What if you could order products from your TV with the click of a button? Would you? (Should you?)
Is there space on the market for a Google Shopping competitor? And if so, is Microsoft the one to do it?
What's the deal with everyone cancelling their streaming music and video subscriptions? Are we about to enter the age of attrition as consumers experience subscription fatigue?
Rather than old boring standard delivery (where your food gets cold in transit), how would you enjoy ordering a food truck to your home to fresh cook you a meal outside your door?
Answers to these questions and more in this week's 74th edition of Shopifreaks. Thanks for being a subscriber.
Stat of the Week
BNPL purchases reached $120B in GMV last year, according to GlobalData consultancy firm, which is an increase of 4X since 2019. And it doesn't appear to be slowing down. In fact, it's penetrating into even more markets like travel, healthcare, and even grocery shopping! — Share it on Twitter & LinkedIn
1. Shop on your TV with Roku and Walmart
Roku and Walmart have teamed up to make it even more dangerous to put your kids in charge of the remote control!
The companies announced their plans to bring together Roku's 61.3M subscribers with Walmart's more than 120k products and allow viewers to purchase items with their remotes while streaming on Roku devices.
The program will add an overlay to an existing ad so that streamers can choose to click “OK” on their Roku remote to make a transaction right on the screen with their TV show paused. They won't need to be taken to Walmart.com or leave Roku's streaming interface in order to complete the purchase. Nor will they have to enter their CC number using a remote control. Instead, Walmart will leverage Roku's payment platform which has their customers' payment details pre-populated.
I can imagine the customer service calls already. “Hi Roku, I was trying to skip the ad and I think I accidentally ordered a Jet Ski? … Cancel it? No, I don't want to cancel. I was just wondering when it'd arrive?”
Roku’s OneView ad-buying platform will power and measure Walmart’s shoppable ads, and their Brand Studio will design custom branded content for the new ad medium.
Walmart's been experimenting heavily with streaming in recent months. In November, I reported that Walmart was the first retailer to test Twitter's livestream shopping feature, and in October, I reported on TikTok's new Shopping feature, of which Walmart was one of the first to test. The retailer has also hosted live shopping events across Facebook, Instagram, YouTube, TalkShopLive and other platforms in the past year.
Other platforms such as Amazon, Instagram, Facebook, and Google have dabbled in mixing live streaming with commerce, but so far T-commerce, as it's called, (ie: shopping content from your TV) has never really taken off. YouTube most recently entered the space by making its YouTube app a second-screen companion for TV viewers that will allow them to shop as they watch.
However it's TBD whether or not consumers will engage with the new shopping medium, especially given the fact that we've all got our phones in our hand while watching TV.
Is one-click shopping via your Roku remote too far of an initial step in the T-commerce direction? Would Walmart and Roku be better off developing shoppable ads that send notifications to users' mobile phones via the Roku app so that they can learn more about the product?
Perhaps you shop differently than me, but personally, I need more than the length of a typical TV commercial to decide whether or not I'd like to purchase a product. I'm not about to click “OK” to make an instant purchase, especially without reading any reviews or doing any price comparison — but I would click “OK” to send a notification to my phone that contains a link to more information about the product. That method seems like a much softer approach at transitioning consumers into purchasing what they see on TV.
What are your thoughts? Will you be one-click purchasing products from your Roku remote? Hit reply and let me know.
2. Microsoft to compete with Google Shopping
Microsoft is testing a new retail marketplace in the U.S. via its Bing search engine to compete with Google Shopping. The third-party marketplace, called “Buy Direct”, will allow shoppers to complete their purchases directly in Bing.
So basically it's Microsoft's version of Buy On Google, which lets users checkout without leaving the Google Shopping interface.
I would've called it something cuter and more corporately relevant like “Window Shopping” and then allowed opt-in integration into Windows operating systems to get notifications of product price drops. But hey, “Buy Direct” — a name which could literally exist on any e-commerce platform and offers no branded relationship to Microsoft — works too.
The product is currently in beta and only offered to a couple hundred U.S. based sellers. Microsoft estimates that the service will drive $25M in GMV by June 30, 2023, a gross merchandise volume which Amazon might call a rounding error in their bookkeeping.
Bing will handle payments made through Buy Direct and also allow sellers to promote their products through Microsoft Ads. Checkout requires signing into the customer's Microsoft account, which can also store their payment and shipping info.
