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#106 – Shopify Price Hikes, Walmart Business, & $5 Amazon Prescriptions

by | Jan 30, 2023 | Recent Newsletters

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This week I've got stories for you about controversial price hikes, a new B2B marketplace by America's largest retailer, and a new $5/month prescription subscription plan to compete with Mark Cuban. 

I also cover news about Stripe and Amazon expanding their partnership, Google addressing concerns about their e-commerce practices in the EU, and Amazon's tempestuous relationship with ChatGPT.

All this and more in this week's 106th Edition of Shopifreaks. Thanks for subscribing and sharing!

Poll of the Week 🗳️

“Did Shopify go to far with their 33% price hike on subscriptions?”

🗳️ Take the Twitter poll.


Last Weeks Poll Results: Last week I asked how many times you had purchased through AmazonSmile in the past 10 years. Over half of you (52.4%) have never used it, while 8.9% said they only used it once or twice. 24.8% said they used it on almost every purchase, with the remaining 13.8% claiming they used it whenever they remembered. [View Poll]

Stat of the Week 📈

E-commerce hit $1.09 trillion in the US in 2022, with the last quarter accounting for $332.2 billion, not including travel which would add several hundred more billion in revenue. – According to Comscore

Share this week's stat on Twitter & LinkedIn.

1. Shopify ups subscription fees by 33%

The price of a Shopify subscription is going up, effective immediately for new subscribers and in three months for existing merchants.

  • Basic is going from $19 to $25 per month. (+31.5%)
  • Shopify is going from $49 to $65 per month (+32.6%)
  • Advanced is going from $299 to $399 per month (+33.4%)

Also keep in mind that as of October, Shopify Taxes now costs 0.35% transaction fee (0.25% for Plus merchants) on sales above $100k each year. (See Shopifreaks #91 for more details on that.)

2023 just became more expensive to be a Shopify merchant.

The news seems to have split folks into two categories — some feeling that the price increase is excessive and unjustified and others feeling that the price increase is long overdue and that Shopify is still delivering a great value at the new price. 

I find myself somewhere in the middle…

I do agree that Shopify offers a fair value with their pricing model, even after the subscription price increase. I also understand that the cost of doing business has gone up for the company and that they've grown their feature set tremendously in the past decade. 

However I take issue with the magnitude and timing of the increase. Existing merchants were only given 3 months notice, which isn't nearly enough time to switch platforms and justify the cost of doing so, just to save between $6 and $100 per month (or more depending on currency conversion fees).

I criticized Amazon for similar reasons last year when they gave merchants 60 days notice that they were shutting down Selz, the e-commerce platform that they had purchased sixteen months earlier to compete against Shopify.

It takes more than a few months to properly switch platforms, and the merchants who are having the most difficult time adjusting to the price increase are also the ones who are least likely in a position to be able to afford a short notice platform migration or pay annually for Shopify to retain their old pricing. 

Shopify merchants are inherently stuck with the price increase, at least for a period of time, because it's too expensive and time consuming to switch platforms. And Shopify knows that. The amount of this price increase wasn't arbitrary.

All that being said, I agree that it's within Shopify's right to charge as they see fit, and merchants can take it or leave it. 

The attitude I can't get behind, however, is the, “If you can't afford a $6 to $100 per month increase, you're in the wrong business.”

I've seen a lot of that attitude vocalized on social media in the past week, and I find it to be incredibly insensitive to small business owners.

At the same time Shopify's subscription is going up 33%, everything else has gotten more expensive for small business owners too, including their cost of goods, digital advertising (which has simultaneously become less effective), shipping and fulfillment, working capital, and many other SaaS products they use to power their businesses.

Entrepreneurs are struggling, but still trying to bootstrap a business to make a better life for themselves and their families. I have a lot of respect for those people. An unexpected extra few hundred dollars a year to power the same store they were running in 2022 is a big hit.

Let's not shame the merchant who launched on Shopify for $49/month in in 2021 or 2022 and found a set of apps with free tiers that suited their startup needs, who now finds it challenging that they need to cough up an extra $180 in the coming year. They're not necessarily in the “wrong” business, they're just at the beginning stages of growing their empires and money is tight.

Everyone has to start their e-commerce business somewhere, and since 2006, Shopify has positioned itself as the place to start.

