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#137 – Shop Pay With Prime, New Walmart Fulfillment, & Facebook Premium

by | Sep 4, 2023 | Recent Newsletters

Can two rival e-commerce juggernauts become frenemies?

Is Walmart taking pages out of Amazon's playbook?

Do merchants really need to pay higher credit card processing fees?

Would you pay for Facebook if it meant no ads?

Answers to all these questions and more in this week's 137th Edition of Shopifreaks. Thanks for subscribing and sharing!

PS: If you've never introduced yourself before, please hit reply to this e-mail and do so now. I appreciate knowing who my readers are and what y'all do so that I can best serve you with this newsletter. 

China accounts for one-third of the global e-commerce market by payment value. China's $2.2T in sales was followed by the US with $1.8T and the UK in a distant third with $287.4B in 2022. — According to GlobalData

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1. Shopify + Buy With Prime

Shopify and Amazon are releasing a Buy with Prime App for merchants.

The app will allow Shopify merchants to offer Buy with Prime as a payment and fulfillment option within their stores on products of their choosing without being in violation of Shopify TOS for using an outside checkout.

If you're unfamiliar with Buy with Prime — it's an Amazon feature that allows Amazon merchants to sell their products from their own websites, while still offering Prime shopping benefits like fast, free shipping, quick checkout with Amazon Pay, and free returns.

Brief history of the relationship between Shopify & Buy with Prime: 

  • April 2022 – Amazon launched its Buy with Prime service on an invitation only basis.
  • September 2022 – Shopify warned merchants that Buy with Prime was an unsupported external checkout and that enabling it was against their TOS.
  • January 2023 – Amazon expanded the service nationwide to all US sellers.
  • March 2023 – Shopify began talks with Amazon about adding Buy with Prime as one of its payment / fulfillment partners.
  • April 2023 – My daughter Mia was born! Unrelated, but she's so cute.
  • September 2023 – Andy Jassy and Tobias Lütke made nice nice and the two companies released a Shopify app together. 

Since last year when Shopify posted that warning to merchants about Buy with Prime being in violation of its TOS, there's been debate about if / when / how Shopify would allow the service, as it competes with their native checkout and payment process — which is how Shopify generates a bulk of its revenue.

In a conference call to discuss financial results for Q4 2022, Shopify president Harley Finkelstein said, “When it comes to Buy with Prime, we think any company that's going to make their infrastructure available to merchants to sell more [is] a great thing.”

And later when speaking at the Morgan Stanley Technology Media and Telecom Conference, Finkelstein said, “I'm optimistic we'll get there with Amazon. We have a good history and a good relationship with them.”

However Finkelstein later added that if a deal was to get done with Amazon, it would be on Shopify's terms — leaving merchants in control of their customer and order data. 

And that's exactly what happened:

  • Amazon Prime members who sign into their Amazon accounts on a Buy with Prime-enabled Shopify site will use a payment method from their Amazon wallets.
  • However, Shopify will process the payments through its checkout system.
  • In addition, Amazon Pay will now be a payment option inside Shopify Payments.
  • The app will automatically sync orders, promotions, catalog listings, and taxes within the merchant's Shopify Admin.

To start, the feature is available by invitation only to select Shopify merchants, but it will open up to all Shopify merchants by the end of September.

I'm glad that the two companies could make compromises and find a scenario that works for both. The partnership is to the benefit of merchants on both networks.

Have you enabled Buy with Prime on your Shopify site? If so hit reply and let me know the pros and cons you've discovered so far.

2. Walmart's New Fulfillment Features

Last Wednesday, Walmart kicked off its first-ever Walmart Marketplace Seller Summit, where the company unveiled several new online fulfillment and marketing capabilities:

  • Local Pickup & Delivery – customers can pick up their items directly or have same-day delivery fulfilled through Walmart's last mile delivery network.
  • Big & Bulky Multibox Fulfillment – new fulfillment options for items like canoes, trampolines, and patio sets through Walmart Fulfillment Services.
  • Expansion into Chile – Walmart is opening up its marketplace in Chile to cross-border sellers.
  • Brand Shops & Shelves – allowing sellers to create dedicated digital storefronts and curated landing pages for curated assortments or seasonal collections.
  • Virtual Garage – allows customers to store details about multiple vehicles for when scheduling service appointments at Walmart Auto Care Centers and purchasing car parts and accessories.
  • Augmented Reality – to help merchants show shoppers how an item may look and feel in their living room.
  • Walmart Restored – a premium tier for existing sellers to have the option to add refurbished items to their product catalogs

John Furner, president and CEO of Walmart U.S. said, “Our biggest transformation in the last few years has been the transformation to becoming a true omnichannel retailer. And we started moving this way pretty heavily in 2020 when we brought our store business and e-commerce business together. Our merchant teams work across all channels, stores and e-commerce and marketplace.”

