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Before we get into this week's top stories, I wanted to let you know that I'm launching a referral program soon for Shopifreaks to help grow the readership and simultaneously offer you great rewards. Unlike other newsletter referral programs that you might be familiar with, instead of offering Shopifreaks branded merch and apparel that no-one wants (including me, LOL), I'm partnering with companies that offer e-commerce related apps, SaaS products, and digital products to offer the rewards. If your company might be interested in participating in the new rewards program, hit reply to this e-mail and let me know, and I'll provide you with details. It'll be a great way to reach our community of e-commerce professionals.
Now let's get to this week's newsletter because I've got another jam-packed edition for you. This week I cover a few advancements in the world of last mile delivery, backlash from merchants over Mastercard's new BNPL product, and Salesforce's entry into headless commerce.
I also cover stories about major cost cutting measures by companies looking to turn profitable, which unfortunately includes some more layoffs, as well as Matt Mullenweg's frustration with his company's own website editor.
All this and more in this week's 82 Edition of the Shopifreaks newsletter. Thanks for being a subscriber. Feel free to forward this e-mail to your friends in the industry or share the link above to the web archive of this edition.
Stat of the Week
Facebook, Snap, Twitter, and YouTube are estimated to lose $18 billion in revenues this year as a result of Apple’s privacy changes. – According to Lotame
One guess where those ad dollars will eventually end up! If anyone's looking for a benchmark on where Apple's currently $3.7B ad business is headed, here it is.
1. The evolving future of last mile delivery
It's interesting to witness the evolution of last mile delivery happen in front of our eyes. Imagine how future homes, buildings, and cities will be constructed to facilitate our modern delivery demands. Consumers don't just want the convenience of to-go meals, groceries, and Amazon purchases delivered to their door… they want EVERYTHING delivered to their door! And that's going to involve some major logistics and infrastructure changes — especially if we desire to create a greener world.
Here are three milestones in last mile delivery to have been announced this past week:
Meta is partnering with DoorDash to deliver Marketplace items up to 15 miles away, as long as the items fit within the trunk of a car. It's not yet clear how many Marketplace users will have the option for DoorDash deliveries, or how much it'll cost, but both companies confirmed the initiative. The partnership comes just months after DoorDash CEO Tony Xu joined Meta’s board of directors.
So does this mean that now a DoorDash driver will appear at my door to buy the $200 used Galaxy S10 I posted for sale, only to look at it and ask, “Will you take $50?”
Instacart is launching a new OrderUp feature that lets user order from two retailers with one delivery fee. Customers will now see post-checkout recommendations from nearby retailers with a limited time to add items to their existing order. Doing so will create a new order with a separate cart and a waived delivery fee.
So does this mean that Instacart drivers will be doing twice the work for the same amount of pay?
Forgive my sarcastic commentary about each story above. My point of doing so is only to illustrate that there are pros and cons to every convenience. The DoorDash / Meta partnership adds a layer of quality assurance to the exchange that previously existed directly between the buyer and seller on Marketplace. And the value-add of receiving two-for-one Instacart deliveries has a direct cost to drivers — their time. And we all know what time is…
Drivers are not the only party impacted by the growing demand for instantaneous and same day delivery. Cities are also feeling the challenges of e-commerce fulfillment and are having to mitigate its impact on their communities.
Purolator Courier, Canada’s largest carrier, is experimenting with a new distribution concept in Toronto. Last month, it opened a mini retail outlet in a parking lot — a 40ft container where local residents can ship or collect parcels. They are planning a second mini hub on the campus of the University of Tonto's Transportation Research Institute next month to conduct an extensive analysis of its impact.
A recent trial project run by the City of London Corporation in partnership with DHL Supply Chain and Ford Pro suggests that collaboration between local administrations and logistics providers is the way forward.
Think about it this way… what if wireless carriers were never required to obtain licenses to operate or didn't have to share towers? Can you imagine how many MORE wireless towers you'd look at every day on your drive to work? There'd be antennas everywhere! (Some might argue that we'd have more competition, better networks, and more affordable wireless service — but that's a different topic.)
The point is that without government planning and cooperation in the development of our wireless networks, there'd be a lot of wasted resources. We'd have 100 towers in a community serving an area where 10 towers would suffice.
And even though I hate USA's wireless carriers, and it angers me to reference their development in a positive capacity, it was the best example I could think of to illustrate what would inevitably happen without planning and cooperation between last mile delivery services and local municipalities. We'll have 1000 underpaid drivers serving a community where 100 well orchestrated drivers would suffice.
