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Since launching Shopifreaks in Jan 2021, our biggest source of new readers has been from you sharing and recommending the newsletter with your network and colleagues. Thank you for continuing to do so and helping Shopifreaks grow. I've published 128 editions and counting (never missed a week) and am excited to continue growing our community and delivering you the latest e-commerce news each week.
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Now onto e-commerce news…
This week I've got stories for you about TikTok's U.S. e-commerce plans coming to fruition, Amazon and Microsoft reimagining product searches, and a Google Ads scandal that's rocking the industry.
I also cover Overstock.com's acquisition and rebrand, Goldman Sachs reevaluating its deal with Apple, and Google killing off a shopping feature.
All this and more in this week's 128th Edition of Shopifreaks. Thanks for subscribing and sharing!
Stat of the Week 📈
Sales from TJX's e-commerce platforms, including T.J. Maxx, Marshalls, HomeGoods, Sierra, and HomeSense, made up less than 3% of the company's total sales in 2022. – According to Business Insider
T.J. Maxx's website emulates the “treasure-hunt shopping experience” that the company is known for in real life. TJX CEO Ernie Herrman told investors in May 2020 that the company looked at e-commerce as a small part of its larger business.
Share this week's stat on Twitter & LinkedIn.
1. TikTok Shop is ready for the U.S.
TikTok Shop is finally ready to enter the U.S. market this year, according to sources. The company has been promising Chinese manufacturers and exporters free access to reach its 150M users in the U.S., a market currently dominated by its domestic competitors Shein and Temu.
ByteDance, TikTok's parent company, has begun pitching itself as a cost-free marketplace to potential merchants in a series of seminars and meetings, dangling free listings, shipping, zero commissions, and even warehousing to folks who onboard early.
TikTok says it will help Chinese merchants access its U.S. users by handling everything from marketing to logistics and invoicing. Merchants simply need to submit product info and ship their goods to a Guangzhou warehouse, and ByteDance will take care of the rest.
TikTok is already running a similar marketplace in the U.K. and Saudi Arabia, and is planning on entering North America in the coming months.
Last week I reported that TikTok is testing a new shopping section called Trendy Beat in the U.K., where it offers products for sale that are shipped and sold by ByteDance. The company said that it was NOT going to test Trendy Beat in the U.S. right now so that it could concentrate on TikTok Shop in that market.
In May I reported that ByteDance postponed the launch of its shopping platform on TikTok in the U.S. until June at the earliest due to concerns about the app's future, lack of interest from merchants, and lack of live-streaming e-commerce adoption in the U.S. Now June has come and gone, and they are almost ready for the big leagues.
It’s not uncommon for Chinese e-commerce platforms to waive fees to build an initial base. Alibaba employed that approach in China in its early years. Shein is currently waiving commissions on a selective basis. And in May, I reported that Temu is losing an average of $30 per order as it throws money at trying to break into the American market.
2. Amazon Search GPT
Amazon is planning to bring ChatGPT-style product search to its marketplace to rival Microsoft and Google, who have been actively weaving generative AI into their search engines.
Amazon's ambitions were spotted in recent job postings by Bloomberg News.
One listing says the company is “reimagining Amazon Search with an interactive conversational experience” designed to help users find answers to questions, compare products, and receive personalized suggestions.
Another posted job would be part of “a new AI-first initiative to rearchitect and reinvent the way we do search through the use of extremely large scale next-generation deep learning techniques.”
The search bars at the top of the Amazon app andwebsite have become the default gateway for more than half of U.S. shoppers, who say they begin their product searches on Amazon, a higher share than Google.
However Amazon isn't taking that market share for granted, as competitors are actively improving their product searches (more on that in the next story).
Right now, asking Microsoft Bing, which is powered by ChatGPT, to show the five best electric razors pulls up five options, including citations to reviews from Men’s Health and GQ, along with links to stores selling the products. The same search on Amazon produces 61 results on the first page, of which many are Sponsored.
Choice overload or customer empowerment? Amazon plans on finding out.
Amazon CEO Andy Jassy said on an earnings call last month that generative AI “presents a remarkable opportunity to transform virtually every customer experience.”
3. Microsoft's new AI shopping features
Speaking of tech giants coming for Amazon's product search market share… Microsoft introduced new AI features to Bing and Edge that are designed to speed up online shopping for consumers and help save them money.
1) Shopping For Multiple Items – The first feature automatically creates a list of relevant items if a user types a phrase such as “laptop accessories” into Bing. The feature is designed for scenarios where shoppers are seeking to buy several items, as opposed to one single item like a trackball. Bing provides a page of results which is divided into sections for each type of product. For example if you search “writing supplies” it'll show sections dedicated to pencils, pens, erasers, and notebooks.
