Happy New Year!
Cheers to a great year of e-commerce in 2024.
What are your goals / resolutions / themes this year? Hit reply and let me know. Maybe I can help support your goals or connect you with another reader who can.
If you're new to e-commerce, you might enjoy this recap I published entitled The Top 52 E-Commerce News Stories of 2023. That should catch you up to speed on the the biggest stories of last year to set the stage for what's about to transpire in our industry in 2024.
In this week's first edition of the year, I cover:
- Bonanza's new Shopify Plus competitor
- Amazon Prime Video's $2.99/month squeeze
- Underground delivery tunnels coming to Georgia
- Zulily closing its doors
- The top 10 commercials of 2023
- The top 7 AI leaders in e-commerce
- An update on the Apple Watch ban
- How many retail stores shut down last year
- WordPress going after its own builder market
All this and more in this week's 154th Edition of Shopifreaks.
PS: I'm proud to share that right in time for the new year, Shopifreaks surpassed 8,000 subscribers! Thanks for your support of this newsletter and for continuing to share it with your network and colleagues and helping us grow.
Stat of the Week 📈
The total amount of retail returns in the U.S. in 2023 came to $743 billion. This equates to 14.5% of total retail sales for the year. — According to the NRF and Appriss Retail
1. Bonanza launches a Shopify competitor
Wait, what's Bonanza? If you're unfamiliar, Bonanza is an online marketplace that launched in 2008 and was sold to IBM-veteran Quincy Faison in March last year. (See story #4 in Edition 112 for more info about the acquisition.)
Bonanza boasts 50k sellers, 35M items for sale, and users across 199 countries. In comparison:
- Amazon has 9.7M sellers worldwide and about 350M products for sale.
- Etsy has 7.47M sellers (and I couldn't find out how many products for sale).
- Ebay has 18.3M sellers and around 1.7B listings at any given time.
Now Bonanza wants to veer away from its marketplace roots and compete harder in the world of e-commerce website builders.
Technically Bonanza has offered a Webstore since 2014, but it was more of a feature add-on for sellers on its marketplace, as opposed to a bonified e-commerce solution. However the new Vercado product promises to be much more than that.
Bonanza describes Vercado as “an all-encompassing, cost-effective webstore builder and all-in-one business hub designed to cater to businesses ranging from start-ups to established giants.”
Vercado offers merchants for $99/month or $999/year:
- An e-commerce store with unlimited products and categories, built-in cross sell, upsell, and pricing rules capabilities, gift cards, and integrations with payment gateways.
- Zero transaction fees, other than 3rd party merchant processing fees.
- Shipping integrations from FedEx, UPS, USPS and other couriers.
- CRM with lead and sales management, customer service and case management, quotes, and sales funnels.
- E-mail and SMS Marketing
- A tool to monitor and respond to conversations across Facebook Messenger, Instagram, LinkedIn and other social platforms.
- Inventory and sales channel management for selling across marketplaces like Bonanza, Amazon, Etsy, and eBay.
- A full ERP system for tracking and reporting company data.
- Accounting tools such as account receivable, accounts payable, invoices, payments, statements, and aging, as well as other financial reporting and budget management tools.
I believe that what Bonanza is going for here is — “Hey instead of spending several hundred or several thousand dollars a month on multiple SaaS products, you can use our all-in-one solution for just $99/month!”
Which sounds good in theory, but ultimately I feel that Vercado's success will depend on three questions:
1) Can its features live up to the hype?
All-inclusive is great if everything works, but that's a big promise to say that one solution (especially a new one) can compete with market leaders in each individual category.
It's also not always practical. Businesses often need choice and the ability to integrate with their existing tools. So if a business didn't need the CRM, ERP, accounting tools, or channel management because they're already ingrained in other solutions, does the all inclusive model make sense? Or would they be better off piece making a solution on Shopify or Woo?
2) How can Vercado help drive sales for merchants?