New problems require new solutions, and that's what we're seeing take shape. Finding the perfect balance between convenience, efficiency, cost, and emissions will take time. However if we let the market decide on its own, we all know where the needle would tip. That's why it's important that local governments start thinking now about the future of last mile delivery in their communities and how to best work with their local logistics providers.
What interesting projects or collaborations have you seen in this space? Hit reply and let me know what you think the future of last mile delivery will look like.
2. Mastercard BNPL backlash
Mastercard has been automatically enrolling merchants in its new BNPL program, Mastercard Installments — and there are concerns about this.
Quick backstory: Mastercard first unveiled its BNPL offering last September and has since been partnering with big retailers like Walgreens, American Airlines, and Bass Pro Shops to offer the service — which costs the retailer 3% of the purchase price. For your reference, this is roughly half of what BNPL firms like Affirm or Klarna charge merchants. Now Mastercard has been doing a broader rollout of the service to more retailers.
Here are some of the concerns about Mastercard's auto-enrollment:
- The cost. Although 3% is less than other BNPL providers, it's more than traditional Mastercard fees.
- Exclusivity. Many retailers have already negotiated separate deals with other BNPL providers that limit them from offering competing services to their customers.
- Small purchases. Some retailers have opted-out of the program over worry that their customers taking out installment loans to pay for smaller purchases will later result in the customers becoming dissatisfied for having to pay for a meal or a tank of gas for several months.
I'm curious to learn how banks, lenders, and partner providers feel about the move. The way merchant processing is setup — everyone involved gets a piece of the pie. So for example, if Wells Fargo partners with Mastercard to offer debit or credit cards — both entities get a piece of the transaction fee involved with the swipe. As does the bank of the retailer who swipes the card, and the merchant process who issued the terminal, etc.
When these entities decided to partner up with Mastercard, they had the understanding that this was a mutually beneficial relationship. But what happens when one party involved in the transaction (Mastercard) wants a bigger piece of the pie? What happens when a facilitator becomes a competitor?
When Mastercard partners with Synchrony Financial and Barclays' U.S. card unit to offer BNPL services directly at the terminal, other banks that issued Mastercard credit cards, who previously would've been part of that transaction, are no longer part of it. For example, Capital One partnered with Mastercard because of their wide network and acceptance, but how happy are they when Mastercard bypasses their credit cards to offer their own BNPL products?
If you can speak to those questions above, shoot me an e-mail. I'd love to hear your thoughts.
3. BigCommerce News (Sponsored)
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- Santrel Media explores 10 of the best e-commerce products to sell online for maximum success. They also talk about the reasoning and tools they use to find these ideas for drop shipped, digital, and inventoried products.
- Reminder to register free for the Make it Big Conference, a two-day virtual event on September 13-14, 2022 featuring panels, workshops, and interviews about cryptocurrency, NFTs, Web3, metaverse, headless commerce, and more. Level up your e-commerce knowledge and explore the latest retail trends at BigCommerce's free, virtual conference with speakers including Seth Godin (best selling author), John Mackey (co-founder of Whole Foods Market), Jenny Fleiss (co-founder of Rent the Runway), and other leaders in our industry. I'll see you there!
4. Microsoft joins ONDC
Microsoft has decided to join India's Open Network for Digital Commerce (ONDC), and India hopes that this move will make it harder for Amazon and Walmart to dominate e-commerce in their country.
Microsoft plans to join ONDC through the creation of a shopping app. A company spokesperson described their participation as, “a win-win for both buyers and sellers as it will enable them to connect without dependency on any e-commerce solution.”
Is India correct in thinking that Microsoft will be a threat to Amazon and Walmart? In June, I reported that Microsoft was testing a new retail marketplace in the U.S. via its Bing search engine to compete with Google Shopping, and I criticized the company for its copy-cat attempt at further entering e-commerce.
Microsoft isn't exactly a threat to Amazon, Walmart, Google, or really any other big tech company when it comes to e-commerce in the US, so what exactly makes India think they'll get it right there?
ONDC feels that their joining is a boost for the project and offers it considerable credibility — and I can see that from a technological and development perspective. However, as the article author points out, it's not hard to notice the irony of another tech giant's involvement adding credibility to a project aimed at reducing the influence of big tech!
5. Salesforce unveils its headless commerce solution
Salesforce announced Composable Storefront, a fully-customizable, headless digital storefront made available in a progressive web app (PWA) toolkit. The product includes pre-built packages made specifically for headless implementations and use cases with commerce partners including Contentful, Contentstack and Coveo, as well as integrations across its own ecosystem including content search and delivery.
