With a recession ahead of us, how much are companies willing to spend to keep you coming back?
Do customers actually spend their crypto when given the payment option? Or is everyone a HODLER?
If BNPL was available everywhere (including in-stores), would you stop paying for items today and start paying for everything later?
Speaking of payments, do you trust Meta enough to use their messaging services to pay your friends and family? How about paying businesses?
How much live streaming is TOO much livestreaming? YouTube is bringing creators together to 2x your livestream consumption.
All this and more in this week's 70th Edition of the Shopifreaks newsletter. Thanks for being a subscriber.
Stat of the Week
48% of consumers would pay more for drone delivery if it meant receiving their items within the hour. — According to Propeller Insights –> [RETWEET IT]
Would you pay more? Take the poll: https://twitter.com/shopifreaks/status/1528799232714498049
1. Shopify's new rewards program
Shopify is beta testing an early version of its new rewards program, Shop Cash, to some Shop app users in the U.S. The rewards have no monetary value outside of the Shop app and can only be used towards purchases made in the Shop app.
For eligible merchants and customers, Shop Cash is automatically added as a payment method for orders placed in the Shop app, and there is no additional cost to merchants to accept Shop Cash — which is good because they currently can't opt-out.
To clarify the above statement… Merchants can opt-in / opt-out of having their products appear in Shop app's Search & Discovery tab, however, they cannot opt-out of being part of the Shop Cash rewards program if they choose to opt-in to the Search & Discovery. It's all or nothing.
When a customer uses Shop Cash towards an order, their Shop Cash is applied first, and any remaining balance is paid for with Shop Pay.
Shopify is keeping this rollout very quiet — even from their merchants! Many merchants first became aware of the new payment method after receiving orders paid via Shop Cash and wondering if they were legit.
Lat week I reported on Amazon's new cashback rewards program called Alexa Shopping List Savings, which puts rebate offers from brands and manufacturers directly into consumers’ hands through the Alexa app.
With a recession looming, are e-commerce giants looking for new ways to keep money flowing within their ecosystems?
My questions about Shop Cash moving forward are:
- Who will be paying for these rewards? Cashback rewards aren't free. And unlike Amazon, Shopify isn't taking a 15% seller fee on purchases. Right now the rewards are in beta testing and Shopify is helping subsidize the promotions.
- Will merchants be willing to offer Shop Cash rewards (and pay for them) if the rewards can be used in other stores? I thought the purpose of offering cashback rewards was to keep customers coming back to MY store, whereas Shop Cash rewards may or may not benefit my particular store.
Still lots left to be discovered about this early stage rewards program.
2. Shopify accepting Crypto.com Pay
Last month I reported on Shopify's integration with Strike, a crypto payments network that saves merchants money on processing fees through cash-final settlements via the Lightning Network.
Shopify is at it again with a new crypto payments integration via Crypto.com Pay. Merchants using the Crypto.com Pay feature can accept over 20 tokens including BTC, ETH, CRO, SHIB, DOGE and APE.
To incentivize new sign ups, Crypto.com is waiving their 0.5% settlement fee on all transactions for one month for Shopify merchants who join before June 30, 2022.
While making big crypto plays is certainly newsworthy given Shopify's overall market share, how significant is it actually?
Integration is the easy part. Adoption is the challenge. Just because the payment option exists, are customers actually going to pay for their purchases in crypto? Especially given the 55% drop in crypto value since November's high.
Why would I pay for online purchases using my crypto, which I'm hoping will double in price again this year?
And as a merchant, other than the pride associated with my store being cutting edge by accepting crypto, do I really want to accept a form of payment with such volatility? It's not like anyone making a purchase on my store doesn't have a fiat payment option, so how much am I missing out by not offering it as a payment option?
The reduced transaction fees for accepting crypto certainly has appeal, but by the time Shopify adds its up to 2% transaction fee for not using them as your merchant processor, a merchant is right back where they started in terms of transaction fees.
As long as Shopify still charges their transaction fee for using 3rd party payment processors, their crypto plays feel more like PR moves than integrations in the true spirit of cryptocurrency.
3. Square adds Afterpay BNPL to in-person POS systems
Square is rolling out its BNPL integration from Afterpay (which it acquired earlier this year for $29B) to its millions of in-person sellers in the U.S. and Australia who use their POS system.
In January, I reported that Afterpay announced new partnerships with Nordstrom, Tommy Hilfiger, and Calvin Klein to offer their BNPL services online and in-store.
And in February, I reported that Afterpay became available to all Square e-commerce sellers after they completed the acquisition.
Now all merchants using Square will have access to Afterpay's BNPL payment options both on their websites and in their brick-and-mortar stores.
Customers who'd like to use Afterpay in-person can use a mobile wallet, which contains a virtual Afterpay card, at the point of sale (POS), where they can access the installment payments. Square sellers receive their full earnings from the sales right away.
