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#86 – E-commerce scandals, Goliath battlegrounds, & online inflation

by | Sep 12, 2022 | Recent Newsletters

This week I've got an exciting edition for you. We've got stories of founders fleeing the country, international battles between retail giants, new one-click payment apps, and live commerce apps with negotiation features built-in!

I also share reports on where major retailers are investing their capital and record breaking online inflation. Plus a $1B investment round!

All this and more in this week's 86th edition. Thanks for reading and sharing!

Stat of the Week

Data Feed Watch released their 2022 Feed Marketing Report that shares some statistics about e-commerce merchants. This week I'd like to share some highlights of that report: 

Share this week's stat on Twitter & LinkedIn

1. Where major retailers are spending billions

Despite earnings decline, spending by big retailers including Walmart, Target, and Amazon is way up this year, with technology spending being the top priority. 

After the 2008 financial crisis, 60 companies Gartner classified as “efficient growth companies” that invested through the crisis saw earnings double between 2009 and 2015, while other companies saw stagnant growth and profits, according to a 2019 report on 1,200 U.S. and European firms.

Now it looks like major retailers are looking to repeat history and capitalize on the current recession by once again making major investments. Even while the S&P Retail Index is down nearly 30% this year, most big players are boosting investment in capital spending by double digits.

Here's a recap of what companies are doing, according to a CNBC report.

  • Home Depot – improving supply chain logistics between stores and their suppliers.
  • Walmart – improving in-store operations so that shelves are restocked more quickly and fewer sales are lost, including initiatives like VizPick, an AR system linked to worker cell phones that lets associates restock shelves faster
  • Amazon – acquiring warehouse robotics technology to help move and stack heavy palettes and goods, and package products together for delivery (more on that later)
  • Kohl's – expanding the firm's relationship with Sephora by adding 400 mini-stores to their department lineup
  • Target – spending $5B to add 30 stores and upgrade another 200 and expanding its beauty partnership with Ulta Beauty, adding 200 in-store Ulta centers with 600 more planned
  • Amazon – spent $31B on property and equipment in the first half of the year

What else would you add to CNBC's list of notable capital investments above? Hit reply and let me know. 

2. Online inflation is back! (It left?)

According to the latest Adobe Digital Price Index, online inflation returned in August, after taking a brief break in July, with prices rising 0.4% in August, after dropping 1.0% on an annual basis in July.

However despite the price upticks, consumers spent $64.6B online in August, up 6.5% annually, showing that demand remains steady, which will likely keep prices elevated. 

Highlights from the report include: 

  • Grocery prices rose by 14.1% YoY, a new record on an annual basis which broke July's 13.4% record.
  • Apparel prices increased 4.9% YoY after falling in June and July due to heavy discounting by retailers. 
  • Personal care products increased 2.7% YoY, the highest increase since Mar 2021
  • Electronics prices declined 10% YoY, continuing their consistent downward trend since Dec 2021
  • 12 out of 18 product categories saw YoY price increases in August.

3. BigCommerce News (Sponsored)

  • BigCommerce announced the launch and early success of The Beer Bat store on the BigCommerce platform. From the start of the baseball season in April through July 2022, the company experienced a 115% increase in revenue, a 98% increase in site visits and a 71% increase in orders. “The Beer Bat is a great example of a merchant taking advantage of BigCommerce’s B2C and B2B capabilities, our open SaaS approach and our ability to support both a quick launch and fast growth,” said Marc Ostryniec, chief sales officer at BigCommerce. “We’re excited to help them continue to scale as they reach new markets and customers.”
  • Last chance to register free for the Make it Big Conference, a two-day virtual event on September 13-14, 2022 featuring panels, workshops, and interviews about cryptocurrency, NFTs, Web3, metaverse, headless commerce, and more. Level up your e-commerce knowledge and explore the latest retail trends at BigCommerce's free, virtual conference with speakers including Seth Godin (best selling author), John Mackey (co-founder of Whole Foods Market), Jenny Fleiss (co-founder of Rent the Runway), and other leaders in our industry. I'll see you there!

