#139 – TikTok Shop, Amazon vs Flexport, & Buy with Prime 2.0

Before we get started today I want to take a moment and wish a HAPPY BIRTHDAY to my DAD, who turns 73 years old today!

Pop is my #1 fan of this newsletter and has read every edition start to finish since I launched in Jan 2021. Although he's never sold a product online in his life and had little reason to keep up with e-commerce news, he's never missed reading an edition, and usually hits reply and shares supportive words after each one — words which have gone a long way in motivating me to continue growing Shopifreaks, especially in the early days when I had very few subscribers.

However I say that after 2+ years of keeping up with e-commerce news — he might just be an expert now too! Happy birthday, Pop! Love you!

This is a JAM PACKED edition with several headline stories.

This week I've got several big Amazon updates for you including new features to their Buy with Prime, updated visual search features, AR tools, and more. 

I also cover TikTok officially launching their Shop, Flexport making a strategic pivot, and Affirm raising their rates. Plus a new contender in the world of online grocery delivery.

All this and more in this week's 139th Edition of Shopifreaks. Thanks for subscribing and sharing!

Stat of the Week 📈

The Twitter alternative, Bluesky, hit one million users. Although Bluesky surpassed 1 million installs in July, it hadn't actually hit the 1 million users mark until now because more people had downloaded the app than actually had invite codes to sign up at the time. — According to TechCrunch

Share this week's stat on X & LinkedIn.

1. Buy with Prime Updates

Amazon debuted new features for its Buy with Prime service at its annual seller conference last week including: 

#1 Buy with Prime Cart – Customers can now buy multiple items at once, like a traditional online cart. Previously, buyers could only purchase one item at a time, such as with a Buy Now button. 

It's funny that this “update” is making headline news. It's such a basic feature, and Buy with Prime never should have launched without it. Not having the ability for customers to purchase multiple items at once was one of the biggest complaints by merchants who've gotten started with Buy with Prime so far. We're certainly glad to have it now though!

#2 Buy with Prime Assist – allows sellers to offer Amazon customer support for no additional charge. Customers can access a chat feature with Amazon customer service reps who can answer questions about shipping, current orders, and returns. 

What happens when the customer inevitably uses the chat to ask questions about product features, specs, or discounts? 

Amazon's FAQ says that their customer service rep will direct any questions about the brand that they can't answer to the website's customer service email.

Don't customers expect more from live chat though than to be passed off to an e-mail address?

It's silly to think that a customer will see the live chat and exclusively use it to ask questions about shipping and returns — two pieces of info that should be prevalent on the website and product pages anyway. I'm wondering if the Assist chat feature will add more friction than benefit to the customer journey. Customers will blame the brand if they can't get their answers from the Amazon customer service rep. 

Plus, answering questions about shipping, existing orders, and returns feels like three things my existing chat bot could handle without Amazon if they'd open up the data. Perhaps that's on the radar. 

#3 Reviews from Amazon – displays a product's Amazon reviews on the product page of a merchant's e-commerce website. Shoppers can control how they filter reviews between Top Reviews and Most Recent, as well as view total rating counts, individual written reviews, verified purchases, and review dates.

This feature is amazing, especially for Amazon sellers who are just starting their DTC journey, who might have hundreds or thousands of reviews for their products on Amazon.com, but are starting with a clean slate on their own website. Now those merchants can leverage their product and seller reputation from Amazon on their own site. I used to have to think of creative ways to do that. 

The caveat is that currently the Reviews from Amazon feature is meant to supplement a brand's product page — NOT serve as its primary product review system. For example, customers cannot leave new reviews via the feature, it only works on the products that are offered through Buy with Prime, and the reviews are owned by Amazon, so they aren't submittable to Google Merchant Center, nor do they show up in your product page schema markup as structured review snippets. (In other words, they won't help your Google SERPs.)

Customers can see your product's Amazon reviews to help them decide whether to make a purchase, but will have to leave a review through your site's native review platform. 

Buy with Prime is on a roll lately. 

Two weeks ago I reported that Amazon and Shopify released a Buy with Prime app for merchants, after a year of much debate about if / when / how Shopify would allow the service, as it competes with their native checkout and payment process. However with Shopify unloading Deliverr to Flexport earlier this year, and with Amazon willing to let Shopify have a piece of the checkout, it was a no-brainer for both companies. 

