Should platforms change their rules over public outcry? Should you be responsible for tipping your Amazon driver? What happens when America's largest retailer lets their shoppers pay for groceries in installments? Do people flock to TikTok for the product videos or the dance videos?
This week I've got a jam-packed edition for you with stories about the Shopify vs Libs of TikTok debate, Amazon's new TikTok-style feed, and Walmart's new internal BNPL.
I also cover this year's digital wallet winners, what consumers value most from retailers, and WPP's acquisition-spree.
All this and more in this week's 99th Edition of Shopifreaks. Thanks for subscribing and sharing!
PS: Stay tuned for our E-commerce Predictions 2023 Special Edition to come out this week!
Poll of the Week 🗳️
“Should Shopify ban Libs of TikTok from selling on its platform?”
➡️ Click here to take the poll. ⬅️
Last Weeks Poll Results: 63.1% of respondents said that they will NOT be making a purchase in a metaverse in 2023, while 7.7% said they YES they will be making a purchase in a metaverse, and 29.2% checked “What's a metaverse?”. Although that third option may have left some room for people trying to be funny. [View Poll]
Stat of the Week 📈
90% of U.S. consumers say their paychecks have not kept up with inflation, and 40% plan to use credit cards or BNPL to cover spending. – According to PYMNTS
At the same time, U.S. credit card debt just hit an all-time high of $930B, and the U.S. savings rate has dipped below 3%, which is historically followed by reduced spending.
Share this week's stat on Twitter & LinkedIn.
1. The Libs of TikTok Debate
So many people have contacted Shopify in regards to it hosting the Libs of TikTok store that the company has had to issue specific guidance to customer-support reps about how to handle the topic.
Two weeks ago, I reported that Shopify was under heat for resisting calls to cut ties with Libs of TikTok, a controversial site accused of being anti-LGBTQ2 that sells merchandise plastered with allegations of grooming children. A Shopify spokesperson said at the time that the merchant was not in violation of their Acceptable Use Policy.
Now the public calls to have the store taken down have intensified, and advocates of the store's removal are encouraging their followers to contact Shopify and pledge their support for removal — which has resulted in a lot of extra social mentions and chat inquiries.
Shopify's social team have since received guidance not to engage with tweets about the Libs of TikTok store or discuss details of any store except with the owner of that store.
The customer-support team were told to direct chat inquiries to a page where the person could report violations of the company's acceptable-use policy.
Shopify's acceptable-use policy prohibits harassment, bullying, and threats and says that the platform can't be used to “promote or condone hate or violence against people based on race, ethnicity, color, national origin, religion, age, gender, sexual orientation, disability, medical condition, veteran status or other forms of discriminatory intolerance.”
Libs of TikTok products don't directly break those guidelines, according to Shopify, however the t-shirts and mugs that say, “Stop grooming our kids” are interpreted by some as an allegation of child abuse among LGBTQ communities, which in turn condones hate against them.
Context is very important here.
If an entrepreneurial club sold a t-shirt that read, “All about the money!” — that'd be fine, as you'd assume that slogan encourages business growth and development.
However if Kanye West produced the same t-shirt tomorrow, given his recent anti-semitic remarks towards Jews, you could argue that, given the context surrounding Ye, the t-shirt was designed to promote hate towards a particular group.
So while it's hard for any rational person to argue with the thought, “Stop grooming our kids” in isolation (after all, who's on the side of grooming?) — it's impossible to ignore the context, which is that the brand as a whole has a particular agenda.
It's a tough position for Shopify to be in, but it's not an inherently Shopify-only issue.
After all, if Shopify were to rule in favor or removing Libs of TikTok, it'll immediately become the next platform's problem to deal with. Are you ready for them BigCommerce and Wix? How about you Amazon and Etsy?
Every platform or marketplace, if they haven't already, will inevitably find themselves caught in the murky waters between their platform policies and public opinion.
It's a platform's responsibility to provide clear, direct, and transparent policies for merchants to follow, and to subsequently enforce them fairly and unequivocally. However regardless of intention and implementation, there's always a gray area.
While some would say that Libs of TikTok are skirting the line of Shopify's Acceptable Use Policy — aren't they allowed to do so as long as they don't cross it?
Otherwise, what should Shopify do in this situation? Move their line? ie: change their Acceptable Use Policy in a way that puts Libs of TikTok in violation of it? Or are Libs of TikTok already in violation of it and Shopify is simply slow to act?
