Is American tech still leading the pack worldwide? And will it continue to into the next decade?
Did Amazon's secret pricing algorithms break the law?
Did PAYPAL'S merchant rules break the law?
DID ELON MUSK BREAK THE LAW?
As you can tell, I cover a lot of lawsuits in this week's edition! 😂
I also cover Uber's new return a package service, new seller tools from Squarespace, and Flipkart's attack on Amazon India with its new Prime-competitor membership.
All this and more in this week's 142nd Edition of Shopifreaks. Thanks for subscribing and sharing!
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Stat of the Week 📈
Adobe forecasts online holiday spending will exceed $221 billion this year. Mobile shopping is expected to make up more than half of that amount. — According to Adobe
1. Uber will pick up your packages
Uber is now offering return package shipping through UPS, FedEx, and USPS. Customers can send up to five packages at a time for a flat $5 fee or $3 for Uber One members, its $9.99/month subscription plan.
Didn't Uber already deliver packages?
Yes, in 2020 the company launched Uber Connect, which offered same-day delivery for customers to send packages to and from local destinations — but that was more for delivering items to friends and family, or for a small business to offer free delivery to its customers.
Technically Uber Connect customers could have used the service to send postage-ready packages to a UPS, FedEx, or USPS, and maybe enough of them did that Uber decided to bring more attention to the use-case via a new dedicated feature.
However now, with Uber's flat rate pricing, doing so may be cheaper than before using Uber Connect, which charged based on distance (like a normal Uber ride).
Is $5 / $3 Uber One return package shipping a good deal?
Let's compare that to the cost of at-home pickup with those same carriers.
- FedEx charges between $3-4 per package for one-time pickup
- UPS charges $13 for same-day pickup and $8 for future-day pickup, plus up to a $6.50 surcharge for picking up from a residence (versus a business)
- USPS offers free package pickup from your home or office. USPS is amazing.
So yeah — a $5 / $3 flat rate is pretty good in comparison to UPS or FedEx, especially when shipping multiple packages. However if using USPS, you might simply opt for its free package pickup, although I can see the benefit of Uber's service if leaving packages out for pick up at your location isn't an option.
There are a few restrictions with Uber's return package shipping:
- Packages must be sealed and prepaid
- Packages must weigh less than 30 pounds
- Content value must be under $100
- Certain items are prohibited including alcohol, tobacco, weapons, illegal/stolen goods, narcotics, hazardous materials, animals, money, gift cards, high-value items, and others. Although as long as the package is sealed, who would really know? (Other than if there's a puppy bouncing around the box.)
Remember when Uber used to be a people delivery company?
Then they started delivering food.
Next on the pipeline — Uber Custody — picking up and dropping off children from one parent's household to the other!
I'm being facetious, but I do understand the desire to enter into new delivery markets. If Uber has a warm body behind the wheel on stand-by, they're losing money if that driver isn't making a delivery.
Will you be using Uber's new Return A Package feature? Hit reply and let me know.
2. Forty companies beating the west
One of my favorite publications, Rest of the World, created a report that highlights 40 global companies that are outmaneuvering Silicon Valley for market share domination in their respective countries. It wrote:
“Startup ecosystems outside the West have been churning out billion-dollar tech companies and radically innovative products for years. But their achievements are rarely celebrated or known here in the U.S. Today, not only are entrepreneurs in Buenos Aires, Lagos, and Jakarta building businesses that create huge economic opportunity and value, they’re also competing directly with Silicon Valley for users and growth in these markets. And they’re winning.”
Below I'll highlight 8 of the 40 companies that are “beating the west”:
- PhonePe – with 480M registered users, it's leading the pack against Google Pay and WhatsApp Pay in the payments app market in India. PhonePe was acquired by Flipkart in 2016, which was then acquired by Walmart two years later.
- Nubank – this Brazil-based bank is the largest digital bank in the world with 85M account holders and $4.8B in revenue in 2022. The bank has received investment from Berkshire Hathaway, and aligns itself with Brazilian pop stars as its global brand ambassadors.
- Binance – a Dubai-based crypto exchange founded by a Chinese entrepreneur who grew up in Canada. Binance reveled in the popularity of alt-coins, while US players like Coinbase steered clear, resulting in a $20B a year company.
- Grab – this SEA-based ride-hailing and delivery app dominated Uber in the Philippines, Thailand, and other Southeast Asian countries, eventually causing Ube to leave (although not without taking 27.5% of Grab as part of the deal). Still a great deal for Grab, who went on to gain 32.7M users and produce around $1.43B in revenue as of last year.