Lastly on this topic, I think that the sudden double-digit price increase breaks merchant trust. 

Shopify has historically offered merchants reliability — not just with service — but the promise has also extended into affordability. Merchants have come to rely on Shopify's consistent pricing that's scaled with their business through transaction fees. Now merchants have learned that at any point in the future, the cost of doing business with Shopify can increase by a double digit percentage. That can have a lasting impact on merchant retention and trust.

What are your thoughts? Take the Twitter poll and join the convo on my LinkedIn post


In other Shopify news, the company's chief technology officer, Allan Leinwand, will be leaving the company after just over a year in the role, with CEO Tobias Lütke to take on some of his responsibilities. Leinwand said he is leaving the company for an unspecified personal reason. You can read the his full memo on Business Insider.

2. Walmart launches Business+

Last week Walmart launched a dedicated e-commerce site called Walmart Business that is tailored to small and medium business customers.

The website offers a curated assortment of more than 100k items such as office supplies, furniture, snacks, food and beverages, restroom supplies, electronics, and facility needs.

So Sam's Club?

To shop on the new marketplace, businesses can create a free Walmart Business account or pay $98/year for a Walmart Business+ membership which includes: 

  • Free / no minimum shipping (excluding marketplace and oversized items)
  • Free pickup and delivery from stores with a $35 minimum
  • 2% rewards on orders of $250 or more
  • Up to 5% savings on eligible items set to a subscription
  • Organizations can add up to 5 users per membership
  • Applicable sales tax is automatically removed during checkout

Essentially Walmart Business is a portal that curates 100k of the 35 million product that Walmart sells on its online marketplace into a selection for businesses, with a separate set of membership benefits that cater to business owners. 

For example, on the homepage of Walmart.com you'll find Valentine's Day gifts, towels, consumer electronics, and sports items in preparation for the Super Bowl.

Whereas on Walmart Business homepage, you instead see laptops, office chairs, printers, pens, cleaning supplies, and bulk packs of toilet paper. 

Amazon launched its Amazon Business in 2015, which replaced Amazon Supplies, their old marketplace for industrial products and office supplies. Many of the benefits advertised for Walmart Business look very similar to those offered by Amazon Business.

3. BigCommerce News (Sponsored)

BigCommerce was included on Built In's Best Places to Work 2023 for Austin and San Francisco — which is great news for readers who are currently in the job market because BigCommerce is hiring!


Do you build on BigCommerce? The company is looking at ways to make your life easier and simplify your process when building on BigCommerce. Share your thoughts in a brief survey and help shape the future of how developers build with BigCommerce.


Melissa Dixon, Director of Content Marketing at BigCommerce, and Leah Spector, Senior Brand Manager at BigCommerce, went live last week to share key takeaways and highlights from NRF: Retail's Big Show. If you missed the live stream, you can watch the recap here.

4. Amazon's $5 unlimited prescriptions plan

Last week Amazon announced RxPass, a new $5/month add-on for Prime members that will give them access to prescription generic drugs for more than 80 health conditions, ranging from high blood pressure to anxiety.

The flat fee covers all the patient's medications (ie: it's not $5 per month per medication). So a patient who takes prescription drugs for high cholesterol, high blood sugar, and anxiety would just pay $5 per month versus the $30 or more they might pay currently. 

Amazon Pharmacy will continue to sell generic drugs for up to $15/month if purchased separately, but it would behoove consumers to switch to their $5 plan if it covers their particular meds.

Amazon said in a statement, “RxPass isn’t insurance, but it can be helpful for those without insurance, or when insurance doesn’t cover certain medications. Many people with diabetes, high blood pressure, and anxiety will find their medications are eligible.”

The service is now available to customers in 42 states, not including California, Louisiana, Maryland, Minnesota, New Hampshire, Pennsylvania, Texas, and Washington.

About 150M US residents have a prescription for one of the drugs included in RxPass, according to Amazon. However the service is not available to people on Medicare or Medicaid, and it doesn’t offer insulin.

The rollout of RxPass comes a month after Amazon shut down one of its other health care outreach programs, Amazon Care, five years after acquiring the online pharmacy PillPack in 2018 for $753M, and almost seven months after acquiring boutique primary-care provider 1Life Healthcare for $3.9B in July.

RxPass is Amazon's answer to Mark Cuban's Cost Plus Drug Company, which offers hundreds of medications at cost + 15%. 