Having immediate access to a fully integrated BNPL payment option is pretty big news for merchants. Although BNPL is readily available to merchants around the world, the application and integration process is still a bit cumbersome with some networks. For example, the amount of time and effort it took for me to get a Canadian client of mine setup with Affirm / Paybright's BNPL services was disturbing to me as an AFRM stock holder. It took weeks of back and forth e-mails, and significant follow up on my end, to get all the answers I needed about fees and integration specs, which should be readily available on their website.
Meanwhile, Square and Afterpay have made the payment option as easy as possible. It might be the most streamlined and integrated solution currently available on the market. There's little reason for Square merchants not to accept Afterpay in their store, which I imagine will be a boost for their revenue this year.
4. Meta adds Pay button to WhatsApp
Starting last week, Meta’s WhatsApp messaging service now includes a “Pay” button for users in Brazil and India. The button is available directly on a user’s contact card, allowing them to send money (with no fee) to friends and family.
WhatsApp began allowing users in India and Brazil to make payments through its app in 2020, however, the functionality was held up for a year in Brazil after its central bank said it had concerns about the system.
The announcement came one week after Meta revealed it was changing the name of its Facebook Pay to Meta Pay.
Meta’s head of commerce and financial technologies, Stephane Kasriel, said, “We’re always working on new ways to unlock the potential of payments on WhatsApp. By adding a Pay button to the contact card on WhatsApp, we hope to make sending payments even more intuitive.”
I actually can't believe that we're just reading about these types of milestones in 2022. In my opinion, there is nothing more important to the future of Meta's business than becoming a full-fledged global payments facilitator — both for personal and business use.
In July 2021, I wrote in response to Facebook Pay becoming available outside of their platforms, “It’s been obvious for quite some time now that the future saving grace of Facebook’s revenue model is e-commerce and fintech. The handwriting has been on the wall long before Apple’s privacy updates and Chrome’s cookie-less future were revealed, but the company has been late to the party.”
All Meta users, whether on Facebook, Instagram, or WhatsApp, should be able to transfer money globally for free (and without currency conversion fees), and businesses should be able to accept orders and payments through their messaging services. Until we reach that point, Meta is officially behind in an area where they should already be the market leader.
5. YouTube livestream shopping expansion
Last week at the YouTube Brandcast event, the company teased upcoming features that it claimed would make it easier for viewers to discover and buy from brands.
- Co-streams – this new feature will allow two creators to go live at the same time to co-host a single live shopping stream. Each creator would bring their own fanbase to the stream.
- Brand-integrated shopping – will allow viewers to shop the products shown in the video by tapping on a built-in “view products” button that then brings up a list of items featured by the creators.
- Live Redirects – this will allow creators to start a shopping livestream on their channel, then redirect their audience over to a brand’s channel for fans to keep watching.
YouTube CEO Susan Wojcicki said, “People come to YouTube every day to make decisions about what to buy, and 87% of viewers say that when they’re shopping or browsing on YouTube, they feel like they can make a faster decision about what to purchase because of all the information that we have in videos. We have so much shopping activity that is already happening on YouTube, so we are making it even easier for viewers to discover and to buy.”
Amazon Prime Video and Peacock have also been testing new virtual product placement tools, a post-production technique for inserting a brand into a TV show or movie scene.
Amazon's new tool lets advertisers place their branded products directly into streaming content after they have already been filmed and produced, and Peacock’s new “In-Scene” ads will identify key moments within a show and digitally insert a brand’s customized messaging or product in TV shows and movies.
LOL, so when re-watching Pretty Woman on Peacock, you're going to be like, “Why is Julia Roberts using an iPhone 13? Those didn't exist in 1990.”
6. Shopify is ramping up lobbying in U.S. & Europe
Shopify is expanding its government affairs teams in the U.S. and Europe, recruiting top lobbyists with experience at major Silicon Valley firms, as lawmakers in both regions have begun putting pressure on large digital companies in recent months.
Shopify is focusing its efforts on platform regulation, competition, privacy and other issues including crypto, data protection, consumer protection, and tax issues relating to commercial partnerships.
In the US… Shopify has lobbied Congress and the White House on two major pieces of digital antitrust legislation. One would prevent large firms that run app stores (ie: Shopify, Apple, Google, Meta) from requiring that developers use their payment system. The other would stop online platforms from using third-party sellers’ data to improve their own products and from prioritizing those offerings in search and rankings.
In the EU… Shopify has lobbied European Commission staffers on the Digital Markets Act, which contains similar provisions.
Although they'll be ramping up their lobbying, Shopify doesn't plan on reaching out to lawmakers directly. Instead, they'll expect staff to work with “nonprofits and civil society focused on tech policy issues, think tanks, academia and research groups,” according to job postings.