The outcome of their decision could have significant financial impact on Libs of TikTok, which receives an estimated 50% of its revenue from the store. If Shopify were to ban them from their platform, their store becomes radioactive, and no other platform will want to host them (less they welcome the public outrage that Shopify is incurring).
While every platform gets to make their own rules — I'd hate to see e-commerce follow the path of social media into having separate left and right leaning platforms.
What are your thoughts? Should Shopify remove Libs of TikTok?
Take the poll on Twitter and share your thoughts on the topic.
2. Tip your Amazon driver $5
Last week I read the news that Amazon debuted a new voice command that allows users to say, “Alexa, thank my driver”, which would tip the driver $5 — and I immediately got triggered.
“What??? Now Amazon is asking us to tip drivers $5 for orders that we already paid shipping for instead of paying them a decent wage!?”
As you might recall, a few weeks ago I reported on Drivr, a startup that wants consumers to tip last-mile delivery drivers through their platform. I also ran a poll that week in which 63.3% of respondents felt that consumers should NOT have to tip drivers.
Like many folks, I feel that the tipping culture has gotten out of hand in the U.S. — so when I read the headline about Amazon's new feature, the alarm bells went off in my head, and I was ready to blast them!
However it turns out I jumped to conclusions too soon.
Amazon is actually the one covering the $5 tip — for the first 1M thank yous given.
Plus, the five drivers who get the most thanks will get an additional $10,000 bonus, which the company will also match as a gift to the charity of the driver's choice.
If you use the feature, you can confirm that your driver received the $5 because Alexa will respond with, “Glad you enjoyed your most recent delivery. Since you shared your appreciation with your driver, as a special thanks this holiday season, your driver will receive an extra $5 at no cost to you. This promotion is for a limited time only.”
After the 1 millionth thank you, Amazon will continue to share customers' appreciation with drivers, but they won't receive any tip.
So it turns out that Amazon will NOT be asking you to tip your drivers $5 out of your own pocket this year — but that's not to say a feature like that isn't on the horizon.
The timing of Amazon's feel good promotion is also very coincidental to recent heat the company's been under surrounding driver tips. On the same day the promotion was announced, Washington Attorney General Karl Racine announced that a lawsuit was filed against Amazon for allegedly using tips intended for drivers for their own benefit.
3. BigCommerce News (Sponsored)
Lots of exciting updates from our sponsor BigCommerce this week:
- BigCommerce announced a new partnership with Sage, a leader in accounting, financial, HR, and payroll technology, to provide merchants with an end-to-end commerce solution, integrating their online storefronts to their back-office.
- BigCommerce CEO Brent Bellm, alongside PYMNTS and other industry experts, offered insights into how to bridge the payments gap with international shoppers.
- Check out the latest episode of the Make It Big Podcast, where Jenny Fleiss, co-founder of Rent The Runway dives into emerging digital trends, from sustainability to experiential commerce.
- 84% of consumers say sustainability is important when making purchasing decisions. But how much are consumers willing to sacrifice to support brands’ sustainability efforts? Find out in BigCommerce's Global Consumer Trends report.
- BigCommerce was awarded Platform Partner of the Year by Searchspring, a search, merchandising, and personalization platform built exclusively for ecommerce, for 2022.
4. Walmart's ONE bank to offer BNPL
ONE, a fintech backed by Walmart, which a few months ago introduced checking accounts to thousands of Walmart employees and a small percentage of its online customers for beta testing, plans to launch a BNPL service for customers to use online and in-stores, as well as with other retailers.
A source told CNBC that the decision to roll out its own BNPL is motivated by recent economic challenges and inflation. It also may have been because of successful testing of the feature with third party partners over the last few years.
Walmart has technically offered BNPL online and in-store since February 2019 in partnership with Affirm. The two companies did a promotion earlier this year to offer free 90-day Walmart+ memberships if you spent $300 or more on a single purchase with Affirm.
It makes sense for a company like Walmart to offer their own internal BNPL payment option — as Apple, Shopify, and others have done — as it's leaving money on the table to send those payments elsewhere.
5. Amazon launches TikTok feed publicly in U.S.
In August, I reported that Amazon was internally testing a vertical video and photo feed in its app among staff.
The feed, known as “Inspire”, appeared at the bottom navigation bar in the Amazon app, and when users tapped the diamond-shaped icon, they saw posts on the feed, which included links to purchase featured items.
It wasn't clear at the time whether Inspire would go past this testing phase, but now the Wall Street Journal reports that Amazon is rolling out the feature publicly to select customers in the U.S. and plans to make it available to all U.S. shoppers in the coming months.