5. Stripe + Amazon Expanded Partnership

Amazon and Stripe announced an expanded partnership last week.

Amazon will broaden its use of Stripe's payment processing platform significantly, and in turn, Stripe will expand its use of Amazon Web Services. Stripe currently runs multiple internal workloads on AWS.

Amazon first started using Stripe in 2017 and has used the platform to support its market expansion initiatives in Asia and Europe. Stripe also helps Amazon process millions of purchases on Prime Day, Black Friday, and Cyber Monday events.

As part of the expanded partnership, Amazon will become a “strategic payments partner for Amazon in the US, Eerope, and Canada.”

Amazon’s Prime, Audible, Kindle, Amazon Pay units will use Stripe to process payments, and the company will also make Stripe a part of its Buy with Prime service.

Stripe's user base also includes Google, Salesforce, Shopify, and other major industry players. The company reportedly generated revenues of $2.5B in 2021 and is believed to be valued at $74B after taking a 28% hit in internal valuation last July.

6. Google E-Commerce Transparency

Google is updating four of its services to address concerns raised by consumer protection regulators in the EU, including Play Store, Google Store, Google Hotels, and Google Flights.

The changes focus mainly on e-commerce purchases, with a goal of making it easier for consumers to access information about handsets and other items they buy through Google services.

Google Play & Google Store – Google will provide more clarification on how to switch between country-specific versions of the Play Store and Google Store, and allow shoppers to use payment methods from any EU member state.

Transparency – Google will provide clear and pre-contractual information about product delivery costs, repair or replacement options, and cancellation policies, as well as provide easier access to product supplier info, including the availability of customer support services.

Android App Developers – Google will more clearly inform developers about the EU's Geo-blocking Regulation, a law implemented in 2018 that requires apps sold in the EU to be made available for purchase across all member states.

Google Hotels & Flights – Google will make it simpler to determine whether it acts as an intermediary during a purchase or sells the item directly, as well as clarify that accommodation reviews on Google Hotels are not verified. Google will also make it easier to determine the price of a purchase after discounts are applied. Lastly, Google will commit to making it easier for users to access information about travel offers before making a purchase. 

7. The 17 Most Valuable E-Commerce Companies in the World

Insider Monkey used stock screeners and manual research to identify the biggest e-commerce companies in the world based on market cap.

For private companies, they used a revenue multiple of 2x to come up with the estimated market value. Their list isn't a perfect science, but it's probably fairly accurate.

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Before scrolling any further, how many can you name? 

I could name 11 of the 17! One surprised me that they were considered an “e-commerce company”, but hey, it's not my list. 

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Top 17 Most Valuable E-commerce Companies by Market Cap (in billions of $)

  1. Amazon – $949.91 
  2. Walmart – $392.45
  3. Alibaba – $303.22
  4. Meituan – $128.75
  5. Pinduoduo – $118.08
  6. JD.com – $107.48
  7. MercadoLibre – $46.47
  8. Shopify – $45.93
  9. Otto GmbH – $33.92
  10. Sea Limited – $31.67
  11. Shein – $31.4
  12. Coupang – $30.56
  13. Copart – $29.49
  14. eBay – $25.23
  15. DoorDash – $19.85
  16. Chewy – $18.39
  17. Etsy – $16.82

8. Amazon's relationship with ChatGTP

An Amazon engineer made headlines for asking ChatGPT interview questions for a software coding job at the company, and the chatbot got them right!

The answers were reportedly not the most efficient and had some buggy implementation, however, ChatGPT was able to give correct solutions and even improve the code.

Other Amazon employees were apparently using ChatGPT for research purposes and to solve daily problems like writing software code and creating training documents.

An Amazon lawyer chimed in on Slack where the conversations were taking place, warning employees not to share confidential information with ChatGPT.

He wrote, “This is important because your inputs may be used as training data for a further iteration of ChatGPT, and we wouldn't want its output to include or resemble our confidential information (and I've already seen instances where its output closely matches existing material).”

On the other side of the AI bot, Microsoft is betting big on ChatGPT. Microsoft CEO Satya Nadella said, “We fundamentally believe that the next big platform wave is going to be AI and we strongly also believe a lot of the enterprise value gets created by just being able to catch these waves and then have those waves impact every part of our tech stack and also create new solutions and new opportunities.”