A source also told Business Insider that Microsoft believes it has an edge over Google because its shopping tools allow users to manually set their shopping preferences to make search results more relevant, versus Google's more algorithm-based shopping results.
Microsoft's deeper dive into e-commerce isn't just to benefit its second place (by a landslide) search engine. The company's shopping data offers a closed-loop ad system that can reach between Bing, Windows, LinkedIn, connected televisions, and its network of third-party ad companies.
I certainly understand Microsoft's reasoning for launching this copy-cat consumer marketplace, however, I think that resources would be better spent developing and dominating a more niche marketplace that leverage the demographics of their existing userbase, as opposed to trying to cast as wide an e-commerce net as possible.
For example, a B2B product marketplace on LinkedIn that connects business users with office related products. If Microsoft wants to deeper penetrate e-commerce, why shouldn't I be able to order toner and office chairs directly on LinkedIn Marketplace?
My point being that LinkedIn has over 800M active users, so why not create and facilitate a connection between the B2B e-commerce products that their users are after, and the brands that already engage on their platform?
If I were Microsoft, I'd rather attempt to build the biggest B2B product platform in the world than try to build an e-commerce subset of an already small market share of consumer search.
However I applaud the effort either way, as Google and Amazon (the number one and two places where consumers begin their product searches) need competition.
3. One million U.K. music streamers cancel their subscriptions
A new report by Kantar claims that over one million U.K. consumers have cancelled their subscriptions to Apple Music, Spotify, Amazon Music, and other music streaming services.
The report also notes that there is a decline in the number of young people with music streaming subscriptions in the country.
The company reports, “With inflation rising to 9% in the United Kingdom and further rises in the cost of living expected, the rising cancellation rates of music subscriptions is evidence that British households are starting to prioritise the spending of their disposable income.”
The number one reasons consumers cancelled their subscriptions, cited by 37% of users, was that they want to save money. A standard subscription to Spotify and Apple Music each costs £9.99 each per month, making the yearly price for each just under £120.
Other reasons cited included experiencing technical difficulties with the services, a limited selection of music, and too many advertisements.
Streaming video services aren't immune either. (We all remember the recent Netflix debacle.) Kantar put out a similar report last month which said that 1.51M video streaming subscriptions were cancelled in Q1 2022, of which more than 500k were attributed to money saving as well.
Consumers are experiencing subscription fatigue! I'm curious if Kantar will put out a similar report about live streamer subscriber attrition (like Twitch or Patreon). That's a study I'd be interested to read.
4. Samsung Pay is now Samsung Wallet
Samsung is combining its Samsung Pay and Samsung Pass apps into a single product called Samsung Wallet which will store passwords, payment info, driver's licenses, student IDs, COVID-19 vaccination cards, home and car keys, and other digital credentials.
As more consumers become comfortable with using their phones in lieu of credit cards, as a form of entrance, or as a way to start their car, which app(s) they use to power these functions is becoming a very important part of our digital lives.
With 28% US mobile market share, Samsung is the only phone maker who could potentially compete with Apple, which has a 57% market share. Last week I reported on Apple launching its BNPL offering through Apple Pay, and two weeks ago I reported that Square will begin to support Apple’s Tap to Pay technology later this year — both moves which indicate that Apple wants to become your de facto app for mobile payments — a title which Samsung wants a shot at as well.
But do users need one more mobile wallet app? You could argue that Google, which controls the operating system of Samsung phones (and practically all other non-Apple phones), would be next in line to dominate mobile payments. Google also recently launched their Google Wallet app to store transit, travel, incentive marketing and health care credentials, with Google Pay operating as a companion app to conduct payments. But that doesn't mean that Samsung doesn't stand a chance. Of Android's approximate 40% mobile market share, Samsung accounts for around half.
In the world of mobile wallets, Samsung was one of the first movers. Samsung acquired LoopPay in 2015, which developed a system that lets a phone wirelessly mimic the signal that POS terminals detect when they read a magstripe card. This technology enabled Samsung Pay to work at stores that could not yet accept contactless payment. However eventually the technology caught up, allowing all phones to work as a digital wallet, diminishing Samsung's early lead advantage.