2. Amazon's new seller, search, & logistics features

The seller conference wasn't just about Buy with Prime though. Amazon also unveiled new seller, search, and logistics features. Here's a recap of what's new: 

#1) Visual Search w/ Text – Amazon now lets you add text to your visual search queries to help you narrow your search results. For example, if you're looking to order a replacement part for your dishwasher, you can snap a photo of the part and type the brand name of the appliance like “Frigidaire” to narrow the results. This is similar to Google's multi-search feature.

#2) View in Your Room – a feature that lets you see exactly how furniture, home decor, or appliances will look in your space. Previously it worked with furniture and home decor, and now it works with small appliances like lamps and toaster ovens.

#3) Sales Trend Data – showing information like “10k+ bought in past month” within search results and on product detail pages so that customers can have an indicator of the product's recent popularity. (A page from Temu's playbook.)

#4) Find-on-Amazon – users can tap the Share button on a photo on social media, in an e-mail, or on a website, choose the Amazon Shopping app, and click “Find products on Amazon”. They'll then be taken to the Amazon Shopping app to see similar products. Google and Pinterest both offer similar features.

#5) Easier Reorders – previously ordered items are now presented at the top of search results with the date of the last purchase. 

#6) AI Written Product Descriptions – to make it faster and easier for sellers to list new products or enrich existing listings. The AI tool can write product titles, bullet points, descriptions, and photo captions. Basically every platform is offering something like this now. 

#7) Supply Chain by Amazon – to expand its fulfillment and logistics operations for sales outside of Amazon.com. The product suite includes discounts for cross-border transportation, automated inventory replenishment, improved visibility and tracking, and low-cost, long-term bulk storage through AWD.

3. TikTok officially launches Shop

Last Tuesday, TikTok officially debuted its long-awaited TikTok Shop in the US.

If you've been reading this newsletter long enough, you've seen teasers about this day coming for several years, including two weeks ago when I reported that TikTok was sunsetting its Storefront feature, which launched in the US and UK in August 2021 and helped merchants drive traffic back to their e-commerce stores. Storefront shut down on Sep 12th, the same day that TikTok Shop officially launched. 

Now with TikTok Shop, users can discover, learn about, and purchase products directly on TikTok without ever leaving the app. Whereas before, they could only discover products and were sent to the merchant's website to actually make the purchase.

TikTok will still connect to Shopify and WooCommerce stores via API, but only to sync inventory and product data, no longer linking the user to the merchant's store to make the purchase.

TikTok Shop offers: 

• In-Feed Video & Live Shopping – to purchase tagged products discovered through videos
• Product Showcase – to browse products, read reviews, and purchase directly from a brand's profile
• Shop Tab – a product marketplace that customers can search and discover promotions, as well as manage orders within a single tab
• Affiliate Program – creators can connect with sellers to promote their products for a commission on sales
• Shop Ads – for sellers to promote products from their TikTok Shops.
• Fulfilled by TikTok – a logistics solution that stores, picks, packs, and ships sellers' products.
• Secure Checkout – powered by a third party payment platforms to facilitate transactions on TikTok Shop. All US user data is stored in the US.

Current TikTok Partner Integrations: 

• Commerce Platform Partners – Shopify, WooCommerce, Salesforce, BigCommerce, Magento and more
• Connector Apps – AfterShip, Silk, SKUIQ, CEDCommerce, and ShoppeDance.
• Multi-Channel Partners – Channel Advisor, Feedonomics, Productsup, Pipe17, GoDataFeed, SellerCloud, Linnworks, ChannelEngine, ShoppingFeed, and Cymbio.
• Customer Service – Zendesk, Gorgias, and 1440
• Print-on-Demand – Printful, Printify, and NovaTomato
• Reviews – Yotpo
• Shipping Services – Flowspace, WeeBee, and Easyship.

TikTok Shop is going to be a gamechanger for the e-commerce industry, and it's frankly amazing how fast and well TikTok has put this whole thing together.

Entertainment, product discovery, merchants, affiliates, logistics, advertising — it's the complete package. 

Other social media companies have struggled with e-commerce for the past decade, constantly pivoting to the detriment of merchants and never really offering a great value to any of their partners (including merchants and creators). 