Even if there are immediate challenges for cloud growth, which is forecast to slow 4-5% in the coming quarter, Microsoft sees its $10B OpenAI bet as a bigger strategic move — and a smarter gamble than the metaverse.

9. Other e-commerce news of interest

PayPal and Bold Commerce are bringing payments and checkout together into a single, pre-integrated solution. The two providers have launched a new integration that will let brands and retailers use Bold Commerce's checkout suite to accept payments with PayPal, Venmo, PayPal's BNPL tools, and credit and debit cards through their platform.


Amazon Fresh orders below $150 will have a delivery fee between $3.95 and $9.95, starting Feb. 28. Previously, Prime members received free delivery on any orders over $35 or $50, depending on their location.


Meanwhile on the other side of the ocean, Meesho, the India marketplace for fashion and consumer goods, is tightening up its return policy following feedback from its third-party logistics partners. The platform historically has compensated its sellers for products returned by customers, but the misuse of its lenient policy prompted a change.


One of the predictions in our 2023 E-commerce Predictions report was from Emily Pfeiffer, Principal Analyst at Forrester, who said, “Businesses will slash promises to consumers to protect their bottom line. This focus will manifest as more limited delivery options, tighter policies for returns and guarantees, and most importantly, investment in optimization technology like order management systems.” — Is it happening already??


In other Amazon Fresh news, the North London store is closing its doors less than two years after opening. This was one of Amazon Fresh's prototype stores for its Just Walk Out technology.


Bolt, the one-click checkout provider, laid off about 10% of its employees on Tuesday, or around 50 people. Once valued at $11B, the company has cut more than half of its headcount since May.


The total cost of e-commerce fraud in 2023 will reach $206.8B, according to the new State of Fraud 2023 report from Signifyd. The company's analysis also suggests that consumer abuse is becoming a bigger problem than payment fraud for e-commerce retailers, growing 36% during 2022.


CedCommerce announced the launch of Social Ads for Buy with Prime, which helps merchants drive traffic to their e-commerce website by creating Buy with Prime badged Facebook and Instagram ad campaigns. With the announcement, the company became the first partner listed on Amazon’s Buy with Prime Marketing Solutions and Marketplace.


Amazon will sell its vacant office in the Bay Area, just 16 months after purchasing it as part of the company's expansion during the pandemic and strategy to acquire real estate properties in big cities for future growth. Amazon paid $123M for the 29-acre property in Oct 2021 and will likely sell it at a loss to Dermody Properties LLC who will convert it into warehouse space.


Mollie, a Swedish payments provider, named Koen Köppen, a former Klarna executive, as its CEO. He will replace Shane Happach, who is leaving the company to take up a leadership role in Asia.


Despite massive layoffs in recent months, tech jobs are still in high demand in the US, according to Indeed. Eight of the top 10 best jobs in the US are tech roles including full stack developers, data engineers, cloud engineers, senior product managers, back-end developers, site reliability engineers, machine learning engineers, and product designers.

Several tech industry observers including John Cook, co-founder of GeekWire, and Vice reporter Maxwell Strachan believe that the recent layoffs aren't out of necessity, but done to put tech engineers in their place by making them fear for their jobs. 


Speaking of layoffs, less than two years after HBC split e-commerce from its brick-and-mortar operations of Saks and The Bay, the companies are laying off up to 3.5% of their workforce. As tech companies scramble to contain their costs and lay off thousands, HBC’s rationale for the split doesn’t seem to be holding up.


YOTTAA published its fifth annual “2023 eCommerce Technology Index” to hep retailers research new technologies for their sites and understand the impact third parties can have on overall site performance. The report examines the site performance impact of 619 of the most widely adopted e-commerce third parties, with data collected over the course of December 2022, representing 5.5 billion page views from the nearly 2,000 e-commerce sites.


A new “creditor matrix” published by FTX's lawyers revealed that Google, Meta, TikTok, Twitter, Apple, Netflix, LinkedIn, Amazon and Microsoft are all owed money by the crypto exchange after its recent collapse. It’s unclear how much money is allegedly owed to the tech companies, and it's possible that some or all of these companies are owed ad fees, as the exchange had accounts and cloud hosting with the platforms. 