5. Britain introduces new BNPL regulation and changes to credit law
Britian announced on Monday that it plans to make BNPL firms carry out affordability checks, gain approval by the Financial Conduct Authority (FCA), and ensure advertisements are fair and clear. The government is also looking to expand rules to cover other forms of unsecured short-term credit such as those used for dentistry work.
The new rules will take effect in 4 bi-weekly installments. (Kidding! Get it though?)
John Glen, economic secretary to the finance ministry, said in a statement, “Buy-Now Pay-Later can be a helpful way to manage your finances but we need to ensure that people can embrace new products and services with the appropriate protections in place. By holding Buy-Now Pay-Later to the high standards we expect of other loans and forms of credit, we are protecting consumers and fostering the safe growth of this innovative market in the UK.”
The government will publish a consultation on draft legislation towards the end of this year and then will lay secondary legislation, used to fill in the details of Acts, by mid-2023.
In addition to BNPL regulation, the government announced a new plan to grow the country’s economy and tackle the cost of living, including the Chancellor providing £37B of support for British families via direct payments and help with energy bills.
The EU is also in the process of reviewing consumer credit legislation.
Frankly, it couldn't come at a more needed time. As we enter a recession, consumers don't need more ways to AMORTIZE purchases, but rather, they need more help AFFORDING basic necessities. My fear with BNPL has always been that it merely pushes the goal post farther down the line towards insurmountable consumer debt.
6. Google – guns good or guns bad?
Google has long boasted that it doesn't accept ads for guns and firearms because of the company's values and culture, but a ProPublica analysis has revealed that millions of ads from some of the nation's largest firearm makers have flowed through Google's ad systems and onto websites and apps during that same time period.
Some of the ads violated Google's rules and were simply uncaught by their algorithm, but the majority of others were permitted as a result of a longstanding loophole which has allowed Google to claim it has a no-gun policy while simultaneously facilitating the placement of more than 100M gun ads each year.
Here's how the loophole has worked….
Google has two sets of rules for weapons ads. One is for Google Ads, which run on the company's own ad network and appear on YouTube and Google search results. On Google Ads, gun ads are not allowed.
The other set of rules is for ads sold by partners, such as ad exchanges, that place ads using Google's systems, which get to make their own rules about gun ads. For these partners, Google operates as an “exchange of exchanges”, which means that it facilitates the buying and selling of ads on other exchanges, and takes a cut of the transaction.
In May, I reported that Google was potentially skirting rules in the EU that required it to open up Google Shopping to external competition. Rather than comply, they simply started running ads through performance marketing agencies that exclusively sold ads on Google Shopping's auction system.
So it wouldn't be the first time Google used loopholes to say one thing and do another.
Perhaps a bigger question is — is it actually a problem if Google runs gun ads? Guns aren't illegal. People like guns. Advertisers want to reach gun enthusiasts. Publishers want to make money. What's the issue?
The issue is that not every advertiser wants to have gun ads displayed on their websites, and Google has a history of failing to properly identify and block weapons ads, which publishers have to opt-out of displaying versus opt-in.
Perhaps a more ideal and less hypocritical solution would be for Google to increase the types of ad controls available to publishers and require that they opt-in instead of opt-out of receiving certain types of ads. Doing so, however, would bring attention to the types of ads that cause controversy on their network. So it's a catch 22.
7. PayPal's new BNPL service is getting awfully close to a credit card (without the card)
PayPal introduced a new BNPL service called PayPal Pay Monthly, which allows users to break down the total cost of their purchase into monthly payments over a 6-24 month period.
The program allows consumers to make purchases between $199 and $10,000, with the first payment due one month after the purchase is made, followed by monthly payments until the purchase price and interest is fully paid off.
Shoppers will be presented with the option to “Pay Monthly” at checkout, fill out an application, and if approved, be shown up to three different payment plans of varying lengths, each with risk-based APR ranging from 0% to 29.99%.
Is it just me, or is that sounding awfully a lot like a credit card, albeit without the physical card?
The company's previous BNPL product, Pay in 4, only allowed customers to finance purchases over a six-week period, which is typical in the industry, but now customers can stretch purchases as far as two years. That's a long time to pay for consumer goods. Imagine if you were just paying off your Pixel 3a!
PayPal isn't new to offering credit to its customers. The company introduced Pay in 4 in August 2020 and previously offered credit cards and lines of credit to its customers. Since Q1 2020, PayPal has processed over $15B in global BNPL payment volume across 105M transactions.