Streamlining your tech stack has value, but the defining question for e-commerce platforms moving forward is going to be — what do they offer in terms of helping with customer acquisition? (ie: ShopApp)
As new merchants get priced out of Google Ads and Amazon ads in the coming year, they're going to seek out platforms that help them get an edge up on new customer acquisition. So if that's a market Vercado wants to go after, it'll be important to find a solution for them (outside of just Bonanza's own marketplace).
Which brings me to the third question…
3) Who is Vercado for?
An all-in-one solution could be great for a brand new seller who hasn't yet fallen into working with other tech solutions, but will a new seller want to pay $99/month? And can Bonanza reach that niche market at the right stage of their e-commerce journey?
An all-in-one solution could also work for a mid-sized business that is spending thousands a month on various tech components, and sees the value in streamlining down to a single platform solution — but who's got the time? To get the full value of Vercado at the $99/month price point, the business would have to import data, funnels, and processes from all their platforms into Vercado's system to take over. If that wasn't possible given internal constraints or conflicting priorities, they'd inevitably end up paying for multiple solutions anyway, so what would be the point of switching?
Vercado's website says in the headline, “Get your site up and running quickly and with no technical know-how,” but also says that it's a cost effective solution for “small, medium and large eCommerce businesses.”
Right now Vercado's messaging is a bit conflicting as to who the platform is catering to. The DIY technophobe who needs an easy solution to start selling online? Or the mid-sized / enterprise client who requires a CRM and ERP?
I think that if Vercado can dial in on their desired user in regards to their marketing and product offering, they could carve out some market share in this already fairly saturated industry with this product.
What are thoughts on Vercado? Hit reply and let me know or join the convo on my LinkedIn post.
2. Amazon Prime squeezes an extra $2.99/month for ad-free experience
You know that ad-free experience you've come to enjoy on Amazon Prime Video? Now it'll cost you an extra $2.99/month.
Amazon first broke the news in a blog post in September 2023 that they'd be switching existing users to an ad-supported experience, but did not announce exactly when the changes would take place.
However last week in an e-mail sent to subscribers the day after Christmas, they shared that the effective date of the change will be Jan 29th (my mom's birthday!).
The e-mail said that the change “will allow us to continue investing in compelling content and keep increasing that investment over a long period of time. We aim to have meaningfully fewer ads than linear TV and other streaming TV providers.”
The fee applies both to regular Amazon Prime members, who currently pay either $14.99/month or $139/year for all the perks, as well as folks who pay $9/month for only the standalone subscription to Prime Video.
Amazon isn't the first streaming service to introduce ads:
- Last year Netflix launched a $7/month tier with ads.
- Peacock has an ad-supported option for $4.99/month.
- Hulu with ads costs $7.99/month.
- Disney+ with ads costs $7.99/month.
- HBO Max's ad-supported plan costs $9.99/month.
- Please note those prices are for U.S. customers and can vary by market.
However even though other streaming platforms offer ad-support tiers, do you know what makes this move pretty $%ed up by Amazon?
They're converting subscribers' existing ad-free subscriptions into ad-supported subscriptions!
Basically Amazon is saying — “you now have to pay an additional fee to get what you already paid for / subscribed to.”
It's one thing to create a new cheaper ad-supported tier and simultaneously raise the price of the premium tiers upon renewal (which others have done), but it's another thing to pull the ad-free experience from users who are already subscribed to the premium tier!
This feels like a class-action lawsuit in the making. It's like Amazon didn't learn their lesson in 2022 when they got sued for removing free Whole Foods delivery as a benefit from existing members.
3. Underground delivery is coming to Peachtree Corners, Georgia
A company aptly named Pipedream Labs Inc. in collaboration with Curiosity Labs is launching the world's first below-ground delivery system in Peachtree Corners, GA.
The system is exactly how you'd imagine, with little roller coaster cars on an underground track that make deliveries right to your door. Here's a video of the concept in action.