Although Walmart is the largest overall retailer in the US with $161.1B in total revenue, it lags behind Amazon in online sales with $24B versus Amazon's $134.4B. 

However Walmart is slowly closing the gap, having reported a 24% increase in online sales in Q2. Walmart also notably netted nearly 36% of all US e-commerce grocery sales in Q2.

3. Visa and Mastercard are raising their interchange fees

Visa and Mastercard are set to raise the interchange fees on credit card transactions, particularly for online purchases. The fee hikes are scheduled to commence in October and April.

Didn't I just write this exact same headline one year ago? (Story #5)

Retailers have just two questions for the card networks:

  1. Who do you think you are?
  2. What gives you the right?

Increases in merchant fees could cost businesses an additional $502M annually, with costs passed on to customers.

The increase will be split between network fees, paid to Visa and Mastercard, and interchange fees to the bank that issued the credit card.

Are the fee increases necessary? Or is this strictly greed?

Both companies have seen massive net income growth over the last four years, including in the most recent quarter when Visa posted a profit of $2.16 per share (up 7% from a year ago), and Mastercard posted a profit of $2.89 per share (up 10% from a year ago). 

The thing about card networks is that — they don't really need to raise fees every in order to see an uptick in profits. Their revenue increases every year with inflation. In other words, 0.2% of $1.06 is higher than 0.2% of $1.00 the year before. Inflation is their annual raise.

The optics of the timing for a fee increase isn't great right now either. 

The UK government is currently investigating the possibility of capping interchange fees in line with similar EU legislation, which capped interchange fees at 0.2% for debit cards and 0.3% for credit cards.

The US has also proposed similar legislation in the past, but so far nothing has materialized. However last month I reported that the Credit Card Competition Act is being reintroduced via a bipartisan push, which could ultimately increase competition and theoretically reduce fees if passed.

Trade organizations in the UK have also launched campaigns against the card networks to pressure them to reduce card fees, as have retailers. In Nov 2021, Amazon said it would stop accepting UK-issued Visa credit cards as a result of the high fees, but came to a resolution in the final hours of the standoff.

Merchants are fed up with interchange fees and the increasing cost of doing business in a payment world that's turning increasingly digital. Visa and Mastercard should tread lightly on raising fees, less the next one be the fee increase that breaks the camel's back.

4. Amazon raises free shipping minimum

Amazon is increasing its free shipping minimum to $35 for non-Prime customers in some regions, up from $25.

The company says it’s testing the new free shipping threshold randomly in various zip codes, in which everyone in the same region will see the updated threshold.

Prime members are unaffected by the change and will continue to receive free shipping with no minimum order value. 

This isn't the first time the free shipping minimum has changed: 

  • Amazon increased the minimum to $49 from $35 in 2016.
  • Then they brought it back to $35 in 2017.
  • Later that year they dropped it even further to $25 to undercut Walmart, which offers a $35 free shipping minimum for non-Walmart+ customers.
  • If Amazon rolls out the $35 minimum nationwide, they would be back inline with Walmart again. 

It would be absolutely hilarious if next week I reported that Walmart dropped their threshold to $25! Although with the rising cost of fulfillment, and Walmart's desire to convert shoppers into Walmart+ subscribers, I don't see that happening.

Amazon is on a mission to reduce their shipping expenses: 

  • Last week I reported that Amazon will begin charging Prime members £1.99 for same-day delivery in the U.K. on orders under £20.
  • In March, Amazon raised the minimum threshold for Prime free shipping to $150 from $35 and added charges of $3.95 to $9.95 on orders below the new limit.
  • In April, Amazon began charging a $1 fee in the US to return drop-offs to UPS stores.
  • Two weeks ago, I reported that Amazon will begin adding a 2% fulfillment fee for members of its Seller Fulfilled Prime program, which allows merchants to ship their own packages, but still include the Prime badge on their listing.
  • And three weeks ago, I reported that Amazon going to begin delivering more products directly in the manufacturer's box, without an Amazon box wrapped around it

5. Meta Premium in the EU

Meta is considering offering paid versions of Facebook and Instagram that would have no advertising for users in the EU, according to three insiders.

What name do you think they'd go with?

