Today's edition of Shopifreaks is brought to you a little late in the evening thanks to Daylight Savings Time!
LOL – I'm in Ecuador where DST is not practiced. At some point this morning, my phone (set to Ecuador time) read 11:30am and my laptop (which updates automatically to EST) read 12:30pm. I was so confused and had no idea what time it was until I remembered Daylight Savings Time!
Well now it's time to bring you the latest e-commerce news. This week I start with up-to-the-minute news about Silicon Valley Bank.
Then I cover generative AI making its way to Salesforce, Bonanza's new owner, Meta launching a Twitter alternative, and Rivian looking to back out of its exclusive deal with Amazon. It's a wild edition!
All this and more in this week's 112th Edition of Shopifreaks. Thanks for subscribing and sharing!
Poll of the Week 🗳️
💰 Are we going to see more bank runs and bank failures this week in the US?
Last Weeks Poll Results: I asked what was your favorite method of returning items you bought online. 38% voted that shipping the item back via dropping it off at a carrier facility was their preferred method, while an equal 28% said shipping it back via home pick-up and in-store return were their favorite methods. 6% voted drive-up return, but to be fair, that method is barely available yet!. [View Poll]
Stat of the Week 📈
E-commerce brands sent 62.3% more SMS campaigns in 2022 than in 2021. –According to Omnisend
Click rate dropped from to 10.66% in 2022 from 11.54% in 2021, and conversion rate dropped from 0.25% in 2021 to 0.19% in 2022.
1. Silicon Valley Bank recap
Okay, so by now you've heard the news everywhere that Silicon Valley Bank, the 16th largest bank in the US, was taken over by the FDIC on Friday after failed attempts to sell it to healthier banks.
In this newsletter, I usually try to focus on stories specific to our industry that haven't been covered by every major business and tech newsletter, but this story is too big to ignore, especially since so many e-commerce companies did business with the bank.
So what I thought I'd do for you is give you a recap of what's happened with that story since Friday so you'd have all the facts to bring to the water cooler tomorrow (or Slack channel or wherever you do your office chisme).
First, what happened?
Over the past year, SVP customers, who were mostly startups and tech companies like Shopify, Etsy, ZipRecruiter, AcuityAds, Pinterest and Andreessen Horowitz (to name a few), became needier for cash as funding dried up, which led them to withdraw money from their accounts.
This required SVP to have to sell its assets, mainly bonds, at a loss to free up capital for customers to withdraw funds. Eventually the losses were so high that customers began to fear that the bank couldn't guarantee access to their funds, which led to a bank run.
Then on Sunday, Signature Bank, the 29th-largest bank in the US, closed its doors, suggesting the financial panic had spread.
Bank stocks took a hit:
SVB shares declined swiftly, plunging from $267.8B at 4 pm on March 8 to $106B 24 hours later. Trading was obviously suspended, and later, trading of 12 regional banks was also halted including First Republic Bank (down 60%), Western Alliance (down 45%), KeyCorp and Comerica (both down 30%), and Zions (down 25%).
Government stepped in:
FDIC announced Friday that customers with up to $250k would have access to their funds by Monday morning, but no timeline for customers with more than $250k
The Treasury Department and the Fed took further action on Sunday, telling depositors in Silicon Valley Bank and Signature Bank that the FDIC would protect all of their funds, including those that exceed the $250k.
Later on Sunday, the Fed announced an emergency lending program, which will allow distressed banks to borrow funds on favorable terms directly from the Fed, instead of generating cash by selling underwater securities.
This morning, Silicon Valley Bank's UK business was sold to HSBC for £1. The subsidiary's depositors will be protected, and they'll be able to access their accounts normally. No taxpayer funds were used for the transaction. SVBUK had a total balance sheet of approx £8.8B and a deposit base of £6.7B.
SVB Financial Group and two top executives including CEO Greg Becker and CFO Daniel Beck, were sued today by shareholders who accused them of concealing how rising interest rates would leave the bank. The lawsuit seeks unspecified damages for SVB investors between June 16, 2021 and March 10, 2023.
And I think that catches you up to speed on the SVB story! This was the last section of the newsletter I wrote with up-to-the-minute news before hitting send.
2. Salesforce to incorporate AI
Salesforce announced at the TrailblazerDX developer conference that they will soon be piloting a technology called “Einstein GPT” that adds ChatGPT-like features across the platform.
The tech is built on top of OpenAI’s technology, but customers can bring their own AI models or use one that comes out of the box from Salesforce.
Salesforce has been running an underlying intelligence layer since 2016 called Einstein, which brought intelligence to the platform like helping sales teams find the most likely customer to buy or the ones most likely to churn.