2) Product Summaries – The second AI feature rolled out provides a summary of online reviews about a particular product. This feature is specifically for Microsoft Edge browser, where the summaries appear in the browser's Bing Chat sidebar.
3) Post Purchase Price Match – Lastly Microsoft announced plans to launch a feature called Price Match, which is designed to track prices AFTER a customers buys a product so that they can seek partial refunds if the product later drops in price. This feature is also specific to Edge browser, which will automatically detect when a user is eligible to ask for partial refunds based on the price match policies of the retailer in which they purchased from.
The revival of a Microsoft browser would be the ultimate comeback story for browser market share in our lifetimes. Edge currently holds an estimated 7-11% market share in the U.S.
At one point in the late 90s / early 2000s, Microsoft's Internet Explorer browser attained a peak market share of around 96%, beating out rival Netscape Navigator which at one point held 80% market share in the early 90s.
4. Google TrueView Scandal
A new report by Adalytics accuses Google of misleading advertisers and misallocating billions of digital ad dollars through its TrueView skippable in-stream video ads.
TrueView ads are a proprietary ad format that allows advertisers to only pay for actual video views rather than impressions, The ads are intended to be served on YouTube and various other apps across the web, providing users with the option to skip the ad after five seconds. Anyone who doesn't subscribe to YouTube Premium is familiar with this type of in-stream ad.
However according to ad fraud expert, Dr. Augustine Fou, these ads are “marked as 100% viewable because javascript in the popunder cannot look outside of itself to determine that the popunder is behind something else.”
In other words, Google isn't meeting the promise it gives advertisers that the videos must be skippable, audible, and not initiated by passive user scrolling.
The behavior is similar to Facebook's scenario a few years ago where they claimed an ad was fully viewed after just three seconds.
In the 20018 Facebook scandal, Facebook was found to be inflating its metrics by as much as 900%, leading advertisers to believe their campaigns were far more successful than they actually were.
The report also speculates that TrueView was placing ads on third-party sites that did not meet the quality expectations of media buyers.
The issue with TrueView ads impact major brands like Johnson & Johnson, American Express, Samsung, Disney+, and more, as well as government agencies like Medicare, the U.S. Army, and the Social Security Administration.
Advertisers and media buyers are calling for full refunds for ad dollars spent on invalid traffic.
It's important to note that the report was published by a company that sells ad authenticity services to marketers. So while they would legitimately be the ones to hold this type of data, they also have an agenda to publicize it.
5. Overstock & Beyond
Overstock.com is buying the Bed Bath & Beyond brand from bankruptcy for $21.5M and adopting the name. Well, it beats having Tai Lopez buy the domain and turn it into a crypto exchange!
The deal excludes any asset associated with the brick and mortar business of the bankrupt retailer.
The name change will start within the week, with Overstock relaunching the Bed Bath & Beyond domain in Canada, followed by a refreshed website in the U.S. a few weeks later.
Customers in the U.S. and Canada who visit overstock.com will be redirected to bedbathandbeyond.com, which will now sell furniture and home décor.
Additionally, Overstock's loyalty program, Club O, is being taken over by Welcome Rewards, which is Bed Bath & Beyond's loyalty program.
The real question is — will they keep offering BB&B's signature 20% off coupons in some capacity?
Overstock.com CEO Jonathan Johnson said, “Bed Bath & Beyond is an iconic consumer brand, well-known in the home retail marketplace. The combination of our winning asset-light business model and the high awareness and loyalty of the Bed Bath & Beyond brand will improve the customer experience and position the company for accelerated market share growth.”
Overstock.com was founded in 2019 as a liquidator, but has since transformed itself into an online retailer of furniture and home items, so the original name didn't reflect the new direction.
Johnson said, “I can’t tell you how many times I’ve been asked over the years when we’re going to change the name of Overstock.”
Well now he can spend the next five years answering the question, “Yeah, but why Bed Bath & Beyond?”
6. Goldman Sachs to hand off Apple to AMEX
Goldman Sachs is in discussions with American Express to take over the Apple credit card and other collaborations between the two companies, according to a report by The Wall Street Journal on Friday. All three companies declined to comment.
Goldman Sachs announced plans last year to scale back its consumer banking offerings, but pushed forward with its agreement with Apple, even deepening their relationship while the bank moved away from consumer banking.
Now sources tell the WSJ that Goldman Sachs want to hand over those businesses and its credit card partnership with Apple and General Motors to American Express.