  • Facebook+ / Instagram+
  • Facebook / Instagram Premium
  • Facebook / Instagram Prime
  • Facebook / Instagram Infinity
  • Or maybe the ad-free version will become the regular Facebook, and the current version will become “Facebook w/ Ads”

The offering could help fend off privacy concerns and other scrutiny from the EU by giving users an alternative to the company's ad-based services.

Here's a recap of Meta's privacy troubles in the EU: 

  • In July, the EU barred Meta from combining data collected about users across its platforms — including Facebook, Instagram and WhatsApp — as well as from outside websites and apps, unless it received explicit consent from users.
  • In May, Meta was fined €1.2B by EU regulators for violating its privacy laws by sending data on European citizens back to US servers to improve its ad tech. (Meta has appealed the ruling.)
  • In January, the company was also fined €390M euros by Irish regulators for forcing users to accept personalized ads as a condition of using Facebook. 
  • Meta has been fined for other violations of G.D.P.R., including a €265M fine for a 2021 data leak, €225 million over violations in a case involving WhatsApp, and another €17M over a data leak.
  • In 2018, the EU enacted its General Data Protection Regulation, or G.D.P.R., which was landmark legislation to protect people’s online data.
  • In recent weeks, a new EU law called the Digital Services Act took effect to stem the flow of illicit content online.
  • By next year, the Digital Markets Act will take effect to force big tech platforms to change certain business practices to encourage competition.
  • Meta has not yet released its new Threads platform in Europe because of regulatory concerns.

Meta insiders believe that giving users the choice of opting out of an ad-based service with an ad-free paid version could alleviate future EU problems, even if few people choose the paid version.

If that's the case though, they might as well charge $99/month — or some other outlandish amount for the premium service — if it's only designed to be be an opt-out deterrent.

And who knows if it'd even work? The EU could very well say — “Nope! You've still got to offer a way for users to opt-out of ad tracking on your free tier too” — which would bring us right back to where we started.

Earlier this year, Meta launched its Verified subscription offering in New Zealand, Australia, and the US, which allows users to add a blue check mark to their Instagram and Facebook accounts for a monthly fee, among other perks. However that premium subscription, which costs $11.99/month on the web and $14.99/month mobile, has nothing to do with ads.

It might, however, shed shed some light on where Meta would price an ad-free subscription at — which would be not less than that. 

6. Grubhub goes cashierless

Now I know what you may be thinking — Grubhub had cashiers?

Technically Grubhub is an online ordering and delivery service, but the company is looking to build a bigger foothold in college campuses around the US — which for them includes partnering with existing on-campus stores (that do have cashiers).

Last week Grubhub announced that it's bringing Amazon's cashierless Just Walk Out technology to colleges, starting with Loyola University Maryland next week before expanding nationwide.

The tech is capable of identifying items taken from and returned to shelves so that students and staff can buy food from on-campus stores without waiting in line.

Here's how it'll work: 

  • Student “eats a sandwich” and gets the munchies.
  • Student visits an on-campus store and scans a QR code at the entrance using the Grubhub app.
  • Amazon's Just Walk Out tech uses cameras and sensors to identify customers and the products they pick-up and put back.
  • Grubhub automatically charges their linked meal plans or other payment method after they leave the store.

This isn't Grubhub's first stab at ingraining themselves into on-campus college life. Two years ago the company began using robots to deliver food on college campuses.

7. Apple & Shopify support changes

Apple is planning to eliminate its social media support advisor roles on X, YouTube, and the Apple Support Community forum.

Beginning Oct 1st, live representatives will stop responding to X direct messages, and customers will instead receive an automated reply informing them how to contact Apple to receive assistance.

The paid Community Specialist role, which helps customers via Apple's Support Community forum will also be eliminated, and the company will stop offering technical support through comments posted on YouTube videos.

The 150+ employees impacted by the change are being transitioned to phone support roles.

In other support news, Shopify is working on a customer support offering exclusively for its enterprise merchants, according to an internal video that was viewed by Insider. 

A Shopify spokesperson told Insider, “This is just the beginning as we forge a future for enterprise retail that is more interconnected, accessible, and robust.”

Last week I reported that Shopify is cutting success managers for 16k of its Plus merchants — a strategic support role that offered recommendations to merchants about new product opportunities and growth. 

It was speculated in the comments of my LinkedIn post that success managers may have been an underutilized offering by smaller Plus merchants anyway, given that most merchants of that size work with agencies, and that the perk wouldn't be missed.

Now it makes more sense after reading this news about enterprise support, that Shopify may just be restructuring their internal support resources to cater to the type of support requests that they actually receive — which might be more technical in nature than growth oriented. However that's purely speculation.