- BYD – a Chinese-made electric vehicle that will soon overtake Tesla as the biggest EV company in the world. BYD stands for “build your dreams”, which the founders sure have with 1.86M EVs sold and $63B in revenue in 2022.
- Tencent – one of China's most valuable companies, most known for its everything app, WeChat, which every other app in the world aspires to be. Tencent boasts 1.3B users and generated $79.6B in revenue last year.
- MercadoLibre – By building an online payments infrastructure called Mercado Pago, the company leapfrogged Amazon's efforts in South America to lure in buyers and sellers. It allowed Latin Americans, who had been skeptical of online purchases, to make digital payments in cash at approved locations.
- Zalo – Vietnam's biggest messaging app with 73.4M daily active users — which is quite an accomplishment given the country's 75M population!
Check out the rest of the 40 companies here. What other international companies are outmaneuvering US big tech? Hit reply and share some companies on your watchlist.
3. Amazon's not-so-secret algorithm
A redacted portion of the FTC's antitrust lawsuit against Amazon has come to light, offering more details about a secret pricing algorithm known as Project Nessie.
If you missed it: Last week I covered all of the FTC's allegations against Amazon in story #1.
The FTC's suit is highly redacted, with almost all of the details about Project Nessie blacked out, aside from the FTC's claim that “Amazon's use of its Project Nessie pricing system is an unfair method of competition in violation of Section 5(a) of the FTC Act.”
However inside sources have since spoken to the Wall Street Journal and claimed:
- The algorithm was used to test how high Amazon could raise prices before being undercut by competitors.
- When rivals did not match Amazon's price hikes, it would automatically return prices to their previous lower level.
- It was also used to discount goods if a competitor reduced prices.
- Amazon would often maintain its lower prices at the end of a sale period to force its competitors to match that lower price.
- The project extracted excess profit of $1B from American households.
The FTC argues that Amazon had “no valid and cognizable justification” other than an attempt to stifle competition.
The FTC says it can't comment on redacted portions of the case, but that Amazon has 14 days after info is sealed to provide a justification for why the data shouldn't be released.
FTC spokesperson Douglas Farrar told The Register, “We once again call on Amazon to move swiftly to remove the redactions and allow the American public to see the full scope of what we allege is their illegal monopolistic practices.”
Amazon told the WSJ, “Project Nessie was a project with a simple purpose – to try to stop our price matching from resulting in unusual outcomes where prices became so low that they were unsustainable. The project ran for a few years on a subset of products, but didn't work as intended, so we scrapped it several years ago.”
4. Squarespace launches new tools
At its annual Refresh event, Squarespace announced several new platform features. Some you've seen me mention in recent editions (like Courses), and others (like Payments) are newly announced:
- Squarespace Payments – a native payment solution that will let business users collect money for goods and services without having to integrate an external payment processor. This is Squarespace's answer to Shop Pay and Woo Payments.
- Enhanced Invoicing – a new and improved client invoicing solution that lets merchants vet leads and receive payments via invoice. New tools include client intake forms, CRM, and project tracking.
- Courses – enabling entrepreneurs to turn their expertise into income with a professionals online course complete with layouts, video lessons, and progress tracking.
- Expanded Commerce Tools – new features include fulfillment profiles, checkout improvements, shipping labels, order tracking, subscriptions improvements, shop page and product listing enhancements, and a new add-to-cart feature.
- Acuity Scheduling Improvements – platform updates to streamline the client booking experience and a new centralized dashboard, enhanced mobile app, and payment features like automated e-mail receipts, invoice creation, and management.
- Updated E-mail Marketing Tools – including enhanced automations, seasonal e-mail templates, and an editable discount field to convert site visitors into repeat customers.
- Squarespace Domains – new features including domain and e-mail forwarding, bulk domain management, and simplified domains dashboard. Previously Squarespace Domains had minimal features, designed just to sell domains to users of their website builder, but now, since acquiring Google Domains, they are building it into a standalone platform.
- Squarespace AI – available within the website text editor, e-mail campaigns, commerce stores, and Squarespace Blueprint to help customers create content reflective of their brand identity.
- Bio Sites Pro – expansion of their one-page link-in-bio sites tool for social media that offers premium features for deeper customization, engagement, and monetization.
- Expanded Extensions – the addition of a dozen new Extensions to expand the functionality of the platform (kind of like Shopify apps)
- Plus new features to their Enterprise offering and Tock, its hospitality management platform.
5. Flipkart VIP & Commerce Cloud
Walmart-owned Flipkart had two news-worthy announcements this week.