Brandon Branham, assistant city manager and chief technology officer of Peachtree Corners, wrote in a press release, “By bringing the delivery system underground and directly to the customer, Pipedream is showcasing the future of logistics technology that will not only bring added convenience to our residents and businesses, but also reduce traffic, noise, and emissions from delivery vehicles on our roads.”
Pipedream’s installation at Peachtree Corners spans almost 1 mile long via a tunnel that connects a busy shopping center to Curiosity Lab’s 25,000 sq.ft. smart city innovation center.
When an order is placed, Pipedream’s mobile robots travel back and forth through the tunnel to autonomously pick up and deliver food, packages, groceries, household goods, or potentially poop, depending on which jokester is on the other end of the tunnel.
Although the installation is small and only connects to one building right now, Pipedream is hopeful that this first real-world installation proves that underground delivery is not only possible today, but also easy to retrofit.
The company said its installation at Curiosity Lab is only the start and that it plans to implement its robots in more cities looking for “future-proof logistics” to implement into their communities without needing new legislation or regulation.
It is currently working with Wendy’s to robotically transfer orders from the kitchen to Instant Pickup portals outside its quick-service restaurants, but it hopes to build the bigger vision of a citywide underground delivery network.
Pipedream is also courting master-planned community builders with a system that would deliver into the home.
4. Zulily shuts down and liquidates
Zulily, a Seattle-based retailer that catered to families with young children, is closing down, surprising customers and laying off hundreds of workers after efforts to salvage the business failed.
The company has ceased all customer-facing operations, other than fulfilling existing orders during the next two weeks.
Zulily was founded in 2010 and staged a successful IPO in 2013, but it was taken private after it was acquired in 2015 for $2.4B by QVC's parent company Qurate. From there it was acquired by private equity firm Regent and Baker in May 2023 for an undisclosed amount.
The company fought for years to compete with Amazon and other major retailers, including filing a lawsuit as recently as Dec. 11 against Amazon, accusing it of trying to destroy Zulily through price-fixing.
However after several rounds of layoffs and other cost-cutting measures, the company just simply couldn't compete, and it eventually had to pull the plug.
Zulily wrote on its website that it “made the difficult but necessary decision to conduct an orderly wind-down of the business to maximize value for the companies’ creditors. This decision was not easy nor was it entered into lightly. However, given the challenging business environment in which Zulily operated, and the corresponding financial instability, Zulily decided to take immediate and swift action.”
Instead of declaring bankruptcy, Zulily is using an alternative for winding down the business known as an Assignment for the Benefit of Creditors (ABC), where it's transferred all its assets and business in trust to Zulily ABC, LLC to pay creditors out of proceeds from selling them.
Last I reported on Zulily was in Jan 2023 when former Zulily employee stole over $300k from the site after being inspired by the movie Office Space. Ermenildo Valdez Castro was accused of manipulating product prices and altering the company’s code to divert shipping fees from the business to his personal account.
Looks like things didn't improve too much around Zulily since then.
5. Top 10 Commercials of 2023
Digital Trends released its top 10 commercials of 2023, many of which came from the Super Bowl last year.
- Top of the list was Squarespace's Singularity commercial where Adam Driver comes to terms with the idea that a website builder could create itself.
- Tubi faked fans out at last year's Super Bowl out by pretending that the game was back from a commercial break, only for the ad to turn off the game and move over to watch a movie on Tubi. It confused a lot of people!
- Uber One teamed up with Robert De Niro and Asa Butterfield to show how the two actors, despite the age difference, could connect over the fact that they both like “eating food” and “going places,” which Butterfield realizes that he can use the Uber One to do both.
- Apple Music’s Run This Town ad was designed to get viewers excited for Rihanna’s Super Bowl halftime show, showcasing a young girl with big dreams in the Bahamas, where Rihanna is from.