TikTok, on the other hand, quietly built their audience, network, tech, and logistics solutions and waited for the right time to strike.

I've not been this excited about an e-commerce platform launch in a long time, but TikTok brings reason to be excited. 

What are your thoughts on TikTok Shop? Join the convo on my LinkedIn post. 

4. The good, the bad, and the Flexport

Flexport, the company whose name you might recognize as having acquired Deliverr from Shopify earlier this year, launched a new end-to-end supply chain tool called Flexport Revolution and a membership program called Flexport+.

Revolution offers small and mid-sized businesses access to freight, fulfillment, replenishment, and financing services, as well as direct replenishment into FBA, Walmart, and more than 15 wholesale distribution channels including Target, Costco and Nordstrom.

Flexport+ is a new $149 membership program that offers merchants exclusive access to supply chain financing and priority shipping services.

Flexport has historically focused on moving international freight to a destination port, but the Shopify Logistics / Deliverr acquisition gave it e-commerce fulfillment and last mile delivery capabilities.

Now the company wants to be the layer of infrastructure that helps merchants sell anywhere — conquering both sea and land as a logistics provider. 

However the situation is not all roses and rainbows for Flexport. 

The company has experienced some troubles and setbacks recently: 

#1) Former Flexport CEO Dave Clark abruptly announced his departure from the company two weeks ago. Initially he posted on Twitter that the departure was on amicable terms, but it was later revealed that he was fired by the board, which included founder Ryan Petersen, who returned as CEO to take his place. 

Petersen immediately resicidend dozens of job offers of new hires, some which were set to start as early as Monday the following week.

#2) Amazon simultaneously announced a competing supply chain service, which I briefly covered in Story #2 above. A huge difference between the two launches is that Amazon already serves a huge network of small and mid-sized businesses, which Flexport wants to onboard. 

#3) Flexport's warehouse plan to lease the Dallas-Fort Worth metroplex is hitting a setback, as the landlord questions whether the company is sufficiently financially stable to take on a lease that size. The landlord had already been burned once by his former tenant, Bed Bath and Beyond. 

Do these setbacks mean it's over for Flexport? Certainly not.

The company has set its sights on international growth and integrating with e-commerce companies like Rakuten in Japan, Coupang in Korea, and Flipkart in India.

Petersen said, “Over the next decade we're just going to go market by market and then go to our amazing customer base that we have and say hey, let us help you grow your revenue by taking you global.”

That is, if Amazon doesn't take them there first…

5. Affirm might be in trouble

Affirm's senior VP of finance, Rob O'Hare, said at a conference hosted by Barclays on Tuesday its funding cost will rise.

O'Hare said, “We have been using warehouse facilities. That will drive up funding costs.”

Warehouse lines of credit are typically short-term, with a typical term of one year or less, with the idea that the loans would eventually be sold to investors. But who's going to buy BNPL debt for more than pennies on the dollar? It's not like investors can foreclose on a customer's sweater than they paid two installments on and then defaulted on. 

He later added that funding costs will “be a drag” on margins, “but we think we're doing a good job.”

In February, I reported that Affirm was going around having one-on-one meetings with merchant clients seeking permission to raise their rates because their initial agreements did not include an automatic mechanism for dealing with rate increases by the Federal Reserve. 

Most clients, including Shopify, said yes — because what was the alternative? Affirm could not longer lend at its former rate. 

I've never quite gotten the impression that Affirm knows anything about lending. Don't get me wrong, I'm no debt expert either, but you don't see me launching a BNPL firm.

6. Albertsons 30 minutes or less grocery e-commerce

Albertsons launched a new e-commerce offering called Flash, which allows customers to place orders available for pick-up in 30 minutes or less. Through the Flash service:

• Customers can choose up to 35 items for pickup or delivery.
• Delivery orders have an $11.95 service fee and will be delivered within a 30-to-50-minute window.
• Pickup orders have a $3.95 fee and will be ready in 30 minutes or less.

Sounds like a pizza commercial from the 90s doesn't it?

Stephen Menaquale, Albertsons’ senior VP of e-commerce and fulfillment said, “Whether you’re missing a key ingredient for tonight’s dinner, or need a healthy snack for your kid’s lunchbox, families can turn to Albertsons to quickly replenish their food and household staples.”