Headless commerce is a departure from the typical Salesforce low-code approach, but it represents an attempt to make Commerce Cloud more customizable.
Predrag Jakovljevic, analyst at Technology Evaluation Centers, told TechTarget, “Headless is not necessarily about low-code, but rather about not imposing your user interface onto the web designers. Web designers tend to like specific tools and want to stick with them. This way, you sell them the underlying commerce platform — the catalog, promotions, prices, order history, etc. — and let them develop their own UI and presentation layer.”
PWAs are a common way to deploy custom, browser-based headless commerce sites because they don't require separate versions for different mobile operating systems. Most of the longtime e-commerce vendors take this route to headless commerce deployment, and Salesforce did not veer from the herd.
Pricing for Salesforce's headless commerce features is based on gross value of merchandise sold on the platform, as well as subscriptions to various Salesforce cloud tools and APIs the merchant uses.
6. Everyone's cost cutting, and Wix is no exception
Between the recent surge of layoffs, venture capital dry-up, and acquisition slow-down, companies in our industry have been looking to cut costs wherever possible — and Wix is no exception. The company has begun implementing cost reduction measures in hopes to achieve $150M in annualized savings.
Wix said in its Q2 report that these savings are not one-time in nature and will continue to be realized in the future, with the ultimate goal of achieving free cash flow targets set by the company earlier this year.
Most of the savings will come from the company's efforts to “right-size the workforce” (which sounds like a fancy way of saying “laying off people”), hiring people in the future to perform multiple functions, and reducing operating expenses. Wix has already decreased its workforce by 3.6% this year.
Avishai Abrahami, Wix Co-founder and CEO, told TechRadar, “Despite the current macroeconomic environment, we are focused on what is under our control — driving operational efficiencies to accelerate our path to profitability while continuing to execute on growth initiatives, such as launching the new Wix Editor this quarter.”
Overall, Wix’s total revenue in the second quarter of 2022 was $345.2M, up 9% YoY.
Lior Shemesh, CFO at Wix, said that the cost savings would continue even if market conditions were to improve next year.
7. Matt Mullenweg criticizes Gutenberg Block Editor
Matt Mullenweg, creator of WordPress, criticized how long it took for the company to create two pages using their own Gutenberg Block Editor.
He wrote, “It's such a basic layout, it's hard to imagine it taking a single person more than a day on Squarespace, Wix, Webflow, or one of the WP page builders.”
In July, an Automattic employee announced the kickoff of a redesign of the WordPress.org homepage and download page, with the proposal of doing it using WordPress's own block editor, in an effort to showcase its capabilities.
After over a month in development, Mullenweg said, “This is not a good use of time, nor does it further the actual goals of a new homepage or download page, and we have better places to spend our development time.”
He also criticized how long it took the company to recently redesign the WordPress News page, saying that it took a “criminally long time” to complete. “This should take a week or two to launch, not months, and the most interesting part will be the stats and feedback after launch, and any subsequent iterations we make from there, not a long process before.”
The responses to his criticism were mixed. Personally, I say, “Welcome to my world!!” I've absolutely hated the Gutenberg Block Editor since its release in 2018. I find it cumbersome to use, and I hate things that slow me down. Ever since it became the default editor for WordPress, I've switched and kept the Classic Editor enabled for editing posts.
I use WordPress to power most of my non-ecommerce client sites and for many of my own sites including Shopifreaks.com, TravelisLife.org, and IdeasFocused.com — (nice organic plug, eh?) — so I'm no newbie to WordPress. It's funny to see the company's creator broadcasting the frustration that his whole community has endured for the past 5 years.
For those of you who have used other web builders, do you agree with Matt? Or are you Pro Gutenberg?
8. Walmart embraces the dark side with BNPL promotion
Walmart is rewarding Affirm users with a free trial of Walmart+ during the month of August. Eligible consumers who spend more than $300 on a single purchase with Affirm's BNPL payment option at Walmart, either in-store or online, will receive a free 90-day Walmart+ membership, which normally costs $12.95/month.
If you're unfamiliar with Walmart Prime, oops, I mean Walmart+, members receive benefits like free shipping with no order minimum, free delivery from stores, and discounted gas prices.
And what do existing members of Walmart+ receive for making purchases with Affirm? Well, nothing, because companies only care about onboarding new subscribers and not about keeping their existing ones happy.
