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In this week's 90th edition, I've got stories for you about new e-commerce rules taking effect in the EU, more ads coming your way on Facebook and Instagram, and a new online marketplace by America's favorite thrift store.
I also cover the Facebook ending their newsletter service that you probably never heard of before, BigCommerce expanding their shipping offering, and Afterpay stretching out payments a little farther.
All this and more in this week's edition of Shopfreaks. Thanks for subscribing and sharing!
NEW: Poll of the Week 🗳️
Introducing a new section of Shopifreaks called “Poll of the Week” where our community can vote and discuss trending topics in our industry. If you've got an idea for a poll question in the future, hit reply to any of my e-mails and let me know. Our first Poll of the Week is…
“Will Facebook still be the largest social media platform in the world in 5 years?”
Stat of the Week 📈
Less than half of retailers believe they can effectively manage their digital operations over the next 12 months. – According to Incisiv
See story #5 below for more details about this week's stat of the week.
1. EU's Digital Services Act is official
European Union lawmakers have given final approval to the Digital Services Act (DSA), an online safety-focused overhaul of e-commerce rules. This is the first major update to the legal framework for digital services since the year 2000.
The DSA lays out content moderation and marketplace rules that aim to streamline the removal of illegal content, products, and services while creating accountability around decisions.
Here's a recap of what the DSA aims to tackle:
- Takes aim at dark pattern design which is intended to trick consumers into making online choices that are not in their interest such as bait and switch offers, disguised ads, hidden costs or subscriptions, misdirection, etc.
- More stringent requirements and centralized supervision by the Commission for Very Large Online Platforms (VLOPs) and Very Large Online Search Engines (VLOSEs), which are platforms with 45M+ users in the EU.
- Prevent Big Tech from using state level memberships to avoid the overarching EU rules.
- Limit tracking-based advertising.
- A crisis mechanism that empowers regulators to analyze the impact of activities on VLOPs and VLOSEs on crises to “rapidly decide on proportionate and effective measures to ensure the respect of fundamental rights.”
- Transparency around information in terms and conditions through the publication of annual reports (or more frequently for VLOPs).
- A notice-and-action mechanism that allows individuals to notify the platform of illegal content.
- Required reasons for removal when platforms remove content that gets published on a public database.
- Increased advertising transparency, where online platforms must ensure that users can identify an ad and know who's publishing the ad.
- You can read more bullet points about DSA here.
The regulation will start to apply 15 months, in 2024, to give digital platforms and services time to comply with the tighter rules. And of course, enforcement will be another issue to learn how to tackle in between now and then.
In response to the passing of DSA and as a result of an investigation opened in July 2021, Shopify committed on Friday to bring about the required changes in its system to ensure a safe shopping experience for its consumers. Some of those changes include:
- Redesigning its templates to ensure transparency. Shops are now required to provide accurate company and contact info on their contact pages, TOS, Privacy and Refund policies. (So an e-mail address that no-one responds to?)
- Ensuring merchants are well informed of the applicable EU consumer law and that there is no room for loopholes.
- Providing company details about any EU trader promptly when required by any national consumer authority.
In the event of a breach of any EU consumer laws by merchants, Shopify has promised to immediately take down the shops and submit their company details to the national consumer authorities.
2. Facebook & Instagram ads even more ads
Meta announced that it's testing increasing its ad load on Instagram with the launch of two new ad slots:
- Explore Home Page – the page people land on when they first tap on Instagram’s Explore tab. Historically, Instagram only placed ads within the Explore feed, when a person tapped on a post and scrolled.
- Profile Feeds – the feed that appears when a user visits another person’s profile on the app and then taps on one of their feed posts. Historically, this launched a vertical scrollable feed of the user’s past photos and videos, but now the experience will be interrupted with ads.
As a part of the test, it will allow creators to earn income from ads that are displayed in their profile feeds, beginning with users in the U.S.
Meta will also begin testing image carousel ads on Facebook Reels, which are horizontally scrollable ads that can include anywhere from two to 10 image ads and are shown at the bottom of Facebook Reels content.
