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#129 – Threads, Lawsuits, and Acquisition Predictions

by | Jul 10, 2023 | Recent Newsletters

Historically 4th of July week has been a slow time for e-commerce news because everyone goes on vacation, so I thought I was going to have a shorter newsletter for you this week. 

But nope! Despite the holiday, I've still got a jam packed edition for you today. 

This week I share everything you need to know about Meta's new Threads app, news about Temu's international expansion, and info on Google's fight with India. 

I also cover five lawsuits, leaked Amazon documents about the future of Alexa, and the rise of third-party marketplaces. 

All this and more in this week's 129th Edition of Shopifreaks. Thanks for subscribing and sharing!

PS: Mia turned 3 months old last week! Here's a picture of my baby being adorable. 

Stat of the Week 📈

Amazon now has 5,000+ Rivian EV delivery vans on the road delivering packages across more than 800 U.S. cities. 

A far cry from the 100,000 vans they ordered in 2019 and said would be deployed by 2024, but a step in the right direction nonetheless.

Earlier this week, Amazon announced that it'd be sending some of its Rivians to Germany to join its fleet of more than 1,000 electric delivery vehicles. — According to Ars Technica

Share this week's stat on Twitter & LinkedIn.

1. Everything we know about Meta Threads so far

Within 30 seconds of logging into Meta's new Threads app for the first time, it was already abundantly obvious that it's the best Twitter clone on the market.

Why? Because it took 6 seconds to sign-up (imported my IG profile) and immediately got me started connecting with a network of people I know.

Since Threads pulls your connections from Instagram, the app offers relatively instant engagement versus the standard “0 posts | 0 followers | 0 following” that you typically see after signing up with a new network. 

Meta took the whole “network effect” phenomenon and threw 2.35B users at it to start. Whereas normally there's a chicken and egg scenario of, “Which came first, the members or the value of joining the network?”, Meta instead hatched a live chicken. 

Here's what we know about Threads so far: 

  • Threads released Thursday on the Android and iOS app stores
  • Select content creators got early access with the expectation that they promote the app during its release (which seemed to have worked well)
  • Over 10M people signed up in the first 7 hours of its launch, followed by 30M within 16 hours, and 70M by 40 hours.
  • By the end of the day, Threads took the crown as the fastest downloaded app ever, beating out ChatGPT for the title.
  • In comparison, Twitter has between 350M and 400M active users, based on various reports. 
  • Ellen DeGeneres, Bill Gates, Shakira, Oprah Winfrey, and Paul Drecksler immediately joined Threads and began posting.
  • Users are only able to join with an existing Instagram account. I'd imagine this will lead to a surge of phantom IG accounts from folks not currently on IG who want to try Threads. 
  • The first version of the app lacks some basic functionality like DMs, hashtags, account switching, post editing, or the ability to search posts, but those features are supposedly coming soon.
  • Threads offers an all algorithm feed, meaning there's no chronological feed. There's also no way to differentiate between For You and Following feeds, meaning the default feed is a mix of posts from folks you follow and popular posts on the platform. I'd guess this is just to get started so that users have a better experience prior to following many people.
  • The maximum character limit is 500 characters, and maximum video length is 5 minutes.
  • Mark Zuckerberg is attempting to position Threads as an “open and friendly public space for conversation” and a “positive and creative space”.
  • Jack Dorsey and Elon Musk both talked smack about it. The enemy of my enemy is my friend I guess. 
  • Dorsey criticized Threads for being yet another Twitter clone. He tweeted, “We wanted flying cars, instead we got 7 Twitter clones.” Wait, didn't Dorsey build one of those Twitter clones? Maybe he's just salty because Bluesky has only hit 1M since its launch in April, while Threads hit 70M in two days?
  • Threads launched in over 100 countries, but due to its extreme data collection, the app won't be released in the EU in its current form.
  • Threads has already started obscuring some posts behind a warning box, indicating that the content was misleading, and hiding some comments completely. The app also warns against following some users for “repeatedly posted false information.” In other words, Meta is employing similar content moderation policies on Threads as it currently does on its other platforms.
  • Threads temporarily banned @elonmuskjet, the account that tracks the whereabouts of Elon Musk's private yet, but later reinstated the account and said that suspending it was a mistake.
  • Threads does not initially support ActivityPub, the decentralized social networking protocol utilized by open platforms like Mastodon, but plans to join the fediverse in the future.
  • Meta launched its beta program for Android on Friday, to give users early access to new features and bug fixes.