Walmart and Affirm have been partners since February 2019, when the retailer began allowing customers to use Affirm to make installment payments at over 4,000 stores nationwide, as well as on their website. Since then, Walmart replaced its layaway program with installment payments from Affirm on purchases from $144 to $2,000.
Speaking of mutually beneficial partnerships, Walmart has also been having discussions with major media companies like Paramount, Disney, and Comcast about bundling streaming entertainment into its subscription offering. Adding a streaming perk would push Walmart+ closer to a multi-benefit bundled subscription like Amazon Prime, rather than simply a membership with shipping benefits.
btw – I was recently looking back at which authors and publications I've referenced the most in Shopifreaks over the past year and a half, and Dan Berthiaume is one of my top featured authors. (See his story above about Walmart+ and Affirm.) Dan is the Senior Editor Technology at Chain Store Age and a recognized expert on retail technology, having covered the space since 1999. He always puts out well-researched and top notch content, and I appreciate his work in our industry. Give him a follow on Twitter @DBerthiaumeCSA.
9. Other e-commerce news of interest this week
- The FTC referred to data brokering as “commercial surveillance” and announced that it will be exploring whether to crack down on big tech's data gathering practices, including gathering comments from stakeholders, trade groups, digital privacy experts, and former regulators. The agency is hosting an online public forum Sep 8 from 2-7:30pm EST to build a public record meant to inform their future actions.
- eBay and Etsy charge sellers a commission fee on shipping above and beyond payment-processing charges, resulting in a “shipping tax” when carriers raise fees during the holidays. EcommerceBytes explains how the companies would earn extra (at the cost of sellers) for every package shipped using USPS during the holidays.
- The headless commerce platform, fabric, appointed Sandra Campos to its Board of Directors. Campos most recently served as CEO of Diane von Furstenberg, Co-President of Women's Apparel Group at Centric Brands, as well as in other leadership roles in the industry.
- Shoppable released Instant Shop in a beta launch, a tool that lets creators monetize their online presence with a personalized e-commerce shop, curating products from eligible brands and retailers. Shoppers can buy multiple products from multiple retailers in one single transaction. I love the concept! I will probably create an Instant Shop to try it out. I'll let you know what I think.
- Citigroup was hit with a proposed class action lawsuit alleging that they caused $70M in trading losses earlier this year after botching large trade orders involving shares of Shopify and Colgate-Palmolive. The complaint says that Citigroup should have never executed several large stock orders in March since “any reasonable analysis of liquidity and imbalance data” would have revealed that the full quantity of the orders would affect the stock price.
- Shogun, known for its low-code Shopify page builders, is laying off 30% of its workforce, or about 48 people. Employee posts on LinkedIn indicate that there is corporate restructuring that is affecting their design team and technical workers.
- Wix is integrating Google’s URL Inspection API, which was launched in January, directly into their new Wix Site Inspection Tool. This will allow users to view insights about how Google is indexing their site and debug technical issues directly from their Wix dashboard.
- QuickBooks launched a new B2B marketplace called Trada that connects retailers with brands and wholesale sellers. The platform is geared toward small businesses and looks like a cross between Etsy and Amazon. Through the end of 2022, Trada will include free shipping for retailers and zero commissions for sellers.
- Amazon partnered with mental health company Ginger to offer behavioral health options through Amazon Care. Patients can use Ginger to connect with behavioral health coaches, licensed therapists, and psychiatrists. A few weeks ago I reported on Amazon's acquisition of One Medical, a US chain of primary care clinics.
- WIN.IT America, Inc, the US branch of the Hong Kong-based e-commerce company, must pay warehouse workers in Kentucky and California more than $1M in back wages, according to The Department of Labor. An investigation found that the company failed to include merit-based bonuses in employees' regular rates of pay when calculating overtime rates, which goes against requirements under the Fair Labor Standards Act.
- Doritos will be selling its new Classic Ketchup and Spicy Mustard chip flavors exclusively online in its latest e-commerce play. The company wrote on an IG post, “We better start seeing some hotdogs with Doritos on them now that these are out on Snacks.com.” Smart way to send people to your e-commerce shop!
- Marketforce, a Kenyan B2B e-commerce platform, cut 9% of its staff, or 54 people, as part of a reorganization strategy. The layoffs were mainly from field sales, supply chain, and customer experience departments.
- Papmall, a B2B e-commerce platform, is expanding its model and delivery locations, as well as adding BNPL and crypto payments. The company also announced plans to create customizable apps that can let sellers and buyers optimize their purchasing experiences.