Albertson's website notes that, “Most in-store items are available to purchase for Flash grocery delivery & pickup,” but did not say exactly how many items are available through the service. 

Notably, Flash does not include alcoholic beverages, tobacco products, certain frozen items, and food requiring extra preparation time. 

Delivery and pickup are available from 8am to 5pm in most of the 2,000 stores across the Albertsons, Safeway, Vons, Jewel-Osco, Shaw's, Acme, and Tom Thumb stores where it's available.

Members of Albertsons' FreshPass program (ie: their Amazon Prime), which is $99/year or $12.99/month, are eligible for free pickup service and a reduce delivery fee of $2 per order.

The timing for Albertsons' e-commerce move is spot on, as Grocery Dive reports that grocery e-commerce sales jumped 9% YoY in August.

7. What to expect with ads this holiday season

The holiday season is looking glum for X this year. 

Bloomberg reports that despite onboarding Linda Yaccarino as CEO of the company with the hopes that the former NBCUniversal exec would bring back advertisers who had stopped spending on the site, she might be running out of time to make that happen for this holiday season.

Marketers typically finalize their holiday budgets by August, leaving limited room for last-minute adjustments.

Natasha Blumenkron, VP of Paid Social at Tinuiti, said, “It would take a big change and a big reason to believe for us to recommend that our advertisers are shifting budgets back there.”

Her advertisers have instead chosen to increase their spending on Facebook, Instagram, TikTok and Snapchat instead of investing in X.

Other ad agencies have echoed her sentiment, also adding that X's reputation for leniency towards harmful, abusive, or racist content since Musk's takeover isn't doing the business any favors in regards to bringing back advertisers.

Which is why X is starting to receive programmatic ads from Google to fill the void.

Meta, on the other hand, is ready for what will probably be its highest revenue holiday season in history. 

Meta recently added new ad optimization tools in preparation for the holiday push including:

• Budget scheduling for ads campaigns – advertisers can choose to increase their daily budget to maximize promotional and sales opportunities, instead of manually adjusting the budget at the desired time like before.
• Promotional Ads – simplifies the process to find and apply useful promo codes. This ad type will be available to more advertisers in the US, UK, Canada, and Australia.
• Reminder Ads – to help build awareness and anticipation for brand events like seasonal sales or product launches.
• Shop Ads – allow a person to make a purchase directly within the FB or IG app after seeing an ad. #tiktokmademedoit

However with all the ad updates, Meta adamantly denies the rumor that it plans on inserting in-feed ads into WhatsApp.

You can read about how Meta actually plans on monetizing WhatsApp in last week's edition (Story #6). 

8. Indonesia to ban social media e-commerce

Indonesia is planning to ban e-commerce on social media under new trade regulations designed to avoid predatory pricing on social media platforms, which the government feels was threatening offline markets in the country. 

Current trade regulations do not specifically cover direct transactions on social media. Jerry Sambuaga, deputy minister of trade, told the parliament that, “Social media and social commerce cannot be combined,” and that it was time for revisions to the country's trade regulations.

Indonesia, with a connected population of more than 270M, accounted for nearly $52B of e-commerce transactions last year, and social media goliaths don't want to lose that market as they all shift towards offering native e-commerce capabilities. 

TikTok, which has 2M sellers in Indonesia, said that the ban, “would also disadvantage Indonesian merchants and consumers.” 

TikTok previously said that it had no plans to roll out a cross-border business in Indonesia after officials expressed concerns that the platform's e-commerce push could flood the country with cheap Chinese-made products.

In July, I reported that Indonesia was planning to restrict the sale of imported goods below $100 in an attempt to tighten oversight on companies like TikTok and Temu that sell cheap Chinese-made goods, which the country encourages its consumers to shun

Meta so far has not commented on the situation.

What do you think? Is banning e-commerce on social media and restricting the sale of imported goods below $100 the best way to keep cheap Chinese-made goods out of the country? Or is there a better route that the country should take to accomplish that goal? Hit reply and let me know. 

9. Other e-commerce news of interest

Amazon is increasing pay rates for contracted delivery drivers in the US, investing $440M over the next year to make it happen. The exact bump in pay remains undisclosed, but Amazon expects drivers to earn an average of $20.50 per hour.

