Are you ready to start shopping from your TV with QR codes? Love it or hate it, merch is getting ready to take over streaming platforms.
This week I dive into Disney+'s new exclusive merch, a new Gmail feature that makes ordering online easier (except for on Amazon), and the EU's latest attempt at curbing Apple and Google's market dominance.
I also cover stories about Snapchat integrations, Shopify shutting down its marketplace for buying and selling stores, and WhatsApp's big new Communities feature.
All this and more in this week's 94th edition of Shopifreaks. Thanks for subscribing and sharing!
Poll of the Week 🗳️
Do you LOVE or HATE the idea of streaming services like Disney+ and Netflix offering shoppable merch through their platforms?
Last Weeks Poll Results: 61.7% of respondents believe that this year's holiday shopping will fall short of last year's GMV. [View Poll]
Stat of the Week 📈
Amazon has over a thousand Rivian electric vans making deliveries in the U.S. They've delivered over 5M packages in nearly 100 U.S. cities since launching in July. – According to The Verge
1. Disney+ Exclusive Merch
Disney+ announced the launch of a new test that will allow subscribers to shop exclusive merchandise from their brands directly from the detail pages of select movies, series, and shorts on the streaming service.
The products will be available for purchase to U.S. users who have been verified to be 18 or older. (Sorry kids!)
Here's how it'll work…
Disney+ subscribers will hold up their phone to the TV screen to scan QR codes that will bring them to a website on their phone to view and purchase the merchandise. Alternatively they'll be able to visit a special URL if they somehow missed the pandemic and still don't know how to use QR codes.
Users will be required to login to the e-commerce platform using their Disney+ credentials, which means that for the time being, the merchandise will be exclusive to Disney+ subscribers only.
Current brands available in the shop include Star Wars, Marvel, Disney Animation Studios, and Pixar.
I love that Disney is making the merchandise exclusive to Disney+ subscribers. It adds a premium feel to the new service, as opposed to just throwing QR code ads up on the screen for merch that's readily available everywhere and to everyone.
Requiring a Disney+ subscription also means that Disney already has the user's payment information on file, which results in a frictionless checkout.
Whether we love it or hate it, streaming services are moving towards adding to their revenue streams with merch. It's refreshing to see Disney add a level of exclusivity to the offering.
In October 2021, I reported that Amazon launched an Artist Merch Shop, which sells a collection of officially-licensed merch including t-shirts from Queen, The Rolling Stones, and Justin Bieber.
That same month, I reported that Spotify and Shopify teamed up to allow artists on their platforms to list merchandise for sale directly on their Spotify profiles.
Four months earlier, I reported that Netflix launched Netflix.shop – their first owned and operated retail outlet to sell licensed products based on its original programing.
I've also covered several stories about “T-Commerce”, which many companies, including Amazon and Roku are experimenting with.
Do you love or hate the idea of streaming services offering shoppable merch to their platforms? Don't forget to take the poll.
2. Gmail package tracking
Google is building package tracking right into your Gmail Inbox so that you don't have to open a “your item has shipped” email or click on a tracking link to find out the estimated delivery date.
The company said in a blog post that you’ll start seeing “a simple, helpful view of your package tracking and delivery information right in your inbox” in the next few weeks.
Gmail will show you the delivery date on the list item for any shipping e-mail from within the Inbox view, and a card with more detailed info if you open the e-mails. Similar to how they display Calendar invites and travel itineraries above the e-mail itself.
Gmail will also be able to notify you when a package has been delayed and bring the order e-mail to the top of your Inbox — although that feature won't roll out for several months.
Here's the big catch though. The feature will work with most major U.S. shipping carriers EXCEPT… Amazon!
Amazon's shipment notification e-mails don't include tracking information or even tell you what products have shipped, likely because Amazon doesn't want Google to be able to track what you bought from it and use that info for advertising. Very sly Amazon!
It's unfortunate for users that they won't be able to have a fully consolidated view of all their shipments within their Gmail Inbox, but then again, most Amazon shoppers have the app installed on their phone anyway for shipment notifications.
3. BigCommerce & Snap Team Up
BigCommerce and Snapchat have launched a new app together that enables U.S. merchants to integrate their store and sync their product catalogs.