4. Revolut launches Revolut Pay

Revolut, a Britain-based financial services app with 20M customers, is launching a one-click payment feature called Revolut Pay in a bid to compete against rivals like PayPal, Apple Pay, Amazon Pay, and Shop Pay. Merchants in the EU will be able to use Revolut Pay as a payment method across product, cart, and checkout pages.

Existing users can use Revolut Pay to pay with their Revolut account balance or by using a saved card. Non-Revolut users have the option to pay using saved Mastercard or Visa cards issued by any other provider. The platform accepts over 20 currencies. 

Thibaut Genevrier, head of merchant acquiring told Bloomberg, “We want to be on the top 1,000 e-commerce websites in Europe. We want to be right there in the checkout and have merchants improve their conversion rate.”

Businesses will be paid within 24 hours, which is faster than the normal 2-7 day turnaround of rivals, and Revolut will charge retailers fees of around 1% for the service.

Payments will be validated via personalized security features such as Face ID or fingerprint unlocking, without users having to share an account number. In addition, consumers who use the service will be able to earn cashback on purchases made through mobile and desktop browsers.

So far the company has signed up to integrate with Shopify, Prestashop, and WH Smith. Revolut Pay will also be available within the airline industry in the coming months.

In Sep 2021 I reported that Revolut launched their own BNPL services, and in July 2022 I reported that the company ruled out going public this year during the current churn in the markets. Its valuation was around $33B following an investment round in 2021, but probably wouldn't fetch that high of a valuation in today's market. 

5. Shopify makes major leadership changes

Shopify named Morgan Stanley investment banker Jeff Hoffmeister as its next CFO, and appointed Kaz Nejatian, VP of product, to COO effective immediately.

During his more than two decades at Morgan Stanley, Hoffmeister served as a trusted advisor to Shopify for many years, including leading its 2015 IPO, so he is no stranger to the financial intricacies of the company. He succeeds Amy Shapero, who is stepping down following the company's Q3 2022 earnings announcement in October. 

Nejatian succeeds Toby Shannan, who is retiring, and is expected to join the company’s board of directors next year.

The leadership shakeup comes at a tumultuous time for Shopify, which posted a $1.2B loss for the second quarter, compared with a $876M profit a year earlier, and just a few weeks after I reported that the company cut 10% of its workforce, or roughly 1000 employees.

Does their new CFO's background mean that Shopify will focus even harder on acquisitions and investments moving forward, continuing 2022's trend? (Take a look at last week's edition for a recap of Shopify's acquisitions this year.)

Tom Forte, an equity analyst at D.A. Davidson Cos, feels that by bringing on an investment banker as CFO, the company is signaling to investors that it is in growth mode rather than cost-cutting mode, and that Hoffmeister’s background could help the company focus on acquisitions.

Rick Watson, an e-commerce strategy consultant, feels that selecting Hoffmeister as their new CFO, an executive who has never worked at a software company as a financial operator, indicates that Shopify's focus “is not necessarily on typical software company CFO tasks. It's more about managing Wall Street, and having Shopify ‘look like' a company that Wall Street will keep investing in.”

Frankly, Shopify has a lot more investments to manage than two years ago, with more on the horizon. For better or for worse, they're becoming an e-commerce and banking conglomerate, owning a piece of every step of the customer and merchant journey, from marketing to payments / checkout to fulfillment. Each of these acquisitions have tech leaders running the individual shows, and I think it's a smart move to have an experienced investment banker in charge of the checkbook. Or maybe I'm just biased because I own way too much Shopify stock…

What do you think? How do you see Shopify's leadership changes playing out for the company next year and in the long run? Hit reply and let me know. 

6. Walmart vs Amazon in South Africa

You often see me report on Amazon and Walmart's rivalry in India, where the two retailers currently dominate e-commerce sales in the country. However that's not the only country battleground where the two giants are competing for turf.