The new generative AI feature will be more content-oriented to help businesses auto-generate text, pictures, and code.
Unlike ChatGPT, the data won't be coming from the open Internet. Instead it will tie directly into the Salesforce data cloud, making it easier for customers to generate content from their own data.
One example use case for Einstein GPT is sales. Imagine entering a question about a company, and the bot finds publicly available info to add or update a company record into the CRM, or generate an e-mail to the company based on this information.
Input: Paul Drecksler / Shopifeaks
Output: Shopifreaks is the Internet's leading e-commerce newsletter for industry professionals written by Paul Drecksler and sponsored by BigCommerce. Paul Drecksler has great hair.
Wow, thanks Einstein GPT!
Slack, which is owned by Salesforce, is also integrating ChatGPT into its platform — currently beta testing a ChatGPT app which will allow users to draft up message replies, status updates and meeting notes.
Pretty soon the entire Internet will just be a ChatGPT app talking to itself!
3. BigCommerce News (Sponsored)
In light of International Women's Day, BigCommerce celebrated Kristina Pototska, a Product Manager from their Kyiv office.
Airon White, a Manager of Product Marketing at BigCommerce's Austin, Texas office sat down (virtually) with Kristina to learn more about her experience, discover what inspires her about Women's History Month, and much more. Watch the video interview here.
BigCommerce was also proud to share that Meghan Stabler, VP of Marketing, was named one of the 20 most influential women in marketing by Marketing Beat UK.
Congrats Meghan! Well deserved.
4. Bonanza's got a new owner
Bonanza, an eBay / Etsy alternative that launched in 2008, was sold to Quincy Faison who will take on the role of CEO of the newly established company, Bonanza Worldwide, LLC.
Faison began his career with IBM over 20 years ago and focused on small and midsized businesses. Later he built his own Cloud Based ERP focused on helping e-commerce companies manage their business end-to-end, supporting everything from financials to purchase to inventory optimizations and warehouse management.
Faison plans to shift the marketplace to be more marketing focused by driving more traffic and embracing social media platforms, as well as launch an ad program — which will likely be the most profitable leg of the business.
Maybe start with a redesign that makes the website look like it wasn't built using Geocities in 1998!
I'm critical of Bonanza because I've always felt like the marketplace had a ton of unrealized potential. I've had a storefront on there since 2017, but to this day have never sold a product on the platform and have since dismissed it as a worthwhile channel for my business. (Whereas I've sold thousands of the same items on Amazon and other platforms.)
Apparently Quincy Faison saw the potential as well. I look forward to seeing what he does with Bonanza and am personally hoping for the best, as I feel that the market needs another great eBay / Etsy / Amazon competitor. Bonanza is starting with a dedicated existing userbase and is in a great position to pivot and grow.
Bonanza's former CEO Bill Harding will move on from the company to focus his attention on his other businesses including Amplenote, for tasks and note taking, and GitClear, for developer metrics and git analytics.
5. Forbes 30 Under 30 Europe Retail & E-commerce 2023
Forbes released their 30 Under 30 Europe Retail & E-commerce 2023. Taking the top spot was Eric Liu, founder of HungryPanda, a UK-based platform that gives Asian expats a taste of home.
Other names from the list include:
- Youri Moskovic & Nicolas Sabatier – founders of Prediko, a platform that helps e-commerce retailers manage their inventory and plan their budget.
- Ophelia Alickaj – cofounder of Crystal Haze Jewelry, which sells unique, affordable and nostalgia-inducing pieces
- Jan Baan – CEO of Omoda, a 140-year-old Dutch shoe store
- Alexandre Bonvin – founder of Audacia Group, a Swiss aggregator of e-commerce businesses
- Laurence Booth-Clibborn – cofounder of The Mothership, another aggregator which buys and builds D2C e-commerce brands
- Aisling Byrne – founder of Nuw, a platform where users trade old clothes with no pricing or negotiations
- Benjamin Ahlers & Casimir Rob – cofounders of Every, a sustainable plant-based food delivery company
- Jamie Genevieve Grant – founder of Vieve, a vegan and cruelty-free makeup brand
The 30 named to this year’s list currently reside in 11 countries: the Netherlands, Switzerland, the UK, Sweden, Germany, Belgium, France, Luxembourg, Norway, the US and Spain.
Lots of great names and interesting e-commerce businesses to have made the list this year!
6. Amazon vs Walmart
Forbes spoke to Alasdair McLean-Foreman, founder and CEO of Teikametrics, about key findings from their Walmart and Amazon Q4 2022 Benchmark Reports to understand advertising trends for each marketplace and how those might impact the way e-commerce brands think about selling on each.
Below are highlights from the conversation:
- Walmart had over 2,000 stores by the time Amazon launched in 1996, but was late to e-commerce, only launching its own marketplace in 2009.