Their edge over Affirm, Klarna, Afterpay, Zip, Sezzle, and other BNPL providers, similar to Apple, is that PayPal is already accepted by close to 70% of large e-commerce sites.
BNPL — which started out as a new short-term installment payment option has morphed into a 24 month full-on financing plan. At what point does Buy Now Pay Later become Buy Now Amass Huge Amounts of Unregulated Consumer Debt? As others have said, this won't end well…
8. Other e-commerce news of interest this week
- Instacart renamed its subscription service Instacart+, previously called Instacart Express. The subscription costs $9.99/month or $99/year and will give customers the ability to share their accounts with family members in their household, as well as free delivery on orders over $35.
- Amazon Prime Day is coming July 12-13. Last year Amazon disclosed that customers bought 250M items during the event. They did not disclose the revenue amount, but Bank of America projected it to be $9.55B GMV.
- Amazon will start making Prime Air drone deliveries later this year to customers in Lockeford, CA, a town of 8.4 square miles with a population of about 3,500. Amazon's drones can fly up to 50 miles per hour up to an altitude of 400ft. (They could technically fly higher, but 400ft is the legal limit.)
- The body of Brett O'Grady, a 35-year-old Shopify exec who went missing seven months ago after going for a bike ride, has been recovered in the water of the Rockcliffe Pond in Ottawa on Saturday afternoon. His bicycle was found by a neighbor near the family home. Investigators have concluded that foul play is not suspected in O'Grady's death. That's terrible news to read and not the happy ending we were all hoping for. Much love to his family.
- Subhash Choudhary, co-founder and CTO of Dukaan, an India-based e-commerce platform, blasted Shopify on Twitter for its alleged performance issues, comparing the performance of sites running on both platforms. While some agreed and encouraged Choudhary, others criticized his rant as being in poor taste against a competitor. Several replies mentioned that his tests were unfair because they pitted a live Shopify site against a test Dukaan site, and that he should report back once they attempt to scale. Conveniently, the rant comes around the same time that Dukaan is expanding its platform worldwide as it looks to challenge Shopify and other big players.
- Tech layoffs continue across the industry. Swyft, a Shopify-backed Canadian delivery startup, laid off 30% of its staff, just sixteen months after raising $17.5M in venture capital.
- eBay is raising the minimum ad rate for Promoted Listings Standard from 1% to 2% beginning July 11th. This is the second time in two weeks they've raised advertising fees.
- A leaked Amazon internal research memo from mid-2021 revealed that Amazon could run out of workers to hire for its warehouses by 2024. The company said in the memo that the only way to significantly alter this timeline is to make sweeping changes to the way it manages its employees. Amazon’s attrition rate, which was 123% in 2019, jumped to 159% in 2020, which is well above the overall turnover rates in the transportation and warehouse sectors in the USA, which had an average of 59% attrition in 2020, up from 46% in 2019.
- Page A. Thompson, a former systems engineer at AWS that used a self-made tool to detect misconfigured AWS accounts and hack into the systems of 30 organizations including Capital One and USDOJ, was found guilty of hacking and wire fraud charges. Both Capital One and Amazon Web Services denied liability but said they'd settle with class action lawsuits to avoid the time, expense and uncertainty of litigation.
- eBay has launched a beta release of its eBay Live Platform, a real-world-esque auction experience where buyers and sellers can engage with each other through live stream videos. The service is currently live in beta, but there's nothing available to buy yet.
- China is in the middle of its 618 shopping festival, an annual event where e-commerce giants like Alibaba and JD try to entice shoppers with massive discounts and promotions. Last year the GMV across major platforms totaled 578.5B yuan, up 26.5% YoY, but this year growth is expected to slow amidst economic fallout from a resurgence of COVID, which has led to lockdowns in major cities including Shanghai.
9. This week in seed rounds, IPOs, & acquisitions….
- Bonik, a Bangladesh-based e-commerce platform that caters to SMEs who mainly run their businesses through FB and IG pages, raised $47k in pre-seed investment from Mohammad Maaz. The company will use the funds to build more functionality into the product, improve user experience, and hire talent.
- Settle, an all-in-one cashflow management solution geared towards e-commerce brands, raised $280M in revolving credit facility from Citibank and Atalaya, shortly after their $60M Series B round. The company will use the funds to continue expanding support for e-commerce brands in the areas of bill pay, accounts payable management, and financing.