The deal isn't certain, could take a long time to play out, and would require Apple's approval. A deal of this size would also require additional review by anti-money laundering and other security results.
I first reported on Apple's high yield savings account in partnership with Goldman Sachs back in October 2022, which became available to the public in April 2023.
In other Goldman Sachs news, the bank is cutting around 125 managing directors across its global operations in an attempt to bring down its headcount and costs amid a slowdown in deals. The cuts come as deal values have dropped more than 40% to $1.2 trillion this year.
7. Google kills Buy on Google
Buy on Google for Search and Shopping will no longer be available to merchants starting September 26, 2023. However eligible merchants will still be able to use Buy on Google for YouTube in the U.S.
Buy on Google is a feature that allows customers to purchase products from merchants without leaving Google's shopping interface. The feature launched in August 2020 and rolled out to all merchants in 2021. The service began with an integration with PayPal and later expanded to include Shop Pay.
Google says that instead of Buy on Google, they are creating a new “streamlined buying journey for shoppers” that makes it easier for retailers to sell across their platforms.
A Google spokesperson said, “Buy on Google was a small feature that a very limited number of merchants used, so we’re investing in this new buying experience instead.”
“Instead of a multi-step buying journey, people who are ready to buy will now have the option to go directly from Google to the checkout flow on your website. Once there, they will see the chosen product already in their shopping cart and can checkout on your site with whatever payment method they select. We will be piloting this experience on Google and YouTube with select merchants and will share more information as we’re ready to take on additional partners.”
Merchants can express interest in Google's new pilot program via this form.
Additionally, the company plans to prioritize Multisearch, AR, and visual inspiration on Shopping and Search.
8. The new Shopify Ventures website
Shopify Ventures unveiled its full investment portfolio on its new website last week, marking the first time that Shopify published all its investments in one centralized place.
I've covered most of these investments in this newsletter, which include:
- Affirm (BNPL)
- Bench (bookkeeping and taxes)
- Codat (Universal API)
- Diem (payments)
- Nomba (payments)
- Pipe (growth capital)
- Melio (invoices)
- Stripe (payments)
- Disco (brand partnerships)
- Gorgias (customer service)
- Klaviyo (marketing automation)
- Single (content-driven shopping experiences)
- Supergreat (consumer reviews)
- Tapcart (mobile apps)
- Triple Whale (AI data platform)
- Wati (Whatsapp commerce)
- Yotpo (reviews / subscriptions / loyalty)
- Flexport (supply chain)
- Global-e (cross-border solutions)
- Loop (return management)
- Shippo (shipping)
- Cross Minds (recommendation engine)
- Sanity (content modeling)
- thirdweb (web3 apps)
- Wallet App (web3 protocol)
9. Other e-commerce news of interest
Shopify is rolling out its Collabs influencer platform in the U.K., currently in pilot phase with the brand French Connection and influencer Isabelle Kate. I first reported on Shopify Collabs last April when it initially launched in the U.S. and Canada.
Etsy sellers are reporting that the platform is including links to other sellers' listings when it sends shipping notifications under a “You might like these too” headline. Sellers are upset that Etsy is hijacking their sales to promote other stores and concerned that customers might think that the sellers themselves were suggesting or endorsing the intruder listings.
Brazil is experimenting with a new program that lets e-commerce companies voluntarily include import, federal, and state tax collection at the time of purchase, to relieve the revenue service of having to charge the customer these taxes after the merchandise arrives, which is how it's worked historically. In April I reported that Brazil would end a tax exception on international orders up to $50 as part of its effort to tax purchases from global retail giants like Alibaba, Shein, and Shopee, but after opposition from the public, the government decided to maintain the tax exemption, but only for shipments made by individuals.
Shopify nominated Bret Taylor, former Salesforce co-CEO and co-creator of Google Maps, to join its board of directors. If elected at the company's annual shareholder meeting next month, Taylor will replace John Philips, an early angel investor who's held a seat on the board since 2010 and is not seeking reelection.
Wix announced a new SEO tool called Wix SEO Assistant, which flags on-page SEO issues and generates a list of tasks to improve rankings based on the user's chosen keyword. Suggestions can include modifications to the content, adding keywords to relevant places like headings, title tags, and meta descriptions, and encouraging users to add alt text and enable structured data.
Meta partnered with Deloitte to release a report about the state of digital privacy rights today, where Meta highlights privacy enhancing technology as a prime concern. This consists of clean rooms for data, as well as the stripping away of personal identifiers from any and all data that is being collected.
Zip, the Australian BNPL firm, is continuing to streamline its operations by cutting 20% of its1,500 person staff. In March, the company began working to sell off parts of its business in a number of countries around the world, including India, the U.K., Mexico, and the Middle East.