- Walmart launched Walmart+ in 2020 to compete with Prime, also offering in-store and gas benefits.
- It also launched Walmart Fulfillment Services (WFS) to compete with Amazon FBA.
- In 2021 Walmart opened its marketplace to international sellers.
- Brands have learned that being omnichannel is the path forward. It’s not one or the other; it’s both.
- Amazon’s Q4 e-commerce sales were more than Walmart’s for the entire year ($64.53B v. $49.56B).
- 61.8% of Americans cite Amazon as the site they use most often to buy products, while only 8.6% cite Walmart.
- Walmart's e-commerce sales are growing faster than Amazon — 17% growth in Q4 versus Amazon's fell 2%.
- Selling on Walmart’s marketplace also offers the possibility of being invited to sell in Walmart stores — which is overall a bigger business than Amazon.
- Average CPC for ads on Walmart’s marketplace was $0.38, a decrease of 26% YoY, versus $0.85 on Amazon, a slight increase YoY.
- Walmart has around 150k sellers as of 2022, while Amazon eclipsed 2M active sellers the same year.
- Amazon's ad division grew 19% in Q4 while Walmart Connect grew 41% in the US.
- The percentage of high-income households ($150k+) who are members of Walmart+ has increased from 12.7% in February 2022 to 28% in February 2023.
McLean-Foreman ended the interview with this advice, “Walmart won’t overtake Amazon anytime soon, but there are clear trends that are making it an attractive place for brands to invest into over the next few years.”
Is your brand planning to sell on Walmart this year? Why or why not? Hit reply to this e-mail and let me know.
7. Meta is launching Twitter
A spokesperson told the BBC, “We believe there's an opportunity for a separate space where creators and public figures can share timely updates about their interests.”
LOL, like OG Facebook perhaps? Has the platform become so convoluted over the years that even Meta agrees it's better to start from scratch?
Meta's new app is codenamed P92, and will allow users to log in through their existing Instagram credentials and will use existing Instagram data, including names, profile photos, and followers, among other things — which is a huge head start against other rival platforms, as no-one likes starting from scratch with followers.
The app will be based on a decentralized framework similar to the one that powers Mastodon uses. Mastodon belongs to the Fediverse, a network of connected servers that enable web publishing through shared protocols like ActivityPub, which P92 app will support as well, but Bluesky is criticized for not supporting.
Meanwhile, Guy Kawasaki thinks that we don't need another Twitter (or Mastodon or Bluesky). We've already got LinkedIn!
In an interview with Fast Company, the Rich Dad, Poor Dad author said, “Why is everybody going to Mastodon? What am I missing? So you’re going to go to a place that has none of the people you know? I like to say that LinkedIn was standing by the side of the river and a Peking duck flew in its mouth. All it has to do is chew. Because you have 800 million people, most of whom are who they say they are.”
In other Meta news, the company is integrating Messenger back into the Facebook app. The company removed messaging from its mobile app in 2014 and later from its mobile website in 2016, forcing users to download the Messenger app to continue service, but now it's backpedaling to be more like TikTok which offers internal messaging.
8. Other e-commerce news of interest
Meta is pausing its Reels payout program that had been available to all Facebook creators and US-based Instagram creators, but says they may revive it on a “targeted” basis if Reels launches in new markets. It is rumored that the move is in preparation for the rollout of advertising on Reels, which would allow for a more conventional revenue-sharing arrangement with creators. At the same time, the company extended the maximum length of reels up to 90 seconds, from 60 seconds.
Rivian is in talks with Amazon to end exclusivity on their electric delivery van, after Amazon only placed an order for around 10k vans this year. As part of a deal made in 2019, Amazon signed on to purchase 100k vans from the company. Woops!
The German Otto Group, which owns several brands including About You and Bonprix, is disbanding all business operations of MyToys.de by February next year, however the brand will still be offered on Otto's own platform. MyToys was not able to become profitable, despite strategic realignments and high investments.
Speaking of toys, remember Toys R Us – where a kid can be a kid? Ace Turtle, an omnichannel enablement platform in partnership with Flipkart has launched the brand in India via Flipkart, its D2C website, and offline through a brick and mortar store in Hyderabad. Toys R Us in India will sell toys from Barbie, Lego, Hot Wheels, Nerf, Hasbro, Disney and Viacom.
Most organizations that have relied on Twitter API access to conduct research will now be priced out of using the service after the company announced their new API packages — the cheapest being $42k / month which gives access to 50M tweets. Twitter's free API access previously gave researchers access to 1% of all tweets, and now the least expensive package offers around 0.3% of tweets.