The continuous vertical video and photo feed will feature items available for purchase directly on Amazon. The company hopes that Inspire will eliminate the need for consumers to “search elsewhere or comment on a post to get more details for products featured online.”
An Amazon spokesperson told Insider that Inspire is just the start of the company's venture into social shopping, and that more shoppable features are coming soon.
Amazon product recommendations are very popular on TikTok. The hashtag #amazonfinds has 25.6B views, and some influencers have amassed millions of followers solely by finding interesting Amazon products to recommend.
With Inspire, Amazon hopes to capitalize on these “Amazon Finds” on its own app rather than on TikTok or IG.
A big difference though between Inspire and those other apps is that users are gravitating towards TikTok and IG for all sorts of entertainment — not just shopping — and then discovering products as part of the overall experience. Whereas Inspire is a predominantly product-based feed with no other types of entertainment.
Is the market for product-centric content large enough that shoppers will flock to Inspire specifically for product discovery? Or will it serve as a value-add for consumers that are already shopping on the Amazon app?
If entertainment-content is needed to fill some spots within Inspire, Amazon also has access to their extensive library of Amazon Prime videos to pull shorts from.
Whatever the future holds for Inspire, I see it evolving into a success for Amazon and a launching point for its social commerce endeavors.
6. Digital wallet winners 2022
Digital wallets are popular with consumers, but who's leading the pack when it comes to market share?
Here's a look by PMNTS at who's winning the battle of market share:
- Apple Pay is the current market leader, accepted by three-quarters of major U.S. retailers, and capturing 44% of in-store mobile wallet transactions.
- Google Pay, although Apple's closest competitor, only accounts for 15% of in-store mobile wallet checkouts and less than half of Apple's consumer usage share.
- PayPal surpassed Apple Pay in-store in 2020, but its brick-and-mortar use plunged over the past two years, dropping it to 11% market share.
- Walmart Pay is the only digital wallet accepted in-store by Walmart, which accounts for 3.2% of their transactions.
- Samsung Pay and Other collectively made up the remaining market share.
Are you giving your customers the option of paying with their preferred digital wallet? If you're not accepting Apple Pay, then that might be a “No” for 44% of your customers…
7. What do consumers value this year?
In May 2022, over 65% off shoppers were willing to pay premium prices for a personalized shopping experience, but in a few short months, the tide has turned.
When recently asked which factors determine their choice of retailers:
- Only 5.4% of consumers cited personalized experience.
- 60.4% wanted discounts or sales.
- 48.3% needed free shipping.
- 11.4% are looking for BNPL payment options.
- 9.3% are looking for digital wallet options, many of which include their own BNPL solutions.
So basically, consumers don't care anymore if their shopping experience is the exact same as their neighbors', as long as the price is right.
Features like personalized recommended items and promotional emails, virtual fitting rooms, and tailored rewards programs still add value to the customer experience — but they won't necessarily bring customers through the door this year.
8. WPP acquires another agency
WPP, the largest advertising company in the world based out of Britain, is acquiring Diff, a Montreal-based commerce agency that develops solutions for the Shopify ecosystem.
In May, I reported that WPP launched their own e-commerce platform called Everymile to handle the sales, logistics, and delivery of products sold by its clients, which works on a revenue share model.
I found it fascinating that WPP was essentially cutting out the middle man for their clients by bringing the e-commerce portion of their customer journeys in-house. It gave WPP direct control over their platform tech and offered new revenue channels (ie: SaaS subscriptions, merchant processing fees, etc) that would otherwise go to 3rd party providers like Shopify.
However in the past year, I've also reported that WPP acquired:
- Cloud Commerce Group, a UK-based technology company that helps brands take their products to market.
- Corebiz, a Brazilian e-commerce agency that specialized in implementing VTEX, a cloud-based e-commerce and retail software platform that allows retailers to create and manage online retail environments.
- Newcraft, a data-first European e-commerce consultancy based in the Netherlands.
So while WPP took the plunge into launching their own e-commerce solution, they're also not banking all their future success on it and are continuing to invest in other e-commerce ecosystems.
9. Other e-commerce news of interest
Amazon is working towards a world without barcodes, a 50 year old technology that doesn't work well with modern robot automation. Their solution is to use a multimodal identification (MMID) that processes multiple modalities of information like appearance and dimension of an item from an image of that item to automate identification.
Shein will spend $15M on upgrades to its suppliers' factories, following a UK documentary report that found workers were subject to long hours and withheld wages. The company discovered through an independent audit that workers at two factories in China were working up to 13.5 hour days.