Threads aftermath…

Twitter is suing Meta for hiring former Twitter employees who “had and continue to have access to Twitter’s trade secrets and other highly confidential information” and for engaging in “systematic, willful, and unlawful misappropriation of Twitter's trade secrets and other intellectual property.”

Or as Musk put it, “Competition is fine, cheating is not.”

Meta’s communications director, Andy Stone, denied the accusations and said, “No one on the Threads engineering team is a former Twitter employee — that's just not a thing.”

What do you think about Threads so far? Hit reply and let me know or start the convo on my LinkedIn post

2. Kon'nichiwa, Temu!

Temu started selling in Japan, marking its first entry into the Asian market. Well, kind of. 

Temu is owned by Pinduoduo, a Chinese marketplace that sells domestically. So technically the company already operates in Asia, as it was launched there, but this is the first time Pinduoduo is entering Japan with either brand. 

Since launching in the United States last September, Temu has since expanded to 22 other countries including Australia, Austria, Belgium, Canada, France, Germany, Italy, Japan, Mexico, Netherlands, New Zealand, Poland, Portugal, Spain, Sweden, Switzerland, the UK, Finland, Greece, Ireland, Luxembourg, and Slovakia — the last six additions since June.

Temu's entry into Japan was inspired by the success of its rival Shein, which currently holds the top spot in both the App Store and Google Store.

While Japan could be an affluent market for Temu to enter, it's yet to be seen whether the platform can successfully navigate Japan's local shopping nuances.

Currently online shopping accounts for only a small percentage of personal consumption in Japan — around 8% in 2020 compared to around 15.1% in the U.S.

However despite the single digit percentage of retail that e-commerce is responsible for in the country, Japan is still a very large market — the third or fourth largest in the world behind China, U.S., and the U.K. (outselling the U.K. depending on which stats are being used). 

Japan’s Ministry of Economy, Trade and Industry (METI) estimates that e-commerce revenue in Japan currently sits at around $188.1B per year.

3. Google fights India over favoritism

Google lodged a complaint with India's Supreme Court, accusing the country's antitrust body of requiring changes to its business model solely to protect Amazon.

Here's what happened…

Amazon complained that Google put too many restrictions on its ability to modify the Android operating system for its FireOS, causing its lack of success.

As a result of the complaint, the Competition Commission of India (CCI), determined in October that Google abused its dominant position in the market (of which it holds 97% market share in India), fined Google $163M, and demanded 10 changes to its business model — which include allowing the distribution of Android forks without any licensing restrictions or pre-installation requirements for Google apps.

Google argues that FireOS failed commercially on a global scale and never even launched in India, and is seeking to overturn the CCI's order in the Supreme Court. 

Amazon has its eyes set on India…

Last month, Amazon announced its plans to invest another $15B in India, bringing its total investment to $26B. CEO Andy Jassy said, “I had a very good and productive conversation with Prime Minister Modi. I think we share a number of goals. Amazon is one of the biggest investors in India.”

In May, Amazon India announced the expansion of its grocery services Amazon Fresh to over 60 cities across the country. The service offers same-day and next-day delivery of grocery products such as fruits, vegetables, chilled items, personal care, baby, beauty, and pet products.

My verdict…

Although Amazon and India have a strong interlaced relationship, India certainly hasn't gone easy on them or demonstrated favoritism in the past.

India's government and Amazon seem to be in a push and pull relationship over the past few years with the retailer's e-commerce plans, imposing rules and restrictions almost exclusively targeted at Amazon like: 

  • Restricting deep discounts
  • Prohibiting marketplaces from requiring brands to exclusively sell on their platform
  • Prohibiting foreign marketplaces from selling their own brand products in the country (ie: Amazon Basics)

The fact is — India doesn't want to see its e-commerce or tech markets dominated by foreign Goliath monopolies, and the country is going out of its way to make sure that doesn't happen by creating an environment that doesn't foster anti-competitive practices.  

Did Google abuse its position by requiring Android forks to include pre-installation of Google Apps? Probably so.

The U.S. and E.U. certainly thought so of Microsoft in the 90s for bundling its Internet Explorer browser with Windows. 

So while Google could certainly argue that FireOS failed for a number of reasons that had nothing to do with its restrictions, the fact remains that India doesn't look favorably on Google's mobile operating system dominance, and wants to ensure that Google isn't abusing its position.

4. Third-party marketplaces

Daniel Korn, the CEO of Azrieli, recently said, “The biggest driver in the world of e-commerce today is the marketplace,” noting that 56% of all e-commerce in the world today operates on marketplace platforms.