Koo, an Indian alternative to Twitter, integrated ChatGPT to help users draft posts. Users can either type their prompts into the ChatGPT tool or use Koo's voice command feature.
Meta is planning multiple rounds of job cuts at the same level as the 13% reduction of its workforce end of last year. The first round of cuts is expected to come this week and will impact Meta's non-engineering workers the hardest.
Coupang, South Korea's largest e-commerce company, will withdraw from Japan, ceasing operations on Mar 21st. The company operated in the black during the two final quarters of 2022.
Loop launched a new app for the Shopify marketplace that compares a merchant's refund rate, top refunded products, time to repeat purchase and other returns data against industry benchmarks. The app brings data together in a single dashboard, defines each metric, gives the merchant's results and compares them to those of similar brands.
Wix announced the appointment of Gavin Patterson and Francesco de Mojana to its Board of Directors. de Mojana will join the Audit Committee and Patterson will join the Compensation Committee.
WhatsApp could be temporarily banned in Britain if it isn't able to adhere to Britain's Online Safety Bill. Meta doesn't want the product’s security to get lowered and are at a standstill with authorities in the UK. Meta is still trying to launch complete encryption by default for its other apps including Messenger and Instagram Direct, which would be impacted by the bill as well.
Yapily, an open banking API, partnered with Zilch, a UK-based BNPL provider, to provide affordable credit solutions to British consumers. WIth the new partnership, Yapily's open banking platform will be leveraged to support the credit decisioning process for Zilch's BNPL loans.
Keith Rabois said that Google and Meta hire thousands of employees to “do fake work” to prevent them from working at other companies. Any of those jobs still open?
Affirm, an American BNPL platform, is calling it quits on the Australian market, a month after laying off 19% of its workforce. E-mails are being sent to active loan holders who will still be required to make payments.
9. Seed rounds, IPOs & acquisitions
Scalapay, an Italy-based BNPL provider, acquired Cabel IP, an Italian provider of payment and collection services, for an undisclosed amount. The acquisition gives Scalapay the ability to offer merchants an integrated payments offer alongside its BNPL product.
APEXX Global, a payments orchestration platform that enables merchants with access to payments services providers, automatic re-routing, and routing flexibility, raised $25M in a Series B round led by MMC Ventures. The company will use the funds to expand in North America and develop its products and technology.
Source, a provider of digital identity verification and fraud solutions, entered a $95M three-year credit facility with JP Morgan, Silicon Valley Bank (uh oh), and KeyBanc Capital Markets. The company will use the line of credit to invest in new solutions, verticals, and strategic acquisitions.
Plus One Robotics, a provider of AI vision software and solutions for robotic parcel handling, raised $50M in a Series C round led by Scale Venture Partners, bringing its total amount raised to almost $100M. The company will use the funds to increase its capacity, scale deployment, and expand its sales and marketing efforts.
Gently, an Indonesian D2C brand for mom and babycare products, raised an undisclosed amount of pre-seed funding from Init 6. The company will use the funds to roll out new products, increase its workforce, and for marketing and product R&D.
Meta is looking to return Kustomer, a business software company that takes conversations from different channels and puts them on a single screen, back to being a standalone company after purchasing it for $1B in 2022. Since the deal closed, the company's revenue flattened while it burned through $200M.
pgEdge, a startup building a distributed database that can be optimized for use at the network edge, raised $9M in a round led by Sands Capital Ventures and GroTech Ventures. The company's tech is making it possible to make copies of databases around the network, which in turn reduces wait times for web pages to load, specifically in the e-commerce space.
SOCi Inc., a marketing platform for multi-location brands, raised $120M in a round led by JMI Equity. The company will use the funds to launch a new line of “Genius products which leverage AI and machine learning models to automate marketing tasks at scale.
Threecolts, a London-based startup that builds software for brands and retailers to manage their Amazon sales channel, raised $90M in a combined Series A and non-disclosed pre-A investment round from Crossbeam Venture Partners, General Global Capital, Stratos and CoVenture. The company is profitable and says that revenues have grown 6x YoY after acquiring more than 22k customers since launch in 2021.
Patchworks, a London-based e-commerce integration provider, raised £4M from Gresham House Ventures, bringing its total amount raised to £8.8M. In November, I reported that the company appointed Jim Herbert, who most recently served as SVP and General Manager EMEA at BigCommerce, as their new CEO.
NX Technologies, which provides a payment management platform and processes digital payments for the automotive industry, raised €11M in a Series A round led by Motive Partners. The platform already captures 60% of the 100 largest car dealership groups and over €4B were processed through its payment platform by the end of last year.
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.
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See you next Monday,
Paul E. Drecksler
PS:I just found out I’m colorblind The diagnosis came out of the purple.