Reddit users lost the fight, and Reddit moved forward with its decision to charge developers of third party apps exorbitant fees to access its API, effective shutting down popular apps like RIF and Apollo on June 30th. It's been a sad state of affairs to instinctively open the RIF app on my phone throughout the day and watch nothing load. Like many Reddit users, I'm currently evaluating my future relationship with the site. I've certainly browsed it less since June 30th, as I erased the official Reddit app from my phone in protest last month.
Square beta launched new banking and spend management solutions from its U.S. sellers, which include new credit tools like the Square Credit Card, which runs on the AMEX network and offers no late fees or annual fees. Square also introduced new seller features like early deposit access and the ability to have up to four additional debit cards connected to their checking account.
Despite being banned from Amazon in April for being a card-skimming device, the Flipper Zero tool, a portable and programmable pen-testing tool that can debug various hardware devices via RFID, radio, NFC, infrared, and Bluetooth, is expecting $80M in sales this year. The company points out that their firmware is open source and can be inspected by anyone.
Klaviyo unveiled Klaviyo Reviews, a new feature that enables Shopify merchants to collect product reviews with their customer data and messaging in one platform, as well as set up a unified post-purchase journey. Great feature to add to their portfolio, as Klaviyo specializes in post-purchase communication, which reviews play a big role in. The big question will be if it works as well as competing dedicated review platforms in the space, or if it leaves features on the table.
PayPal experienced a major technical issue that prevented customers from completing transactions on third-party websites including Xenforo, MemberMouse, and E-Junkie. PayPal acknowledged the issue and assigned developers to fix it, and the issue has since been marked as resolved.
Meta is working on a way for users in the EU to directly download apps through a new type of Facebook ad, a functionality that only recently became available via the Digital Markets Act, which calls on large tech companies like Google and Apple to open up their “walled gardens”. Meta is reportedly saying it won't take any percentage of in-app revenues from participating apps, which is in stark contrast to Apple and Google who take anywhere from 15% to 30% of in-app purchases.
Amazon will begin holding sellers' funds on July 7th for sellers who have not provided it with required information it needs to comply with the INFORM Consumers Act, which took effect on June 27th. Amazon also noted that it might need to reverify information once a year if sellers make changes to their profiles or accounts.
Amazon officially launched a program its been piloting since 2020 that pays small business owners to deliver packages during the last mile of delivery to customers' doorsteps. The program, called Amazon Hub Delivery, will operate in 23 states and focus on rural areas and large dense cities like Seattle, New York, and Los Angeles. The exact pay is undisclosed, but Amazon estimates that a small business could earn up to $27k a year if it deliveries 30 packages a day with their own staff and vehicles. LOL, don't everybody sign up all at once!
ShipBob hired Melissa Nick, an Amazon alumni who most recently served as VP of North American customer fulfillment, as its first-ever chief supply chain officer. Nick, who will manage ShipBob's 50 partners, said, “You know, not everything needs to have next-day shipping, not everything needs to have two-day shipping. You don't have to have all inventory everywhere.”
JD.com plans to open retail grocery stores through the merger of its 7Fresh supermarket unit with other divisions such as its group-buying arm Pinpin. Beyond opening actual stores, the new division will explore innovative retail models.
Meanwhile Alibaba's grocery unit Freshippo, which is a direct competitor to 7Fresh, expanded its number of physical stores in China, as the business prepares to spin off from its parent company and go public.
Damus, an app built on Jack Dorsey's Nostr decentralized social platform, will be removed from the Apple App Store for allowing users to send each other tips via Bitcoin on posts they like. Apple sees these tips as in-app purchases for digital content, which can only be purchased through Apple's in-app purchase system. Damus plans to contest the decision, saying that no in-app content is unlocked by providing a tip.
What's next? Is Robinhood going to get kicked off the Apple App Store for not giving Apple 30% of users' investment portfolios?
Zalando, a fashion retailer that operates in seven European countries, filed a legal challenge in the Court of Justice of the European Union, contesting its designation as a “Very Large Online Platform” (VLOP), which gives it extra obligations under the new Digital Services Act. The company said in a statement that the European Commission “did not take into account the majority of retail nature” of its business model and argued that it “does not present a ‘systemic risk' of disseminating harmful of illegal content from third parties.”
DoorDash will begin offering couriers a guaranteed hourly rate, which will differ depending on the market, for “active delivery time” as part of several changes to its platform. Dashers will only be paid for the time between picking up an order and delivering it, but not while they're on their way to pick up the items, and the rate will be in addition to tips, which couriers keep 100% of.