Salesforce is planning to recruit 3,300 new employees, less than a year after letting go 10% of its workforce. A third of the new hires will join the company's sales group, a third will be engineers, and the remainder will work on Salesforce's Data Cloud product.

Meanwhile in the world of cryptocurrency, Brian Shroder, the CEO of Binance.us who's served in the position since 2021, resigned, and will be replaced by Norman Reed, the chief legal officer of the firm. The company is also reportedly laying off more than 100 workers, or roughly a third of its staff.

Starboard Value, an activist investor and third largest shareholder of GoDaddy, urged the company in a public letter to either improve its stock performance, or sell itself. The investor said that GoDaddy needs to cut more jobs, reduce the tech budget, and address why it is falling short of its financial targets, while committing to delivering a growth and profitability metric of at least 40% by the end of 2024.

Amazon Japan opened its first sortation center in the country to streamline its domestic distribution process. The sortation center is located in Tokyo and is capable of processing up to 750k parcels daily with the help of automated machinery.

The same writers that are suing OpenAI are now suing Meta over content theft in a similar class action lawsuit that accuses the company of improper utilization of their literary works to train its Llama AI software. The lawsuit alleges that Meta employed their copyrighted writings, including pirated versions, to instruct its language model in generating high-quality, long-form responses. 

Meta's next generation of smart glasses made in partnership with Ray-Ban are rumored to be released sometime soon. Even though the first generation wasn't a hit, with the WSJ estimating that less than 10% of owners use the glasses on a monthly basis, Meta is moving forward with its next generation, which will let you live stream video to FB and IG and even hear comments from people watching your stream. I own a pair of the first generation and wear them daily! Although I haven't charged them in over a year. LOL. 

 In other Meta headgear news, the company gave away free Meta Quest Pro headsets, valued at $1500/each, to attendees at the Roblox conference, indicating that the devices aren't flying off the shelves with consumers. Meta also told suppliers earlier this year that it wouldn't order new components for the device, indicating that production was to end when the company ran out of parts.

However although the headsets aren't hitting sales expectations, their use-cases are slowly growing. Dozens of hospitals are using the Meta Quest 2 headset to train clinicians on complex procedures, and Meta launched a new teaching program in the US to inspire students to explore the opportunities of the metaverse.

Amazon announced that its second Prime Day shopping event will take place on Oct 10th and 11th this year, with sales kicking off at 3am on the 10th. To generate early interest, Amazon is already offering incentives like $15 credits for downloading the Amazon Photos app, a free four-month trial to Amazon Music, and 10% back on select Amazon devices.

 With more than 17.7M people having submitted claims in the $725M Facebook data privacy settlement, plaintiff lawyers estimated that each claimant can expect to receive around $30. US District Judge Chhabria noted that the amount is lower than expected due to the unprecedented number of claims filed in the case. Reopen the case then!

Speaking of Meta payouts, Norway is fining the company $98,500 per day for alleged data privacy breaches and the potential impact it may have had on Norway residents. The country also banned FB and IG from carrying out any behavioral advertising activities until October. 

Splitit, a NY-based BNPL firm that offers embeddable installment payment options for merchants, is expanding its “pay after delivery” service with AliExpress to the US. The service, which allows shoppers to start paying for their products after delivery is complete, first launched in Germany, Spain, and France earlier this year. 

X agreed to try to settle claims by thousands of former Twitter employees who say they were cheated out of severance pay after Elon Musk laid off thousands of employees. The former employees have been waiting for their promised severance ever since and hopes to reach a settlement.

Disputes on Visa's network rose to more than 90M in 2022, rising past their pandemic boom. Around 70M disputes were filed in 2019, which rose 24% in 2020 during the pandemic, and has since risen 2% a year in 2021 and 2022.

Companies that use AI to help students cheat at school are thriving on TikTok and Meta, even though the practice and the ads are illegal in many countries. The tools include services like making texts feel more academic, writing entire essays, citing works, and checking for plagiarism using AI. 

Hallmark is attempting to attract Gen Z shoppers by tapping into digital payment channels and mobile apps. The company teamed up with Venmo to offer co-branded physical greeting cards that include a unique QR code that redirects to Venmo to receive a money gift. 