A few weeks ago I reported that Meta released a new collaborative ad type that enables brands to collaborate with local retail partners that sell their product in order to maximize direct response on their ads on Facebook and Instagram.
Meta recently reported its first-ever quarterly revenue decline in Q2, shortly after its first decline in daily active users. With these new ads, the company hopes to boost its ability to bring in revenue through the platform.
Despite the fact that no-one likes ads, not all Instagram's recent tests are to the detriment of users. It was reported that the platform is also experimenting with allowing multiple links in user profiles without the use of a 3rd party app like Linktree — a heavily requested feature for many years. One influencer with 122k followers was able to add three links to her bio through the app.
A study conducted in May of this year found that 16% of influencer accounts had more than one link in their bios using Linktree.
Meta confirmed the test but did not specify who had access to it and when it had begun rolling out.
3. BigCommerce News (Sponsored)
BigCommerce announced that Rosie Rivel has joined the company as its first Chief Information Officer. Rivel will lead BigCommerce’s business applications and information technology teams with the objective of transforming internal technology systems to improve productivity, efficiency and effectiveness to the benefit of the company’s customers, employees and investors.
“Rosie brings significant business and technology experience and a proven record of excellence to BigCommerce,” said Ben Sumrall, chief operating officer at BigCommerce. “She will lead us into a new era of automation and efficiency to rapidly scale lines of business and revenue streams. Her transformative efforts will help us take the next step in the company’s maturity.”
BigCommerce announced the launch of popular frozen treat brand Dippin' Dots on its platform. The new site, designed and built by BigCommerce Elite Partner Groove Commerce, combines a fun and engaging customer experience with checkout functionality that ensures the temperature-sensitive products are delivered when the buyer wants them to be.
“A big part of what customers love about Dippin’ Dots – in addition to our delicious ice cream – are the memories they experience while shopping at our physical locations or enjoying the sweet treat at their favorite entertainment venues,” said Dana Knudsen, senior director of marketing at Dippin’ Dots. “These enhancements to our website will allow customers to create new memories by bringing the Dippin’ Dots experience home for parties, gifts and more. With the addition of the new delivery date picker, customers plan ahead, selecting the perfect day for their Dippin’ Dots-inspired event.”
4. Bulletin buried in the Meta Graveyard
Meta announced on Tuesday that it's shutting down Bulletin, its newsletter platform that was supposed to rival Substack, less than two years after its launch.
The copycat service was supposed to compete with Substack, Pico, Ghost, and Twitter-owned Revue, and capitalize on the growing market for subscription newsletters (like the world famous e-commerce newsletter Shopifreaks) — but it never really took off despite signing six-figure deals with high-profile writers like Malcolm Gladwell, Malala Yousafzai, Tan France, and Erin Andrews.
Some people point to Bulletin's apolitical agenda as reason for the platform's failure. Meta was very public and intentional with its desire to avoid political content, which is known to draw readers, controversy, and subscriptions.
However I think the real problem is that Facebook launched yet another product that barely anyone knew about. A product this time, that there was no need for. If Meta wanted to dabble in long form content subscriptions (newsletters if you will), they should have just integrated it into the existing Facebook platform. Users would see excerpts of recent editions in their News Feed with an option to subscribe to read more. Why the need for a separate platform for that? Just for e-mail notifications? Simply give users individual e-mail notification control over their newsletter subscriptions.
In August, I wrote that Meta regularly launches copycat services with little fanfare, tells no-one about them, puts too many hoops in between getting started, watches them fail, and then takes them away. It's the same pattern over and over again, and Creators are getting tired of it. It's no wonder Creators didn't jump on the Bulletin bandwagon and choose Bulletin over Substack, other competing platforms, or standalone newsletter services (like how Shopifreaks publishes) — no-one had confidence that the service would be around long enough to make it worth while.
