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#131 – Temu vs Shein, AI Site Generators, & FedNow

by | Jul 24, 2023 | Recent Newsletters

I'll share something personal with you before we begin this week's edition… I'm obsessed with creating a great newsletter!

Each week, as I begin to look back at all the e-commerce news I've compiled during the previous seven days, I experience the same fear — that this week's edition won't be interesting enough!

I do understand that I can't control the news, and that inevitably some weeks will offer more mind blowing stories than others, but regardless of that understanding, I feel a tremendous responsibility to make each edition as interesting, informative, and entertaining as the last one. And I hope that I've been able to do that for you!

This week I've got stories for you about AI website generators and payment networks that are about to disrupt the entire industry.

I also cover TikTok and WooCommerce's partnership, Temu's lawsuit against Shein, and Walmart's new “employee discount.” (That joke will make more sense in Story #4.)

All this and more in this week's 131st Edition of Shopifreaks. Thanks for subscribing and sharing!

Stat of the Week 📈

The number of daily active Threads users dropped over 70% from its peak the first week, now standing at 13M. Users now spend only 10 minutes a day on the app, compared to the initial 20 minutes. – According to WSJ

Share this week's stat on X & LinkedIn.

1. Wix's new AI website builder

Wix announced plans to launch an AI website builder, and even Larry David would admit that it's pretty, pretty, pretty, pretty good!

Wix's AI Site Generator, powered by ChatGPT, can generate a complete website, including text, images, and a unique site design in a matter of seconds after receiving basic prompt inputs from the user.

The AI generated website comes complete with a homepage and all inner pages with text and images, and it can integrate Wix's other business solutions like Stores, Bookings, Restaurants, Events and more.

After the site generator spits out a first draft, users can continue to customize the site with additional text prompts, including changing the design and layout, generating unique AI images, writing product descriptions, removing backgrounds from photos, creating product recommendations, and more. 

Eventually, once AI takes you as far as it can, users can customize and edit the site even further using Wix's traditional site editor.

Other AI features coming soon from Wix include: 

  • AI Assistant Tool for Managing your Business will suggest improvements for businesses and create individualized strategies based on analytics and site trends.
  • AI Page and Section Creator will enable users to quickly add a new page or section to a website by describing their needs, and AI will generate the layout, design and text.
  • Object Eraser enables users to seamlessly extract subjects from images and manipulate them.

Avishai Abrahami, cofounder and CEO of Wix, said, “We’re on the edge of something truly amazing, and we will keep advancing our offerings as AI technology progresses to enable users to grow their businesses and have success with more efficiency and creativity than ever before.”

And like Larry David said, it's pretty, pretty, pretty good! Check out this video preview of the AI Site Generator in action. 

What are your thoughts on AI generated website builders? Game changer or not quite? Hit reply and let me know, or join the convo on my LinkedIn post.

2. WooCommerce & TikTok partner up

TikTok invited WooCommerce shop owners in the U.S. to a new program that allows merchants to sell their products directly on the app via TikTok Shop.

The new Beta program gives WooCommerce store owners access to TikTok's audience of over 150M users, of which TikTok says 61% engage in e-commerce behavior. 

By participating in the program, WooCommerce merchants get to be early adopters to TikTok Shop before it formally opens to merchants on other platforms. 

There are currently no minimums or maximum inventory limits to the amount of products that can be added by merchants to their TikTok Shops.

This isn't the first time the two companies have teamed up.

WooCommerce and TikTok had an existing relationship via the TikTok for WooCommerce ad platform plugin that launched in May 2022, and more recently, WooCommerce launched support for TikTok Smart Performance Campaigns.

TikTok Shop expands on that relationship by enabling merchants to bring their entire inventories into TikTok to sell directly on the platform.

Unlike TikTok Storefronts for Shopify, which syncs products with TikTok for display and then directs the customer to the merchant's Shopify store to complete the transaction, the new WooCommerce / TikTok Shops integration handles the actual transaction within the TikTok app, of which TikTok takes a small cut.

In June, I reported that TikTok is testing a new shopping section in the U.K. called Trendy Beat where it offers products for sale that are shipped and sold by its parent company, ByteDance.