If you work at Shopify and have any information to add about the company's changing support structure, hit reply to this e-mail and let me know. Information will always be kept confidential or anonymous per your request.

8. BigCommerce's Total Economic Impact™ Study

BigCommerce released the results of its commissioned Total Economic Impact™ study conducted by Forrester Consulting.

The study evaluated the cost savings and business benefits of five anonymous merchants using BigCommerce to determine financial impact over a three-year period.

Here's what it found:

  • Merchants achieved a 211% ROI with a payback period of eight months, and a net present value of $5.42M, after migrating from legacy platforms.
  • Time savings of 50% to 90% for developers using BigCommerce’s open API features, worth around $188k.
  • Time savings of 30% to 40% related to updating site content and catalog, worth around $244k.
  • Business growth from a 10% to 30% improvement in conversion rate and 5% improvement in average order value.
  • Over $300k in revenue retention from better site performance and availability after migrating to BigCommerce.
  • Over $774k in cost savings from retiring legacy solution.

The full study was fairly comprehensive and it was interesting to see BigCommerce and Forrester show their homework. 

I can only imagine that this study was commissioned in response to (or at least influenced by) Shopify's controversial conversion rate study (story #2) from earlier this year, of which they didn't release the data or name the firm that performed the study. Or maybe it was just coincidental timing.

Although impressive metrics, BigCommerce's Total Economic Impact™ Study made me ponder a few things: 

  • The study only mentioned “legacy platforms” without naming any in particular. 
  • I can understand this may have been to not pick a fight or open a can of worms from the “_______ Community”, so it was best to not name the actual platforms. 
  • However it also makes me question whether this study only proves that switching off a “legacy platform” to a more modern platform like BigCommerce (or Shopify or Salesforce) was the real move, and that any e-commerce platform could create similar case studies when handpicking five outdated sites and putting them under the lens after upgrading to a new platform. 
  • Typically a platform migration also goes hand-in-hand with a design, UI, marketing, and overall front-end overhaul. 
  • So was it BigCommerce in particular that was specifically responsible for all those sexy metrics? Or merely the composite of what typically comes with upgrading from a legacy platform?

I'm not trying to pick on BigCommerce here. They are a great fit for some merchants and not for others. I'm just pointing out that the results may be similar after upgrading an outdated e-commerce site from a legacy platform to any new modern hosted solution. And it's a great study to show your team if you've been fighting them to do so!

9. Other e-commerce news of interest

Google is testing a new shopping label on search results that may be considered a Top Quality Store in Google's Merchant Center program. The label is added to the top right of the site name, above the URL, and looks like a capital G placed on top of shopping bags.


Ikea is set to begin operations in the National Capital Region of India by the end of 2024, with plans to open two large omni-channel shopping centers over the next two years. Susanne Pulverer, chief executive and chief sustainability officer at Ikea India, said that the company has only just “scratched the surface” in India, and that Ikea scans “all opportunities” in regards to its plans for Tier Two and Three markets. 


X is lifting its ban on political advertising in the US, which was put in place by former CEO Jack Dorsey in 2019, as part of Elon Musk's “commitment to free speech.” At the same time, the company said it would grow its content moderation teams to combat content manipulation and “emerging threats”.


Meanwhile Meta is under heat for not enforcing its political ads policy and allowing political ads to run without the required disclosure. Meta's advertising transparency rules requires ads around “social issues, elections, or politics” to be labeled, and to include information about who has paid for them.


Amazon CEO Andy Jassy said during an internal Q&A session that it's “probably not going to work out” for employees who defy the company's return-to-office policy. Jassy told employees it was “past the time to disagree and commit” with the policy, which is one of Amazon's leadership principles used often by Jeff Bezos.


Aldi Australia denied the rumor that it will begin offering online shopping to remain competitive with Coles and Woolworths in the country, but noted that it is “keeping a close eye” on e-commerce. 48% of Australians are shopping online for food, while 15% have switched to ordering nearly all of their groceries online.


Walgreens CEO Roz Brewer is stepping down after just three years at the helm, as the company leans deeper into its strategy of becoming a health care company instead of a drug store. Ginger Graham, a member of the board, was named as the interim CEO while the company launches a search for a permanent CEO.


Dollar General promoted Red West, an 18-year company veteran, to executive VP of global supply chain. West, who most recently served as senior VP of distribution, will lead the company's distribution center operations, transportation, supply chain modernization, and its private fleet.


