Hi Shopifreaks
Happy New Year! What a year it's been! The biggest change for me? Mia went from being a baby to a little girl in the span of a year! I've had very little experience with babies prior to having my own, and one of the biggest surprises for me has been how fast she's grown and changed during her first 21 months on Earth. In the span of a year she went from crawling to walking to running, and from making sounds to forming full sentences.
Shopifreaks has grown too! Last year at this time, we had just over 7,800 subscribers. Today we enter the new year with 14,680 readers. Most of the growth has been organic from readers sharing the newsletter with their colleagues, so thank you for that.
What exciting plans do you have for your life and business in 2025? Hit reply and let me know.
And now onto this week's final edition of the year.
In this week's edition I cover:
- 2025 E-commerce Predictions from Top Industry Experts
- Mexico ends border-skipping
- Something fishy happened at Bench
- WooPayments partners with Klarna and Affirm
- Trump asks Supreme Court to delay TikTok ban
- Republicans debate the future of H-1B visas
- Shein joins the Section 321 Data Pilot program
- Amazon incentivizes merchants to stop selling on Temu
- OpenAI justifies its plans to go for-profit
- Meta to add AI profiles to boost engagement
- An Amazon driver's very stressful day…
All this and more in this week's 206th Edition of Shopifreaks. Thanks for subscribing and sharing!
Stat of the Week
Temu is projected to earn more than $50 billion in total sales this year, according to analysts from AB Bernstein and Tech Buzz China, potentially tripling its 2023 figure. Temu’s website now gets nearly 700 million visits worldwide every month, and Apple recently revealed it was the most downloaded app of 2024 on iPhones in the US.
1. Our third-annual E-Commerce Predictions 2025 report is live!
I love great predictions! It's a fascinating way to gain insight from experts into where a market is headed.
However I particularly love predictions that are easy to call out as “right” or “wrong” a year from now. For example…
GREAT PREDICTION: “BigCommerce gets acquired.” — That either happens or it doesn't, with little room for subjectivity.
BORING PREDICTION: “BNPL continues to have an impact on e-commerce.” — Okay, and? Thanks Captain Obvious!
Each year for the past three years, I've curated your submissions alongside published predictions from e-commerce industry leaders to help shed light on where e-commerce is trending in the near future.
Here are a few highlights from this year's 2025 E-commerce Predictions Report:
- “BigCommerce gets acquired.” — that's one of my predictions
- “6 months until there is a $1,000/month ChatGPT plan” – Matt Schlicht, CEO, OctaneAI
- “I envision at least one B2B-focused commerce platform to be acquired in 2025 and one agency merger/acquisition during the same period.” – Jason Greenwood, Founder, Greenwood Consulting
- “SEO in 2025 is going to be unrecognizable.” – Matt Diggity, CEO, Diggity Marketing
- “With the high likelihood of heavy tariffs on imports taking effect in 2025, the consumer base should expect to see price inflation to match.” – Jessica Sunderland, Director, Amazon Business Unit Lead, Kepler
- “Amazon and Walmart will manage more than 50% of their own freight transportation, including last-mile delivery, making them nearly independent from UPS, FedEx, and USPS.“ – Daniel Sodkiewicz, Co-Founder, GeekSeller
- “Agentic Process Automation will overtake Robotic Process Automation in 2025.” – Dharmesh Shah, Founder, HubSpot
- “There will be 1 great AI embarrassment this year that sets adoption back a couple years, but it will be necessary for the space to evolve.” – Jeremy Horowitz, Managing Partner, Because Ventures
- “Blue links will die on [Google] mobile. Expect continued investment in content blocks that aggregate different types of media vs. a title tag and a meta description.” – Joe Baugnet, Owner, Native Oak Digital
- “Google's dominance in search will crumble by 20%.” – Neal Goyal, VP of Strategic Sales, Disco
- “Retailers will increasingly view their stores as integral parts of their fulfillment networks.” – Craig Moore, Solutions Expert, Körber Supply Chain
- “Next year will be the highest number of IPOs since 2021.“ – another prediction of mine
Read the full versions of the predictions above (and around 30+ more predictions) in our 2025 E-Commerce Predictions report.
