Before we begin, I'd like to welcome Flowspace to the Shopifreaks family as our first official News Partner! 🎉 🥳
Flowspace is a full service omnichannel fulfillment management platform that helps merchants enable fast and efficient delivery to their customers on any platform including Amazon, Shopify, Walmart, BigCommerce, Etsy, Faire, and more.
Flowspace operates over 33M sq.ft of fulfillment space across 150+ US fulfillment locations, and they boast a 99% on-time shipping rate and a 99.9% pick accuracy rate. Most recently they were the first fulfillment partner for TikTok Shop in the US!
If your company is reevaluating its fulfillment needs, schedule a free demo with Flowspace to learn how they can help your company optimize its inventory and fulfillment.
News Partners? In between now and next year, I'll be onboarding up to twelve news partners to help fund our research, content production, and growth at Shopifreaks. Which means occasionally you'll see a sponsored news section within an edition, but rest assured, all sponsored news stories will fit within the realm of your e-commerce interest. Only news stories that fit our editorial guidelines will make it to your Inbox.
If your company is interested in becoming a News Partner and reaching our audience of e-commerce professionals and store owners, hit reply to this e-mail and let me know. Only twelve slots are available.
In this week's edition… I cover the the FTC's long-awaited lawsuit against Amazon, the Shopify / Faire deal, and Indonesia's official ban on social commerce.
I also share stories about AI-generated biographies hitting Amazon's bookshelves, new merchant tools from Square, and DoorDash making a play for in-store grocer priority.
All this and more in this week's 141st Edition of Shopifreaks. Thanks for subscribing and sharing!
Stat of the Week 📈
Walmart's marketplace has reached 100k active sellers. For the past year, between 10k and 20k new sellers applied to join Walmart each month, of which at least 10% got approved and became active. — According to Marketplace Pulse
1. Battle Royale: FTC vs Amazon
The FTC along with 17 states are suing Amazon, alleging that its policies inflate online prices and stifle competition. The FTC believes that:
- Amazon used anticompetitive practices to strangle competition and favor its own business.
- Amazon used its size to create unfavorable conditions for third party sellers.
- Amazon used a set of punitive and coercive tactics to unlawfully maintain its monopolies.
- Amazon is now exploiting its monopoly power to enrich itself while raising prices and degrading services for tens of millions.
- Amazon moves sellers further down in its search results when it discovers it's being undercut on price, including on the brand's own website.
- Amazon forces sellers to use its fulfillment services in order to reach customers.
- Amazon harms consumers by limiting the choices of products they see on its marketplaces.
- Amazon skews search results in favor of its own products, even when it knows they are worse quality than others available on its site.
- Amazon deliberately increased junk ads on its marketplace and prioritized the ads over organic results.
- The FTC estimates that some sellers end up paying 50% of their total revenues to Amazon.
- You can read the full lawsuit here (pdf).
What does the FTC want?
The FTC is seeking a permanent injunction in federal court that would bar Amazon from continuing these practices.
Bloomberg says that regardless of the outcome of the lawsuit, it should serve as a “code of conduct” for retailers on what NOT TO DO — which is of course easier said than done if Amazon is able to continue doing it.
What does Amazon say about it?
Amazon said that the FTC is “wrong on the facts and the law” and had departed from its role of protecting consumers and competition.
Amazon General Counsel David Zapolsky said in a prepared statement, “If the FTC gets its way, the result would be fewer products to choose from, higher prices, slower deliveries for consumers, and reduced options for small businesses — the opposite of what antitrust law is designed to do.”
Linda Khan's History
FTC chairperson Lina Khan has openly had it out for Amazon and other big tech players for many years, made evident by her now-famous 2017 Yale Law Journal article arguing that US antitrust law was fundamentally broken, allowing for the rise of tech giants like Apple, Google, Meta, and Amazon.
Within weeks of being appointed as chair of the FTC in 2021, Facebook and Amazon requested she be recused from the agency's antitrust investigations into their companies, arguing that her intense criticism in the past meant she would “not be a neutral and impartial evaluator” of antitrust issues. (That doesn't necessarily mean she's wrong though.)
