I hope you had a great long weekend. If it's not obvious already, the world is entering the era of e-commerce. If you think the pandemic set things on fire — that was just the beginning! Today's newsletter dives into some of the market leaders who are emerging and capitalizing on this “new” e-commerce trend that's here to stay.
And now, onto the 11th edition of Shopifreaks newsletter….
? Stock News
Mon, Mar 29th – Open: $1,053.60 – Close: $1,039.91
Thur, Apr 1st – Open: $1,150.00 – Close: $1,155.41
Today (Apr 5th) – Open: $1,175.08
1) BULLISH: Shares of SHOP jumped 4% last Wednesday after Stifel analyst Scott Devitt gave it a buy rating and $1,200 price target. In a note to clients, Devitt wrote, “We believe the company is positioned for sustainable growth supported by international expansion, growth in enterprise merchants, and the development of additional products and services supporting increased monetization.”
2) SADLY BEARISH: RGA Investment Advisors passed on buying SHOP last year and apologized to clients in their 2020 Investor Letter. “This mistake will likely be one of the biggest we ever make in our careers… Please do not judge us too harshly for our mistake on Shopify.” They went on to say, “While this mistake was quite costly, it ended up being a key confidence and process builder.”
3) SHOP had significant short interest last month. As of March 15th, there was short interest totalling 1,780,000 shares, an increase of 60.4% from the February 28th total of 1,110,000 shares. The short-interest ratio is currently 1.3 days.
4) Avalara (AVLR) automates tax compliance for e-commerce companies and integrates with companies like Shopify, Amazon, Wix, and Etsy. With a market cap of $10.7 billion and $500 million in 2020 revenue, Avalara trades at a price-to-sales ratio (P/S) of 21.4, but offers gross margins above 70% and a low churn rate to justify the valuation. While I don't think Avalara is the next Shopify like a recent Motley Fool headlines reads (because it's not a sales platform), I do think AVLR is positioned to grow with the rest of e-commerce and is on my follow list.
? E-commerce News
1) Amazon long ago surpassed Google as the starting point for online shoppers, but Google is fighting back with a campaign to be the Anti-Amazon. In the last year, Google teamed up with Shopify to allow their merchants to upload their inventory of products to appear in search results and more easily buy ads. But is it working? It's estimated that about $1B passed through Google Shopping Marketplace as opposed to the $295B that passed through Amazon's third-party marketplace in 2020. Additionally, many small shop owners are as hesitant to put their faith in Google as they are in Amazon, which curbs adoption.
2) Shopify CEO Tobi Lutke asked the DeFi community on Twitter, “What are the commerce-related opportunities that you are most excited about? What role do you want Shopify to play?” Answers ranged from suggesting coin payment integrations and crypto rewards to capital loans and tokenizing inventory.
3) Brands are using Facebook Shops as a digital showroom, but they aren't converting into many sales. Some stores reported as low a 1.4% of their traffic from Facebook, however are leaving their FB Shops live for added branding and marketing touch points. Which begs the question — where is their most valuable converting traffic coming from then?
4) Shopify is heavy handed into climate change efforts, as you may have read about in our previous newsletters. An article by Grist offers a recap into Shopify's recent investments with some updates about their partners development progress.
5) In a recent study, Shopify revealed that 63% of UK shoppers want to continue wearing masks, social distancing, and using hand sanitizer at the checkout post-pandemic . 67% of shoppers surveyed said that contactless payment is more important now than before. Will Shop Pay begin offering NFC touchless in-store payments in the future? I'd bet on ‘yes'…
6) TryNow, a software company that enables consumers to try items at home before buying, raised $12 million in Series A funding. Brands like Universal Standard, Roolee, Western Rise, and Solid & Striped already use TryNow, which is available for Shopify Plus merchants. Basically TryNow is commoditizing the model that Warby Parker, Amazon Prime Wardrobe, and Stitch Fix built years ago in-house.
7) Keith Rabois, founder of OpenDoor, the startup that buys houses, teamed up with Atomic's Jack Abraham to launch OpenStore, a company that plans to acquire a number of small e-commerce businesses including Shopify stores with same day offers and acquisitions (like they do at OpenDoor with houses). Their plan is to acquire the stores and continue to operate them on OpenStore's central platform. OpenStore is based out of Miami and is currently building their team in preparation for their first acquisitions. Online publication and e-commerce consolidation is nothing new, but it's an interesting disruption to see investors build a platform around the acquisition instead of relying on existing online brokerages.
8) Interested in selling vintage clothing online? Shopify published an ultimate guide to sourcing, cleaning, photographing, and selling vintage clothes online with examples from some of their top vintage clothing merchants.