Tensions are heating up between the two Goliaths in South Africa, an attractive market for both retailers where total online sales in the country increased by 55%  in 2020 and 42% in 2021.

Here's where the two companies are currently at in South Africa: 

Amazon, although not yet having a dedicated marketplace in South Africa, is currently the third most visited website in the country after (owned by Naspers) and Makro (owned by Walmart-owned Massmart). They are currently working on a South African marketplace with plans to launch in 2023.

In May 2011, Walmart acquired a 51% stake in the publicly-listed retail and wholesale group, Massmart, for $2.5B, and in late August, the company announced that it had reached an agreement with Walmart to acquire all its remaining ordinary shares. This would also make Walmart the owner of OneCart, a fast-moving consumer goods retailer that Massmart acquired in 2021, and of Wumdrop, a last-mile delivery partner.

E-commerce revenue in South Africa is projected to reach almost $9B in 2022, showing an annual growth rate of 17.81%. Although it's expected that the competition between Amazon, Walmart, and Takealot will benefit consumers by resulting in better customer service, pricing, and product selection, all three companies can also expect intense regulation of their operations to ensure the preservation of competition in South Africa's online retail marketplace. 

In July, South Africa's Competition Commission released a report accusing Takelot, Google Search, Apple App Store and UberEats of using their market position to partake in anti-competitive practices — a warning to Amazon and Walmart about the kind of conservative regulatory environment the country offers.

7. A scandal in E-commerceville!

Last year around this time, the Egyptian startup, Capiter, a B2B  selling and distribution platform, raised $33M in a Series A round. The investment was a success story for brothers Mahmoud and Ahmed Nouh, serial entrepreneurs from Cairo who were on trajectory to reach an annualized revenue of $1B through their new platform. 

Flash forward a year later, and the two brothers have been fired from their roles as CEO and COO after allegedly mismanaging funds, and the Board has appointed the company's CFO, Majid El Ghazouli, as the interim CEO.

During the past year, Capiter had not been doing well, and investors were on the hunt for a potential buyer to absorb the struggling startup with an acquisition or merger, however, throughout the process, it was reported that the founders had not been reporting to the Board or its representatives, or showing up during on-site in-person due diligence inspections.

Employees of the company have alleged that the $33M was seized by the two brothers, who have now potentially fled the country! This is a relatively new story, rumors are freshly circulating, and the truth of what happened to the Nouh brothers is still developing. 

Despite its financial and reputational difficulties, the company announced that it has decided not to liquidate its assets, declare bankruptcy, or lay off employees, but instead, is studying acquisition opportunities. 

Will we ever hear from the Nouh brothers again? Have they fled Egypt with their $33M? What's your guess?

8. Flipkart's new app

Walmart owned Flipkart is introducing new features and design changes on its app to attract customers in India including:

  • Design changes – introducing a grocery tab, new typography, iconography, layouts, animation, navigation, and colors to reduce visual clutter and improve readability 
  • Image search – users can take a screenshot of the outfit or item they are looking for and upload it to the app, which will then look for either exact matches or similar products
  • Live commerce – influencer-led interactive video content for make-up tutorials, curated fashion looks, and consumer electronic launches. A “chat and buy” feature will allow shoppers to negotiate like they do when shopping in person.
  • Virtual Try-Ons – users can preview how they look with beauty products such as lipstick and foundation with live AR or b uploading a selfie
  • Brand Mall – a new way to discover products from popular brands on their platform by either filtering their searches by brand or viewing the brand pages

These changes are in preparation for this year's festive season and shopping holidays. A study by Google found that Indian consumers go online to search for inspiration and to keep up with the latest fashion trends about two to three weeks before Diwali, which starts this year on Oct 22nd and is celebrated for 5 days. Last year, total GMV during Diwali topped $9.2B. 