7. Will Arnett's commercial for Commercetools
Did you see Commercetool's new commercial starring Will Arnett?
In their first major advertising campaign, Commercetools features Will Arnett personifying a legacy commerce platform (like Salesforce, Oracle, and Adobe in their eyes), that's unwilling to adapt to modern demands.
In a brainstorming meeting about rethinking commerce, Arnett interrupts constantly and mocks the ideas of shoppable social, gaming app integration, in-flight commerce, and the Metaverse.
It's a funny ad, because who doesn't love Will Arnett, but how could they have left out some of his iconic catchphrases from the commercial??? Huge missed opportunity!
I waited patiently for him to say, “Come on!” to one of the pitched ideas. Or better yet, I was waiting for Arnett to ask, “The guy in the $4,000 suit is listening to ideas from the guy in the turtleneck?”
Commercetools argues that its API, microservices, cloud infrastructure and headless-based tech set it apart from legacy providers – while being more technologically advanced and customizable than Shopify.
Arnett joins a growing lineup of celebrities acting as spokespeople for B2B brand campaigns in recent months including Zendaya appearing in a Squarespace ad during the Superbowl, DJ Khalid's cameo in Intuit Quickbooks’ ad, and Matthew McConaughey in Salesforce’s campaign.
8. Other e-commerce news of interest this week
- Spotify is testing a new feature that allows artists to promote their NFTs on their profiles, as part of their efforts to enable artists to deepen their connections with fans on and off its platform.
- The seventh and final former eBay employee pleaded guilty to participating in a scheme to terrorize the founders of the publication EcommerceBytes for being critical of the company. Schemes included sending boxes of live cockroaches, a funeral wreath, and books about surviving the loss of a spouse to their home. I first covered the lawsuit in June 2021. It's a wild story.
- Shopify's plan to grant CEO Tobias Lütke a new “founder share” that would preserve his voting power is being opposed by the shareholder advisory firm, Glass Lewis & Co, who say that the plan carries “inadequate protection” for the interests of minority shareholders and limits their rights. Shareholders will be asked to approve the plan at a meeting scheduled for June 7. I covered the proposed plans in in April.
- Etsy announced that its search feature now considers keywords and phrases within your listing product descriptions when ranking your listings. LOL it didn't before? Welcome to 1998, Etsy.
- Amazon is looking to sublet at least 10M sq.ft. of warehouse space in New York, New Jersey, SoCal, and Atlanta. The company became stuck with too much warehouse capacity after the surge in pandemic-era shopping faded.
- Amazon is testing a program that involves Flex drivers making deliveries from mall retailers. In August, I reported that Walmart launched delivery as a service for other retailers. Both companies want retailers dependent on their services and tech stack.
- Amazon is sending out Astro robots to a group of test users to learn how they'd use the devices. The company is looking to expand the robots capabilities as it learns what its customers want.
- Albertsons is deploying self-checkout carts in some of their stores to try and make in-person shopping easier as consumers head back to brick-and-mortar stores. The carts cost retailers between $5k-$10k and require a learning curve by customers, so stores are still on the fence about using them.
9. This week in seed rounds, IPOs, & acquisitions….
- Storyblok, an Austrian-based startup that has built a headless CMS, raised $47M in a Series B round led by Mubadala Capital and HV Capital, bringing their total amount raised to $58M at an undisclosed valuation. The company's tools are currently in use by 74k companies including Netflix, Adidas, and T-Mobile.
- TheWMarketplace, an e-commerce platform promoting women's businesses, raised $1.4M in a via the crowdfunding site Wefunder, led by Erika McKitterick, who worked at Amazon for seven years. The marketplace currently offers 4,500 products and services from 500 vendors.
- Because, a startup developing no-code software that connects disparate data sources to automate high volumes of website updates, raised $3M in a round led by Harlem Capital. The company plans to use the capital to grow its product and team, build out integrations with additional platforms, and leverage AI to predict the message site users need to purchase.
- Staytuned, a software company that provides a suite of revenue-growth tools for Shopify merchants, acquired Dexter, a price A/B testing app that lets Shopify merchants find the best price for their products. Staytuned will use the new product to drive more dollars for their merchants and help scale their businesses.
- equipifi, a Scottsdale-based fintech that offers white-label BNPL services to banks and credit unions, raised $12M in a Series A round led by Curql Collective, following its launch and completion of a $3M seed round in November. The company will use the funding to continue rolling out its services.
- Openpay, an Australian BNPL firm, completed its two-tranche placement and raised $18.25M. The company is planning a share purchase plan to raise a further $2M. Openpay will use the new funds to acquire new merchants and customers in Australia and New Zealand and enhance its technology and platform.