- Postscript, an SMS marketing company that integrates with e-commerce and CRM platforms to manage their text communications, raised $65M in a Series C round, one year after their $35M Series B. The company has since grown from 61 employees and 3,500 customers to 230 employees and 8,500 customers. The company will use the funds to expand their product functionality and integrate with additional platforms.
- Wix has received court approval to buyback $500M of its ordinary shares and/or convertible notes between now and the end of the year. The company may file extension requests with the court on an ongoing basis as required.
- Latitude Group, an Australian digital payment and lending firm, terminated its $335M offer to buy Humm Group's consumer unit which includes its BNPL business, citing current disruptions in financial markets for the termination.
- Tanmeyah, an Egyptian microfinance solutions provider, acquired Fatura, a B2B platform that brings together retailers, manufacturers, and wholesalers to offer live product viewing, price transparency, and BNPL services. The consolidation presents an opportunity for both companies to drive growth from the other's customer base and market share.
- Webio, an Irish startup that offers conversational AI in the credit, collections, and payments industry, raised $4M in a Series A round led by Finch Capital. The company will use the funds to triple their R&D team and expand its sales, marketing, and customer success teams.
- Goat Brand Labs, a Bengaluru-based D2C brand aggregator, raised $50M in equity and debt in a Series A round. In the past year of its operation, it has acquired 15 brands and plans to use the funds to acquire more.
- Invoca, an AI startup that helps companies optimize their contact center operations by analyzing conversations between representatives and customers to find ways of increasing sales, raised $83M in a Series F round at a $1.1B valuation led by Silver Lake Waterman. The company reached the $100M annual revenue after growing sales by more than 70% in 2021 and will use the fresh funds to improve its AI and build new capabilities.
- PredictSpring, an omni-channel commerce and POS provider, raised $16M in a Series B round, bringing its total amount raised to $32M. The company will use the funds to accelerate its growth and increase its R&D and go-to-market teams.
- Metropolis Technologies Inc., a mobile commerce platform that combines AI with digital payment technology to enable drivers to make seamless transactions at parking garages without a checkout, raised $167M in a Series B round co-led by 3L Capital and Assembly Ventures. The company will use the funds to develop the next generation of its mobile commerce platform and deploy the tech into other verticals such as car washes, EV charging stations, and gas stations.
- Zoovu, a platform for managing product discovery experiences across apps and websites, raised $169M in a round led by FTV Capital, bringing its total amount raised to more than $200M. The platform has over 2500 customers and generates over $25B in annual sales for its customers. It plans to use the funds to build out its go-to-market strategy and team.
- Khazenly, an Egyptian on-demand warehousing and fulfillment platform that provides an omnichannel solution for merchants, raised $2.5M in a round co-led by Arzan Venture Capital and Shorooq Partners. The company did not give exact figures on the number of merchants on its platform, but said that GMV is in the eight figures.
- KEO World, Inc., a Miami-based B2B BNPL firm, raised $20M in a round led by Montreux Growth Partners, alongside a debt facility from Hayfin Capital Management. The company will use the funds to accelerate the growth of its Workeo SME inventory financing program across USA and LATAM.
- PayCargo, a platform that facilitates companies in the business of shipping products to pay each other, raised $130M in a Series C round from a single investor, Blackstone Growth. The company currently integrates with around 50 of the larger freight management systems, transportation management systems, ERP and terminal operating systems used by shipping and cargo companies. It will use the funds to expand into more regions, build out more products around financial and business data, and potentially for M&A.
- Dastgyr, a Pakistan-based B2B e-commerce marketplace, raised $15M in a Series A round led by VEON. The company will remain an independent entity with a minority position being taken by VEON. The funding will support Dastgyr's expansion into 15 new cities in Pakistan.
- Wonder Distribution LLC, a food delivery startup that operates a network of truck-based restaurants from which consumers can order food through a mobile app and have the trucks drive to their home and prepare an order on-site, raised $350M from Bain Capital Ventures at a $3.5B valuation. As of January, the company operates 60 restaurants in four New Jersey towns and is available to about 132k households. They will use the funds to expand across New Jersey.
What'd I miss?
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Paul E. Drecksler
PS: Gas is so expensive in the USA right now, I asked a car dealership to give me the trade-in value of my car, and they asked if the tank was full or not.