? Tip of the Week
Each week we offer Shopify merchants a Tip of the Week to help them maximize the sales potential of their stores. If you've got a tip you'd like to share, shoot me an e-mail to [email protected] and I'll include it in an upcoming newsletter.
This week's tip is about the shipping.
Do you communicate your shipping prices BEFORE checkout?
One of the biggest drop off points for shoppers has to do with shipping. Customers are on your storefront, love your products, and are ready to purchase — but they can't find out how much it costs to ship their items until AFTER they initiate checkout and enter their shipping address.
The obvious problem with this… That's too much effort for many consumers!
Shipping, turnaround time, and product guarantees are three things that need to be communicated to customers at every step of the buying process. Doing so will minimize buyer friction and lead to more sales conversions.
On every Shopify store I operate, I typically include these three elements near the Add to Cart button: Free Shipping, 24 Hour Turnaround, 100% Satisfaction Guarantee.
Even if you can't offer free shipping, it's better to communicate what your actual shipping costs are than surprise your customers at checkout:
- $9.99 Flat Rate US Shipping
- Free Shipping On Orders Over $75
- Free, 2 Day, & Overnight Shipping Options
Even though some of the examples above don't explicitly indicate how much shipping will cost, they still provide expectations to your shoppers prior to checkout. There are also Shopify apps on the market that take it a step further by allowing customers to enter their zip code on the frontend of your store for live in-cart shipping rates, as well as apps that encourage shoppers to hit your Free Shipping tiers by suggesting additional items to add to their cart.
A few great places to communicate your shipping policies are in your site header / announcement bar, on your product pages themselves, and in the footer — or in all three places.
However you do it, make sure that your customers don't have to hunt around on your website to find your shipping prices, and especially don't make them wait to checkout to find out — because many won't make it that far.
What'd you think of our Tip of the Week? Would you like more tips like this or should we focus on other kinds of tips? Hit ‘Reply' to this e-mail and let me know.
? Shopify Apps
Last week Shopify added 33 new apps to the Shopify App store. Here are a few that look promising.
1) Tempt – Dynamically create targeted, personalized, private offers for your customers who are most likely to convert instead of putting items on sale or creating public offers. Free.
2) Premium Product Tabs – Organizing your products descriptions, parameters, shipping information, etc into tabs on your product pages. Dynamic tabs only appear on certain products while Static tabs appear on all products or within specific collections. $0.99/month.
3) Mood Board – Help customers visualize your products in a curated way with virtual mood boards that you create via a drag and drop interface. $20/month.
4) Super Bar: Sticky Add To Cart – Allow your customers to add your product to their cart at any point while scrolling via a sticky add to cart button that stays fixated to the top of your store. The bar also includes upselling, countdown timers, and more. Free – $7.99/month.
5) Millimetric.ai – Receive notifications for every important metric related to your inventory, sales and customer behaviour with automated anomaly detection. $49/month.
6) EasyHide – Hide PayPal buttons from your product pages and cart, but keep PayPal as payment option in checkout to avoid confusing customers into thinking that PayPal is the only payment option in your shop. $0.99/month.
7) Wishlist Compare – Enable shoppers to create, save, and share a list of products they want to buy with friends. $12.99/month.
8) Critical CSS – Speed up your website by preloading all the visual content that users see when they navigate to your website, and downloading the rest in the background. $10 one time fee.
9) Firework – Add interactive video stories to your website via the Firework.tv platform via carousel, grid, story block formats. Free – $20/month.
10) Search Booster – Help shoppers search and filter through your products and collections through dynamic filter options including collections, vendors, product types, variants, price, stock, shipping, and featured. $5.99/month.
? Shop of the Week
Every week in the Shopifreaks newsletter, I feature a Shopify store with a positive mission. If you'd like to nominate a store, e-mail [email protected] or hit Reply to any of my newsletters and share their website and story.
This week's Shop of the Week award goes to PaliRoots.com – an apparel company on a mission to bring awareness to the world about the Palestinian culture and support local Palestinian charity projects.
Hussein Musa launched PaliRoots in 2016 to explore, celebrate, and share Palestinian culture in a modern and positive way. Their products are made from unique materials, soft cottons, and are hand-sewn with special attention to artisanal detail.
? Thanks for being a Shopifreak!
If you have any Shopify or e-commerce related news that's worthy of sharing in our next newsletter, e-mail [email protected] or hit ‘Reply' to this e-mail.
If you found this newsletter valuable, please share it with your favorite Shopify & e-commerce communities and help us grow.
See you next Monday!
Paul E. Drecksler
PS: Did you hear about the restaurant on the moon? Great food, but no atmosphere.