The new app will allow BigCommerce merchants to create shopping ad campaigns on Snapchat from within their BigCommerce dashboards using Snap's made-for-ecommerce ad formats.
After installing the app, merchants can use the Snap Pixel to track conversions and view, analyze, and edit campaigns.
This new direct integration makes it easier for BigCommerce merchants to access Snapchat's 363M daily active users, who are primarily of a younger generation.
With this new Snap integration, BigCommerce now offers direct integrations with Amazon, Facebook, Google, TikTok, and more.
Snapchat for BigCommerce is currently available in the US and will be expanding into additional markets into 2023.
Snapchat also teamed up with Amazon this week for AR shopping, starting with eyewear. Users will soon be able to see how eyewear styles from Amazon Fashion look on their face before ordering a pair.
4. Shopify shuts down Exchange Marketplace
Shopify shut down Exchange Marketplace, its platform for buying and selling Shopify stores, on Nov 1st.
Shopify merchants who want to sell their stores will now have to use other marketplaces such as Flippa or Empire Flippers, or sell their store to an aggregator like Open Store or Foundry.
Exchange Marketplace launched in 2017 and offered a unique level of transparency into the buying and selling of Shopify stores, given that the exchange had access to the Shopify store's historic sales data.
It's unclear why the exchange will be shut down. Shopify only wrote in a statement, “There will be no exceptions for stores that are not sold by this time. This app will be fully decommissioned upon this date and will no longer be accessible to merchants. All the data and listings on the app will be deleted. We’d encourage merchants to exchange contact information with any buyers they may be currently discussing sales with.”
Maybe they accidentally fired all the people who ran Exchange Marketplace?
5. EU's Digital Markets Act
A few week's ago I reported on EU's new Digital Services Act, an online safety-focused overhaul of e-commerce rules, and the first major update to the legal framework for digital services since the year 2000.
The EU also recently launched the Digital Markets Act, with a goal of requiring companies such as Apple and Google to offer alternatives to allow third-party app stores on its platforms and alternative payment systems.
The Digital Markets Act entered into effect on November 1 and will be applicable on May 2, 2023.
Gerard de Graaf, an EU official who helped pass the DMA, expects it to affect about a dozen companies and said, “We expect the consequences to be significant. If you have an iPhone, you should be able to download apps not just from the App Store but from other app stores or from the internet.”
Graaf is now in the U.S. to negotiate with affected companies, who the EU classifies as “gatekeepers”.
According to the European Parliament, a gatekeeper has to provide browsers, messaging services, or social media, have at least 45M monthly users in the EU, and they must also have 10k annual business users, a market cap of at least €75B, or a yearly turnover of €7.5B.
The EU will announce the group of companies in spring 2023, and they will have six months to comply with the law.
What are your thoughts? Should Apple and Google be required to open their devices up to 3rd party app stores? Hit reply and let me know.
6. WhatsApp launches Communities
WhatsApp launched Communities, a new feature that offers larger and more structured discussion groups. Previously, WhatsApp only offered group chats, which got a bit cumbersome to keep up with as they grew.
Communities is designed to help organizations, clubs, schools, and other private groups better communicate and stay organized through new features including admin controls, support for sub-groups and announcement groups, 32-person voice and video calls, larger-file sharing, emoji reactions, and polls.
While some features of Communities are comparable to those of Facebook Groups, the latter is designed to connect strangers who share a common interest, whereas the former is meant to be used by members who are already connected in the real world. Unlike Faceboook, a phone number is required to use WhatsApp, and phone numbers are the messaging platform's primary login. (However the phone numbers will be hidden from the whole group within Communities.)
Also unlike Facebook Groups, which are discoverable on the platform, WhatsApp Communities are hidden. There will not be a search and discovery feature available. Users will have to be invited to join a Community.
Communities can support groups of up to 1,024 users and offer end-to-end encryption. Admins of existing group chats will be prompted to migrate their group chats to the new Communities.
