Does your company run an affiliate program? If so, you might get value from this podcast I recorded last week with Jason Shepherd called 7 Mistakes Brands Make With Their Affiliate Programs. He also recapped the info in this post.
Technically it turned into “9 reasons” but that's my fault, as I've got a lot of information to share about affiliate marketing. As part of my work at Ideas Focused, I've helped hundreds of companies launch and grow their affiliate programs in the past decade. And on the other side of the affiliate spectrum, I've also been an affiliate for hundreds of companies myself through my various publications. So I've got a lot to say on the subject!
Jason runs a newsletter called The Real Heroes of E-commerce where he covers customer psychology in e-commerce. Well worth a follow and sub.
In this week's edition, I've got a ton of news for you about Amazon and Walmart including newly introduced shopping and advertising features, a comparison of their e-commerce models, and their predictions for the holiday season ahead.
I also cover stories about Square's questionable e-mail marketing tactics, the effect of the strong dollar on international brands and retailers, and a $100k giveaway from MrBeast and Shopify.
All this and more in this week's 93rd edition of Shopifreaks. Thanks for subscribing and sharing!
PS: Are you enjoying Shopifreaks? If so, please take a moment and write a review for me on Google. Your kind words go a long way in helping me reach new readers.
Poll of the Week 🗳️
“Will 2022 U.S. holiday shopping SURPASS or FALL SHORT of last year's GMV?”
Everyone's predicting “slow growth” this year when it comes to holiday sales, but just how bad will they actually be? Or will consumers surprise analysts this year? What are your thoughts? Take the poll and cast your predictions.
Last Weeks Poll Results: 63.3% of respondents believe we SHOULD NOT tip Amazon delivery drivers. Looks like Amazon will have to pay fair wages on their own! [View Poll]
Stat of the Week 📈
Apple grew its e-commerce sales 97% in two years, making it the third largest online retailer in the US behind Amazon and Walmart. – According to Trading Platform
That's wildly impressive, especially if you consider that the two largest retailers ahead of it also sell Apple products!
1. Amazon's new advertising features
At their Unboxed event in New York last week, Amazon announced its new advertising capabilities, which I'll highlight below:
- Rewarded Sponsored Display – brands will be able to add Amazon shopping credit directly into their Sponsored Display Ads, which customers receive by purchasing the product. This feature is only available for Sponsored Display Ads (which appear on and off Amazon), but not on Sponsored Product Ads (which appear within product results).
- Sponsored Display for Brands That Don't Sell on Amazon – previously only available for brands that sold on Amazon, now the ad type is available for restaurants, hotels, etc to reach the Twitch audience. Only currently offered to U.S. advertisers in closed beta.
- Sponsored Display Video Creative – allows advertisers to create video campaigns such as tutorials, demos, unboxing, and testimonials, and measure campaign performance with new video metrics. I'd imagine this one is also early-days Twitch focused.
- Digital Signage Ads in Amazon DSP – programmatically purchase digital signage at Amazon Fresh stores based on location (both of the store itself and within the store) and by time of day. Not yet available for Whole Foods stores.
- Sponsored Products campaigns with presets – use Amazon-recommended campaign settings including daily budget and bidding strategies. Presets are now automatically featured in the ads console for new products.
- Performance recommendations – in-console, actionable best practices for Sponsored Products campaigns. These recommendations work in the background, constantly looking for ways to optimize the campaigns with new keywords or bid suggestions. Amazon has had similar in the past, but now it's front and center.
- Amazon Marketing Cloud (AMC) enhancements – added Sponsored Display and digital subscription events to AMC, more pre-built instructional queries, and the ability to manage DSP audiences.
The trend you might have noticed above is that Amazon is creating new advertising opportunities OFF its marketplace. Perhaps they've capped out on the number of sponsored listings that their product results can support and/or with the amount that sellers are willing to spend on-platform.
Kiri Masters, Head of Retail Marketplace Strategy at Bobsled and author of the article used as a source above, noted that “Empowering Brands of All Sizes” was a key message in the announcements from Amazon.
She wrote, “Amazon is arming smaller and emerging brands with tools to get them started with advertising. This represents a very ‘long tail' of advertisers, and if Amazon can mobilize them with self-serve tools, will bolster Amazon’s ad revenue.”