Amazon.com experienced a several hour outage on Dec 7th for some customers and sellers. An error message on the site said that the site was experiencing “unusually heavy traffic.” Perhaps they should checkout AWS for hosting, which offers a 99.5% uptime guarantee.
Block was ordered by a federal magistrate judge to comply promptly with investigative demands made by the Consumer Financial Protection Bureau as part of a two-year investigation into Cash App and other fintech companies on whether they have either deprived customers of access to their funds or failed to adequately address their concerns about fraud and errors.
In November, I reported that a Texas woman filed a class action lawsuit against Block and Cash App, alleging that the companies were negligent and allowed a data breach. And last week I reported that Block is suing Bitcoin.com for using the trademarked word “Verse” for its native tokens. Lots of time on both sides of the court room coming soon for Block.
USPS is advertising holiday shipping supplies on eBay that lead to a landing page on the USPS store promoting their free Priority Mail packaging supplies. EcommerceBytes wasn't sure of the ads' intent — whether to reach people who are shopping online and need to ship presents to recipients, or to reach casual or professional sellers on eBay.
Bol.com, a Dutch e-commerce marketplace, cut approximately 10% of its staff, or around 300 jobs. The company is also looking to save money in other areas including cloud services and employee bonuses. It cancelled its plans to go public earlier this year due to disappointing numbers and economic uncertainty.
Google, Oracle, Microsoft, and Amazon will share in the Pentagon's $9B contract to build its cloud computing network. The Joint Warfighter Cloud Capability is envisioned to provide access to unclassified, secret and top-secret data to military personnel across the globe, and is anticipated to serve as a backbone for the Pentagon's modern war operations.
Primer, a U.K. startup that provides a drag-and-drop framework for merchants to build online payment stacks, has laid off one-third of its staff, or around 85 employees. The company raised $50M at a $425M valuation last year, but things have cooled down and the company is preparing for what it believes will be a tough year ahead.
Amazon and AWS have joined the Open Invention Network (OIN), the world's largest patent non-aggression consortium which works to protect Linux and Linux-related software from patent aggression by rival companies by cross-licensing Linux System patents to one another on a royalty-free basis.
The Australian Securities & Investments Commission is suing American Express for allegedly creating confusion for customers about whether they were applying for a credit card or loyalty card when signing up for the offering through the department store David Jones. The agency says that AMEX knew that some consumers were confused about its card, but did not stop issuing them.
10. Seed rounds, IPOs, & acquisitions
Archive, a peer-to-peer fashion resale marketplace, raised $15M in a Series A round led by Lightspeed Venture Partners, just 11 months after an $8M round, bringing its total amount raised to $24M. The company will put the funds into product development and building out the implementation and success teams to meet demand from customers.
Osome, a financial admin platform that helps business owners with admin tasks like payroll, accounting, and tax reporting, raised $25M in a Series B round led by Illuminate Financial, AFG Partners, and Winter Capital, bringing their total amount raised to $51M. The company's revenues have doubled since its Series A in June 2021 and plans to become cash flow positive within the next 12 months.
Onomotion, a Berlin-based vehicle-as-a-service provider that offers customers a fleet of cargo e-bikes with built-in covers, raised €6M from Proeza Ventures, Zu na mi GmbH, the European Innovation Council and others, and €15M in debt in the form of a bond operated by GLS Bank. Onomotion designs and assembles its own vehicles and is able to customize containers for different customer needs. It aims to expand into additional cities in Germany.
Chattermill, a platform that helps companies unlock insights by analyzing customer feedback data, raised $26M in a Series B round led by Beringea. The company has developed a deep learning model for extracting insights from aggregated data across platforms and social media to identify ways to improve customer experience and spot issues before they snowball.
HealthKart, an India-based nutrition marketplace that sells supplements, vitamins, protein powders, and weight-loss foods, raised $135M in a Series H round led by Temasek Holdings. The company has launched a couple of its own in-house brands and plans to use the funding to grow beyond its website and sell its products on other online retailers and stores.
Apromore, a Melbourne-based process mining startup that provides a platform for companies to make their businesses operations more efficient, raised $10.3M in a Series B round led by Salesforce and GBTEC Software Consulting AG. The company will use the funds to develop more features for its platform such as adding analytics and AI capabilities.
Operative Intelligence, an AI operational management platform that offers contact centers data to make meaningful changes in the way they serve customers that are tied directly to bottom-line revenue, raised $3.5M in a round led by Bonfire Ventures. The company will use the funds to scale up its customer intelligence product capabilities.