Why is this e-commerce related? Just you wait…
In August I reported that Jio Platforms was bringing grocery shopping to India's 500M WhatsApp users, in what they said was a global-first end-to-end shopping experience on the platform. Users are now able to browse JioMart’s grocery catalog directly within the app, add items to their cart, and make the payments via local payments rail UPI without ever leaving WhatsApp.
Since then I've also covered various platforms like Heyday and WATI developing tech to integrate with Meta in a conversational and retail capacity.
Given that WhatsApp is used by over 2B people worldwide, many of whom it is their primary messaging app to communicate with friends, family, and businesses… Communities appears to be the beginning of bringing group commerce (such as Marketplaces) over to WhatsApp, a platform where commerce is more embraced than on Facebook.
7. E-commerce brands at risk
Despite record funding and patronage during the pandemic, many e-commerce brands are at risk now that consumers have returned to stores, and that consumer spending in general is down.
Inflationary and volatile economic environments have impacted both brands and consumers, as businesses have had to increase prices to improve their button line.
Krista Morgan, general partner of Stage, a female-led private equity group that acquires controlling interest in early-stage companies, outlined some of the risks that brands are facing in a recent interview with Forbes, which I'll highlight below.
- The obvious risk is that consumers become more price sensitive and choose generic options.
- Brands will likely face inflationary pressure in their supply chain, which will compress margins making it harder to maintain a competitive price.
- We also haven’t seen an inflationary environment in the modern ecommerce market.
- Middle and upper-middle market consumers have been driving the increase in new, modern brands. It is unclear how a recessionary environment will impact these consumers.
- While we’re likely to see fewer new and emerging brands, it is possible this recession will create prosperous opportunities for more established trend-forward brands, as consumers are less likely to explore and experiment with niche, higher cost brands in a recession.
- VC-backed brands that built an unsustainable business model relying on continuous investment could have trouble rightsizing if the money stops flowing. We’re already seeing a pull-back in venture funding that is likely to impact consumer brands first and foremost.
- I believe the number one thing consumer and e-commerce investors will be looking at are retention metrics. Advertising costs rose in 2021 largely driven by the changes Apple made to their privacy settings. With cost of acquisition increasing, brands that have figured out how to increase the lifetime value of their customers by bringing them back again and again will prove valuable.
8. E-commerce in Latin America
Consumer habits in Latin America changed drastically during the pandemic, possibly more than any other region.
Out of necessity, people became e-commerce shoppers for the first time and started buying essentials like groceries, household goods, and apparel online.
I can attest! I spend most of the year in Tena, Ecuador (in the heart of the Amazon jungle) and have seen the rise of e-commerce adoption first hand in Ecuador during the past couple years.
Practical Ecommerce shared some insights into how Latin America is one of the most rapidly growing e-commerce markets in the world, which I'll highlight below:
- Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, Panama, and Peru comprise the top online markets, where collectively 79% of the population have Internet access and 50% of consumers shopped online in 2021.
- The biggest hurdles in Latin America are payments and logistics, given that half of the population has no bank account and rural areas are difficult for last-mile delivery companies to conquer.
- Argentina’s Mercado Libre is the preeminent player. Their revenue grew 90% in 2020 when the pandemic forced the closure of brick-and-mortar stores.
- Consumers in Latin America remain suspicious of the quality of online goods and rely on customer reviews. (That's probably fair to say about consumers everywhere.)
- Brazil has the strongest preference for mobile for online shopping at 48% in 2022, up from 27% in 2017. Colombians and Costa Ricans also are devotees of mobile commerce, but usage has not increased as much over the past few years.
The full article shares a lot more interesting stats. I recommend you check it out if you do business (or are planning on doing business) in Latin America.
9. Other e-commerce news of interest
Shopify has begun unifying its fulfillment network with Deliverr, President Harley Finkelstein said on a Q3 earnings call last week. The process is expected to be completed in Q1.
The USPS revealed that they are monitoring social media to measure custom satisfaction by zip code via a heatmap that geographically displays comments left on their Facebook and Twitter accounts and on online review sites. With the help of the map, a South Florida district observed a 31% reduction in “where is my package?” complaints, a 51% reduction in Certified Mail exceptions, and an 85% drop in “where is my mail?” concerns.