What are your thoughts?
Is the FTC spot on with their allegations? Or is Amazon being unfairly targeted by Lina Khan? Hit reply and let me know.
2. Shopify & Faire deepen relationship
Shopify and Faire are deepening their relationship. Here are the highlights:
- Shopify is investing an undisclosed amount in Faire for an undisclosed stake.
- Faire will become the recommended wholesale marketplace for Shopify merchants.
- Shopify Point of Sale will become the preferred POS provider for Faire’s independent retail community.
- The new partnership kicks off with the launch of official Faire buyer and seller apps.
- The updated apps add features that save time and reduce manual updates between system.
- Retailers who use the BUYER app can discover products from 100k brands, add / sync products ordered on Faire to their Shopify account.
- Brands using the new SELLER app can pair their Shopify / Faire accounts together, automatically sync orders, keep inventory, fulfillment, and catalog details up-to-date in real time.
- The expanded partnership will not impact fees.
- The legacy integration will eventually be sunset.
Faire was founded in 2017 and was most recently valued at $12.59B. It serves over 500,000 retailers across North America and Europe, which it matches up with more than 70,000 brands from 100+ countries. It's largest market is the US, with Europe its fastest-growing second since launching in 15 European countries in 2021.
Rumors of a Shopify investment / partnership have been circulating since earlier this year.
So what's to come of Handshake, the wholesale marketplace Shopify acquired in 2019?
Will part of Shopify's new strategy of “returning to its main quest” mean sunsetting marketplaces like Handshake and letting its investment Faire do the heavy lifting? Or will the two wholesale marketplaces continue to compete for the same market share?
If anyone at Shopify has insight into those questions above, please hit reply and let me know. I couldn't find any mention of Handshake in all the Faire + Shopify news this past week.
3. Indonesia actually did it
The government of Indonesia officially banned e-commerce transactions on social media platforms last week, in an aim to protect its small businesses from predatory pricing and avoid flooding the country with cheap Chinese-made products.
Two weeks ago I reported that the country was considering doing so, but whether or not they would go through with it was up for debate at the time. However the ban is in place, and Trade Minister Zulkifli Hasan said social commerce platforms have a week to comply with the new rule.
Hasan said in a news conference last week, “Now, e-commerce cannot become social media. It is separated.”
He later added that “any government would protect local small businesses,” describing the regulation as a way to ensure “equality in business competition.”
The new regulation means that social commerce companies are now prohibited from facilitating payment transactions on their electronic systems. They can still place ads “like TV,” Hasan said, but the ads can't be transactional. The social networks can't directly sell.
The regulation also sets a minimum price of $100 for certain foreign goods bought from Indonesian sellers on e-commerce platforms.
Companies that do not comply could eventually have their licences to do business in Indonesia revoked.
Indonesia was TikTok's second-largest global market after the US. With a connected population of more than 270M, Indonesia accounted for nearly $52B of e-commerce transactions last year.
Will separating social media from e-commerce actually stop the flood of cheap Chinese-made products into the country?
Or is the regulation merely creating one degree of separation?
Other than a single added step of leaving a social platform and arriving on the e-commerce site to make a purchase (which is how social media has historically operated anyway for the most part), the regulation really isn't creating that much additional friction between buyers and sellers.
I'd think that more laws outright banning the import and sale of certain Chinese-made goods would be more effective, and wouldn't handcuff local businesses from leveraging social media to sell their wares too.
What are your thought? Hit reply and let me know.
4. New Square merchant tools
Square rolled out a new set of tools for sellers, some which were made available last week and others that have been introduced over the past couple of months. Highlights include:
- Themes – a pre-built set of 19 site design templates that merchants can customize to fit their brand.
- More customization features on a store's Shop All and product pages, mega menus for larger catalogs, and embedded native videos.
- AI generated product descriptions to help write titles and descriptions.
- The ability to archive old items. (Square couldn't do that before??)