Right now, all major e-commerce companies in India are ramping up their hiring and expanding their temporary workforce in preparation for the festive season. Between October and December, companies will add 20% more workers to their current workforce, and the pay scale will be 8-10% higher than last year. Amazon India is even slashing their seller fees by 50% for new vendors on its marketplace ahead of festive season sales. 

9. Other e-commerce news of interest this week

  • Amazon sellers have until Nov 2nd to get their inventory into fulfillment centers in order to be available for sale by Black Friday and Cyber Monday, and by Dec 1 for Christmas shoppers. However sellers must pay attention to Amazon's updated restock limits so that they don't occur additional fees or red marks on their seller health. 
  • Metapack, a UK delivery platform, partnered with Zedify, a last mile delivery startup, to offer same day and next day delivery via its bicycle courier network. Metapack offers delivery management software worldwide that works with over 350 carriers to ship more than 550M parcels per year.
  • Snap employees have been joking that the company is turning itself into “Snapazon”, referencing the fact that former Amazon executives have ascended to key roles in the company, and that Snap managers are obsessing over metrics like Amazon does. Last week Snap laid off about 1,500 employees, or about 25% of its workforce, amid a slowdown in its ads business, after earlier this year saying that they were only slowing down in hiring and would still grow headcount by 10%. 
  • Amazon is considering partnering with pharmacies in Japan to deliver medications in 2023. Patients would be able to get info about the drugs they've been prescribed and sign up to get them delivered. People in Japan will be able to order prescriptions online after online doctor visits for the first time next year.
  • Gamestop announced a strategic partnership with the crypto exchange to collaboratively work on new e-commerce and online marketing initiatives. As part of the deal, Gamestop will serve as FTX's preferred retail partner in the U.S., with customers getting access to FTX gift cards in select stores. That news is good for at least a few memes…
  • Alibaba's Lazada is coming together with major brands like HP and BMW to launch the Southeast Asia eCommerce Anti-Counterfeiting Working Group (SeCA Working Group), a consortium committed to collaborating with stakeholders to address the rapidly evolving issues of counterfeit trade in online retail, and to support each other in their intellectual property rights. At its launch, the group will provide an online directory at to house the respective IPR protection policies, programs, tools and resources offered by the group.
  • Amazon's Alexa has seen questions in Hindi go up by 52% in the last year, including voice requests made in “Hinglish”. In Sep 2021, I reported that Amazon was rolling out its voice shopping experience feature in Hindi in the South Asian market, where only 10% of India's 1.3B people speak English. 
  • Visa, DailyPay and The Bancorp Bank launched a reloadable prepaid card that offers a way for employees to access a portion of their salaries earlier than the traditional two-week pay cycle. So now consumers can put themselves in more debt with BNPL and then take an advance on their salaries to keep up with payments? Something's going to give…
  • 15 subcontracted Amazon drivers in Nagasaki are protesting the long hours and excessive number of deliveries in the absence of overtime pay, and blaming Amazon’s AI algorithms for exacerbating their plight, by setting impossible deadlines and routes. The group announced that they were joining another cohort of subcontracted drivers based just outside Tokyo who unionized in June.
  • Visa, Mastercard, and AMEX plan to start separately categorizing sales at gun shops, adopting the International Organization for Standardization’s new merchant code for gun sales, which was announced on Friday. Until Friday, gun store sales were considered “general merchandise.”
  • Dell, Best Buy, Ford, Pottery Barn, Nike, Patagonia, Match, Twitch and other companies are removing Facebook login from their websites. Less and less visitors were using it (possibly over privacy / security reasons), so it made sense to get rid of it. Google is the most preferred social login among North American consumers.
  • Microsoft announced Multi-platform, an all-in-one feature available in Smart Campaigns that lets you run ads in Microsoft, Google, Facebook, and Instagram all through the Microsoft interface with a single dashboard to manage and report on campaigns. The Microsoft AI can also optimize your budget for performance.
  • ByteDance, the Chinese company that owns TikTok, shut down their Douyin Box app and platform. Their regular Douyin app (non-Box app) already serves as a one-stop shop, so Douyin Box was deemed unnecessary. It also got barely any engagement from users.
  • According to Inc42’s calculation, the median salary of founders of unicorn e-commerce startups in India was INR 64 Lakh ($80,678) in 2021, a jump of 27.8% from INR 50 Lakh ($63,029) in 2020.
  • Starting Sep 15th, viewers who want to watch Thursday Night Football will have to log in to Amazon Prime, after 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. The partnership marks the league's first all-digital rights agreement. Do you envision livestream one-click purchases of footballs jerseys and apparel on the horizon? 