10. This week in seed rounds, IPOs, & acquisitions….
- ReturnLogic, the maker of a platform that organizes return workflows and operations for e-commerce retailers, raised $8.5M in a Series A round led by Mercury. The company, which currently employees 34, will use the funds to continue growing this year, which they think will be likely as retailers feel additional pressure to create savings through process and automation.
- Forage, a San Francisco-based fintech platform that makes online groceries accessible to SNAP EBT recipients, raised $22M from Instacart founder Apoorva Mehta, PayPal Ventures, and Nyca Partners. The company will use the funds to accelerate hiring and to further develop its product.
- Ohsogo, a Bangladesh-based skincare e-commerce startup which caters to a curated assortment of international brands, raised $8M from Believe Pte. Ohsogo is already ranked number two among beauty and skincare e-commerce players in the country.
- Gorgias, a company that develops customer service tools for e-commerce companies, raised $30M in a Series C round led by Shopify and Transpose Platform, at a $710M valuation, bringing its total amount raised to $72.4M. The company works with over 10k online stores and has grown to 245 employees and will use the funding to accelerate development of its Automation Add-on feature, which provides customers with instant answers (like an FAQ page? LOL).
- Take App, a Singaporean startup that helps merchants sell via WhatsApp, received an undisclosed investment from Meta. The startup was founded by former Facebook engineering manager, Youmin Kim, who left the social network last year to work on this new product intended to bridge the digital gap for small business owners in SEA.
- Boxme, a Vietnam-based e-commerce logistics startup, raised $6.4M in a round led by NextTech Group and Ngan Luong. The company will use the funds to expand the scale of fulfillment centers in Vietnam.
- Society Pass, a Vietnam-based loyalty and e-commerce firm, acquired NusaTrip, a Jakarta-based Online Travel Agency serving Indonesia and SEA, for an undisclosed amount. The acquisition extends Society Pass's reach into the SEA regional travel industry and marks its entrance into Indonesia.
- Pastel, a Nigerian bookkeeping and digital platform for merchants in sub-Saharan Africa that allows small businesses to monitor and manage their transactions and customers, get insights into cashflows, issue receipts, and manage customer debts, raised $5.5M in a seed round led by TLcom Capital. The funding will be used to expand its product offerings and develop more productivity and finance management features and tools around group savings, loans, and payments for small businesses.
- Shopic, a startup that sells clip-on touchscreen hardware for shopping carts that identify items to display promotions while acting as a self-service checkout window, raised $35M in a Series B round led by Qualcomm Ventures, at an undisclosed valuation estimated to be in the hundreds of millions of dollars, bringing its total amount raised to $56M. The company plans to expand the amount of data it collects by introducing side-facing, shelf-capturing cameras on the device. It also plans to focus on customer acquisition, while expanding its headcount.
- ConvertedIn, an Egyptian startup that operates a marketing operating system for e-commerce brands, raised $3M in a seed round led by Merak Capital. The software plugs into more than 10 major e-commerce platforms and ad networks and the company partners with media buying and advertising agencies as well as 100 local brands across Africa, Middle East, and South America.
- Edamama, a Filipino e-commerce platform designed for mothers, raised $20M in a Series A round led by Alpha JWC Ventures. Last year I reported on their $5M pre-series A round. The funds will be used to fuel expansion, including same-day and next-day delivery options in Metro Manila, and to enhance the company's content and community elements, launch its own offline stores, and scale its private label portfolio.
- Vista Equity Partners has entered into an agreement to acquire Avalara, a global sales tax software specialist, at $93.50 per share in an all-cash deal worth $8.4B. The company will continue to operate under the Avalara name and brand, with few immediate changes to be made.
- CleverTap, a SaaS platform that leverages AI and machine learning to help brands build long-term relationships with their customers, raised $105M in a Series D round led by CDPQ. Brands can use the platform to perform user analytics, understand user journeys across channels, engage with customers in personalized ways, and enhance the customer experience.
UPDATE: Text to buy
Last week I reported on Attentive's announcement about the launch of a text-to-buy solution with Shop Pay, which enables consumers to make purchases directly from an SMS conversation.
Klaviyo & Yotpo/SMSBump announced it as coming soon while Emotive has a landing page but didn’t make a formal announcement.
Thank you Mindy from Postscript for providing me with the additional info above.
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: Did you hear about the new cloud storage service called Titanic? It's currently syncing.