In non-advertising Amazon news, Amazon will begin offering Venmo as a payment option on its website and app, rolling it out to select customers immediately and available to all U.S. shoppers by Black Friday.
2. Walmart's new e-commerce features
Not to be outshined by the world's largest online retailer, Walmart also introduced new features ahead of the holiday season.
- Virtual Queuing – this feature will hold a customer's place in line for the highest demand items during Black Friday events while they continue shopping on the site. Customers can have their spot held in multiple queues and be able to view an estimated wait time as well as how long they have to checkout. Now that's innovative!
- Buy Now button – a new type of one-click checkout that will give customers the option to purchase items directly from their respective pages.
- Dynamic Search Results – will now indicate the most viewed and purchased items to help customers quickly locate popular items.
- Dynamic Product Pages – will display how many people are viewing the item and how many people have it in their carts. This would have no impact on my shopping unless inventory is low.
Last week I reported on Walmart introducing its new content creation platform to allow influencers and other creators to make social media posts and earn commission on the products they sell.
Walmart got a relatively late start into the world of e-commerce. By the time they started taking it seriously, Amazon had already created enormous headway. However the company is quickly catching up! See story #4 below to learn just how much.
3. BigCommerce News (Sponsored)
Here's what's been happening at BigCommerce in October:
- Dippin' Dots launched a new site, designed and built by BigCommerce Elite Partner Groove Commerce, which combines a fun and engaging customer experience with checkout functionality that ensures the temperature-sensitive products are delivered when the buyer wants them to be.
- Rosie Rivel joined the company as its first Chief Information Officer to lead BigCommerce’s business applications and information technology teams with the objective of transforming internal technology systems to improve productivity, efficiency and effectiveness to the benefit of the company’s customers, employees and investors.
- BigCommerce announced the launch of The Wine Flyer, a venture from a newly formed subsidiary of IAG Loyalty, where millions of members of the British Airways Executive Club can earn Avios, IAGL's global loyalty currency, by purchasing wine and redeem Avios for wine.
- Jimmy Brings, one of Australia's largest express alcohol delivery services, launched a progressive web app (PWA) storefront built on BigCommerce’s headless architecture, making it one of the first e-commerce platforms hosted locally by BigCommerce in the region, minimizing the potential for disruptions to occur.
- British cycling lifestyle brand Kostüme launched a store on BigCommerce, leveraging its headless technology to equip Kostüme with the flexibility to rapidly transform its online storefronts to exhibit exclusive, small-batch seasonal apparel created with exclusive artist collaborations that combine performance, comfort and utility.
4. Amazon vs Walmart e-commerce
Since we're covering several Amazon and Walmart stories this week, I thought it would be a good time to examine how the two retail giants compare in the world of e-commerce.
Jungle Scout, an Amazon-focused e-commerce firm, shared a new report detailing how America’s two biggest retailers stack up against each other, which I'll share highlights of below:
- Net Sales – Amazon: $121B vs Walmart: $151B
- Subscription Sales – Amazon: $8.7B vs Walmart: $1.5B
- YoY E-commerce Sales Growth (U.S.) – Amazon: -4.61% vs Walmart: +11.91%
- Average Monthly Site Visitors – Amazon: 2.5B vs Walmart: 429M
- Number of 3rd-party Sellers – Amazon: 6.3M vs Walmart: 150k
- 75% of U.S. consumers made a purchase from Amazon in Q3 2022 versus 43% made a purchase from Walmart.com and 65% from Walmart stores
- Walmart customers are more price conscious (43%) than Amazon customers (36%)
- Customers find both websites equally easy to use.
- 48% of consumers shop on Amazon at least once per week vs 43% of consumers who shop on Walmart.com once per week
- Gen Z shoppers are more likely than any other generation of consumers to begin their search for a product online at Amazon (67%) over Walmart.com (42%)
- While consumers are spending less overall in 2022 amid an economic downturn and record inflation, their spending at Amazon and Walmart is relatively stable compared to a year ago.
The full report also gets into comparing the demographics of shoppers and sellers at both marketplaces, where shoppers are most likely to begin their product searches, membership growth, and the future of online grocery.