So it makes sense that retailers like Walmart, Shein, H&M, Macy's, Lands’ End, Nordstrom, Michaels, David's Bridal, Krogers, Mathis Home, 1-800-Flowers, and others are in a race to launch their 3rd party marketplaces and expand beyond their existing in-house retail sales.

Shein's Marketplace Efforts

Shein Marketplace launched in May in Mexico, Brazil, and the U.S., with plans to enter Europe soon, as well as expand beyond its bread-and-butter categories of fashion, beauty, and lifestyle.

Shein swung hard out the gate, offering big incentives for brands to sign up, like free advertising and no commission for the first three months.

The platform aims to offer incentives to 100k sellers to reach annual sales of $100k and 10k sellers to hit $1M in annual sales within three years.

Shein recorded $8B in U.S. sales last year with over 150M worldwide active users, so it's definitely got the customer base and existing market share from its own branded clothes to grow its marketplace.

Using a topical analogy, Shein could be to 3rd party marketplaces what Meta was to the Twitter clone market. Meaning it's got the existing active users to jump start something new.

H&M's Marketplace Success

H&M is also making strides with its third-party marketplace, which it launched in March 2022.

Currently, 70 third-party brands are available for purchase through H&M’s marketplace, including Adidas, New Balance, and Klättermusen — and sales have been going well. The company's revenue is on the rise, with a growth of 9% YoY.

H&M's CEO Helena Helmersson said about its marketplace efforts, “This has been really well received by customers who also complement the H&M assortment with other brands.”

5. Amazon Prime Day 2023

Amazon Prime Day 2023 starts tomorrow, July 11th and extends through July 12th. Two weeks ago I shared which major retailers were running their own sales events to compete with Prime Day, many of which have already started.

Here's what's new with Prime Day this year: 

  • Amazon is offering a “Watch this Deal” feature, which lets shoppers preview items that will be on sale and save them to their watchlists.
  • Amazon unveiled a new filter for finding Prime deals from small businesses.
  • Amazon is showcasing discounted products in shoppable videos and photos via influencers through its Inspire and Shop by Interest deal feeds.
  • Amazon will also share deals via personalized feeds such as “Deals related to your views” or “Deals from brands you may like.”
  • Amazon is hosting a two-hour livestreamed gameshow on TikTok tomorrow featuring Alix Earle and Jake Shane, during which viewers can play along to access exclusive discounts.
  • Amazon introduced invite-only deals where shoppers can browse deals early and request an invitation for exclusive access to the most covetable deals.

Last year Prime members globally purchased more than 300M items during the sales event, surpassing more than $11.9B in sales in the U.S., and this year it's expected that Amazon sell even more. However keep in mind that any figures you read are purely estimates, as Amazon has historically been very secretive about its actual sales figures. 

Amazon Prime Day Strikes

Amazon workers are planning a strike at a UK warehouse during Prime Day over a pay dispute. However strikes happen almost every year on Prime Day, and like previous ones in 2022, 2021, 2020, and 2019, the strike isn't expected to affect customers.

6. Affirm is sunsetting Returnly

Affirm is sunsetting its Returnly app, a self-service online returns experience it acquired in 2021 for $300M, and transitioning merchants using that platform to competitor, Loop.

Returnly will officially shut down this October, and the “vast majority” of employees are being re-deployed to other areas of Affirm — although they didn't specify how many would be let go versus transitioned to other departments.

Loop, a returns partner for Shopify, will become the “preferred returns provider” for merchants currently using Returnly.

The new partnership will add Returnly's 1,500 merchants to the more than 2,200 using Loop, once the service shuts down in October.

What's in it for Affirm? I've read as many articles as I could about the deal, but couldn't find any mention of Affirm benefiting financially from the “strategic partnership” or taking a stake in Loop. 

Wayne Pommen, Affirm's Chief Revenue Officer, said that shuttering Returnly and partnering with Loop will allow the company “to take an even deeper focus on driving strong growth and profitability in our core business” — but I don't buy it. 

Purely speculation.. but I feel like there's some restructuring and consolidation going on in preparation for an acquisition or larger strategic investment in Loop from Shopify. 

Shopify owns 20M shares of Affirm and also participated in Loop's $65M Series B round two years ago. It doesn't necessarily need overlapping businesses and would rather have each company focus on its core value proposition, while strengthening Loop's position in the market.

Shopify is also moving away from logistics to focus again on software, and acquiring Loop satisfies that itch.

My prediction is that shortly after the Returnly –> Loop transition finalizes in October, Shopify will acquire Loop and make its return services a native Shopify feature.