Got a prediction to submit? There's still time! Hit reply to this e-mail and send me your predictions before Jan 5th, and I'll add yours to this year's roundup.
2. Mexico ends e-commerce border-skipping loophole
Mexican President Claudia Sheinbaum issued a decree that ends the popular “border-skipping” strategy used by many US e-commerce sellers to avoid tariffs on Chinese goods. This decision was announced on Dec. 19 and took effect immediately, primarily targeting apparel imports.
Quick Background: For many years, US e-commerce businesses have been importing goods in bulk from China into Mexico and then shipping them to the US as individual orders valued under $800, bypassing tariffs imposed on direct imports from China. This gave companies the combined financial benefits of paying less import taxes, shipping in bulk from China, and faster / cheaper individual shipments to the US (as opposed to shipping each individual order direct from China which takes longer).
The new decree introduces several significant changes:
- Import duties on 121 apparel products and 17 made-up textiles have been raised from 20-25% to 35%, and 17 tariff headings related to textiles now face a 15% duty, up from 10%.
- Certain finished products, including clothing and textile articles classified under HTS Chapters 61, 62, and 63, are now excluded from temporary importation under the IMMEX program.
- These changes are effective immediately, including on products currently in transit. Mexico couldn't have given companies 30 days notice? Jeez.
Why did President Sheinbaum do it?
By imposing the higher tariffs, Mexico aims to limit the influx of low-priced imports and level the playing field for local manufacturers. The increased import costs are expected to incentivize retailers and consumers to source products domestically, stimulate growth within the national textile sector, safeguard existing jobs, and potentially create new employment opportunities by supporting local businesses against foreign competition.
In the meantime… Companies taking advantage of this “border-skipping” strategy now face immediate higher operational costs and must explore alternative supply chain strategies to comply with the new regulations and/or pass on the increased cost to consumers.
3. Bench Accounting closes without notice
Bench, a Canadian accounting software platform that helped customers store and manage their bookkeeping and tax reporting documents, abruptly shut down last week.
A notice on its website reads:
“We regret to inform you that as of December 27, 2024, the Bench platform will no longer be accessible. We know this news is abrupt and may cause disruption, so we're committed to helping Bench customers navigate through the transition. From the entire team at Bench, it has been an absolute privilege to serve small businesses for the last 13 years. Thank you for being part of our journey.”
The notice went on to recommend that customers file a six-month extension with the IRS and choose Kick, a new accounting startup that announced its $9M seed raise in October 2024, as their replacement.
WTF? Seriously, what's going on here?
Bench raised $113M since its launch in 2010 from backers including Shopify and Bain Capital Ventures, and touted having more than 35,000 customers — but it only had enough runway left to provide a few hours notice before shutting down?
According to comments on LinkedIn from Bench customers, the company was collecting money and requiring that customers sign new contracts as recently as a day before shutting down.
Bench last raised $60M in a Series C round in 2021. Where did the money go?
The company's co-founder and CEO, Ian Crosby, departed shortly after the last funding round, replaced by unnamed board members who wanted to bring in “a new professional CEO” to take Bench in a different direction, according to Crosby. After his departure, the board appointed Jean-Philippe (JP) Durrios as President and Chief Financial Officer, who has yet to make a statement about the company shutting down.
Something fishy went on here. This will surely be investigated.
If you have any info about what happened at Bench, hit reply to this e-mail. Your anonymity will always be respected.
4. WooPayments enables Klarna and Affirm as default payment options
Klarna will now be offered as a default payment method to merchants using WooPayments, which is Automattic's answer to Shopify Payments. Klarna is currently offered as an alternative payment option that can be added at the request of the retailer, but moving forward, it'll be featured front and center and by default, without any action needed from the merchant.
And guess what? So will Affirm!