#1) The company launched Flipkart Commerce Cloud, a suite of retail tech solutions including:
- Marketplace Technology Stack – helps retailers launch or scale an online marketplace with advanced capabilities including 40 plug-and-play components for cataloging, personalization, and merchandizing.
- Retail Media Solution – an ads engine that understands the online shopping journey of users, including their current shopping intent, to serve personalized ads using advanced AI and machine learning algorithms.
- Retail Pricing Manager – a cloud based SaaS tool for retailers to offer competitive pricing strategies and optimize pricing to maximize margins and volumes. It helps track, compare, and analyze competitor price changes in real time and learn price elasticity of demand from historical sales data.
Anand Lakshminarayanan, Senior VP of Shopping Experiences & Commerce Cloud at Flipkart, said, “Flipkart Commerce Cloud is a testament for the ‘Made in India' story – technology that was built for India and now available for the global retail market. We are confident that these scale-tested, robust solutions will help enterprises across the globe with their digital transformation in e-commerce, scale their business and deliver new customer experiences.”
#2) Flipkart launched its VIP subscription program in preparation for the festive season of sales, taking on Amazon's Prime membership in India.
The membership will be priced at Rs 499 annually ($5.99/year), undercutting Amazon Prime in the country which is priced at Rs 1499 annually ($17.99/year).
Flipkart VIP will offer free same-day and next-day delivery, returns within 48 hours, and access to a separate customer support team, among other perks. It is currently available in Bengaluru, Kolkata, Mumbai, and Delhi-NCR.
VIP will be separate from its existing loyalty programs, Flipkart Plus and Plus Premium, which offer users “SuperCoins” for their purchases, which can then be redeemed for products and services on and off the Flipkart platform.
In response to the Flipkart VIP program, Amazon launched Prime Shopping Edition for Android, which gives users access to free shipping and one-day deliveries for Rs 399 ($4.79/year), but does not include access to Prime Video, Music, Reading, Gaming, or other offerings.
6. Google & Yahoo e-mail policies
Google and Yahoo announced new email-sending policies that could impact e-commerce merchants. The policies require:
- E-mail authentication – moving forward, e-mail senders must employ SPF, DKIM, or ideally both to authenticate messages, as well as employ DMARC records. The policy applies to all e-mails including both transactional and marketing.
- Single-click unsubscribes – senders who deploy 5,000+ emails in one day must offer a one-click unsubscribe link.
- Low complaint rates – email senders must keep spam rates reported in Google Postmaster Tools below 0.3%
Historically it's been recommended that companies authenticate their e-mails using the tools above, but now Google and Yahoo are making them requirements versus recommendations.
Messages from non-complying senders will likely be automatically marked as spam, which could damage deliverability and reduce clicks and conversions. It could also, depending on the policies of the merchant's EMS, result in the termination of their account for having too high of a spam rate.
The new rules take effect in February 2024 for Gmail and sometime in Q1 2024 for Yahoo and AOL users.
Are you confused about the new requirements? Contact me at IdeasFocused.com to audit your site's current sender authentication and determine what changes (if any) need to be made to your website, e-mail marketing service, or any other service that sends e-mails from your domain in order to stay in compliance.
In other Google news this week, the search engine is showing some users an e-commerce or products section in their Google Discovery feed. Glenn Babe posted a screenshot on X of a “clothing” section that appeared in his Discover feed that led to Google Shopping for more details.
7. PayPal sued for what Visa & Mastercard used to do
PayPal was hit with a class action lawsuit by consumers alleging that its anti-steering rules stifle competition against lower-cost payment platforms such as Stripe and Shopify.
PayPal's rules say that if a retailer accepts PayPal or Venmo payments, they agree:
- Not to offer discounts or incentives to persuade consumers to use other payment options that have a lower cost.
- Not to tell customers that other payment methods are more cost effective or preferred.
- Not to present other forms of payment earlier in the checkout process.
The suit states that PayPal’s merchant agreement leads to consumers paying more to make purchases, which “if PayPal’s agreements were transparent, consumers would quickly see a price difference between PayPal and Venmo and its competitors.”
Attorneys called PayPal's policies “draconian” and “illegally anticompetitive” and compared the rules to those that Visa and Mastercard used to impose before they were sued by the DOJ in 2010.
Claiming violation of federal / state antitrust laws and state consumer-protection laws, the lawsuit seeks repayment to “those who paid excessive prices due to PayPal’s anti-steering rules” and injunctive relief to end those policies.
