You're reading a web archive of Shopifreaks - the Internet's #1 newsletter following the e-commerce industry.

What's more valuable to an online seller in 2022 — their e-commerce platform or their ad network?

Can a government sponsored e-commerce network outperform and out-innovate big tech companies like Walmart and Amazon?

Can Meta win by default at their own self-proclaimed game or will other metaverse contenders bring stiff competition to the space?

In this week's 67th Edition of the Shopifreaks newsletter, I shed insight on these questions and more. Thanks for being a subscriber. 


Stat of the Week

The share of Internet users who shopped online DOUBLED and TRIPLED in some developing countries during the pandemic. United Arab Emirates rose from 27% in 2019 to 63% in 2020. Bahrain went from 15% to 45%. Uzbekistan from 4% to 11%. Of the 66 countries covered, online shopping remains the lowest in El Salvador at 1%. — According to UNCTAD. –> [RETWEET IT


1. The world's largest advertising company just launched an e-commerce platform

WPP, the largest advertising company in the world based out of Britain, has launched their own end-to-end e-commerce platform to handle the sales, logistics, and delivery of products sold by its clients. 

The company entered into this leg of the business during the pandemic, when it started setting up D2C sites for its clients while their brick-and-mortar shops were shut down, and now they're looking to expand this offering.

WPP's new e-commerce platform, Everymile, will handle the entire process from marketing and sales to product delivery, and will work on a revenue share model to ensure that the platform is focused on delivering mutually beneficial results for customers.

This is fascinating, and I'm excited about this. Here's why: 

Merchants on Shopify, BigCommerce, WooCommerce, and other e-commerce platforms have one big collective challenge… advertising!

Earlier this year, in Shopify's Future of E-commerce Trends 2022 Report, Shopify said that the biggest challenge facing e-commerce today is the cost of customer acquisition, which is set to rise in the face of increased DTC competition and the increasing cost of advertising. 

Prior to that trends report, I discussed Shopify's two big challenges of not having a central destination where shoppers begin their search for products and lack of an advertising end of their business. 

E-commerce logistics is becoming a commodity. There are a LOT of options for merchants on the market. However advertising is a much more coveted element of the business. 

So I find it fascinating that WPP is essentially cutting out the middle man for their clients and bringing the e-commerce portion of their customer journeys in-house. It gives WPP direct control over their platform tech and offers new revenue channels (ie: SaaS subscriptions, merchant processing fees, etc) that would otherwise go to 3rd party providers like Shopify. 

This is no different than Facebook, Twitter, and TikTok (social advertising channels) attempting to cut out the middleman through their internal Shops features. 

Keeping e-commerce in-house also prevents those 3rd party platforms from interfering with WPP's advertising revenue via their partnerships and integrations that may compete with WPP's core offering.

Building an e-commerce platform is easier today than building an advertising network, especially with headless commerce options and open integrations. And now it seems that the advertising networks themselves want to siphon off a piece of that business. 

A bold move by WPP that could offer big upside to the company. 


2. India battles US Big Tech

This Friday, India will soft launch its much anticipated Open Network for Digital Commerce (ONDC), a government sponsored not-for-profit platform that will allow buyers and sellers to connect and transact with each other online, no matter what other application they use. 

This government created e-commerce ecosystem is designed for everyone, and intended to take market share and platform control back from Amazon and Flipkart (owned by Walmart), who control more than half of India's e-commerce trade, and put it back into the hands of small Indian merchants. 

Initially, the open network platform will launch in five cities, however, ONDC plans to onboard 30M sellers and 10M merchants online and cover at least 100 cities and towns by August, focusing on apps in local languages for both buyers and sellers, with a special emphasis on small merchants and rural consumers

With the launch of ONDC, the government aims to promote an open platform for exchange of goods and services through electronic networks. If successful, open network could help millions of small businesses in India go online and compete with global giants.

However in order to be successful, it's got to be a great network that attracts buyers, sellers, payments logistics and warehousing firms — and competing with Amazon and Walmart in those areas is no easy task. 

Meanwhile, India's current market leaders aren't sitting on the sidelines waiting for ONDC to take over. Flipkart is planning its entrance into the web3 industry in India with the launch of its innovation unit, Flipkart Lab, which plans to explore web3 and metaverse commerce this year, which includes NFTs, virtual immersive stores, and play-to-earn games.