Agree or disagree? Hit reply and let me know, or place your bets about if I'm right or wrong in the comments of my LinkedIn post.

7. Amazon to revamp Alexa with GPT

Leaked documents reveal that Amazon is planning to revamp Alexa with more ChatGPT-like features to make her smarter. 

An internal memo shared that users should feel “like Alexa is thinking vs fetching from a database.”

Amazon is also looking to focus on new entertainment features for Alexa like conversational video search, personal recommendations, storytelling, and news reading capabilities. For example: 

  • Alexa could “present a summary of personalized news highlights for customers, and can help customers dig deeper into each story by retrieving related news and information.” (Uh oh, that's what I do?)
  • Help people find things. “Alexa, find that HBO or Netflix show where rich people go on vacation to Sicily or Hawaii.” To which Alexa would respond with, “That sounds like ‘The White Lotus,' an HBO series that takes place at a luxury resort in Hawaii and follows the vacation experiences of wealthy, privileged guests. Is that what you're looking for?”
  • Answer open ended questions like, “What should I watch tonight?” based on past search results, which users can narrow down to “something less romantic” or “movies that have won Academy Awards.”

Alexa will use Amazon's homegrown large language model and generative AI tech called Alexa Teacher Model, which launched publicly in Nov 2022.

Alexa's Tumultuous History

When Alexa launched in 2014, it started a wave of hundreds of manufacturers embedding voice technology into their products. Publications at the time called it the “computer of the future,” but it's since lost some of its luster. 

An internal document from several years ago wrote, “We want to make money when people use our devices, not when they buy our devices.” However not as many people ended up using the devices to buy products as they'd hoped. People mostly used Alexa for simple hands free tasks like starting and stopping music or asking about the weather. 

By 2018 the company was on pace to lose about $10B from Alexa enabled devices, froze hiring for the team in 2019, and by 2020 Jeff Bezos' interest in Alexa, his once pet project, began waning. 

Now Amazon is ready to give Alexa a fresh set of capabilities. Andy Jassy publicly disclosed last week that an upgraded Alexa voice assistant was in the works, and this recent document leak sheds light on how Amazon plans to use generative-AI technology to answer its competitors.

8. Lawsuits, lawsuits, lawsuits

It's lawsuit season! Here are some new lawsuits happening in our industry, as well as an update on an existing one…

Mattel vs Burberry

Mattel is challenging Burberry over the company's recent trademark registration of the initials “BRBY”. Mattel argues that the initials are too close to the name of their Barbie dolls and could lead to confusion with consumers and dilute its brand.

In addition to the children’s toys, Mattel holds federal trademarks for the Barbie brand name in clothing, jewelry and cosmetics as well as the soon-to-be-released movie.

Shein vs Twitter

Shein is suing Twitter in an attempt to force it to reveal who is behind anonymous accounts impersonating its company, which Shein is arguing are using their trademarks to advertise non-Shein products and damage the brand's reputation. They suspect that it's actually Temu behind the accounts!

So far Twitter has refused to comply with a subpoena for account information filed in February. They probably responded to the request with a 💩 emoji. (Explain the joke.)

Sarah Silverman vs OpenAI & Meta

Sarah Silverman, Christopher Golden, and Richard Kadrey are suing OpenAI and Meta for training their AI models on their works without their consent.

The group offers exhibits showing that when prompted, ChatGPT will summarize their books using datasets illegally-acquired from “shadow library” websites like Bibliotik, Library Genesis, and Z-Library, infringing on their copyrights.

Shopify vs IP Trolls (Update)

Last month I reported that Shopify was attempting to fight back against patent trolls with a motion that called on the U.S. District Court to require the disclosure of third-party interests in the case. Shopify's attorney explained that patent trolls quietly orchestrate hundreds of patent litigation cases every year with no accountability and that they are no longer willing to accept this as the status quo.

However last week a federal judge in Texas declined Shopify's request to force the patent attorney to disclose the investors behind its infringement suit. 

9. Other e-commerce news of interest

Several Amazon vendors got suspended for unknowingly selling stolen items from Breville, Keurig, Levoit, and SharkNinja. An investigation of invoices and e-mails discovered a comprehensive network of wholesale and liquidation businesses responsible for providing the goods, however the vendors are contending that they were unaware the items were stolen.

Amazon is forcing sellers to comply with its policy governing children's products, even when manufacturers say the products are designed to be used by adults. For example, Amazon decided that all backpacks should comply with its children's school supplies policy and show proof that their products were tested for lead, cadmium, or phthalates, even if the backpacks are made for and marketed to adults.