At the time, TikTok made it clear that Trendy Beat was currently NOT being tested in the U.S. because it was focusing on adding new merchants to its TikTok Shop offering. 

Last week I reported that TikTok is experimenting with a new way to integrate TikTok Shops into the app via a Shop tab adjacent to the Following and For You tabs.

The new Shop tab, which is side swipeable from the main screen, displays the home screen of TikTok Shop, which looks similar to the homepage of Amazon or Temu.

3. FedNow is live! Adios ACH?

The U.S. government officially launched FedNow, its new instant payment system that'll serve as a faster payment rail for financial institutions. The service went live last week.

54 financial institutions and service providers are already participating, and banks and credit unions of all sizes are now welcome to sign up and use the tool.

Unlike its predecessors, FedNow offers instant transfer and immediate access to funds 24/7, as opposed to having to wait several business days for funds to clear.

This type of real time payment transfer could theoretically allow employees to get paid immediately and reduce the need for workers to rely on payday loans to make ends meet.

Other use cases include peer to peer payments (which are coming soon), and the ability for customers to pay merchants directly, allowing them to bypass expensive credit card processing fees.

Industry experts are optimistic about the new service, but note that creating a new rail system is a slow process. The vast majority of dollars still flow through the antiquated Automated Clearing House (ACH) network, which launched in the 1960s.

U.S. FTA President and CEO Penny Lee said in a statement, “FedNow means more consumers and businesses can send and receive payments in seconds instead of days through their financial institutions. Instant payments will provide additional options for consumers to pay bills on time, access their paychecks more quickly, and avoid overdraft fees and predatory lenders. It will also help businesses better manage expenses, decrease errors, and reduce costs.”

Other countries have offered similar services for some time including India, the UK, EU, and Brazil, where the country's system, Pix, is so commonplace that shoppers even use it to over credit cards to pay street vendors.

4. Now offering 50% off Walmart+

Walmart is offering a 50% discount on its Walmart+ membership program to U.S. customers who receive food stamps or other government assistance.

Through the new Walmart+ Assist program, qualifying government assistance recipients can get Walmart+ memberships for as little as $6.47/month or $49/year. 

Existing members who qualify and sign up will receive a prorated refund on membership periods they've already paid for, and the new price will start immediately.

The company wrote in a statement, “We at Walmart+ believe that everyone should be able to enjoy all the ways a Walmart+ membership helps them save time and money, with benefits like free shipping and grocery delivery, nationwide gas discounts and video streaming with Paramount+ at no extra cost.”

Walmart also noted that it was one of the first retailers to begin taking part in the USDA's SNAP Online Purchase pilot program in 2019, which allows customers to pay online with their SNAP benefits.

Nice, but…

While admirable to offer the 50% off discount, maybe they should've called it an “Employee Discount”, given that Walmart is one of the top four largest employers in the nation of SNAP and Medicaid recipients.

The move is not completely altruistic either, as more Walmart+ members (no matter what they pay for the service) equates to higher customer retention and revenue.

Walmart has been aggressively trying to onboard more customers to its Walmart+ membership this past year:

  • Walmart held its first Walmart+ Week earlier this month, which overlapped with Prime Days, offering member-only deals for the first 24 hours.
  • Walmart partnered with Pawp, a veterinary telehealth provider, to offer Walmart+ subscribers free access to virtual veterinarians for a year.
  • In partnership with the Pampers Hospital Gift Program, Walmart gave away 20,000 Walmart+ memberships to mothers who give birth to children in May.
  • Walmart and Affirm ran a promotion to offer free 90-day Walmart+ memberships if you spent $300 or more on a single purchase with Affirm.
  • Walmart introduced a cashback digital rewards program for Walmart+ members.
  • Walmart began offering Paramount+ at no extra cost to Walmart+ members.

Amazon has offered a similar discount on its Prime membership since 2017, allowing low-income households that qualify for government assistance to subscribe for $6.99 per month, instead of the full $14.99 per month. Walmart introduced Walmart+ in Sep 2020.

5. Temu sues Shein

Temu is suing Shein in the U.S., alleging that the retailer engages in at least four strategies to stifle competition. 