Plus, Amazon and Walmart are not the only big tech companies who've got their sights set on India's market. WhatsApp, owned by Meta, is currently hoping to attract more users in India to the app by offering cash back rewards for P2P payments. The user acquisition program will offer users up to 33 Indian rupees ($0.40) for money transfers made on its service

ONDC could be a gamechanger, but it requires a network effect which involves many things happening smoothly and at once. No network like this has ever previously existed, so India and ONDC have their work cut out.


3. Wix and Legal Zoom

Wix is partnering with LegalZoom to offer tools for merchants to legally form their businesses in the US. The goal is to create a one-stop-shop for new merchants to launch their e-commerce business and their business entities all under one roof. 

In true cross-platform promotion fashion, LegalZoom's clients will be offered a website built specifically for their business type at the time of business formation, while Wix users will have access to legal, tax, and compliance solutions and services from within their Wix Dashboards.

It's an interesting partnership that brings legal services into the reach of small e-commerce business owners — an area which most fall short in regards to accessibility and know-how.

Wix is all about direct integration partnerships this past year, and I understand why. It's a great way to bring services to their clients without having to develop them in-house.

In August I reported that Wix partnered with Vistaprint to power Vistaprint’s website builder and e-commerce services. In February I reported on their partnership with YellowPages to offer their website creation tools to SMBs. And you might recall last month I reported on their partnership with DoorDash to provide restaurant owners access to their large delivery fleet.

With just around 300 apps in the Wix App Marketplace (versus the over 7k apps in Shopify's App Marketplace), Wix's strategy seems to be less is more. Instead of offering a wide selection (which can be daunting for users and lead to choice overload), Wix has historically pursued deeper integrated partnerships, albeit less of them, to offer a full in-house integrated solution for their merchants. 


4. Forever21 is suing Bolt over $150M in lost e-commerce sales

Bolt is in trouble, but this time it's not from their founder Ryan Breslow bringing the heat with his tweets. Rather, the company is being sued by Authentic Brands Group (ABG), owner of Forever 21, over alleged failures to adequately deliver a new online checkout and customer loyalty solution. 

ABG hired Bolt in Oct 2020 to deploy AllPass, a customer membership and loyalty platform, across their brands including Aéropostale, Brooks Brothers, Eddie Bauer, Forever 21, Lucky Brand, and Nautica. The deal was supposed to be a win-win for both companies — giving Bolt more stature, and eventually allowing ABG to pick up a 5% stake in their business.

The feature was supposed to seamlessly integrate Bolt's products onto ABG's brand websites, but the execution, which started with Brooks Brothers, Lucky Brand, and Forever 21, turned into a flop, and ABG eventually pulled the plug.

ABG believes that Bolt showed false bravado about capabilities that it allegedly couldn’t back up, and their attorneys are arguing that the bungled effort resulted in Forever 21 missing out on more than $150M in online sales. 


5. TikTok follows Facebook into the Metaverse

TikTok's parent company, ByteDance, is a sleeping giant in the metaverse world and ready to compete with Meta in their own self-proclaimed territory. The Beijing-based company is currently assembling a metaverse hardware, content, software and platform to compete with Meta.

Here's how the two companies are going head-to-head: 

  • In 2014, Facebook acquired Oculus (now renamed Quest) for $2B.
  • In Aug 2021, ByteDance bought Pico, a Chinese VR headset maker, for around $1.4B.
  • Meta is opening an offline retail store in May in California.
  • Pico is rumored to be opening stores (including authorized offline dealers) in the thousands this year.
  • Both companies are selling as many VR headsets as possible at a price below cost in an attempt to dominant market share and attract the most developers, creators, and merchants.
  • Meta opened Meta Quest Store which offers over 1000 apps.
  • Pico opened Pico Store with 425 apps.
  • Both have their own pre-installed apps on their VR content store.

In April, Pico entered the European consumer market in a beta program, and will expand to Japan and South Korea next.

As it turns out, in the expansive and unlimited world of the metaverse, there's still an East and West battling it out for market dominance.


6. Afterpay is being class action sued for its ‘significant' fees

Afterpay is being sued by a customer in Maine who says she was hit with multiple bank fees from using the service. The plaintiff claims that Afterpay targets young and poor people and misleads them into thinking there will be no fees associated with the service, yet they later get hit with bank overdraft fees.

The plaintiff, Amanda Edwards, filed the complaint against Afterpay US, Inc. in Maine federal court, alleging that the company runs a BNPL service that has a hidden risk of landing customers with multiple insufficient funds fees or overdraft fees from their banks as a result of automated transfer coming out of their accounts.