Tock, a Squarespace company that allows guests to discover and book culinary experiences at restaurants, bars, wineries, pop-ups, and events, launched its own e-commerce platform, Tock Wine Shop, which enables winery partners to sell directly to consumers while continuing to manage tasting reservations on its all-in-one platform. The shop is launching with an initial collection of thirty wineries, with hundreds more to come.
Retail Federation (NRF) reported that last year’s holiday sales grew 13.5% over 2020 and forecast this year’s sales will grow between 6% and 8% over 2021. Online and other non-store sales, which are included in the total, are expected to increase between 10% and 12%.
Udaan, a Bengaluru-headquartered startup that helps merchants secure inventory and working capital, laid off 350 employees as part of cost-cutting measures and to tackle redundancies in certain roles, as part of their journey to become profitable. Last week I reported that the company raised $120M in convertible notes and debt and hopes to be ready for the public markets in 12-18 months.
Jumia, an African e-commerce Amazon-like marketplace, saw its co-founders Jeremy Hodara and Sacha Poignonnec step down as co-CEOs. Francis Dufay, who previously held the CEO role at Ivory Coast will replace both co-founders as acting CEO.
When Jo Bennett found out there were co-CEOs, she said, “Two guys doing one job? We've got to do something about that. This is knucklehead talk. I'm not going to bite it. You can’t give me gravy and tell me it’s jelly ’cause gravy ain’t sweet!”
Amazon Prime Video launched a new mobile-only plan for users in India for Rs 89 ($1.09) a month billed annually. The mobile plan will compete against similar subscriptions offered by competitors like Disney+, Hotstar, and Netflix.
FedEx owned ShopRunner, a platform that connects consumers with more than 100 retailers and brands and offers an Amazon Prime-like shipping incentive, launched a new app designed to simplify online shopping. The app allows users to discover new brands and connect with retailers through a single feed that can be optimized through their browsing and purchase history. Users can also purchase, ship, track, and return items directly through the app.
Splitit partnered with Checkout.com to offer their BNPL services through the platform. The partnership will see Checkout.com's merchants and marketplace adopt Splitit's Installment-as-a-Service platform, which debuted in May.
Substack launched Substack Chat, a new feature that allows writers to communicate directly with their most avid and loyal readers within the mobile app. With the new chat feature, Substack is taking on Twitter, Discord, Slack, and Telegram by eliminating the need for its writers to “frankenstain together different software tools and cross-reference subscriber lists.”
Instagram will soon have NFT creation and trading tools built in, but in-app purchases will be “subject to applicable app store fees.” At launch, Instagram will use the Polygon blockchain for NFT minting and pull NFT metadata from OpenSea.
Apple is now worth $2.307T, more than Alphabet ($1.126T), Amazon ($940B), and Meta ($240B) combined.
Mastodon, a free and open source decentralized social network that launched in 2016, gained more than 230k new sign-ups since Oct 27, the day Musk took over Twitter. From what I saw, it's currently mostly just a mix of posts from users about being new to Mastodon, comparing it to Twitter, introducing themselves to no-one, and patting themselves on the back for not being on Twitter. Then they've returned to Twitter to talk about how they're on Mastodon because they just “cannot with Twitter anymore!”
Benitago Group, an FBA aggregator, confirmed that it is NOT shutting down its operations or selling its assets, despite rumors. The company is merely laying off some employees as it shifts gears toward brand incubation and operations.
The online banking company Chime also laid off 12% of its employees last week, or about 160 jobs, blaming current marketing conditions. Chime makes money by earning a fee from payment processors like Visa every time a customer uses a Chime debit or credit card and was valued at $25B after a funding round in August last year.
Stripe has launched in Thailand, continuing its goal of expanding into the Asia Pacific region where it spotted demand for its payment tech. The expansion comes in the week that the company fired about 1,000 workers, and after seeing its valuation fall about 27% to $74B this year.
PayPal announced during an earnings call that 25M consumers are now using its BNPL option, equating to 150M loans over 2.2M unique merchants, with nearly $5B in Q3 volume, up 157% YoY. Meanwhile at Block, BNPL through its acquired Afterpay contributed to $150M of gross profit, split across Square and Cash App, with GMV in Q3 to the tune of $5.4B.