If Shein responds to the allegations in the next 23hrs 57mins 36 sec, Temu will accuse the company of a fifth strategy! Plus click here to spin the wheel and win a sixth accusation.

Alright, enough of my Temu jokes and back to the story…

The lawsuit alleges that Shein violated antitrust laws by using threats and intimidation to block clothing manufacturers from working with its company.

Shein entered the U.S. market in 2017 and has since grabbed more than 75% of the “ultra fast-fashion market” — a category it practically created. 

When Temu entered the U.S. in Nov 2022, Shein responded by forcing clothing manufacturers into supply agreements that excluded Temu, the suit alleges.

In other words, Shein said, “If you want to manufacture for us, you can't also sell to Temu.”

Temu’s complaint, filed July 14 with the U.S. District Court for the District of Massachusetts, reads, “Shein has engaged in a campaign of threats, intimidation, false assertions of infringement, and attempts to impose baseless punitive fines and has forced exclusive dealing arrangements on clothing manufacturers.”

They continue to say, “Shein has required all of the approximately 8,338 manufacturers supplying or selling on the Shein Platform to execute Exclusive-Dealing Agreements, which prevent those manufacturers from offering products on the Temu Platform or supplying products to sellers on the Temu Platform.”

The 8,000-plus manufacturers that supply Shein represent 70% to 80% of the total number of merchants capable of supplying ultra-fast fashion, and Temu said that merchants have pulled more than 10k listings from its platform as a result of Shein's anti-competitive actions.

Temu can't afford too many bumps in its road towards U.S. domination.

In June I reported that Temu is losing an average of $30 per order, and currently losing between $588M and $954M a year as it throws money at trying to break into the American market.

Temu's prices are so low, Amazon basically said, “Temu doesn't count” when it comes to its fair pricing policy, because Amazon simply can't compete against it on pricing. 

6. Chinese TikTokers eye Western consumers

Chinese livestreamers are setting their sights on TikTok shoppers in the U.S. and Europe, selling everything from bags and apparel to crystals and cosmetics. 

Livestream e-commerce is huge in China. It's forecast to reach 4.9 trillion yuan ($676B) by year's end, with popular hosts like “Lipstick King” Austin Li racking up tens of millions of dollars in sales during a single livestream. 

(See Story #3 from my 76th Edition for a recap of how popular livestream commerce is in China.)

However with over 600M live streamers in the country, the market has become super saturated, and now popular livestreamers are looking to expand their reach to the US. and E.U. markets.

For example, one livestreamer by the name of Oreo Deng sells jewelry to U.S. customers by livestreaming on TikTok in English for up to six hours a day!

But are Western consumers ready for livestream commerce?

U.S. tech companies don't know, and can't quite figure out their relationship with livestream commerce.

  • Facebook shut down its livestream feature in August last year.
  • Instagram killed it in March this year. 
  • YouTube shut down Simsim in March 2022, the live social commerce app it bought for $70M less than two years earlier, and then a few months later expanded its own livestream shopping in partnership with Shopify.
  • Twitter and Walmart did some pilot tests of livestream shopping a couple years ago, but no-one knows what's going on with Twitter, or X now, anymore.
  • TikTok, although it's been back and forth about it, is the only major social media platform making any strides with livestream commerce in the U.S., which is why Chinese creators are flocking to it to sell their wares. Not to mention the fact that they can price items higher in the U.S., where customers are accustomed to paying higher prices compared to in China.

Will livestream commerce take off in the U.S. the way it has in China? And will Chinese influencers be the ones to bring it here? Hit reply and let me know your thoughts. 

7. Amazon to phase out plastic mailers

According to the company's 2022 sustainability report released last week, Amazon is planning to eliminate plastic in its mailer bags as part of an effort to cut down on waste, decarbonize, and improve overall sustainability.

The report says that the company is “phasing out padded bags containing plastics in favor of recyclable alternatives.”

In December 2022, I reported that while Amazon said it produced only 214M of plastic waste in the year prior, the nonprofit group Oceana said it actually produced three times as much. 

Oceana’s senior VP for strategic initiatives said that Amazon's low estimate is because it only accounted for plastic packaging used for orders sent through Amazon-owned and operated fulfillment centers, which account for a fraction of Amazon’s total sales, whereas Oceana's estimate considered all sales facilitated by Amazon.