She also claims that Afterpay has concealed the fact that its already-struggling users have had to pay hundreds of thousands of overdraft and non-sufficient funds fees for using the service.

In January, I reported that the Consumer Financial Protection Bureau is peering into the policies of Affirm, Afterpay, Klarna, PayPal, Zip, and other BNPL platforms, concerned that they encourage overspending while dodging existing regulations around credit and lending.

And in February, I reported that Britain told four BNPL firms — Clearpay, Klarna, Laybuy, and Openpay — to change their contracts after identifying potential harms to consumers. Britain’s finance ministry also promised to bring forward legislation to regulate BNPL when parliamentary time allowed.

I've been vocal about how I'm not a fan of the BNPL industry. While it's nice to offer interest free installments on purchases, it's no better than what companies like Best Buy and Home Depot, for example, have been offering for years through their credit card programs. The difference being that a credit card offers a consolidated view at outstanding debt, and is regulated by consumer protection agencies. If consumers want to be able to make interest free installments on small purchases — so be it — but no need for an entirely separate payment portal to do so. 

The one thing I like about BNPL is that it is taking market share from Visa, Mastercard, and AMEX, who dominate B2C transactions, by creating a payment option that goes around them. I'm a big fan of lowering the merchant processing tax on businesses and consumers through technology that enables bank to bank transfers, and I want to see new payment options like that become mainstream. However, BNPL does not do any of that. It's simply another more costly and unregulated version of the merchant processing tax that already plagues the industry. 

I hope that lawsuits like this further expedite the need for regulation over BNPL platforms.


7. Other e-commerce news of interest this week

  • In December I reported that five major text book publishers were suing Shopify for allowing the sale of pirated textbooks and test materials on their platform, and in January I reported that Shopify rejected those claims. Last week, Shopify opposed the plaintiffs' second motion to compel discovery, saying that their request “needlessly harasses and significantly increases the burden on Shopify.”
  • Amazon is closing six Whole Foods Market locations in four states, just two months after shutting down dozens of bookstores and gift shops around the US. Amazon on Thursday said it had excess warehouse space and employees when explaining an unexpected first-quarter loss and a bleak outlook for the current period. 
  • Square is bringing its lending programs for small business to Canada. Square Loans uses transaction data to proactively provide customized offers to eligible sellers, and funds are delivered as soon as the next business day.
  • The NSA has re-awarded the “Wild and Stormy” cloud computing deal to Amazon Web Services after reviewing Microsoft's failed attempt to challenge the $10B contract. The contract is part of a larger Hybrid Compute Initiative that will see the NSA migrate intelligence data from their in-house servers to a cloud provider like AWS.
  • Splitit, a US-based BNPL provider that allows consumers to make installments against unused credit on their existing credit card accounts, is negotiating with Google about extending their partnership to the U.S. consumer market, funded by its existing $150M facility with Goldman Sachs. Since Dec 2021, Japanese customers have been able to split Google Store payments for a Pixel 6 into equal monthly installments using Splitit's financing.