Jeff Bezos predicted many years ago that there would be 4 or 5 Amazon-sized marketplaces in the future for customers to pledge their shopping allegiance to. He knew back then that while Amazon was paving the way for the future of commerce, there was room in the market for several major players. And it seems that Walmart is securing its position as one of those other major players.
Who will be #3 and #4? Hit reply and let me know your predictions.
5. Bad holiday season ahead?
In this week's poll, I asked you to predict whether this year's U.S. holiday GMV would SURPASS or FALL SHORT of last year?
The reason I ask is because SO many major companies are predicting “slower growth” — and it makes me question whether that's just earnings report talk for “worst holiday season in years”.
- Sales of iPhones and services were softer than expected last quarter, but Apple’s revenue and profit topped analysts’ estimates. The company said that growth wouldn’t be as strong during the current period.
- Mastercard Inc. saw spending growth slow to its lowest level in more than a year as the company said it’s watching the impact of inflation and other geopolitical risks on its business.
- Affirm expects that only 42% of Americans will buy gifts for co-workers this year, down from 79% last year, as they begin to dial back their spending.
- More than two thirds of shoppers surveyed expect inflation to impact their holiday gifting budget, according to Coresight Research’s consumer holiday shopping study.
- Bain & Co. forecasts growth of as much as 7.5% from last year, but when adjusted for inflation, it expects growth of just 1% to 3%, which is below its 10-year average.
- The poll also found 52% of respondents said it will be harder to afford their holiday expenses this year than in 2021.
Polls and analyst forecasts are one thing, and actual numbers are another. Regardless of how consumers responded to surveys about their spending plans, the truth will reveal itself when they shop this holiday season — which you know I'll report on!
What are your predictions? Vote and discuss on this week's Twitter Poll.
6. The strong dollar cost Amazon $900M
The U.S. Dollar has jumped nearly 16% in 2022, thanks in part to aggressive Federal Reserve interest rate hikes, which means that international brands and retailers are earning less on exports paid for in other countries' currencies.
A strong dollar is a double-edged sword for foreign markets. While it typically makes it more expensive for foreigners to buy American goods, which can decrease demand, it also makes their goods more affordable for American consumers, which can increase exports.
Amazon estimated that the strong dollar cost it $900M more than expected when looking at net sales, contributing to its dismal Q3 earnings performance.
The U.S. Dollar has climbed 15.6% this year so far, measured against a basket of six major currencies, and rose 4.7% in the third quarter — which is more than 3.9% higher than Amazon had factored into its forecasts.
Amazon's CFO Brian T. Olsavsky said on an earnings call, that Amazon's revenue growth is likely to keep facing dollar headwinds in the final months of this year, during the key holiday shopping season.
Apple also reported similar findings in its earnings call. While Apple avoided a specific forecast, their Chief Financial Officer Luca Maestri cautioned analysts to expect revenue growth to “decelerate” in the fourth quarter, due in part to a foreign exchange hit of 10 percentage points.
7. Square's questionable e-mail marketing
Have you ever received a Square promotional e-mail or text message from a local business that you'd never given your info to?
Ben Brody, a tech policy reporter at Proctocol, did some investigating and discovered that when you enter your e-mail address or phone number on a Square terminal to receive a receipt, you're not only giving that particular merchant permission to send you marketing correspondence, you're also giving Square permission to rent your contact info to other local businesses who you've shopped with, but didn't give your info to.
For a couple hundred dollars a month, Square merchants can access tens of thousands of e-mail addresses and phone numbers collected by other local Square customers.
Block disclosed in securities filings that it handled more than 3B card payments in 2021 and kept 261M consumer profiles — so we're talking about a lot of customer info.
While the practice doesn't appear to violate data protection laws, it definitely walks a fine line.
Opting out was no easy task either, even for Brody who considers himself more tech savvy than your average user. It took a lot of digging to figure out how to actually opt-out of these messages, which some might argue is an intentional dark pattern design by Block.
Amazon recently came under heat in the EU for employing dark patterns by intentionally making it difficult for customers to cancel their Prime memberships.
Square says its system is really all just about customer convenience — making sure you get payment receipts with minimal friction.
However whether or not you'd call it “convenience” or “spam” is up for you to decide.
8. MrBeast gives $100k to best business pitches
Jimmy Donaldson, aka MrBeast, has partnered with Shopify to give the Top 10 best business pitches $10k on TikTok.