The identical news stories were announced separately by each BNPL provider, and each made it sound like it was some great exclusive partnership, but in reality, I'd imagine there are more default WooPayments + BNPL deals to come. (I wonder if Affirm and Klarna knew the other company was also given the same deal before making the announcements?)
It sounds like WooPayments is simply tapping into the higher fee world of BNPL and looking to partner with the industry's giants to cover a wide regional territory. Affirm's integration focuses on the US and Canadian markets, while Klarna casts a wide net across European markets (although it's aiming to grow its market share in North America).
David Sykes, Chief Commercial Officer at Klarna said:
“Our goal is to have Klarna at every checkout, everywhere, for every need, at any time. This expanded partnership takes us closer to that vision, establishing Klarna as the go-to payment option for tens of thousands of retailers globally.”
Wayne Pommen, Chief Revenue Officer at Affirm said:
“We are thrilled to expand our partnership with WooCommerce and to serve as a default payment option for thousands of their merchants. This is an exciting opportunity to expand Affirm’s reach, especially among small and midsized businesses, and bring our honest financial products to more and more of the places where people shop.”
5. Trump urges Supreme Court to delay the TikTok ban so he can make a deal
Last week I reported (story #1) that the US Supreme Court agreed to take up TikTok's appeal challenging a federal law that would ban the app next month, giving the social media app one last chance in court to fight the ban or divest law. The court agreed to take on the case just a day after TikTok filed its appeal and will hear oral arguments on Jan 10th before issuing a decision on whether the law holds.
On Dec 9th, ByteDance and TikTok filed an emergency motion with the US Court of Appeals for the District of Columbia, requesting a temporary halt to the law's enforcement pending Supreme Court review. Although the Supreme Court agreed to take on the case last week, they did not grant the emergency motion to halt the law's enforcement.
Trump to the rescue?
In an amicus brief filed to the court — which is a legal document submitted to a court by a “friend of the court” who possesses a strong interest in the subject matter — Trump says he “seeks the ability to resolve the issues at hand through political means once he takes office,” and that he “alone possesses the consummate dealmaking expertise, the electoral mandate, and the political will to negotiate a resolution to save the platform.”
In his Supreme Court filing, Trump asked for the bill’s January 19th deadline to be delayed, arguing that the deal he’d negotiate “would obviate the need for this Court to decide the historically challenging First Amendment question presented here on the current, highly expedited basis.”
Trump did not currently offer any details on what the deal would look like, or if it would require ByteDance to divest TikTok to an American-owned company, like the bill currently requires.
Trump argued that having over 14M followers on TikTok, along with his ownership of the social network Truth Social, gives him the unique ability to “evaluate TikTok’s importance as a unique medium for freedom of expression, including core political speech.” He also cited Brazil’s temporary ban of Elon Musk’s X as an example of “the historic dangers presented” by a government banning a social media platform.
It's not all sunny skies ahead for TikTok though… A group of senators and congressmen, including Mitch McConnell and Ro Khanna, alongside former FCC Chairman Ajit Pai, filed petitions on Friday urging the Supreme Court to reject TikTok’s appeal.
6. Republicans debate the future of H-1B visas
The H-1B visa program, which allows US companies to employ foreign workers in specialized occupations, became a contentious issue amongst Republican last week. While I normally don't cover politics much in this newsletter, I know that this particular topic affects many readers (both workers and employers), so I thought I'd provide a quick recap of what's been going on and what changes might occur after Trump takes office.
Quick Background: The H-1B visa program, which was established by the Immigration Act of 1990 and signed into law by President George H. W. Bush, is designed to enable US employers to hire foreign professionals in fields requiring specialized knowledge, such as technology and engineering. While proponents argue that it addresses skill shortages and fosters innovation, critics contend that it can displace American workers and suppress wages. US authorities can issue 65,000 H-1B new visas a year, with a possible extra 20,000 for people with master’s degrees. About 70% of H-1B visa recipients are from India and another 10% are from China.