So add Bulletin to the bodies of projects buried in the Meta Graveyard. Other recent burials include:
- Oct 2022 – Facebook shut down its Live Shopping
- Aug 2022 – Instagram shut down its affiliate commerce program
- August 2022 – Facebook shut down its standalone gaming app
- June 2022 – Facebook discontinued podcast and audio services
Zuckerberg's next bet is the metaverse. The purported $70B endeavor will be the most exorbitant sum of money any tech company has funneled into a single initiative. This one's going to be hard to walk away from…
5. Most retailers unprepared with digital operations
A recent survey conducted by Incisiv in partnership with Fluent Commerce, commercetools, and Conteststack, found that retailers expect major increases in operational requirements in the coming year, and that most brands feel inadequately prepared to deal with these new challenges. The study surveyed 350 retail businesses, 82% with revenue over $500M, in U.S., U.K., France, and Germany, with 90% of the respondents a director, VP or above.
The survey found that fewer than half of retailers believe they can effectively manage all aspects of their digital operations over the next twelves months. Below is a recap of the survey's findings:
Retailers expect the complexity of their digital operations to increase over the next 12 months:
- 81% expect product returns to increase
- 69% will increase their number of online SKUs
- 67% will increase the number of digital assets they utilize
- 65% expect the number of store fulfilled digital orders to increase
Most retailers are underprepared to effectively manage them:
- 46% think they can manage the growth of their product returns
- 43% feel ready to manage their online SKU growth
- 32% stated they will be effective in managing the variety of their digital assets.
- 35% stated they will be effective in managing their store order fulfillment
Retailers were forced to invest in commerce and fulfillment capabilities during the pandemic in order to stay in business, while content and campaign management was given less attention. Now retailers are striving to catch up:
- 39% stated their current store fulfillment platform will not meet their needs
- 40% stated their personalization platform won’t meet their needs
- 42% stated their product catalog system won’t meet their needs
- 43% stated their content management system won’t meet their needs
If your company is having trouble keeping up with the digital technology that powers your business, my agency Ideas Focused is available to help you develop a powerful online presence and a 21st century entrepreneurial mindset.
6. BigCommerce and DHL team up
On Tuesday, DHL and BigCommerce announced a partnership that will grant BigCommerce merchants access to the DHL Express delivery network and make merchants eligible for perks like discounted rates and access to DHL shipping and logistics professionals.
They will also have access to DHL's On Demand Delivery tool, which offers flexible delivery options and proactively notifies customers of any delays or disruptions.
DHL has operations in more than 220 countries and territories and integrates with other major e-commerce platforms including Amazon, Shopify, and WooCommerce. The company has aspirations of playing a major role in the e-commerce space.
A quick recap of some notable DHL e-commerce moves in the past year:
- Sep 2021 – Shopify launched Shopify Markets that offers tools to manage global commerce, which included negotiated global rates with DHL.
- Oct 2021 – DHL eCommerce Solutions announced plans to expand the square footage of its U.S. distribution center network by 70% over the next five years and invest $300M to add more automation to its existing facilities
- July 2022 – DHL announced plans to invest £560M across its U.K. e-commerce operation, DHL Parcel U.K. The investment followed a 40% volume uplift since the start of 2020 and increased demand for its e-commerce and B2B services.
- Sep 2022 – Amazon made its acquired Veeqo software free for merchants in the U.S. and U.K., which includes access to discount rates at DHL
7. Afterpay offers new payment terms
Afterpay, now owned by Block, introduced new payment options that give consumers more time to pay. Consumers who select their new monthly payment option can amortize purchases between $400 and $4,000 over a six or twelve-month period with no late fees, no compounding interest, a cap on total interest owed, and a clear view of what is owed at time of purchase which won't increase during the course of the payment plan.
The monthly payment option is initially available for online purchases, but will become available for in-person purchases in 2023. At the moment, the longer pay period is only available through select US merchants, but the company plans to extend the offer to merchants outside the U.S. in 2023.
In comparison, competitor Affirm, Klarna, PayPal, and Sezzle offer 4 interest-free payments every 2 weeks, and Klarna also offers monthly financing options.