A couple weeks later, Bloomberg revealed that India may be bringing in as much as 500,000 tons of plastic waste hidden within paper shipments each year, a lot of which come from Amazon mailers.

Monkey see, monkey do (but in a good way this time).

Last month I reported that Walmart announced its initiatives to reduce its use of plastic in its online business and reduce waste, which included replacing nearly all its plastic mailers with paper mailers and “rightsizing” its cardbox packaging. 

When it comes to the environment and creating sustainable business practices, I'm happy to see major retailers “copy” each other!

So keep up the good work in this area, Walmart and Amazon both.

8. BNPL app downloads on the decline, but usage up

According to a report published by Bank of America Securities analysts, BNPL app downloads are on the decline globally. From the report:

  • Total BNPL app downloads fell 19% to 5.51M in the US during Q2, compared to one year ago, marking the third consecutive quarter of YoY decline.
  • Average daily BNPL app downloads globally declined 22.8% YoY to about 104,000.
  • Affirm downloads fell 5.7%.
  • Klarna downloads fell 38.1%.
  • Afterpay (owned by Block) was the only BNPL provider to experience growth, increasing 9.2%.

However unfortunately, despite declines in app downloads, the number of monthly active users is still growing for BNPL providers in both the U.S. and globally. BNPL firms are seeing more growth from repeat users than newcomers. 

In regards to monthly active users:

  • Affirm increased by 27.3%
  • Afterpay was up 17.7%
  • Klarna saw a 12.5% increase
  • Sezzle increased by 10%

In other BNPL news… around one in ten BNPL loans now carry an interest rate, with some as high as 36.99%, making certain loans more expensive than credit card financing. 

The Consumer Financial Protection Bureau is expected to issue official regulations addressing the BNPL sector, but the agency has not stated when those rules would come.

9. Other e-commerce news of interest

Barbie scalpers are flooding eBay with limited edition Barbie merch at over 300% markup, after the new movie hit $155M in box office sales its first three days in theaters, the highest opening of 2023. Items such as the limited edition, bright pink, Barbie-branded cup that is exclusive to Cinemark and sold on its website last week for $19.99, was selling for up to $85 on eBay. 


Twitter is officially rebranded to X with the classic bird logo being replaced by an “interim X logo” that went live last night. Elon Musk e-mailed employees about the change, which he said was the last time he would e-mail from a Twitter address. The company projected a big X across its headquarters in San Francisco last night to commemorate the occasion. 


TikTok is now letting users post written content as a way to give “the written creativity we've seen in comments, captions, and videos a dedicated space to shine.” The text-based posts look similar to Instagram stories in that they can be shared with music, sounds, stickers, and a location. They can also be duetted and reposted like videos.

Gross, I don't want to read posts on TikTok. Stick to video! Does all social media have to be the same now? Or can we go back to the days of doing some things on some apps and other things on other apps?


OpenStore launched Gumdrop, a new app for creators to find and discover brand collabs within the OpenStore ecosystem. IG and TikTok creators can choose from 10-20 pre-approved collabs each week from more than 10k products across beauty and skincare, apparel, tech, and more.


Etsy is inflating prices of certain items on its product results pages, in what sellers are speculating is the platform testing a new AI pricing research tool. Sellers are not happy about the pricing discrepancies, which were first spotted in May, as they can affect click-through rates and subsequently sales.


An anonymous former Shopify employee has broken their NDA to share that the company has been quietly firing their global customer service team across U.S., Canada, and Ireland and is about to replace them with AI chatbots. The tweet series details how Shopify has been aggressively embracing AI technology, using it for various purposes like generating product descriptions, creating virtual sidekicks, and developing a new help center AI agent that's still in beta. Is this considered “whistleblowing” or did literally everyone already know this?


Amazon is asking some corporate workers to relocate cities as part of its return-to-office policy, which mandates workers be in the office three days a week. Amazon did not disclose the number of employees that will be required to relocate, but did note that it will provide relocation benefits to workers who are asked to move.


