommerce, an acquirer of Shopify companies, for $2.6M CAD in cash and an earn-out based on revenue growth for 18 months. WeCommerce’s owned companies and brands include Pixel Union, Out of the Sandbox, Yopify, SuppleApps, Rehash, Foursixty and Stamped.
What'd I miss?
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Paul E. Drecksler
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