10. This week in seed rounds, IPOs, & acquisitions….

  • CommerceHub, a platform that connects supply, demand, and delivery for retailers and brands, entered into a definitive agreement to acquire the 27.5M outstanding shares of ChannelAdvisor, a provider of cloud-based e-commerce solutions that enable brands and retailers to increase global sales, in a $635M cash deal wherein ChannelAdvisor stockholders will receive $23.10 per share, a 57% premium over the their closing stock price on September 2, 2022. Upon completion of the transaction, ChannelAdvisor will become a privately held company and shares of ChannelAdvisor common stock will no longer be listed on any public market.
  • Verily, an Alphabet-owned research organization devoted to the study of life sciences, raised $1B in new investments led by its parent company to counter Amazon's One Medical acquisition. Verily was formerly Google Life Sciences, a division of the semi-secret research and development group at Google X, until it split off as a separate subsidiary of Alphabet in 2015. Two executives will leave the company, and founder and long-serving CEO Andy Conrad will become executive chairman, while current president Stephen Gillett will step into the CEO role. The capital infusion will be used to support the company’s efforts in data platforms, research and technology, as well as assist in strategic partnerships and acquisitions. 
  • CVS Health will acquire home care company Signify Health for $8B ($30.50 per share in cash), beating out other healthcare and retail companies including Amazon and United Health Group for the deal. Through the acquisition, CVS will add to its growing menu of healthcare services that includes more than 9,000 retail drugstores and 1,100 MinuteClinics staffed by nurse practitioners. 
  • el-dokan, an Egypt-based provider of e-commerce APIs for retailers in MENA, raised $550k in a pre-seed round led by local and regional investors including EFT EV, Flat6Labs, 500 Global, and Hala Ventures. Launched in 2020, the company, whose tech can integrate with third-party providers like payments, shipping, POS, and ERP systems, primarily targets large retailers and chain stores seeking to expand their e-commerce market share, increases sales, and improve operation automation.
  • ZineOne, an in-session marketing platform that records real-time customer decisions to help boost conversions, raised $28M in a Series C round led by SignalFire, bringing their total amount raised to $42M. The company's tech uses AI to score behavior and personalize website and app users' individual experiences to craft custom messaging, discount offers, and product recommendations in real time. 
  • Instacart acquired Rosie, an online grocery app that allows customers to shop online from local grocery stores in 40 states with same-day delivery and in-store pickup. Instacart says the new tech will give Rosie's retailers access to tools and technologies that can lead to business growth, and that Rosie customers will gain access to features like Instacart's in-store offerings and loyalty programs. Last week I reported that Instacart acquired Eversight, an AI company that helps consumer packaged goods brands and retailers determine pricing and promotions by continuously testing at scale.
  • Tuesday Morning, a Dallas-based closeout retailer that was on the verge of filing bankruptcy for the second time in two years, secured $35M in new funding from Retail Ecommerce Ventures and Ayon Capital, as $32M in convertible debt and $3M in convertible financing. As part of the deal, Tuesday Morning will enter into a licensing agreement to sell Pier 1 Imports products in its stores. There will also be a change of control with new board members.
  • Splitit, a US-based white-label Installments-as-a-Service platform for companies to launch their own BNPL options, raised $10.5M from several new large institutional investors. The company says that the fresh funding will allow it to accelerate its product roadmap so users can embed their service directly into their technology stack while supporting a “next-generation one-click installment checkout.”
  • Unlikely AI, a Cambridge and London-based startup founded by William Tunstall-Pedoe, who is responsible for several key technologies used by Amazon's Alexa service, raised $20M from Amadeus Capital Partners, Octopus Ventures, and Patrick Pichette, former CFO of Google and current Twitter board member. The company launched its first product during the pandemic, an app that solves and explains cryptic crossword clues.