It's important to note that one of the co-plaintiffs, Christian Sabol of Redondo Beach, CA also sued Amazon in 2020 over its price parity practices under the fair pricing provision o fits seller agreement, which he claims “severely penalizes sellers who offer lower prices outside of the Amazon.com platform.” That case is still ongoing.
8. New leadership / direction at Pitney Bowes
Pitney Bowes is evaluating if the company should sell off its global e-commerce business unit, which provides retailers with a parcel delivery and returns network and other fulfillment services.
Last week the company's President and CEO Marc B. Lautenbach stepped down, effective immediately, after being pressured by a large investor to do so from both roles. He also resigned his seat on the company’s board.
Lautenbach, who has been at the helm of Pitney Bowes since 2012, was at the center of a proxy fight involving Hestia Capital Management, which owns more than 9% of the company. Hestia repeatedly blamed Lautenbach for the company's sagging marketplace and share price value.
Jason Dies, who most recently served as the company’s executive VP and group president, was named interim CEO, while the company searches for a permanent successor.
While the CEO search is underway, Dies will be responsible for evaluating if the company will choose to sell off its global e-commerce business unit, which provides retailers with parcel delivery, returns, and pick, pack and ship services.
Pitney Bowes says it will begin to “focus on accelerating corporate cost optimization and related restructuring efforts” while also working to identify opportunities to strengthen its performance and market position.
For the second quarter ended June 30, Pitney Bowes revenue declined 11% to $776.48M, down from $871.49M in Q2 2022. Net loss was $141.5M versus net income of $4.3M in the prior year. Revenue for its global e-commerce unit was $313M, down 21% from $394M in the Q2 2022.
9. Other e-commerce news of interest
WPP launched a strategic partnership with Shopify to jointly develop products with shared insights and pair WPP's network of 13,500 commerce experts with Shopify's platform. The two companies will also roll out customized training and certification pathways for WPP employees, creating 300 certified Shopify specialists across WPP's network within the first year. Earlier this year I reported a similar partnership between WPP and BigCommerce.
Microsoft is sunsetting its Supply Chain Platform, a composable platform designed to help enterprise organizations optimize their supply chain that launched less than a year ago. The platform will be deprecated on October 31, 2023.
Tesco, a UK-based superstore, is launching an online marketplace where shoppers can purchase a selection of third-party products, in addition to grocery items already available on its website. The company has been developing the marketplace for two years and expects it to roll out at the beginning of 2024.
Mailchimp (now owned by Intuit) and Wix entered into a multi-year partnership and cross-platform integration that'll offer merchants stronger functionality to make their marketing activities easier. Coming soon to the US, Canada, and the UK, users will be able to sync and organize their customer data between the two services, customize campaigns with real-time behavioral data, and drive better engagement using AI-powered features.
Meta came up with a price for their EU subscription — $10.50/mo on desktop or $14/mo on mobile. The new subscription tiers are an attempt to comply with the EU's crackdown on personalized advertising. Now users will have a way to “opt out” of personalized ads.
Speaking of social media subscriptions, X revealed that its currently testing a three-tier premium service that would charge customers different amounts depending on how many ads are shown. X Premium, which currently costs $7.99/month, would be split into Basic, Standard, and Plus variations.
Etsy has been experimenting with cutting off product titles after the use of special characters like commas, parentheses, and dashes, without having informed sellers. Due to the testing, product titles looked incomplete, and sellers were losing sales before realizing what was going on.
Smatch, a German startup, launched a B2B platform to tackle overstock, which it claims is a 3 trillion euro problem each year with serious environmental impacts. On its new marketplace, brands and retailers can list their excess inventory, add product details, and even specify preferences about the type of sale, such as potential buyers or which regions and distribution channels to aim for.
Dave Clark, the former CEO of Flexport who was publicly ousted from the company, fired back at Flexport via an X post, calling recent reporting on the company “deeply concerning.” Clark said he discovered extensive problems with he joined Flexport in Sep 2022, including a “revenue forecasting model that was consistently providing overly optimistic outputs.”
Shopify's head of customer support, Clovis Cuqui, is leaving the company after more than eight years, to be replaced by Glen Worthington, who has worked at Shopify for five years. The organization Cuqui led was temporarily known as “merchant acceleration,” but will once again be known as “support” under its new leadership.
X will run a livestream shopping event with Paris Hilton. The feature will allow users to watch a livestream video, chat with others, shop, and hang out in Spaces. The livestream infrastructure has existed long before Musk took over. Walmart was the debut partner to test it out in Nov 2022.