- Barcode label printing from the Square POS system to make it easier for sellers to prepare their products for sale.
- A new Shipments Page that streamlines omnichannel order fulfillment.
- A new integration with Shippo.
- Enhancements to its checkout interface to help sellers more easily offre BOPIS shipping options.
- House Accounts – a new deferred payment account that corporate clients can charge purchases to.
- Text Message Marketing that can now include images and GIFs.
- Retail Bundles for sellers to offer multiple items into a single gift basket, while ensuring accurate inventory counts across included products.
- Group eGift Cards for individuals to contribute to a group present.
5. AI generated book ripoffs being sold on Amazon
Book spammers are releasing dozens of titles a day via Amazon KDP, which enables authors to self-publish ebooks and print books.
Most are one off guides on how to use camera models and cheap fantasy romance novels, but others are more personal.
Take for example Rory Cellan-Jones, an author and former BBC technology correspondent who wrote a memoir untangling the truth about his family history.
Suddenly he gets an e-mail from Amazon saying, “You might like this.” with a link to a biography about himself!
“I thought: ‘This is strange – who’s writing a biography of me?’” he told the Observer.
Turns out it was just an AI spin of his autobiography written in third person. And poorly written at that! Rory said that the AI generator had gotten next to nothing right about his story.
He added about Amazon, “They’re effectively allowing book spam and recommending it to the very person who is most annoyed by it.”
Dozens of titles were removed by Amazon, but plenty more have gotten through its filters intended to weed out low-quality books.
To be fair, it's not like Amazon can read every book before they go live on its platform, but also to be fair — most authors aren't publishing 20+ books in a day like these AI authors! So they should be pretty easy to spot.
6. Highlights from Meta Connect
- Meta Quest 3 – the newest headset model with full-color passthrough tech, 10x as many pixels as the Quest 2, 110-degree field of view, augments to personalize your physical space, and more for a price tag of only $500
- Xbox Cloud Gaming – including a virtual screen that can float in either a completely virtual or mixed-reality space
- Emu – a foundational model for image generation that offers generative AI stickers for Meta's messaging apps
- Ray-Ban Smart Glasses 2.0 – now with 12mp camera and livestream capabilities
- AI Chatbots – including an AI assistant called Meta AI that can help plan a trip with friends in a group chat, answer general-knowledge questions, and search the Internet using Bing to provide real-time web results
- AI Studio – a platform that lets businesses build AI chatbots for its messaging apps
Meta also teased its upcoming Meta Quest for Business platform, designed to offer enterprise AR applications in a single spot. The platform will be compatible with other enterprise applications including Microsoft 365, which is set to arrive on the platform later this year.
If you've got 10 minutes and want to see some of those features listed above in action, Matt Wolf published a great video overview.
7. DoorDash becomes InstoreDash
DoorDash is looking to improve the in-store processes of its grocery and retail vendors to remove “defects in the system” such as:
- Helping grocers have a better idea of what they have on their shelves to reduce the likelihood that an item becomes out of stock after promising it to an online customer.
- Helping grocers identify items that are consistently out of stock.
- Encouraging retailers to take measures to help their pickers avoid checkout lines as a means of speeding up fulfillment. (Hey, no cutsies!)
Fuad Hannon, VP of new business verticals, said that DoorDash sees grocers and retailers as “an e-commerce fulfillment hub” and that the company is “partnering with them along the way to figure out how do we make the shopping more efficient.”
I'm not quite so sure that the grocery stores would agree with that assessment though, given that online grocery orders only account for around 11-13% of total grocery sales. Something tells me they view their retail footprint as more than just an “e-commerce hub.”
However I do get the sentiment and understand how working with retailers to better facilitate their e-commerce orders is a win-win for in-store and online customers alike.
I'll make you a deal DoorDash — you can have the self-checkout aisles to yourselves so that the rest of us don't have to scan our own groceries anymore like unpaid cashiers.