HeyDude, a comfort shoe maker, reached a $1.95M settlement with the FTC on charges that it misled consumers by keeping negative reviews off its website and gave customers gift cards instead of cash refunds. The FTC complaint also says that the company failed to issue shipping-delay notices when it couldn't fill orders on time and failed to cancel customers' orders and issue prompt refunds when it couldn't send customers their shoes. 

Wix is now offering tap-to-pay on Android phones for merchants who accept in-person payments, after having launched the service for iPhones in March earlier this year. Payments are handled through Stripe, and the service is currently limited to the US.

Shopify launched its POS Go hand-held device in the UK and Ireland. The device, which comes with a built-in scanner and allows retailers to initiate checkouts anywhere in the store, was first introduced in 2022 to retailers in the US and brought to Canada in May this year. 

Family Dollar revealed that its upcoming mobile app will allow users to manage coupons and more easily locate products with improved search functionality. The company also promised enhancements that will include in-app e-commerce, personalization capabilities, and an “evolved” rewards experience for its sister company Dollar Tree.

Google Domains stopped selling domains to new and existing customers last week and is now directing users to purchase domains through Squarespace instead, who bought its domain portfolio for $180M. The acquisition was completed on September 7th.

A new study shows that the number of e-commerce sites globally surpassed 26.5M in 2023, ballooning from 9.2M in 2019. The US hosts nearly 14M of these sites, a figure that substantially overshadows other nations.

10. Seed rounds, IPOs, & acquisitions

Birkenstock, the famous German sandals maker, filed an IPO with the SEC with plans to list on the NYSE under the ticker BIRK. The company did not yet list how many shares it will list or the share price range it will target. Bloomberg estimated in July that Birkenstock is worth around $8B.

DistroKid, the independent music distributor that connects musicians with Spotify, Apple Music, Pandora, and other streaming platforms, acquired Bandzoogle, an e-commerce platform that allows musicians to market and sell products to their fanbases. Bandzoogle powers 60,000 sites, offering tools for artists including web stores for selling music, merch, and tickets, as well as crowdfunding, fan subscriptions, and e-mail lists.

Instacartdisclosed that it hopes to raise $616M in its upcoming IPO, making up to 22M shares available to investors at a price between $26 and $28. Three weeks ago I reported that Instacart filed paperwork to go public under the Nasdaq symbol CART and revealed net income of $114M with revenue of $716M in the most recent quarters.

Klaviyo also set a price range last week. The company announced that it wants to raise as much as $518M, offering 11.5M shares for $25 to $27 each, while existing shareholders plan to sell 7.7M shares. BlackRock and AllianceBernstein LP have expressed interest in buying as much as $100M in the IPO.

Squarespace priced a secondary underwritten public offering of 5M Class A shares by General Atlantic at $29 per share, just under the stock's current trading price, adding an additional 750k shares to its current public allotment. Squarespace will not receive any proceeds from the sale of the shares by General Atlantic. During the past few months, Squarespace's CEO Anthony Casalena has sold over $4M in Squarespace stock.

AMP, an Australia-based platform of interconnected e-commerce apps, raised $18.5M in a Series A round led by Jungle Ventures and Openspace Ventures. Since its inception in 2022, AMP has made three acquisitions including AppHQ (checkout and versions), Addition (shipping), and Lifetimely (analytics), and will use the funds to build and buy additional tools.

Buyandship, a Hong Kong-based cross-border e-commerce platform, raised $10M in a Series B round led by Cool Japan Fund. The company will use the funds to automate operations, R&D for AI, and market expansion in Southeast Asia.

GXO, a Connecticut-based logistics and supply chain management firm that gets most of its revenue from Europe, acquired PFSweb, a California-based e-commerce order fulfillment platform, for approximately $181M, or $7.50 per share, which is a nearly 50% premium on PFS' stock price. GXO said the acquisition would position it to expand its operation within short cycle, high-volume product categories like luxury goods and cosmetics by leveraging PFSweb's relationships with big brands like L’Oréal, Champion, and Kendra Scott. 

Deft, an AI-powered search engine for e-commerce products, raised $1.8M in a round led by Jason Calacanis. Business Insider shared the 14-slide pitch deck that the company used for the round. 

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See you next Monday,

PAUL

Paul E. Drecksler
www.shopifreaks.com
[email protected]
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PS: Did you hear about the prisoner who escaped jail by putting a paper towel over his face and walking out the front door? There's a Bounty on his head.