Maybe X can livestream its upcoming lawsuits… The SEC, which is currently investigating whether Elon Musk violated federal securities law with his Twitter purchase last year, initiated a lawsuit against Musk due to his non-compliance with a subpoena. Give him a break — he was already fined $44B for the purchase! LOL.
X is also being sued by X Social Media, a Florida-based legal marketing company, for trademark infringement over the name X. This is the first time X is being sued over the name change, but likely won't be the last, as there are hundreds of federal trademarks for X owned by various tech companies.
TikTok Shop shut down in the country as of last Wednesday, but many sellers are staying put on the platform. Since they can no longer checkout on TikTok, the sellers are sharing links to their storefronts on Shopee, Tokopedia, Lazada, or even on their WhatsApp accounts, however some have reported a 60% drop in sales.
Mastercard teamed up with Peacock and Instacart to offer special perks. New Instacart+ members will get a two-month free trial and $10 off their second eligible Instacart purchase every month, as well as no delivery fees on certain orders and reduced services fees. New Peacock subscribers will get statements credits each month for their subscriptions, as well as access to experiences like NBCUniversal's parks and studios.
Amazon reduced its free delivery threshold to $100 from $150 in an attempt to boost its fresh-food business. The company previously offered free grocery delivery for orders more than $35 for Prime members, and then upped that to $150 in February, and now dropped it to $100.
France began enforcing a new law that imposes a €3 minimum delivery fee on Amazon and other online retailers for book orders. The law is designed to set a level playing field between small local bookshops and tech giants who can afford to subsidize shipping costs and gain an unfair advantage over smaller competitors. A 2014 French law already prohibits free book deliveries, but Amazon and others have circumvented this by charging 1 cent per delivery, whereas local bookstores typically charge up to €7 for shipping a book.
Meta is beginning to rollout generative AI capabilities in its Ads Manager this week including background generation, image expansion, and text variations. The company has been testing the features in an AI Sandbox, making them available so far only to a small set of advertisers, but they are expected to roll out globally by next year.
Amazon is now offering the ability to buy games on its Luna cloud gaming service, but for the time being, only Ubisoft titles. Previously you could only play games on Luna by subscribing to specific channels of content, accessing a rotating set of games available to Amazon Prime subscribers, or playing Ubisoft games you already owned for PC.
Waitrose, a UK-based supermarket chain, is in talks with Amazon to sell groceries via its marketplace, in an attempt to lure more shoppers and claw back market share. The company has lost ground to discounters Aldi and Lidl, and its share of the UK grocery market has fallen to 4.6% from 5.1% at the start of 2020.
10. Seed rounds, IPOs, & acquisitions
Shopblocks, a UK-based online store-building platform, raised £1.5M in a round led by Mercia, bringing its total amount raised to £3.5M. The company says it will use the investment to surpass its annual recurring revenue of more than £1M to its goal of £50M.
Smile Direct Club, a D2C dental care company known for its teeth aligners, filed for Chapter 11 bankruptcy after not being able to obtain third-party financing. The company has agreed to a DIP facility in which its co-founders have committed to provide at least $20M, with additional funding up to $60M to be available if it satisfies certain conditions such as a net cash flow test.
Sycamore Partners acquired Chico's for $938.1M in an all-cash deal. The firm tried to buy Chico's in 2019 to no avail, but this time the deal is expected to close by the end of Q1 2024.
scnd, a French startup that aims to provide a marketplace solution to sell services online, raised €4M in a round led by 42Cap and Partech. The company will use the funds to to expand its e-commerce solution and strengthen its position in the market via partnerships with consultants, integrators, and payment service providers.
Clearco, a Toronto-based fintech that uses machine learning algorithms to underwrite businesses to help fund inventory and promotional invoices, raised $60M in a Series D round led by Inovia Capital and Founders Circle Capital. The deal includes up to $100M in financing capacity and is expected to support $850M of Clearco orgiginations over the next two years.
Aspire.io, an influencer marketing platform, acquired the Commerceup team, an India-based SaaS e-commerce platform. Twelve team members plus executive leadership joined Apire's Product Team to build and scale influence-driven commerce.
Peach Payments, a South Africa-based digital payment service provider, raised $30M in a round led by Apis Partners. The funds will be used to build out new products, accelerate growth, and expand into new countries in Africa.
Centro, an automated inventory control platform for e-commerce brands, raised $2M in a pre-seed round led by Ripple Ventures and 2048VC. The funds will be used to expand its selection of offerings to include forecasting and procurement automation features.
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See you next Monday,
PS: Why did the mummy's girlfriend break up with him? He was too wrapped up in himself.