- MatchMove, a Singapore-based fintech, acquired Shopmatic, an e-commerce startup, for $200M. The combined entity will target revenues of $400 million and 4M customers in 15 countries by 2026. The deal signals consolidation in the startup ecosystem in India and SEA.
- Tranch, a U.K. BNPL platform for SaaS sellers, raised $4.25M in pre-seed equity and debt funding in a round led by Flash Ventures. The company will use the funding to expand its team and bring more suppliers on board as it prepares to expand into the U.S. later this year.
- Bidnamic, a U.K.-based Google Shopping e-commerce marketing platform, raised $5M in a Series A round led by Gresham House Ventures. The new funding will fuel the company's R&D projects and expansion into the U.S. market.
- 1K Kirana, an Indian startup that operates a hyperlocal shopping app and retail distribution network, raised $25M in a Series B round led y Alpha Wave Global, Info Edge Ventures, and Kae Capital, bringing its total amount raised to $34M. The startup serves as a distribution network for small stores in India and helps them with digital marketing to reach new customers.
- SyIndr, an Egyptian online used-car marketplace, raised $12.6M in a pre-seed funding round led by RAED Ventures. The company has yet to launch its marketplace to the public and is instead currently focused on acquiring cars from individuals, reconditioning them, and reselling them to new owners.
- Square, part of Block, acquired GoParrot, an all-in-one digital ordering and marketing platform for restaurants. As a long-time Square partner, GoParrot's products already integrate with their ecosystem.
- in3, a Netherlands-based BNPL firm, raised $85M in a Series B round led by Force over Mass, Waterfall Asset Management, and Finch Capital. The company will use the funds to scale operations and business reach within their market.
- Bravado, a community platform for sales people that recently hit 200k members, raised $26M in a Series B round led by Tiger Global. The startup is not yet profitable, but recently scaled from $0 to $4M in annual recurring revenue.
- Klarna is seeking to raise new funds that could value the company at almost a third less than the $46B valuation it achieved under a year ago. The company is aiming to raise up to $1B from new and existing investors in a deal that could value it in the low $30B range.
- FloorFound, a recommerce business that focuses on oversized items, raised $10.5M in a Series A round co-led by Next Coast Ventures and LiveOak Venture Partners. The company will use the new finding to expand its market presence in the U.S. and move into additional retail verticals like appliances, mattresses (gross), and exercise equipment.
- Xendit, a Jakarta-based payments infrastructure company operating in Indonesia and the Philippines, raised $300M in a Series D round led by Coatue and Insight Partners at an undisclosed valuation. Nine months earlier, the company announced its $150M Series C round at a $1B valuation, which makes me think the new round was at a discount if they're not disclosing valuation! The company is planning to expand its markets to Thailand, Malaysia and Vietnam.
- SpotOn, a cloud-based software platform that provides payment solutions for merchants, raised $300M in a Series F round led by Dragoneer Investment Group, bringing its total amount raised to $928M. The company will use the funding to further develop its product offering.
- Treyd, a Swedish BNPL firm that services international supply chains and pays suppliers while giving companies 120 days to pay the balance, raised $10.5M in a Series A round. The funding will help the company expand to the U.K. and operate out of Stockholm and London.
- GreyOrange, a warehouse solutions provider, raised $110M in growth venture funding in a round led by Mithril Capital Management, bringing its total amount raised to $293M. The company will use the funding to expand into North America and other regions. Its customers include Walmart, H&M, COS, Coupang, and GXO Logistics.
- Pemo, a Dubai-based fintech that offers physical and virtual prepaid cards that can be topped up and distributed to employees, raised $12M in a seed funding round co-led by Cherry Ventures and Shorooq Partners. The company will use the funds for product development and expansion across the Middle East and North Africa.
- Modulr, a London-based embedded payments platform, raised $108M in a Series C round led by General Atlantic. The company will use the funds to expand its geographic footprint and extend its client and partner coverage.
- Bamba, a platform that provides tools for micro-merchants to run their businesses in sub-Saharan Africa, raised $3.2M. The platform is currently pre-launch and is testing its services with 30 merchants.
- ZMO.ai, a software startup that uses AI to create virtual models for e-commerce stores, raised $8M in a Series A round led by GL Ventures. Right now 80% of ZMO's customers are based in China, but the company is working to attract more overseas users to its platform.
- Fashinza, an India-based supply chain marketplace for fashion brands and retailers, raised $100M in a Series B round co-led by Prosus Ventures and Westbridge, bringing its total amount raised to $135M. The company will use the funding to refine their supply chain tech and expand into new markets, including raw materials procurement.
- Locale, a curated food delivery startup that allows users to order from several restaurants in one order, raised $14M in a round led by Andreessen Horowitz. Locale currently operates in California and has delivered more than 50k orders for 130 small businesses on a flat-fee model.
Shopifreaks newsletter. Thanks for being a subscriber.