Network Merchants Inc., a global payments company, acquired the payments solution arm of Agreement Express Inc., an underwriting and onboarding software solutions provider that automates client onboarding processes for financial services firms. With the acquisition, NMI has expanded its full commerce enablement offering to include underwriting and risk monitoring capabilities.
SideUp, an Egyptian e-commerce company formerly known as Voo that offers payment gateways, API integration for shipping, warehousing, fulfilment and advisory, raised $1.2M in a round led by Launch Africa VC, 500 Global, and others. The company currently serves 2000 businesses and plans to grow its client base in Egypt, Saudi Arabia, and at least two other countries before the end of 2023.
Oda, a Norwegian online grocery delivery company, raised $151M at a $353M valuation in a round led by Kinnevik, Verdane, and Summa Equity. In April 2021, the company, then known then as Kolonial, raised $265M at a $900M valuation from investors that included SoftBank’s Vision Fund. The company will focus on getting profitable in Germany and Finland before expanding elsewhere.
Taeillo, a Lagos-based online furniture e-commerce store, raised $2.5M in expansion funding from Aruwa Capital. The furniture seller sources raw materials from local suppliers and manufactures furniture pieces including sofas, beds, chairs, and tables, which it sells to consumers and businesses.
NF3, a Singapore-based NFT exchange and financing marketplace, raised $1.65M in a round led by Infinity Ventures Crypto and Spartan Group. The company will use the funds to accelerate growth and expand operations.
Komi, a personalized website builder for influencers and celebrities to create landing pages, raised $5M in a round led by Contour Venture Partners. The startup partners with major platforms such as TikTok, Instagram, Twitter, Pinterest, Snapchat, Spotify, Apple Music, YouTube, SoundCloud, Twitch and Shopify, to allow users to integrate all their content and products.
Elastic Path, a headless commerce technology provider, raised $30M in a round led by Sageview Capital, following their $60M round in February. The company will put the funds towards sales and marketing, customer support, and growth.
PhonePe, an India-based payments company, revealed its plans to raise $1B in an all-equity funding round, which it hopes to raise from General Atlantic, Tiger Global Management, Qatar Investment Authority, and Microsoft Corp, which could value the Walmart-backed company at $13B. Two weeks ago I reported that PhonePe is acquiring ZestMoney, a BNPL provider that has struggled to raise fresh funds from investors.
Getir, a Turkish online grocery app, will acquire Gorillas, its German competitor, for $1.2B, collectively valuing the group at $10B. Getir investors like Mubadala Investment Company, Sequoia Capital, and Tiger Global are planning to raise more funding early next year.
Forum3, a digital collectibles firm that helps companies create NFTs and token-based loyalty rewards, raised $10M in a round led by Decasonic. The funds will be used to expand its Web3 tools for brands to launch their own NFT-based rewards programs.
Maergo, a platform to manage and fill excess capacity on commercial aircraft with parcels to enable faster and cheaper shipping for retailers, raised $20M in a round led by Deep Lake Capital. The company's focus is the “middle mile” and works commercial airlines to identify spare capacity, match it to where packages need to move, and deliver those parcels to the aircraft to travel.
Snapdeal, a SoftBank-backed Indian e-commerce firm which competes with Amazon and Flipkart, pulled the plug on its $152M IPO. The company was valued at $6B in 2016, but has seen its popularity dwindle over the years as competition increased.
Banzai, an engagement marketing startup that provides tools to source and connect with potential sales leads, and tools to run online video events, announced that it is going public via SPAC. It is also acquiring Hyros, a startup that specializes in advertising and marketing attribution, for $110M.
Pixyle AI, a Netherlands-based e-commerce startup focused on providing visual AI for retailers, raised €1 in a round led by South Central Ventures. Their software identifies fashion items in an image, categorizes them by color and pattern, and then matches the keywords shoppers use when searching for an item.
ShopBack Group, a regional shopping and rewards platform, raised $30M from Westpac Banking Corporation, bringing its total Series F round to $200M. The funds will be put towards their growth efforts across Asia Pacific and gearing up for the public markets.
PayTabs, a Saudi Arabia-based payment solutions provider for SMEs, acquired Paymes, Turkey's largest social commerce platform. The acquisition aims to create a unified social commerce platform for micro merchants and entrepreneurs across the MENA region.
Curve, a London-based digital wallet that combines all money into one app with one card, secured $1B in loans with a facility provided by Credit Suisse. The deal enables Curve to scale its lending business, Curve Flex, across the UK, EU, and US.