BigCommerce launched new localization features to its multi-storefront functionality, which localize the language, payments, currency, tax, and shipping options for customers. Multi-storefront launched last year to enable enterprise merchants to use a single BigCommerce dashboard to manage country-specific stores with unique domain extensions, website designs, and transactional e-mails. 

India's ONDC is going beta live in Mumbai, Delhi NCR, Chennai, Hyderabad, and Kolkata. Currently the network has more than 40k sellers and is live in over 200 cities.

Soundcloud partnered up with Squarespace, Adobe, Discord, and Rap Pugin to offer new benefits for artists including music-themed domains from Squarespace, a complementary three-month subscription to Discord Nitro, and over 30 free courses on Rap Plug. With the Squarespace partnership, SoundCloud artists will now have the opportunity to create domains with extensions like .band. 

eBay sellers have begun noticing that the platform is giving a 100% discount to some buyers and were initially confused on whether they should ship the items. Luckily sellers who reported the discount got paid, but no-one knows where the discounts were coming from.

India and Canada's post offices introduced International Tracked Packet Services (ITPS) between the two countries, designed to facilitate e-commerce exports by providing an affordable shipping solution for packages up to 2 kg to exporters. Canada is the 39th partner country to receive this service with India Post after the service began on Saturday.

Walgreens is closing its e-commerce distribution center in Edwardsville, Illinois on August 28th, which will result in the loss of 400 jobs. The company recently announced that it plans to close 150 stores in the U.S. and 300 stores in the U.K. as they transform the business into a healthcare company.

Twitter secured its first payments licenses to enable funds transfers in the app in New Hampshire, Michigan, and Missouri, as it heads in the direction of becoming an “everything app”. Musk and his new Twitter CEO Linda Yaccarino recently said that “X” may soon be replacing the name “Twitter.”

Flipkart partnered with Axis Bank to offer lending to customers, extending a credit of up to 500,000 Indian rupees, or $6,100 USD. The loan requires no document submission and boasts a 30 second approval time, while promising customers a seamless borrowing experience.

A former Amazon manager has been jailed for 16 years after running a $9.4M fraud ring at the company. Kayricka Wortham worked as an operations manager at an Amazon warehouse where she used her position to submit and receive payment on invoices from fake vendors. She then used the money to buy a $1M home, a Lamborghini Urus, Dodge Durango, and a Tesla Model X. She flew too close to the sun on an Amazon operations manager salary!

Salesforce revealed its plans to invest $4B in its U.K. business in the next five years, building on its previous five-year investment of $2.5B. CEO Marc Benioff said, “This significant investment builds on our long-standing commitment to the UK.”

The weight loss company, Jenny Craig, which filed for bankruptcy in May, is now being revived by Wellful Inc, a D2C wellness business that also owns Nutrisystem. Wellful acquired the rights to Jenny Craig's IP for an undisclosed amount and plans to relaunch the brand as an e-commerce business, with members still able to order meals to their doorsteps and get access to personalized coaching. Did you know that the real Jenny Craig is 90 years old?

Longo's and its parent company, Empire Co, Ltd, have merged their two e-commerce businesses, Grocery Gateway and Voila into one mobile app. Customers can now shop more than 23,000 products from Empire-owned Sobeys, Farm Boy, and Longo's on one platform.

10. Seed rounds, IPOs, & acquisitions

Sendcloud, a shipping automation platform for e-commerce merchants, acquired Tracey, an AI-powered data platform, for an undisclosed amount. The acquisition will allow Sendcloud to offer new data tools like AI-driven delivery predictions and near-real-time package monitoring.

Rierino, a Turkish-startup aims to make e-commerce technology more accessible with a low-code micro-service development platform, raised $1.25M in a round led by Future Impact Fund. The company will use the funds to fuel its growth further into Europe., a customer data platform for e-commerce businesses that uses AI and machine learning to help optimize customer engagement, raised £1.1M in a round led by Mercia Ventures. The company will use the funds to enhance its platform and expand its sales and marketing teams to help scale the business.

FIS announced that it's selling its majority stake in Worldpay to GTCR for $18.5B, which is set to be the largest buyout financing since last year's Twitter deal, which didn't end so well value-wise. Banks are preparing $9.4B of debt, including loans and bonds in dollars and euros, to back the firm's purchase of a 55% stake in the company. 

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See you next Monday,


Paul E. Drecksler
[email protected]
LinkedIn | Reddit

PS: What comes after USA? … USB