62% of e-commerce companies believe that real-time data will be a primary focus in 2023. Real time scraping is an essential function for e-commerce advertising, and it will become increasingly important for companies to track information on their competitors' websites.

10. Seed rounds, IPOs, & acquisitions

Emperia, a SaaS platform for virtual e-commerce experiences that can be extended into the metaverse, raised $10M in a Series A round led by Base10 Partners. Emperia has partnered with Dior, Bloomingdale's, Burberry, Sunglass Hut, and Lacoste to create virtual shopping experiences, and plans to use the funds to deepen its capabilities and grow their team.


Addie's, a new drive-up grocery store concept that recently opened its first location in Norwood, MA, raised $10.1M in a round led by Disruptive Innovation Fund. The 22,000 sq.ft. store offers 4,500 products from national and local brands that are available for purchase via Addie's website or app, and then become ready for the customer to pick-up at one of their 14 pull-through parking lanes.


Speakeasy, an alcohol e-commerce platform that sources hard to find and craft alcoholic beverages along with merch, custom packaging, personalized labels, and cocktail kits for D2C shipping, raised $6.8M in the company's third round, bringing its total amount raised to $9.8M. The platform works with almost 300 partners including Whistlepig, Tesla Tequila, Stoli Group, and Jägermeister, and will use the funds to grow its team and invest in its fulfillment model.


Tranch, a London and NY-based fintech that offers a B2B BNPL platform for SaaS and professional services, raised $5M in equity in a round led by Soma Capital and FoundersX and $95M in debt from Clear Haven Capital Management. The funds will be used for US expansion, where it estimates businesses spend over $29T on invoice payments every year. 


Accord, a collaboration platform designed to support B2B sales that offers the ability to collaborate around and share sales milestones, next steps and resources with stakeholders, raised $10M in a Series A round led by Matrix Partners, Nat Friedman, and Y Combinator, bringing its total amount raised to $17M. The company will put the new funds towards growing their engineering, sales, and marketing teams. 


Vartana, a sales closing & financing platform for SaaS companies, raised $12M in a Series A round led by Mayfield, bringing its total amount raised to $19M, along with a a $50M line of credit from i80 Group. Vartana’s platform is designed to be used by sellers of B2B software and hardware paired with SaaS software to manage tasks like contract tracking, payment terms, and signature capture. 


PayEm, a global spend and procurement platform that offers tools and workflows for expense approval automation, accounts payable automation, purchase order creation, expense reimbursement, and credit card management, raised $20M in a Series A round along with a $200M credit line from Viola Credit, Mitsubishi Financial Group, and others. The platform creates bills and sends payments to over 200 territories in 130 currencies and has grown its customer base by almost 300% in the past year.


Share Creators, a startup that makes it easier for game developers, e-commerce marketers, and product designers to collaborate online and manage massive digital files, raised $5M in a Series A round led by 5Y Capital. The company will use the funds to hire more engineers, developers, and designers, grow their portfolio of e-commerce and automotive product design customers, and expand their presence in the US and Europe.


Cudoni, a UK-based luxury resale platform, raised £7.5M in a round led by eBay's venture arm, bringing its total amount raised to £14.3M. The company plans to invest the new funds in its sales and marketing functions to scale their operations. 


Elliott Investment Management has taken a substantial stake in Salesforce, coming in after massive layoffs and stock downwind. Salesforce had a market cap of $151B at close on Jan 20, down from its peak of more than $300B in 2021. The move by Paul Singer’s Elliott adds to activist pressure on Salesforce to boost profits and shareholder returns after years of hiring and large acquisitions.


Walmart is preparing to spend over $2.5B in India, including $1.5B to buy back their shares in Flipkart from early backers Tiger Global and Accel Partners. They are also looking to invest between $200M and $300M in PhonePe’s ongoing funding round.

What'd I miss?

Shopifreaks is a community effort and I appreciate your contributions to help keep the rest of our readers in the know with the latest happenings in e-commerce. Whenever you have news to share, you can e-mail [email protected] or hit reply to any of my newsletters.

You can also mention @shopifreaks on Twitter or submit posts to r/Shopifreaks on Reddit, and I'll curate the best submissions each week for inclusion in the newsletter. 

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See you next Monday,

PAUL

Paul E. Drecksler
www.shopifreaks.com
[email protected]

PS: There's a new grocery store opening soon where everything expires in a week. It's called Best By.

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