One Medical CEO Amir Dan Rubin is leaving the company, just one year after Amazon bought the concierge health-care startup for $3.9B. Rubin will be replaced by One Medical COO Trent Green.


Best Buy online sales declined 7.1% in Q2, accounting for just 31% of its total revenue. The company's total domestic revenue also declined 7.1% to $8.89B. Hmm.. after reading that news, maybe my conspiracy post on LinkedIn wasn't so far fetched. 


Mastercard launched ALT ID, a solution for guest checkout transactions that creates an alternate identifier for the real card numbers provided by cardholders during guest checkout transactions. The solution is designed to enhance online payment security for both merchants and customers by removing the possibility for card numbers to be leaked in the event of a data breach. 


Forbes released its Asia 100 to Watch List, which spotlights small companies and startups that are targeting underserved markets or applying new technologies. This year's list includes businesses in the areas of generative AI, blood-based cancer diagnostics, insect-based alternative proteins, digitization of milk production, and more.


Benitago Group, a San Francisco-based Amazon business acquirer, filed for bankruptcy in the US, listing its assets and liabilities ranging from $50M to $100M. The company plans to restructure its debt and potentially sell off some parts of its business in bankruptcy, which includes 15 brands in the areas of health, office, and beauty products.


Entry-level software engineers can make over $170k in total compensation at Meta and Google, which is higher than at Apple or Amazon, according to recent data from Blind. The study found that pay across all companies is more similar for senior-level engineers.


iPrice Group, a Malaysia-based shopping aggregator, launched its price comparison platform in Australia, marking its first significant expansion beyond SEA. Outside of Malaysia and Australia, the company also operates in Singapore, Indonesia, Thailand, the Philippines, Vietnam, and Hong Kong.


A new ruling by the National Labor Relations Board streamlined the union-forming process in the US by shifting the onus from employees to prove workers want a union, to employers to prove they do not. The ruling also specifies that if a company commits illegal or unfair labor practices in the run-up to a union election, it will have to recognize the union by default.


Brazilian delivery drivers are fighting to get app users to pick up their orders at the entrance of their buildings, as opposed to having to take the delivery all the way to the customer's door. Drivers say that delivering to a customer's door increases the risk of having bikes and bags stolen, as well as loses time that could be spent on other orders.


Shopee opened a new warehouse called the Shopee Export Warehouse in Cengkareng, West Jakarta. The new center can process tens of thousands of packages per day, and the company plans to use the location to increase exports of local MSME products.


OpenAI launched ChatGPT Enterprise, a business-focused edition of their AI-powered chatbot app. The enterprise edition can perform the same tasks as ChatGPT, but also adds new offerings such as “enterprise-grade” privacy and data analysis capabilities on top of the vanilla ChatGPT, as well as enhanced performance and customization options.


27% of consumers have credit scores of 650 or less, according to a report by PYMNTS and Sezzle. 53% of those consumers are dissatisfied with their low credit scores, and 80% reported experiencing financial hardship.

10. Seed rounds, IPOs, & acquisitions

Walmart spent $3.5B this year to acquire Flipkart shares from non-controlling stakeholders including Tiger Global and Accel, according to its regulatory filings with the SEC. Part of the investment was also spent to settle the liability to former shareholders of PhonePe, which it separated from last year.


Zepto, an India-based instant grocery delivery startup, raised $200M in a round led by StepStone Group, at a $1.4B valuation, marking the first Indian startup to attain the unicorn status this year. Zepto, which sells and delivers everything from grocery items to electronics, processes more than 300k orders a day and is aiming to be IPO-ready next year. 


Starcart, a Finnish e-commerce shopping platform that allows customers to buy items from multiple stores through a single interface, raised €3.5M in a round led by Inventure. The company will use the funds to scale up its AI-powered shopping platform and launch to customers across Europe.


Amazon acquired Fig, a startup that helps provide developers a better experience at the command line interface with tools like autocomplete and collaboration, for an undisclosed amount. Amazon's interest in the company aligns with its goals of providing systems that shift the burden of building and shipping applications off software engineers and operations. 


Amazon announced that it will make a $3M initial investment in nature-based projects in India, as part of the company's $15M fund it allocated for nature-based projects in the APAC region. The first project the company will work with is the Centre for Wildlife Studies to support conservation efforts in the Western Ghats, which is home to more than 30% of all of India's wildlife species.

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See you next Monday,

PAUL

Paul E. Drecksler
www.shopifreaks.com
[email protected]
LinkedIn | Reddit

PS:I bought an original DeLorean, but I only drive it from time to time.

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