8. No side quests for Shopifolk
Shopify CEO Tobi Lütke wrote a company-wide memo last week informing employees that their side hustles (and any other commitments that take attention away from their Shopify jobs) are discouraged.
Many employees were surprised, as the memo contradicted Shopify's long term attitude of promoting a spirit of entrepreneurship within the organization.
Highlights of the memo include:
- “Shopify's mission requires your unshared attention.”
- “I recently learned our offer letters and some Vault pages have been suggesting side gigs. This surprises me because it directly contradicts the countless times I've said Shopify is like a professional sports team that requires our unshared attention.”
- “This is not a part time job, in the same way premier league teams don't have part time players.”
- “Any other commitments that drain and subtract from the creative energy that you would bring to work is not good.”
- “Side jobs, board work, secondary employment – need to be disclosed and reviewed.”
- “Any role you take on ought not to conflict with your primary craft's output accruing to Shopify's mission.”
However at the same time, and possibly contradictory to the rest of the memo, he wrote, “You should run a Shopify store to learn our product. If it grows, hire help or do the thing we celebrate most: ascent to be a full-time entrepreneur.”
Even Shopify's President Harley Finkelstein has his own store, Firebelly Tea, which he co-founded with the DavidsTea creator David Segal in 2021.
Speculation: Have the number of employee side hustles risen to the level that it's becoming a problem for Shopify? Might it have anything to do with employees feeling a lack of job security? After all, Shopify has laid off almost 30% of its workforce in the past 18 months.
In regards to working on open source projects, Lütke even says in the memo to “give yourself an out” — which is perhaps the smart advice they're taking with their Shopify roles too.
9. Other e-commerce news of interest
Brazil launched a new national identify program to its 214M residents that's powered by blockchain technology, with Rio de Janeiro, Goiás, and Paraná being the first states to issue the IDs. The Brazilian government said that the national ID project is crucial in targeting organized crime by allowing government sectors to work together to offer a simpler way to access services and administrative records. In regards to e-commerce, it could serve as a way to verify consumer purchases of age-gated products like alcohol, facilitate tax collection, and reduce online fraud.
commercetools unveiled commercetools Connect, a feature that makes it easier for merchants to add new components into their Composable Commerce platform. Connect facilitates integrations for hosting, maintenance, execution, monitoring, and security.
WHP Global is rolling out more Toys ‘R' Us stores throughout the US next year in partnership with Go! Retail Group, as well as expanding to cruise ship and airport venues. Since acquiring the Toys ‘R' Us brand in 2021, WHP Global has opened over 1,400 stores and e-commerce sites in 31 countries.
Paperfly, a Bangladesh-based third-party logistics e-commerce firm, ceased operations last week, leaving 1,000 employees jobless. The company blamed the halt in operations on non-disbursement of funds from its foreign investor, coupled with funds frozen by CVC Finance.
The US Supreme Court agreed to hear a case to decide whether state laws that seek to regulate social media platforms violate the Constitution. The justices will review laws enacted in Florida and Texas that aim to prevent Facebook, TikTok, X and other social networks from censoring users based on their viewpoints.
X CEO Linda Yaccarino revealed that X has paid out almost $20M to creators since July for shared ad revenue they earnedf rom ads served in the replies to their posts to other verified users. To be eligible, users must subscribe to X Premium, have more than 500 followers, and have received more than 5M tweet impressions for the last three months.
commercetools announced its first ever Elevate Summit, which will feature hosted keynotes, panel discussions, developer training, networking, entertainment, roundtable conversions, and product announcements. The two-day event will be hosted at the Miami Beach Convention Center from April 16-18, 2024.
Lululemon laid off 120 workers from its Studio team, as the company announced plans to stop selling its Mirror connected-fitness device. Lululemon acquired Mirror for $500M in 2020, but has since struggled to grow sales for the device.
Those laid off from Lululemon can maybe find work at Dick's Sporting Goods, which is planning to hire 8,600 seasonal workers for the upcoming holiday season, down from 9,000 last year. Keeping up with tradition, Dick's will close all of its stores and distribution centers on Thanksgiving Day so that employees can spend the holiday with their families, and then re-open on Black Friday.