- In the fifth spot was Ikea's Proudly Second Best campaign which acknowledged that their furniture could never replace a kid falling asleep on their mom or dad. As a new dad, it was super cute and true to life!
- Meow Wolf's ad for its location in Grapevine starts as an 80s throwback about finding yourself at the mall, but takes a strange turn.
- McDonald's showcase of Grimace's birthday celebrations over the years was a fun way to advertise the company's Grimace Shake, and also started a wild and disturbing trend on TikTok.
- Pepsi asked Ben Stiller to take on a number of iconic roles, including Thanos and Wall-E, to show how verseatile of an actor he is.
- Dunkin' got Ben Affleck to work at a drive-thru where customers, including Jennifer Lopez, go through his line.
- And coming in at number 10 was PopCorners' Breaking Bad homage with “SEVEN!” original flavors.
What was your favorite commercial of 2023? Hit reply and let me know.
6. Top 7 People in AI E-Commerce
Continuing on to another top list, Business Insider compiled a list of 100 people at the forefront of artificial intelligence, including these seven e-commerce entrepreneurs. I linked to their LinkedIn profiles if you'd like to follow along with these AI leaders.
- Miqdad Jaffer, Shopify – leads a team incorporating AI across Shopify including launching Shopify Magic, a suite of AI tools meant to help merchants run their businesses that use a combination of Shopify data and OpenAI's ChatGPT tools, Shop.ai, and another chat-assistant product called “Sidekick” that's in the works.
- Prakhar Mehrotra, Walmart – his team oversees all aspects of merchandising, including assortment, pricing, and inventory management at Walmart, leading his team to win the 2023 INFORMS Franz Edelman Award for its work in advanced analytics and management science.
- Nitzan Mekel-Bobrov, eBay – launched its Office of Responsible AI to define best practices for AI across eBay while developing an “AI-first culture” at the company including tools to list products, enable 3D imaging, improve buyer's search results, and create AI-generated content for electronics and motorparts.
- Rohit Prasad, Amazon – recently promoted to lead a new artificial general-intelligence group at Amazon, and also in charge of creating the company's “most ambitious” and “most expansive” large language models.
- Shreya Shankar, Alta – now the chief scientist at Alta, a stealth e-commerce startup building foundation models for the fashion space. Formerly the first machine-learning engineer at Viaduct and an engineer at Google Brain and Facebook.
- Nikko Ström, Amazon – VP and scientist at Amazon, working primarily on Alexa's AI and speech technology, and a founding member of the team that built Amazon's Echo device and Alexa voice assistant.
- Raquel Urtasun, Waabi – CEO of Urtasun where she leads efforts to revolutionize trucking by teaching virtual self-driving vehicles inside an AI-generated simulator. Previously the chief scientist and head or research at Uber's Advanced Technologies Group.
7. Apple Watches: To Ban or Not To Ban
Have you been keeping up with the Apple Watch controversy? If not, here's a recap of what's went down since October, leading up to what went down last week.
- In October, the U.S. International Trade Commission (ITC) issued an order to ban Apple from importing its Watch Series 9 and Watch Ultra 2 after finding that the devices violate patents owned by the medical technology company Masimo. The company accused Apple of hiring away its employees, stealing its pulse oximetry technology and incorporating it into its new Apple Watches.
- President Joe Biden's administration had 60 days to decide whether to veto the import ban based on policy concerns before it went into effect. Presidents have rarely vetoed bans in the past.
- In December, after the 60 days had come and gone, Biden ultimately did not veto the ban, and Apple filed an emergency request for the U.S. Court of Appeals to halt the ban, which they denied.
- On Dec 21st, Apple pulled the watches from its online stores. However other retailers like Walmart and Best Buy weren't affected until their existing supplies ran out.
- On Dec 27th, Apple won a temporary pause of the ban, which allowed it to resume sales in Apple Stores immediately.