Hackers are conducting a widespread exploitation of the WooCommerce Payments plugin, which is used on over 600k websites, to gain privileges of administrators on vulnerable WordPress installations. Wordfence warned that large-scale attacks began last week, peaking at 1.3M attacks against 157k sites on Saturday.


Non-U.S. eBay sellers are reporting that eBay is restricted their selling privileges in the U.S. and Canada this month, and holding their funds, prior to a new shipping performance policy set to go into effect today (July 24th). The new shipping policy will track the number of Item Not Received cases for every seller, which if grow too high, can restrict the account. Given that sellers are being restricted already, it appears that eBay is retroactively enforcing the policy, as opposed to starting sellers with a clean slate.


India's government in collaboration with NSE Academy Ltd launched ONDC Academy to provide video lessons to sellers about managing their operations effectively on the network. Citing an example, Joint Secretary in the DPIIT Sanjiv said that a villager without any knowledge of e-commerce can learn how to make a seller app to aggregate all sellers from a nearby marketplace and make those products available online. Has Sanjiv ever worked with a villager without any knowledge of e-commerce? LOL because those better be some pretty comprehensive lessons!


The Iranian government shut down the Tehran office of Digikala, one of the country's largest e-commerce companies, after it allegedly published pictures online showing female employees without headscarves. Digikala's website remains operational, however, Iran's judiciary filed a court case over the incident as part of a renewed effort by the Faraja (aka: Iran's morality police) to enforce an Islamic dress code.


ByteDance's social media app, Lemon8, which reached the top 10 most downloaded apps in March after it launched in the U.S., and was described as a cross between Pinterest and Instagram, is flopping in the U.S., with users complaining that the app feels inorganic and curated, and prioritizes the needs of influencers over users. Since April, the app's daily active users have nearly halved from 11,930 to 6,360, and by the end of May, daily downloads fell to 6.7% of its March peak.


ChatGPT has also seen a decline in users since its launch in November, albeit not as steep as the Lemon8 or Threads declines! The number of people visiting ChatGPT's website and downloading its app fell for the first time since its launch in November by 9.7% in June from the previous month. To be fair though, a million ChatGPT-powered apps have hit the market recently, which may result in less people directly visiting the website or app, but more folks indirectly using the service. 


Block is suing Visa and Mastercard for allegedly using their market dominance to fix prices, avoid competition, and protect their market power. Among other allegations, Block alleges that Visa and Mastercard's “Honor All Cards” rules, which requires merchants to accept all of its products if they accept one, “constitute agreements among the banks to not compete for merchants' acceptance of their general purpose cards.”


TikTok Shop will soon offer a BNPL service in Malaysia in partnership with Atome, as part of its e-commerce push into Southeast Asia. The partnership will allow customers to spread payments over three or six month and help the platform better compete with Shopee and Lazada.


Orium launched a collection of masterclasses on Composable.com that are led by industry experts from commerce tools, Elastic Path, Google Cloud, and Vercel. The courses are free of charge and designed to provide real world insights on common topics associated with composable architecture.


Lowe's expanded its same-day delivery service nationwide for online orders in partnership with OneRail, an omnichannel fulfillment company. Eligible orders placed by 2pm local time will be delivered same day, with Lowe's 1,700 stores to serve as online fulfillment and delivery resources for the service.


The White House announced a new cybersecurity labeling program that aims to easily let consumers see which Internet of Things devices have an acceptable level of security protection against cyber attacks. The new U.S. Cyber Trust Mark will be applied to products that meet the requirements, and an accompanying QR code will let the user scan to see details about the device's security, including whether there are any updates or patches available.


Video footage recorded from Amazon's Netradyne Driveri camera system is leaking on Reddit, sparking concerns about the privacy of delivery drivers who are being video and audio monitored for their entire shifts. Is Amazon even legally allowed to monitor “drivers delivering for Amazon” like that? (See story #7 from edition #126.) Similar surveillance systems were a bargaining point in the negotiations between UPS and the Teamsters trade union earlier this month, with UPS now tentatively agreeing to shut off its in-vehicle cameras.


ESW, an Irish-based e-commerce company formerly known as eShopWorld, appointed Eric Eichmann as CEO, who most recently served as the CEO of Spark Networks and prior to that as CEO of Criteo. Founder and current CEO, Tommy Kelly, will assume the role of co-chairman alongside Marc Pontet, CEO at Asendia, ESW's former owner.