Amazon will be freezing their recruitment plans for its corporate sectors. No specific dates were given regarding how long, but the announcement said that the hiring freeze will last for a few months.
New Zealand proposed new BNPL regulation, such as requiring providers to carry out affordability checks for purchases above NZ$600 ($424), as the country has seen BNPL spending increase from NZ$755M in 2020 to NZ$1.7B in 2021. Government officials will collect feedback for the proposed rules and roll out final regulations next year.
Drizly, the Uber owned on-demand alcohol delivery platform, announced a new brand direction. It will head in the direction of an e-commerce resource for any occasion with a focus on gift giving. The overhaul comes just a little over a year after Uber purchased the company for $1.1B.
10. Seed rounds, IPOs, & acquisitions
Shopify acquired Remix, an open source web framework that leverages distributed systems and native browser features instead of using static builds, with plans to integrate Remix into Hydrogen, its framework tool for building storefronts. Remix will remain as an independent and open source framework.
Optiwise.ai, a marketplace optimization platform that asissts brands and retailers in scaling their e-commerce business across multiple marketplaces, raised $1.3M in a round led by StartupXseed Ventures. The company will use the funds to continuing building their product, expand their team, and grow beyond North America to other emerging markets.
MoEVing, a last mile EV platform in India that enables drivers to own and operate electric vehicles, raised $2.5M from JSW Ventures, bringing its total amount raised to $10M. The funds will be used to expand across multiple cities in India and grow their team.
Krepling, an e-commerce platform that enables merchants and retailers to build and scale their e-commerce operations through no-code and AI, raised $1M in a pre-seed round led by Jason Calacanis, LAUNCH, Jon Oringer, and Brickyard. The company will use the funds to evolve its model of “democratizing the functionality being brought about by other e-commerce 3.0 and headless players” and expand its team
Topline Pro, a generative AI platform that helps home services professionals manage their online presence across directories, marketplaces, and social media, raised $5M in a round led by Bonfire Ventures, TMV, and BBG Ventures. The product enables professionals to build a website, collect payments and reviews, manage local listings, schedule bookings, and develop customer relationships.
WalletConnect, a New York-based web3 communications protocol company that establishes an end-to-end encrypted connection between a wallet and an app, raised $12.5M from Shopify, Coinbase Ventures, ConsenSys, Circle Ventures, Polygon, Uniswap Labs Ventures, and others. The company will use the funds to the growth of its suite of APIs and expand operations.
Quinio, an e-commerce aggregator that acquires consumer packaged e-commerce brands in Latin America, raised $40M in equity and debt. The company focuses on brands in the areas of home and kitchen, beauty and personal care, baby, health, and household items, and already owns several brands with presences in Mexico, Colombia, Chile, and the U.S.
Dropit, a retail technology platform that unifies merchants' online and in-store inventories, raised $25M in a Series C round led by Vault Investments, bringing its total amount raised to $50M. The company enables brands to sell their in-store inventory online, essentially converting brick-and-mortar stores into local distribution hubs.
Cover Genius, an embedded insurance firm that works with major brands like Amazon, Skyscanner, Shoppee, and more, raised $70M in a Series D round led by Dawn Capital. The funds will be used to expand the company's footprint in the ticket and live entertainment space with embedded protection for ticket sellers, platforms, and live event companies.
Givingli, an online gifting service that lets users customize digital greetings and send gifts, raised $10M in a Series A round led by Seven Seven Six, bringing its total amount raised to $13M. The company makes money by charging users a monthly subscription fee for access to the platform, plus additional fees for premium cards.
PhotoRoom, a French startup that helps e-commerce merchants remove photo backgrounds, raised $19M in a Series A round led by Balderton Capital. The app has attracted 40M downloads on iOS and Android with 7M monthly active users, and will use the funds to bring generative AI to its app, starting with Stable Diffusion.
What'd I miss?
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See you next Monday,
Paul E. Drecksler
PS: At a job interview last week, the hiring manager asked me, “Where do you see yourself in five years?” I said, “My greatest weakness? I'm a bad listener.”