8. Goodwill goes digital with its first online marketplace
Goodwill has launched a new online marketplace called GoodwillFinds that offers everything from used clothes to oddities like a crystal bowling ball with a skull. The store currently holds an inventory of 100k products ranging from books and home décor to specialty and collectors items.
All purchases go towards Goodwill's mission of creating job training and other programs for people facing barriers to employment. One thing I never knew about Goodwill is that although their mission is centralized, the actual organization is decentralized: There are 155 local Goodwill organizations across the country that run the 3,300 stores. Proceeds from each sale on the website will go back to the region where the item was sourced.
With Goodwill's new online system, each store can photograph and upload products to the website where consumers can search and purchase. After purchase, the individual store that sold the item will ship it and receive the revenue from it.
Matthew Kaness, CEO of GoodwillFinds said, “Our goal was to make the system as intuitive as possible, so it is an easy lift for the store.”
Goodwill is piloting the tech at 338 stores in Colorado, Southern California, and Minnesota, but the idea is to expand quickly to other locations to ultimately include every store in the network.
Goodwill is launching this storefront at a good time, as the secondhand clothing business is exploding, with sales expected to hit $77B by 2025. The number of first-time buyers of secondhand clothes in 2020 jumped by 33M, with 75% of those shopper planning to increase their spending in that market.
I think that Goodwill's idea is brilliant, and I hope that they find success with the platform. When I read the news this morning, it gave me an idea for an online marketplace for secondhand goods that supports local thrift stores who don't have the same resources and reach as Goodwill. You can watch the video on my Facebook if you'd like to learn more.
9. Other e-commerce news of interest this week
- Amazon is investing more than €1B to add thousands more electric trucks, vans, and cargo bikes to its fleet of delivery vehicles across Europe over the next five years, including €300M in the UK, where it plans to have as many as 700 electric HGVs by 2025 and triple its fleet of electric vans to 10k. To power these new vehicles, they will install hundreds of fast charging points at their EU warehouses and delivery hubs to allow the vehicles to charge up in about 2 hours. Will the drivers get paid for the charging time? A question that unfortunately needs to be asked….
- Google Shopping is testing a new chat feature in the product search results. The feature was reported on Twitter and captured in a screenshot. At the moment, no-one knows where the Chat button leads, but most likely to the messages feature in Google Business Listing.
- Heyday, the conversational AI platform purchased by Hootsuite for $48M in 2021, integrated Instagram DM and Facebook Messenger within its e-commerce Shopify chatbot app. The company hopes it will provide merchants with the ability to sell more products and offer immediate customer support, since according to Shopify research, customers are almost 70% more likely to make a purchase from a business that responds to their chat inquiry within a few minutes. Good start, but WhatsApp needs to be on that list. In Latin America, I rarely see anyone using DM or Messenger for commerce purposes, whereas I see EVERYONE using WhatsApp to interact with businesses. It's the standard down here.
- Shopify has settled allegations with 5 major publishers who claim that Shopify allowed the sale of pirated textbooks and test materials on their platform and profited from doing so. The Textbook Mafia asked the court for statutory damages of up to $150k per infringed copyright and $2M for each counterfeited trademark, and listed 3,400+ copyrights that users allegedly violated. I first reported on this lawsuit in Dec 2021. Terms of the settlement were undisclosed and Shopify asked the court to dismiss the case with prejudice, which means it cannot be reopened.
- eBay is pulling its app from the Shopify app store on Jan 1, 2023, five years after its launch. The app was supposed to provide an easy way for Shopify merchants to list their items on eBay, but it failed to synchronize listings, inventory, and order history properly. The announcement encouraged sellers to find other 3rd party apps in the meantime to sync their inventory (of which there are plenty).
- Klaviyo announced a new integration with Wix to provide users with their customer relationship tools. Through the integration, Wix users can integrate their Wix store with Klaviyo's customer platform to personalize customer communications.