8. This week in seed rounds, IPOs, & acquisitions….

  • BigCommerce acquired BundleB2B, the solution that currently powers the B2B Edition of their platform by packaging their Enterprise plan and BundleB2B. BundleB2B was designed with B2B merchants of BigCommerce in mind and the acquisition is a natural progression in the their partnership. 
  • Movable Ink, a platform that uses AI to personalize marketing content, raised $55M in a Series D round led by Silver Lake Waterman, bringing their total amount raised to $97M and valuing the company at $1.3B. The company will use the funding to invest in AI-driven products and expand its 550-employee workforce to more than 700 by 2023.
  • Nium, a Singapore-based digital payments startup, is reportedly in talks to buy an enterprise-focused payments operation that is worth between $20M to $400M to help it expand across Europe. Nium generates about $150M in yearly global revenues, with more than half of sales coming from Europe.
  • Lucid Green, a startup that offers a UPC that follows cannabis from seed to consumer, raised $10M in a Series B led by Gron Ventures. Cultivators and brands can use the barcodes to upload and access test results, while retailers can use them for real-time inventory management and loyalty programs.
  • Volume, an online checkout startup that uses open banking to enable account to account payments, has raised $2.4M in a round led by firstminute Capital. Using open banking rails, Volume detects the preferred bank shoppers pay with and relays them to a biometric security check to finalize the purchase in less than one second.
  • Qualified, a lead generation platform designed specifically for Salesforce that helps merchants qualify customers through the kind of programmatic, anonymized tools that adtech or marketing tech use to measure audiences, raised $95M in a Series C round led by Sapphire. The company will use the funds to continue building out its technology and expanding its overall business.
  • Replicant, a call center automation platform, raised $78M in a Series B round led by Stripes, bringing its valuation to around $550M. The company will use the new capital to ramp up investment in their customer success team to onboard new customers, as well as double their R&D team. 
  • GetUpside, a cash-back app, raised $165M in a Series D round consisting of $65M in equity financing and $100M in debt, bringing its valuation to $1.5B. Alongside the funding round, the company is rebranding the name of its app from GetUpside to Upside.
  • Conjura, a performance data analytics platform that helps e-commerce companies enhance their operational efficiency, raised €15M in a Series A round co-led by Act Venture Capital and MiddleGame Ventures. The company will use the funding to enhance its e-commerce solution and broad its UK and Ireland operations while also expanding into international markets.
  • Eurora, an Estonia-based startup that's built an AI system to automate EU e-commerce shipping compliance, raised $40M in a Series A round led by Connected Capital, which is one of the biggest Series A rounds for a startup out of Tallinn to date. In July 2021, the EU made a series of changes to their e-commerce import laws, including ending a €22 import VAT exemption and putting new trade regulations in place, which has spurred a lot of business for Eurora as sellers look for easy ways to navigate that landscape. 
  • Assembly, a US-based e-commerce software platform, acquired PipeCandy, a Chennai-based data-as-a-service (DaaS) company for an undisclosed amount, making it the first DaaS company to be acquired by a US entity. Assembly feels that the acquisition will allow it to unlock a 360-degree view of e-commerce performance of brands. 
  • 123inkt, a Dutch retailer of print cartridges and office supplies, is for sale for €500M. The company mentions an EBITDA of €50-€60M and boasts 3.5M unique customers, mainly selling to customers in Belgium and Bulgaria.
  • Union Square Ventures (USV), a 19-year-old NY-based venture firm, raised $275M for its eight early-stage fund and $350M for its fourth opportunity fund. The company plans to invest their new founds into web2 and web3 companies and projects.
  • Zmags, which offers a Creator platform that allows clients to publish and optimize their digital experiences across multiple channels, acquired Be A Part Of, a Toronto-based e-commerce digital agency, as part of its mission to support and empower growing e-commerce brands. The acquisition allows Zmags to offer a full solution for e-commerce brands. 
  • Arrow, a Singapore-based e-commerce checkout solution that helps merchants navigate SE Asia's fragmented payments and sales channel landscape, raised $4.8M in a round led by Sequoia Capital India. The company will use the funding to grow their team and establish themselves in key markets within the SEA region. 
  • Reveal, a platform that ingests data from CRMs to identify common sales accounts and potential new leads, raised $50M in a Series A round led by Insight Partners. The company will use the funding to triple its 40-employee headcount, invest in product development, and expand its online learning hub.
  • Mavrck, white operates a platform for brands and media companies to source and engage with influencers, raised $135M, which it is using to acquire Later, a social media scheduling and analytics platform, who also owns the Linkin.bio service. Mavrck and Later will operate independently for now but there will be more integration, including the Linkin.bio click/engagement analytics appearing within the Mavrck dashboard.

What'd I miss?

Shopifreaks is a community effort and I appreciate your contributions to help keep the rest of our readers in the know with the latest happenings in e-commerce. Whenever you have news to share, you can e-mail [email protected] or hit reply to any of my newsletters.

You can also mention @shopifreaks on Twitter or submit posts to r/Shopifreaks on Reddit, and I'll curate the best submissions each week for inclusion in the newsletter. 

💖 Thanks for being a Shopifreak!

If you found this newsletter valuable, please share it with your colleagues and help us grow.

See you next Monday!

PAUL

Paul E. Drecksler
www.shopifreaks.com
[email protected]

PS: George Clooney, Leonardo DiCaprio, and Matthew McConaughey get together to make a movie. Clooney says, “I’ll direct.” DiCaprio says, “I’ll act.” McConaughey says, “I’ll write, I’ll write, I’ll write.”

PPS: Don't forget to show me some love on Google and Product Hunt. Thanks!

Loading...