- The next day, Apple resumed selling the banned watches on its website.
The story will continue in two weeks when U.S. Customs and Border Protection rules on the proposed changes on January 12th.
8. Retailers shuttered 4,600 stores last year, but opened 5,500
According to Coresight Research, 2023 saw an 80% surge in store closures from the year before. Reasons ranged from bankruptcies to operators closing underperforming locations. In some cases, retailers even blamed rising theft as to why they shut down certain locations.
However even though there were a lot of store closings, there were also a lot of store openings.
Retailers actually opened almost 5,500 stores in 2023, more than offsetting the number of closures, oftentimes moving into locations vacated by other businesses.
CBS News recapped some of the biggest openers and closers of last year:
- Bed Bath & Beyond's April bankruptcy led to the closer of 866 stores, and they did not open any new ones.
- David's Bridal also filed for bankruptcy in April and closed 100 stores, but continues to run 195 locations.
- Rite Aid closed 335 stores last year, an uptick from shuttering 158 stores in 2022.
- Christmas Tree Shops closed 80 locations after the retailer filed for bankruptcy in May. The chain had tried rebranding as “CTS” in 2022 as people outside of New England mistakenly thought it only sold trees.
- Party City shuttered 31 locations last year and emerged from bankruptcy protection in September, vowing to keep the bulk of its 800 stores nationwide.
- Family Dollar closed more than 100 locations, and Dollar Tree (which it owns) closed 59 stores, however announced 1,600 new store openings in 2023.
- Their competitor Dollar General closed 74 stores.
- As for 2024, U.S. retailers have so far announced 580 store closures, led by CVS Health and Walgreens.
9. Other e-commerce news of interest
Free shipping is more important to U.S. shoppers than same-day or next-day delivery, according to a new Forrester report. Nearly half of respondents said the option for faster delivery has no impact on which retailer or brand they'll buy, but 75% said free shipping is the most important criteria.
Shopify is rolling out a personal news feed feature that enables users to follow authors and topics they're interested in, as part of the company's effort to integrate more deeply into the content consumption habits of its users. Shopify is also publishing tools to encourage users to subscribe to newsletters and monitor and track financial data of stocks.
Editor's Note: This was the only source I could find on that news story. If you have any additional insights, please e-mail me or comment on my Linkedin post.
U.S. retail sales (excluding automotive) increased 3.1% YoY this holiday season, according to preliminary insights from Mastercard SpendingPulse, which measures in-store and online retail sales across all forms of payments. Online retail sales increased 6.3% YoY while in-store were up a more modest 2.2% YoY, not adjusted for inflation.
Amazon has been handed a warning by the FDA over sales of mislabelled and unapproved products after a lab analysis found several male energy supplements contained undisclosed… umm.. male performance drugs. (Sorry, but if I write the names of the drugs out, this e-mail will for sure hit your Spam folder!) The products, which were marketed as harmless dietary supplements, should have been defined as drugs, as they contain ingredients intended for use in treating and preventing… you know what… the FDA cautioned.
British households will soon have a better way to recycle e-waste like cables, toasters, and power tools under the government's plans to have retailers pay for household and in-store collections. The ambition is for retailers, rather than the taxpayer, to pick up the tab for these new ways of disposing of defunct, often toxic products safely. (Something tells me the consumer will be bearing the brunt of this expenditure either way.)
India's proposed national e-commerce policy is in the final stages and expected to be announced very soon, according to union minister Piyush Goyal. The new rules will address data, infrastructure development, e-commerce marketplaces, and regulatory issues to stimulate the country's digital economy and exports.
Paytm, India's largest digital payments platform, confirmed a “slight reduction” in its workforce (but did not specify a number) while denying media reports that it could cut more than 1,000 jobs. A spokesperson said, “We will be able to save 10% to 15% in employee costs as AI has delivered more than we expected it to.” Damn, it's starting!