Last week, the official Twitter account of Shopify posted a tweet featuring a TikTok link, which led to this video with MrBeast who could be seen sitting on a chair with a pile of cash in front of him, pretending to listen to an audience. No one spoke a word in the video, except a computer-generated voice that read the caption and explained the rules.
Entepreneurs have until Oct 31 (that's today!) to duet the video with their business pitches with #PitchMrBeast and @shopify in the caption, and the top 10 best pitches will get a cash prize of $10k.
The #PitchMrBeast hashtag has over 24.3M views so far. Better upload your duet quick for a chance to win!
9. Other e-commerce news of interest
Elon Musk completed his $44B deal to buy Twitter on Thursday. He quickly began terminating employees including the company's CEO, CFO, and Chief Legal Counsel Vijaya Gadde, who made the call in January 2021 to permanently suspend Trump's account. Today he dissolved the company's board of directors.
Amazon plans to delist Appario Retail, a larger seller in which it maintains a stake, from the marketplace, following allegations from retailers that some sellers received preferential treatment. Amazon did not say why it was delisting Appario, but the move follows a growing scrutiny on its owned sellers, and comes a year after ending ties with Cloudtail, another large seller which it also held stake in.
Clearpay, the European division of the BNPL firm Afterpay, is collaborating with Square and the British Fashion Council (BFC) to help emerging designers create their online presence. As part of the initiative, British designers can take part in an e-commerce mentoring package aimed to boost business growth and make their collections available worldwide.
The number of Vietnamese sellers has increased 80% YoY on Amazon, with nearly 10M products from the country sold to customers worldwide from Sep 2021 to Aug 2022. In recent years, Amazon has been courting more Vietnamese exporters to sell on its platform instead of Chinese marketplaces.
Amazon and Google have struck a deal that allows Amazon to work with manufacturers like TCL, which also makes Android TVs and phones. Last week I reported that over half a dozen hardware vendors have indicated that they cannot enter into a TV manufacturing relationship with Amazon over fear of retaliation from Google. The two companies seemed to have made peace quickly in this arena.
Zip announced the availability of Zip Card, issued by WebBank, the newest BNPL product in its portfolio. The new card will extend its pay-in-four functionality offline in a convenient physical card format.
Visa is ramping up growth of Visa Debit and Visa Direct, its global direct-debit payments services that operates in near-real time, in preparation for a recession. The company noted that debit transaction volume tends to be more resilient than credit during downturns.
Shipt, a delivery service owned by Target, is being sued by the Attorney General of Washington DC for allegedly unlawfully misclassifying employees as independent contractors to avoid paying for worker benefits, thereby denying basic employment rights, shifting costs to those workers, and subverting the law.
Aldi is developing it's own e-commerce platform to allow shoppers to purchase groceries directly online. The retailer launched its partnership with Instacart in 2017 and expanded it nationwide the next year.
Last week I reported that Instacart is facing more competition, including internally from their own partners, as retailers build out their own logistics operations, which often provide better value propositions to customers compared to Instacart’s model.
Huawei is suing Amazon and Compal Electronics, as well as several of their subsidiaries, over e-ink patents. Huawei is among the leaders in the world in granted patents with over 110k patents. It is the fifth largest patent holder in the US, where it is not allowed to do business.
Zara's idea to launch a pre-owned marketplace of its goods was met with mixed reactions. Alice Murphy, journalist for The Independent, said that the fast-fashion company should be focused on reducing waste more than introducing recommerce initiatives.
Former Argo Chief Technology Officer Perry Hothi joined Block to advise on the development of the company’s Bitcoin mining division. Block is continuing to hire from crypto firms, as the payment processor seeks to establish its Bitcoin mining and wallet hardware arms.
Yon Nuta joined the headless commerce platform fabric as its first Chief Product Officer where he will bring his data-driven approach to lead product vision and development. Nuta most recently served as CPO at babylon Health where he guided analytics, product design, and development.
Bolt released a new virtual Shopper Assistant, which integrates into a retailer's site and lets customers get a discount for entering their e-mail into the pop up. Returning shoppers get a more streamlined login experience and can then see past order history, recently viewed products, product recommendations, re-orders, and track live orders.