Uber Eats and Getir are teaming up in the UK and soon to be Germany and Netherlands to expand the range of groceries on tap for Uber Eats' customers. Last year Getir acquired its German rival, Gorillas, which Getir says it is now drawing on its network of dark stores to power the grocery delivery partnership with Uber Eats.
TikTok partnered up with ShipBob (fulfillment), AfterShip (post-purchase customer experience), and CommerceHub (dropshipping). TikTok is rapidly expanding its list of integration partners as it aims to grow its market share in the US.
eBay is redesigning its homepage for the first time in five years. CEO Jamie Iannone told sellers during a virtual keynote at eBay Open 2023 that visitors will soon find it simpler and more intuitive to search for products with the new modernized look and feel of the homepage.
Kroger is looking to compete with Walmart by expanding its product selection into general merchandise with a superstore format. The grocer began construction on a 124k sq.ft. location in Plano, Texas called “Kroger Marketplace”, which marks the company's largest store format to date. It is set to open next year.
The European Commission adopted a series of measures aimed at fighting microplastics pollution, including banning the sale of certain products of which microplastics have been added. Particularly the rules are targeting synthetic polymer particles below five millimetres that are organic, insoluble, and resist degradation such as exfoliators, fragrances, detergents, fabric softeners, glitter, fertilizers, toys, medicines, and medical devices, among others.
Google Bard is under heat for indexing conversations into its search results pages, potentially exposing information users meant to be kept contained or confidential. Google noted that the indexing only occurred for conversations that users had elected to click the share link button, but most users would not have been aware that sharing a convo with a friend would mean that it'd be indexed by Google and then show up within search results.
Speaking of Google Bard, yesterday I asked it, “What is the best e-commerce newsletter?” It replied, “The best e-commerce newsletter for you will depend on your specific interests and needs. However, some of the most popular and well-respected e-commerce newsletters include: #1 Shopifreaks.” — Hell yeah Google Bard! I like you better than ChatGPT now.
10. Seed rounds, IPOs, & acquisitions
Genus AI, a generative AI platform for D2C brands that generates product catalog images, seed audiences, copy, and video to help brands grow across social channels, raised $6M in a seed round extension led by Aleph Group Inc, bringing its total amount raised to $11M. The company will use the funds to invest into its infrastructure and add new integrations to its platform.
Wonder Group, a food-delivery company founded five years ago by the creator of Jet.com, acquired Blue Apron, the meal-kit company that delivered easy-to-make meals at home, for $103M, a premium over its current stock price. The company was valued at $1.9B when it went public six years ago, but struggled to retain customers as competition grew in the meal-kit space.
In other Apron news, a UK-based invoice platform called Apron, which enables users to pay multiple suppliers at once, raised $15M in a Series A round led by Index Ventures. The company, which claims to be processing millions of pounds of transactions every month and working with hundreds of clients, will use the funds to expand its team and further develop its product suite.
Alibaba is planning to spin off Cainiao, its logistics arm, in what will be the conglomerate's first IPO since it announced a revamp of its business earlier this year. The company received regulatory approval to list Cainiao Smart Logistics Network on the Hong Kong Stock Exchange, but did not yet specify a date or share price.
Thrasio, an Amazon aggregator which at one point was valued between $5B and $10B, is exploring restructuring options, including the possibility of filing for bankruptcy. The company, which previously secured over $3B in funding, went on an acquisition spree, which apparently didn't go to well.
Slope Inc, an AI-powered B2B payments platform designed to deliver smoother transactions between enterprises, raised $30M in a round led by Union Square Ventures, bringing its total amount raised to $187M. The company will use the funds to build additional tools and expand its market share.
💖 Thanks for being a Shopifreak!
If you found this newsletter valuable, please leave a review on Google and share the newsletter with your friends and colleagues to help us grow.
See you next Monday,
PS: What gives ordinary humans the power to walk through walls? … A door.