  • JPMorgan Chase & Co has reached an agreement to acquire Renovite Technologies Inc, a payment startup that competes with Stripe, Block, and other fintech firms. The strategic acquisition will help the bank achieve their goal to develop the next-generation payments processing platform globally. This is the fifth acquisition under the leadership of CEO Jamie Dimon. 
  • Kippa, a Nigerian startup that aims to improve the lifecycle of small businesses across the country with its financial management and payments platform, raised $8.4M in an oversubscribed seed round from investors including Goodwater Capital, TEN13 VC, Rocketship VC, and more, following their $3.2M pre-seed round in November. With Kippa, small business owners in in sub-Saharan Africa can keep track of their daily income and expenses, create invoices and receipts, manage inventory and monitor their finances.
  • Coolmate, a Vietnam D2C e-commerce fashion startup offering menswear products, raised an additional $2.3M from GSR Ventures in a Series A funding round, bringing its total amount raised this year to $5.4M. The company will use the funds for supply-chain development.
  • Mahmud Kamani, the co-founder of British online fast-fashion retailer Boohoo, bought 45M shares of Australian e-commerce business MySale, bringing his total ownership to 4.76%. The acquisition comes weeks after Frasers announced a bid for 71.3% of MySale shares it did not already own, to add to its 28.7%.
  • Bassett Furniture Industries, a Virginia-based primarily brick-and-mortar furniture retailer, acquired Noa Home, Inc., a Canadian e-commerce furniture retailer, to expand its online reach. The purchase price included cash payments of CAD $2.0M to founders Jeremy Kopek and Jean-Claude Renaud, along with CAD $5.7M for the repayment of existing debt. The co-founders will also have the opportunity to receive additional annual cash payments of CAD $1.33M per year for three fiscal years based on established goals. 
  • CashFlo, an Indian supply chain finance startup founded in 2018, raised $8.7M in their second fundraising round led by General Catalyst. The company will use the funds to reach more customers with its existing products and to develop new products for businesses.
  • Waysia, an Asian grocery delivery platform previously known as Alorsfaim, raised €10M in a pre-Series A round led by Banyan Pacific Capital. The company is prioritizing user growth over profitability, and as of July, had tripled its order volume from a year prior. 
  •, a NYC-based startup that's building a tech stack for powering calls and messages a better outbound calling experience, raised $38.5M in a Series A funding round led by Emergence Capital, valuing the company at $350M post-money, bringing their total amount raised to $42.1M. The funding will be put toward go-to-market and engineering initiatives as well as hiring. Will they use their own software to sell their product? If so, get ready for some calls…
  • NowNow Digital Systems, a Nigerian fintech platform aimed at offering financial inclusion and job creation to underserved markets, raised $13M in a seed round that will allow the startup to scale and expand its service offerings across Africa. The company wants to set itself apart from its competition by developing NFC-enabled tech that will allow tap-in functionality within its ecosystem of products. 
  • Amazon acquired D. Cloostermans–Huwaert NV, a Belgian company founded in 1884 as a manufacturer of machinery for textiles manufacturers that now designs technology to manage the flow of robots through warehouses, for an undisclosed amount. Amazon has been working with Cloostermans since 2019 and plans to use the company's tech to help robots operate alongside its warehouse employees, including to improve worker safety and reduce packaging waste. 

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.

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See you next Monday!


Paul E. Drecksler
[email protected]

PS: Do you know what the worst part about an apple addiction is? … You can't go see a doctor about it.

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