Amazon is expanding its micromobility delivery hub network with the roll out of its latest fleet of electric cargo bikes in Croydon. Ecargo bikes and on-foot deliveries are now operational from hubs in more than 20 cities across the UK and Europe.
eBay sellers are reporting that additional offers are coming in after they've accepted an offer. Traditionally an item goes into “sold awaiting payment” status, but now items are remaining active until the buyer pays, allowing another buyer to make a higher offer or buy the items outright.
WordPress is creating guides to help publishers migrate away from commercial page builders and onto their block based editor Gutenberg. Some perceive it as a controversial move to create a guide to undermine software publishers like Elegant Themes (maker of Divi) and Elementor, who have been a major part of the WordPress ecosystem prior to Gutenberg entering the scene.
A federal judge ruled that X violated contracts by failing to pay millions of dollars in bonuses that were promised to its employees. Mark Schobinger, who was Twitter's senior director of compensation before leaving Elon Musk's company in May, sued the company in June, claiming breach of contract.
MicroStrategy's stock soared over 300% this year, outperforming tech giants like Nvidia and Meta, after the company's big crypto bet paid off. Since 2020, MicroStrategy has accumulated over 174k bitcoins, now worth about $7.4B, which is over 90% of its total market cap. Sell, sell, sell!
Cindi White, a 65-year-old former insurance investigator who lives alone in NJ, gave more than $25k to Creators via TikTok's Live Matches, where creators compete against each other for likes and virtual gifts. White devoted as much as 50 hours a week to TikTok Battles, and now says it's an addiction like gambling.
Google will begin testing its new Tracking Protection feature, which restricts website access to third-party cookies by default, on Jan 4th to a around 1% of Chrome users. Google plans to phase out the use of third-party cookies for all users in the second half of 2024, although they've already delayed the push several times, so who knows?
JD.com won its antitrust lawsuit against Alibaba, which was ordered by a Beijing court to pay $141M in damages for abusing its market dominance and conducting a monopolistic tactic known as “picking one from two” (where online merchants are forced to pick only one platform as their exclusive distribution channel), which caused damage to JD.com's business. Well, now that that's over, both companies can focus their attention on battling Temu and Shein, which they are rapidly losing market share to.
Two-thirds of Gen Z consumers did not know that they could use account-to-account payment, which allow a user to send money directly from one account to another. The use of this payment method is more widespread among older generations, like Gen X, baby boomers, and seniors.
10. Seed rounds, IPOs, & acquisitions
For new readers, please note that this is a section where I highlight seed rounds, IPOs, and acquisitions that have taken place in our industry in the previous week. However since the week between Christmas and New Years typically sees little to no action in this area, I'm going to recap what Business Insider says are 5 tech IPOs to watch for in 2024.
- Discord – has been subject to IPO rumors since the end of 2021 when the company turned down a $10B buyout offer from Microsoft. It was last valued at $15B in a 2021 funding round.
- Reddit – began making preparations to go public early last year. The company hopes to debut its IPO at $15B, as last reported. See story #2 from Edition 124 to learn how Reddit began prioritizing profits in lieu of user experience in preparation for its IPO.
- Chime – the digital fee-free banking platform was valued at $25B in a 2021 funding round and hired Goldman Sachs in 2022 to advise on an IPO. It's since denied that it had immediate plans for a public debut, but it may have just been waiting out the market.
- Stripe – publicly announced a one-year timetable last year to decide whether to go public, and we're coming up on the deadline. Stripe was valued in 2021 at $95B, but later raised $6.5B in March 2023 at a $50B valuation.
- Klarna – the company said last month that it's “pretty much ready” for an IPO after recording its first profitable quarter since 2019. Klarna's valuation plummeted from $45.6B to $6.7B in 2022, but may have rebounded a bit since then.
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See you next Monday,
PS: I love when they drop the ball in Times Square. It's a nice reminder of what I did all year.