Here's what happened last week:
- Trump named venture capitalist Sriram Krishnan to a top AI policy post, triggering a racially charged backlash that surfaced Krishnan's earlier comments advocating for green cards for skilled workers.
- The backlash escalated when Vivek Ramaswamy criticized an American culture that “venerated mediocrity over excellence,” and claimed this as one reason for the influx of foreign tech workers.
- Ramaswamy also said that the H-1B visa program “is badly broken & should be replaced with one that focuses on selecting the very best of the best (not a lottery), pro-competitive (no indentured service to one company), and de-bureaucratized.”
- Elon Musk, who co-leads Trumps incoming Department of Government Efficiency with Ramaswamy, responded to a tweet about a shortage of skilled workers in Silicon Valley by saying that “the number of people who are super talented engineers AND super motivated in the USA is far too low.” Musk urged people to think “of this like a pro sports team: if you want your TEAM to win the championship, you need to recruit top talent wherever they may be. That enables the whole TEAM to win.”
- The posts by Musk and Ramaswamy generated even more backlash from MAGA supporters who want a hardline approach to all forms of immigration.
- Laura Loomer criticized Krishnan's appointment, expressing concerns that his views on immigration were contrary to the “America First” agenda. She accused Krishnan of supporting policies that would allow foreigners to “come to the US and take jobs that should be given to American STEM students” and made inflammatory remarks, referring to Indian immigrants as “third-world invaders from India.”
- Elon Musk temporarily suspended Laura Loomer's X account for 12 hours, and took away her verification badge and subscription features.
- At one point, Musk defended his position by tweeting, “The reason I’m in America along with so many critical people who built SpaceX, Tesla and hundreds of other companies that made America strong is because of H1B. Take a big step back and FUCK YOURSELF in the face. I will go to war on this issue the likes of which you cannot possibly comprehend.”
The debate is one, of what could be many, rifts between the Republican Party and the MAGA movement, and the internal conflict may influence future immigration policies and the direction of the H-1B program under the incoming administration.
What are your thoughts on the H-1B program? Should it be expanded? Replaced? Ended entirely? Hit reply and let me know.
7. Shein joins the CBP's Section 321 Data Pilot program
Shein is participating in the US Customs and Border Protection Section 321 Data Pilot program, which is designed to speed up low-cost e-commerce deliveries while preventing illegal or hazardous goods from slipping through customs.
Shein voluntarily joined the initiative earlier this year, which tests whether online marketplaces can help CBP identify and target high-risk shipments for inspection while streamlining the clearance of legitimate goods.
Shein, Temu, AliExpress, and other Chinese marketplaces benefit greatly from Section 321 of the US Tariff Act of 1930, commonly known as the de minimis rule, which allows individuals in the US to import goods worth up to $800 per day without paying duties and taxes. The de minimis rule streamlines entry for low-value shipments, which now make up 92% of all cargo entering the US, but consequently makes it easier for counterfeits and narcotics to slip through inspection. Shein and Temu together represent more than 30% of de minimis imports into the US.
The CBP launched the Section 321 Data Pilot program in 2019 with nine voluntary participants including Amazon, eBay, FedEx, DHL, UPS, PreClear, XB Fulfillment, BoxC Logistics, and Zulily, which since went out of business and was later acquired by Bed Bath & Beyond.
The CBP expanded the program in February 2023 after seeing improvements in shipment risk assessments, fewer holders, and smoother processing. Shein announced its participating in the program on Dec 19, 2024.
By joining the new Section 321 Data Pilot, Shein aims to help address transparency and compliance concerns at a time when US law makers are debating potential reforms to the rule. There's currently no information about whether Temu was invited to join the pilot program.
8. Amazon offers incentives for merchants to stop selling on Temu
Amazon is offering incentives like free advertising and lower commissions if merchants agree to stop selling on Temu, according to managers at two large China-based merchants.
Amazon has also started removing Buy Now buttons from product listings when it discovers identical items listed on Temu at lower prices, suggesting that the company is now enforcing a pricing policy on Temu that it has previously applied to other sites like Walmart and Target.