PayPal launched a tap-to-pay feature for merchants using an Android phone through its Venmo and Zettle apps in the U.S., similar to the functionality it launched in the U.K. last year. The feature enables sellers to accept payments from cards or digital wallets like Apple Pay or Google Pay without any additional hardware, of which. PayPal charges 2.29% + 9¢ fee for every transaction.
Meta published a comprehensive look at how its AI systems decide on the posts that appear on your Facebook and Instagram feeds. The company released 22 card systems for the platforms that explain how is AI systems rank content for it Feed, Stories, and Reels, each which explains how a certain aspect of Meta's platform works.
Meta is rolling out a series of advertising tools for WhatsApp to help companies on the app roll out promotions (without needing a Facebook account). WhatsApp will be launching the features soon, which will include the ability for businesses to send a personalized text in bulk to clients in their contact list.
Dollar General is experimenting with an Amazon-like cashierless technology at a store in Banner Elk, North Carolina, allowing customers to simply walk out with their purchases. (Weird that this is news, because I've been seeing people walk out of Dollar General without paying for things for years…) The company is working with AiFi's system, which utilizes dozens of cameras to monitor what a shopper picks up and charges customers for what they remove from the store. “Excuse me, I walked in with this drink.”
10. Seed rounds, IPOs, & acquisitions
Shein registered with regulators for an IPO in New York, which could make Shein the most valuable Chinese company to go public in the U.S. since Didi Global in 2021 (which did not go well). Sources told Reuters that Shein confidentially submitted its IPO registration with the SEC and that it's looking to make its market debut before the end of 2023.
Tiny, a Canada-based publicly traded aggregator, acquired HappyFunCorp, a product engineering house that designs and builds apps for Apple, Disney, Amazon, and Twitter for $30M with a mix of shares and cash. The company will continue to operate independently out of Brooklyn, NY where it was founded.
Tokens.com, a publicly traded company that invests in web3 and digital assets, acquired Startup Slang, the maker of a popular home décor mobile game called Design Home, which allows players to decorate interior design spaces with digital renderings of real furniture and décor pieces. Acquiring the team and their IP gives Token.com's subsidiary, Metaverse Group, access to the shoppable metaverse tech Startup Slang developed, which links in-game purchases transactions to Shopify Plus storefronts.
ShopZetu, a Kenyan fashion e-commerce startup that caters to young and style-conscious women in Africa, raised $1M in pre-seed funding in a round led by Chui Ventures. The startup plans to use the funds to scale beyond Kenya and expand their beauty, skincare, hair, and home décor offerings.
Cart.com, an Austin-based e-commerce platform that provides commerce and logistics enablement tech, raised $60M in a Series C round led by B. Riley Venture Capital and others, bringing its valuation to $1.2B, nearly 50% higher than its Series B extension round in Feb 2022. The company will use the funds to meet customer demand, international expansion, and product development.
Dexory, a platform that combines analytics with autonomous robots to improve space utilization and increase efficiencies in warehouses, raised $19M in a Series A round led by Atomico. The company will use the funds for international expansion to the U.S. and Europe, with aims to double its workforce by the end of the year.
Socure, a Nevada-based provider of digital identify verification solutions, acquired Berbix, a San Francisco-based startup that developed a high-accuracy document verification solution with a patent-pending forensics engine able to detect spoofed IDs, including AI-generated fakes, for $70M in cash and stock. With the integration of Berbix's technology, Socure announced the launch of its Predictive Document Verification 3.0 solution, to enable increased consumer acquisition while stamping out online identity fraud.
Slang.ai, a platform that provides voice-enabled phone answering service powered by generative AI, raised $20M in a Series A round led by Homebrew. The funding will go toward growing their team and expanding into new industries that their voice concierge capabilities can support.
Reka, a startup that creates generative AI models for various kinds of data including text, images, videos, and tabular data, raised $58M in a round led by DST Global and Radical Ventures. Reka was established by former researches from Google DeepMind and Meta with two goals – “to build amazing generative models and to push the frontiers of AI research.”
Parabola, a San Francisco-based startup that uses AI to help expedite back-office processes for logistics and e-commerce businesses, raised $24M in a Series B round led by OpenView, bringing its total amount raised to $34.2M. Using Parabola, customers can take documents like PDFs, text message logs, images, and e-mails and have the software standardize, enrich, or categorize them, as well as extract amounts, due dates, sender info, and line items into a table.
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See you next Monday,
PAUL
Paul E. Drecksler
www.shopifreaks.com
[email protected]
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PS: What' type of turtle has fingers? … A snapping turtle!