Jifiti, a US-based fintech that powers point-of-sale financing for banks, lenders, and merchants, rolled out a new white label B2B BNPL service to enable their clients to provide BNPL under their own brand, embedded directly into the customer journey and checkout experience.
Wix announced that they are now an official partner of React Native, an open source UI software framework originally developed by Facebook. As a partner, Wix will take greater responsibility to promote open source programming and further the efforts of the RN framework and community.
Perfume's Club, a Spanish online beauty product store, is turning its platform into a marketplace. By the end of this year, it wants to add 200k products from 3rd party suppliers and brands, available only in Spain at first.
H&M announced its partnership with Shopee to launch the “H&M Thailand Official Store” on Shopee Mall, with the aim of making customers' shopping experience more convenient. The shop will offer more than 5,000 items, including the brand's latest Fall/Winter 2022 collection.
More than 29% of Brits now make more than 80% of their purchases online, compared to 11% pre-pandemic. The same survey revealed that people living in the UK, France and Italy are the least patient when it comes to customer service, and get frustrated if they have to wait more than five hours for a response.
10. Seed rounds, IPOs, & acquisitions
Money Fellows, an Egypt-based fintech that digitizes money circles, a centuries-old system where a group of people pool resources to help each other build wealth, access interest-free loans, and make investments, raised $31M in a Series B round led by CommerzVentures, Middle East Venture Partners, and Arzan Venture Capital. The funds will be used to accelerate the company's growth across Africa and Asia.
Tymit, a London-based startup that offers brands a tailor-made BNPL program where they can own the customer data, raised £23M in a Series A round led by Frasers Group at an undisclosed valuation. The funding will be used to accelerate the company's product development and support the launch of its B2B2C installment program for merchants.
Udaan, a Bengaluru-headquartered startup backed by Lightspeed India Partners and GGV Capital that helps merchants secure inventory and working capital, raised $120M in convertible notes and debt from existing shareholders and bondholders, bringing its total amount raised to $350M. The company hopes to be ready for the public markets in 12-18 months.
Trigo Vision Ltd, which develops technology that retailers can use to provide cashierless shopping in their stores, raised $100M in a round led by Temasek and 83North, bringing its total amount raised to $199M. The company, whose technology has been adopted by several of the world's largest retailers including Tesco PLC and Rewe Group, will use the funds to further grow its market presence in the U.S. and Europe, as well as expand into new markets.
Evy, a French startup that is working to bring an AppleCare experience to other brands and retailers, raised $6.5M from Sequoia, La Famiglia VC, Global Founders Capital and several business angels. Unlike its competitors, Evy can create custom-made insurance products in very little time and has created 25 tailor-made insurance programs in just a few months.
Penny Black, an e-commerce platform that connects store, marketing tools, and fulfillment operations to deliver personalized unboxing experiences, raised £1.3M in seed funding from AGFA, and VC investor, ninepointfive. The funding will be used to increase the number of platforms they integrate with and strengthen relationships with fulfillment partners.
Ninetailed, a Berlin-based startup specializing in personalization and experimentation, raised €5M in a round led by Mosaic Ventures and Cherry Ventures. The company will use the funds to expand its team, add new technology and solution partners to its network, and continue developing the experience layer of the composable architecture.
WATI, which stands for WhatsApp Team Inbox, a startup that enables companies to have scalable, yet personalized, conversations with customers through WhatsApp's Business API, raised $23M in a Series B round led by Tiger Global with participation from Shopify, bringing its total amount raised to $35M. The company will use the funds to scale its team, invest in its product stack, and grow in emerging markets such as Latin America and Southeast Asia.
Velstar, a Liverpool-based e-commerce agency, acquired We Influence, a Chester-headquartered counterpart, with funding from River Capital. The two combined agencies will have £4M in turnover and are aiming to reach £6M by 2024.
Agroshift, a Bangladesh-based agritech startup that helps farmers sell produce through demand aggregation, sourcing, and delivery, raised $1.8M in a pre-seed round co-led by Shorooq Partners and Anchorless Bangladesh. The funds will go towards improving the platform and adding social commerce features like community group buying and gamification.
What'd I miss?
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See you next Monday,
Paul E. Drecksler
PS: Why did the laptop arrive late to work? Because it had a hard drive.
PPS: Happy Halloween! 🎃