When one merchant asked Amazon for a reason why it lost the Buy Box, an Amazon representative responded by sending them links to listings for identical products on Temu with lower prices.
The Information reports that Anker Innovations, a popular cellphone power bank maker that generates around half of its annual revenue from Amazon, closed its US Temu storefront last week. Temu had previously listed Anker products at significantly lower prices than on Amazon. For example a Bluetooth speaker sold for $36.99 on Amazon, but was listed at $25.99 on Temu, with similar delivery times.
Amazon hasn’t explicitly said whether it applies its lowest-price policy to Temu, but merchants have previously said they were worried about the risk of Amazon enforcing its policy on Temu listings, since the merchants themselves do not control the price Temu shows shoppers, whereas merchants are in control of their product pricing on Walmart and Target.
Amazon denies the allegations and says that it supports selling across different sites. (LOL, they would say that…)
9. Other e-commerce news of interest
Ceneo, a Polish e-commerce platform that enables users to compare prices and reviews for products across 18k online stores, filed a lawsuit against Alphabet, Google Ireland, and Google LLC, seeking $567M in damages for losses it says it suffered due to Google's practices of preferring its own price comparison service in search results, which the company said damaged its business. The requested reimbursement consists of $419M of losses sustained by Ceneo, plus interest payments from 2012 until 2024. Ceneo said that the lawsuit was connected to the $2.7B European Union antitrust fine imposed on Google to punish its use of its prominent search position to gain an unfair advantage over smaller European rivals in the price comparison shopping service market.
OpenAI confirmed its plans to become a for-profit company as it looks to raise even more investor money. In a recent blog post entitled, “Why OpenAI's Structure Must Evolve To Advance Our Mission,” the company outlined its reasons for having both a non-profit and for-profit arm, claiming that the for-profit's success will enable the non-profit to be “well funded, better sustained, and in a stronger position for the mission.”
Meta is aiming to have Facebook filled with AI-generated characters to drive up engagement on its platform, as part of its broader rollout of AI products, according to the Financial Times. Meta VP of product for gen-AI, Connor Hayes, said, “We expect these AIs to actually, over time, exist on our platforms, kind of in the same way that accounts do. They'll have bios and profile pictures and be able to generate and share content powered by AI on the platform… that's where we see all of this going.”
Returns are on the rise! Retailers expect their return rate to be 17% higher on average than usual after this year's holiday shopping season. By the end of 2024, returns are expected to total $890B. Nearly two-thirds of consumers now buy multiple sizes or colors with the intention of sending some back, a practice known as “bracketing,” according to Happy Returns, while 69% of shoppers admit to “wardrobing,” or buying an item for a specific event and returning it afterwards, according to a Optoro report, up 39% from 2023.
A federal judge threw out a lawsuit by non-TikTok users who claimed the company violated their privacy by tracking them on websites operated by Hulu, Etsy, and other companies that embed TikTok pixels. TikTok was successful in urging the court to dismiss the matter without holding a trial, arguing that there was no evidence that any “sensitive or identifying information” was shared with either TikTok or outside advertisers, and that web users consented to pixel tracking when creating accounts on those websites.
OpenAI and Microsoft have a secret definition for artificial general intelligence (AGI), according to leaked documents obtained by The Information. The two companies agreed in 2023 that AGI will be achieved once OpenAI has developed a system that can generate at least $100B in profits for investors. In other words, even if the company is technologically able to reach AGI, they won't call it that (or potentially not make it public) until everyone's been paid.
Amazon employees at a Garner, North Carolina warehouse filed a petition with the National Labor Relations Board requesting an election to determine if workers in the facility will be represented by a union. An organizing effort collected signatures of at least 30% of the workforce at the site, which would force an election. The North Carolina group describes itself as “worker led” and hasn’t disclosed any affiliation with an existing union.