8000 authors including Margaret Atwood, Viet Thanh Nguyen, and Philip Pullman, signed a petition calling for AI companies to stop using their work without consent or credit, via an open letter set up by the Authors Guild. Two weeks ago I reported that Sarah Silverman, Christopher Golden, and Richard Kadrey are suing OpenAI and Meta for training their AI models on their works without their consent.


Speaking of AI… Last week OpenAI, Alphabet, Meta, Amazon and other tech companies made a pledge with the White House to develop a watermarking system that can be applied to AI generated content, including text, images, audio, and videos. Does that mean an Amazon product description might say “Generated with AI” in the future? The move is keeping inline with EU lawmakers, who in June reached an agreement on draft rules that require companies to disclose AI-generated content, distinguish deep-fake images from real ones, and implement safeguards against illegal content.


Ad spending across Twitter's top 10 ad categories are down 71% through the first six months of 2023 compared to the same period last year. Insurance is down 96%, followed by tech companies (-92%), online games (-85%), and digital currencies (-78%), with major advertisers like Progressive, Crypto.com, and Pernod-Ricard having cut their ad spend completely, followed by Coca-Cola (-99%) and AT&T (-96%).


Telegram (800M) has surpassed Pinterest (463M), Snapchat (750M), and Twitter (564M) in regards to its monthly active users. At the top of the monthly active user list is Facebook (2.98B), YouTube (2.5B), WhatsApp (2B), and Instagram (2B). And farther down on the list you've got Meta's new Threads app with 200M 175M 130M 68M 24M 13M daily active users…

10. Seed rounds, IPOs, & acquisitions

Polar Analytics, a platform that offers access to data from all your Shopify apps in one place, raised $9M in a Series A round led by Point Nine, bringing its total amount raised to $10.5M. The company will use the funds to hire engineers and product designers to add to its team of 30, while expanding its integrations with Shopify to ingest more first-party data. 


Ecommerce One, a Germany-based software company platform, acquired Makaira, an e-commerce marketing suite provider, and Marmalade, an e-commerce consultancy, two companies founded and operated by Joscha Krug, who will remain at both and become a minority shareholder in Ecommerce One. The two Germany companies join recent acquisitions DreamRobot and Gambio, which Ecommerce One bought in 2022.


Styched, a New Delhi-based e-commerce fashion brand, acquired Flatheads, a D2C casual sneaker startup. Styched will take charge of the company's operations and hire aggressively to strengthen the footwear department within its brand.


Alibaba Group injected $845M into Lazada, its online retail business serving Southeast Asia, which is facing intensifying competition from Shopee and Amazon, bringing the total that Alibaba has invested into the business to several billion since it gained control of the company in 2016. Last year Alibaba discussed raising $1B for Lazada, but called off negotiations with investors after a disagreement over its valuation. Now it's injected the additional funds itself. 


Musinsa, a Seoul-based fashion marketplace that offers over 8,000 local and foreign fashion brands, raised $190M in a Series C round led by KKR, at a $2.76B valuation. The company will use the funds to scale its online and offline business, expand into overseas markets, hire additional staff, and make acquisitions to diversify its portfolio.


Kasha, a digital retail and last-mile distribution platform for pharmaceuticals that focuses on African women's healthcare needs, raised $21M in a Series B lead by Knife Capital, bringing its total amount raised to $26.1M. The startup works directly with manufacturers and suppliers to ensure its products are authentic, and distributes them through its network of consumers, resellers, and clinics.


Whop, a marketplace for people to sell access to digital products that attempts to differentiate itself through its selling experience and product discovery engine, raised $17M in a Series A round led by Insight Partners, valuing the startup at over $100M. Sellers get a dashboard with promotional tools, a CRM, and analytics, while buyers are offered a recommendation algorithm, visualizations for discovering new products, an da portal for managing their purchases.

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See you next Monday,

PAUL

Paul E. Drecksler
www.shopifreaks.com
[email protected]
LinkedIn | Reddit

PS: Nobody wants to buy my boat. I may need to work on my sails pitch.

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