- Wish is now leveraging the eDesk e-commerce customer support platform to provide retailers with more tools and resources to assist shoppers. Through the partnership, all Wish retailers across U.S. and Europe will be able to view and service customer inquiries from Wish and other e-commerce platforms within a single eDesk account. eDesk is one of our Reward Partners. See the bottom of this e-mail to learn how you can earn up to $250 to their platform by sharing our newsletter.
- E-commerce companies are ramping up hiring in India to meet the demand during the festival season. Close to 300k new jobs have been created and over 500k more are expected to be added from now until Diwali, according to a TeamLease report. Even though that's a substantial amount of jobs, a different report showed that India actually saw a de-growth of 11.8% in retail sector jobs from Aug 2021 to Aug 2022.
- A Los Angeles man is filing a class action lawsuit against Texas Pete for not actually being made in Texas, but in North Carolina. The complaint, filed on behalf of all people in the U.S. who have purchased Texas Pete, asks the court to force Texas Pete to change its name and branding and to pay up. I hope this guy knows that he doesn't speak for me! I could care less where Texas Pete is manufactured, and I hope that this case is laughed out of the court room.
- Not to be outdone by Meta’s Make-A-Video, Google detailed its work on Imagen Video, an AI system comparable to OpenAI’s DALL-E 2 and Stable Diffusion that can generate video clips given a text prompt. Imagen works on a diffusion model, which means it generates new videos by learning how to destroy and recover existing samples of data to create new works.
- Senator Elizabeth Warren reported that Zelle is “rampant with fraud and theft” and has repaid less than $3M of the over $200M in fraud in 2021 and early 2022. In April, Warren opened an investigation into Zelle and its seven bank owners, and is now urging regulators to expand their oversight and crack down on fraud through the platform. I've read from several sources in the past that Zelle is the platform of choice for scammers because the platform does so little to prevent fraud or compensate users for it.
- Parents are suing Amazon for selling “suicide kits” to teenagers who died by suicide. Allegedly Amazon bundled items for purchase together, including a potentially lethal chemical called sodium nitrite, a scale to measure a lethal dose, a drug to prevent vomiting, and a book with instructions on how to use the chemical to attempt suicide. Amazon's lawyers said it would be unfair to hold the marketplace liable for the teens' deaths.
- Twitter is launching its new Edit button in the U.S. through its Twitter Blue subscription. Previously the edit button was made available only to Blue subscribers in Canada, Australia, and New Zealand because Americans couldn't be trusted with it (kidding about the last part, I think). The button allows users to edit their tweets for up to 30 minutes after posting to help them clarify or correct a mistake in their tweet, fix a small typo or add hashtags.
- Grubhub and Gopuff are partnering to provide delivery of grocery items, alcohol, and essential items. The new partnership will allow Grubhub to tap into Gopuff's warehouses to deliver a wider selection of convenience items to customers, while opening up a new channel for Gopuff to reach more customers.
- Neeva, an ad-free search engine launched last year by a former Google engineer, is launching in Europe, beginning with the U.K., France, and Germany. The search engine currently has 600k users, the majority of which are on its free plan, and the company is looing to grow its paid subscriber base in the coming year.
- Sendy, a Kenyan logistics startup, is laying off another 10% of its workforce, deciding to wind down its supply service and solely focus on its fulfillment service. The company has yet to raise the $100M it had targeted to get this year and were far off from the projections it made the previous quarter.
- Shopify CEO Tobias Lütke has purchased close to $3M in Coinbase shares during the past 60 days, according to public records. Lütke became a board member last February and is required by law to submit his trades to the SEC.
- The University of Illinois has partnered with Amazon, Apple, Google, Meta, Microsoft and nonprofits on the Speech Accessibility Project, which aims to improve voice recognition for communities with disabilities and diverse speech patterns that are often not considered by AI algorithms. That includes people with Lou Gehrig's disease (ALS), Parkinson's, cerebral palsy, Down syndrome and other diseases that affect speech. The project will recruit paid volunteers to contribute voice samples and help create a private, de-identified dataset that can be used to train machine learning models, starting with American English.