New EU rules came into force on Saturday requiring all new electronics including smartphones, tablets, cameras, headphones, speakers, and keyboards to come equipped with a USB-C port for charging, in a change designed to cut costs and waste. The law was first approved in 2022 following a battle with Apple, which refused to give up its Lightning ports, and allowed companies until December 28 to adapt, except for makers of laptops, who will have until early 2026 to follow suit.
Global shipments of VR headsets has declined 4% YoY and 16% QoQ in Q3 of 2024, according to Counterpoint's Global Extended Reality Headset Model Tracker. Despite the decline, Meta is still dominating the global VR market at 65% this quarter, but it still saw some decreases in its shipments as compared to previous quarters.
X is raising the cost of its Premium+ subscription in the US almost 40% from $16/month to $22/month or from $168/year to $229/year, effectively immediately for new subscribers and beginning Jan 20th for existing subscribers. Users outside of the US will also be hit with big price increases, such as Canada going from $20/month to $26/month and Nigeria from $5/month to $22/month. X attributes the price increase to “making Premium+ better” as well as to help fund its new creator monetization model, which pays creators based on views of their content, regardless of ad impressions.
After its victory against Google in an antitrust trial earlier this year, the Department of Justice demanded that Google sell its Chrome browser, syndicate its search results, and avoid exclusive deals with companies like Apple for default search placement for 10 years. Now Google responded with a simpler proposal to prohibit default placement deals only for three years, and nothing else, justifying the counter by claiming search deals were at the heart of the case, so they're only what the court should target.
An Amazon driver from Massachusetts dumped more than 80 packages and 3 bottles of pee into the woods over the weekend “because they were stressed.” A police officer spotted the packages and free lemonade while on patrol, and the next day, the driver visited the police department to admit what they did. Police returned the packages to Amazon and no charges were filed, as the police felt this was “a human resources matter for Amazon.” The Amazon driver agreed to report the incident to their manager. (All that is true except for the part about the 3 bottles of pee. I embellished that part.)
10. Seed rounds, IPOs, & acquisitions
Alibaba is establishing an online shopping venture in South Korea with E-Mart. The two companies are planning to combine the assets of their respective online platforms, AliExpress Korea and Gmarket, to form a 50-50 joint venture valued at around $4B. Negotiations are currently ongoing, and the merger would require regulatory approval. If approved, the two brand would continue to operate independently, while cooperating together around developing customer experiences.
Perfect Corp, a Taiwanese startup specializing in AI and AR solutions for the beauty and fashion industries, entered into an agreement to acquire Wannaby, a Belarus-based platform that enables virtual try-on experiences for shoes, accessories, and apparel, for an undisclosed amount. The acquisition enables Perfect Corp to expand its offering into new luxury market segments including shoes, bags, and apparel.
Univest, an Indian wealthtech startup that provides retail investors with personalized investment recommendations, portfolio management tools, and real-time market insights, raised $10M in a Series round led by Bertelsmann India Investments, bringing its total amount raised to $11.5M. The company will use the funds to accelerate its aim to democratize access to high-quality research and provide a full-stack brokerage offering as part of its mission to be India's most trusted, research-first stock market super app.
Shiprocket, an Indian e-commerce enablement platform backed by Zomato that helps merchants choose the best logistics partner to ship their e-commerce orders, raised $26M in a round led by Koch Group at a $1.2B valuation, bringing its total amount raised to $320M. The investment is an extension of Shiprocket's 2022 round, which happened at the same valuation, despite the company's revenue more than doubling in the last two years.
Saks Global completed its $2.7B acquisition of Neiman Marcus Group, merging the two companies alongside Bergdorf Goodman into the same entity, with each remaining a distinct brand. The transaction occurred with investment from a number of other companies including Authentic Brands Group, G-III Apparel Group, and Amazon, which aims to work with Saks Global to innovate on behalf of both brands. Saks CEO Marc Metrick will stay with the company to serve as CEO of Saks Global Operating Group.
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See you next Monday,
PAUL
Paul E. Drecksler
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PS: I read that December 30th has officially been designated as “New Year's Adam” — because it always comes before New Year's Eve!