- United Arab Emirates‘ total e-commerce sales reached $4.8B in 2021, up 84% from 2019, and is forecast to reach $9.2B by 2026 according to Dubai Chamber of Commerce. UAE's retail sales is also expected to reach 12.6% of total market sales by 2026
10. This week in seed rounds, IPOs, & acquisitions….
- Naver, a South Korean tech firm, agreed to acquire Poshmark, the largest fashion consumer-to-consumer platform in North America with 80M users, for $1.6B. The deal will combine Poshmark's shopping platform with Naver's technology including image recognition, AI, and live streaming.
- Ownly, a Calgary-based e-commerce platform for the real estate industry that helps “old school” developers sell new homes, raised CAD $2.55M in a round led by Calgary's Bluesky Equities. The platform enables developers to list and sell inventory and customers to shop, finance, and buy new homes online with more efficiency and transparency. The company currently serves 15 home builders throughout 27 communities in Canada and the U.S. and will use the funds to expand into additional markets in both countries.
- Humaans, a London-based HR tech startup that lets organizations build a customizable HR stack that manages employee documents, data, payroll, contracts and other components, raised $15M in a Series A round led by Lachy Groom with participation from Tobias Lütke and Stewart Butterfield. The company is currently focused on faster and more efficient data access at scale and are investing into new capabilities that will support organizations to better collaborate cross-functionality.
- Walmart signed a definitive agreement to buy Alert Innovation, a robotics e-grocery fulfillment technology provider that develops material-handling tech for automating order fulfillment in retail supply chains. The company developed the Alphabot System specifically for Walmart after the two companies started working together in 2016. Walmart plans to use the technology to reduce reliance on sales associates.
- The Rounds, a startup that developed what it calls reverse logistics, a system where online goods aren't just delivered to the consumer, but their empty containers are also picked back up at the same time, raised $38M in a Series A round led by Redpoint Ventures and Andreessen Horowitz, bringing its total amount raised to $42M. The service allows customers to get items delivered with no cardboard or single-use plastics. It has over 10k active members in Philadelphia, D.C., Miami, and Atlanta.
- Carbon6 Technologies, a company that acquires software for use by e-commerce merchants selling on the Amazon marketplace, raised $66M in equity and debt in a Series A round led by White Star Capital for the equity and MidCap Financial for the debt. Since founding the company in 2021, Carbon6 has acquired 16 software companies with collectively 200k active users.
- Amazon announced the launch of the Amazon Catalytic Capital, a $150M commitment to invest in underrepresented builders in tech. The initiative will invest in funds that back pre-seed and seed-stage startups built by Black, Latino, Indigenous, women, and LGBTQIA+ founders.
- Yofi, a B2B SaaS startup that helps brand better understand their customers and intentions, raised $1.5M in a round led by Kickstart Fund. The company will use the funds to further prove out product-market fit and test the viability of their business model by winning over brands' internal finance teams.
- Meesho, an Indian e-commerce platform backed by Meta, raised $192M from its US parent firm, Meesho Inc, which they do not consider a fundraising activity, but business-as-usual practice as part of the company's larger treasury strategy. Since being founded in 2015, Meesho has raised over $1B. In April, I reported that the company had laid off 150 employees from their grocery business, which was restructured and rebranded as Meesho Superstore.
- EcoCart, a company that built an infrastructure for e-commerce companies and works with them to make their shopping experience more transparent and sustainable, raised $14.5M in a Series A round led by Fifth Wall Climate. The company works with over 2k brands as customers and increased revenue more than 8x and headcount from 5 to over 30 employees. The company will use the funds for additional hires to support its product and sales and marketing teams.
- Fandom, the entertainment platform that hosts wikis on entertainment topics, acquired seven entertainment and gaming brands from media company Red Ventures including Comic Vine, Cord Cutters News, GamerFAQs, GameSpot, Giant Bomb, Metacritic, and TV Guide, in a deal worth around $55M. Fandom offers 40M pages of content and 250k wiki communities in the entertainment space, and the deal expands the company's offerings to now include reviews, ratings, and news.
What'd I miss?
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Paul E. Drecksler
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