E-commerce Industry News Recap ?? Week of Dec 11th, 2023

This is a summary recap of the 151st Edition of the Shopifreaks E-commerce Newsletter - brought to you by Paul Drecksler . Check out the full edition for links and sources.

1. 亚马逊 is reducing its seller fees, but only for clothing items under $20. Starting in January, the seller fee will be reduced from 17% to 5% for apparel under $15, and clothing priced between $15 to $20 will incur a 10% fee. Something tells me we're about to see a lot of clothing items for sale at $14.99…

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2. In other Amazon fee news, the company is increasing fees on Multi-Channel Fulfillment by 3.5% across all delivery speeds, beginning Feb 5, 2024. Amazon is also introducing a new low-inventory-level fee, which it says sellers can avoid by maintaining more than four weeks of inventory relative to sales. So now there's low-inventory and long-term storage fees. You've really got to Goldilocks your inventory if you want to avoid fees on Amazon!

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3. Lastly, Amazon is piloting an add-on grocery subscription for Prime members in three cities (Denver CO, Sacramento CA, and Columbus OH), which gives members access to unlimited grocery delivery on orders over $35 from Whole Foods and Amazon Fresh, as well as unlimited 30-minute pickup on orders of any size. Amazon previously offered free grocery deliveries over $35, but later upped the threshold to $150. They've been playing around with the fees / benefits ever since.

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4. 字节跳动 is investing $1.5B in a new joint venture that will bring together Tokopedia , the e-commerce unit of Indonesian tech giant GoTo, with TikTok Shop in Indonesia. ByteDance will have a 75.01% controlling stake in the new entity, which will allow TikTok to once again do e-commerce in the country. First Tokopedia will acquire TikTok Shop's Indonesia business for $340M before the end of the year. Next TikTok will acquire the majority stake in Tokopedia for $840M. Further money will be invested up to $1.5B over an unspecified period to build out the entity. The overall transaction is expected to close in the first quarter of 2024.

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5. As you might recall, Epic Games is suing 谷歌 over whether Google's Android app store is an unfair monopoly. The trial kicked off Nov 6th, and The Verge's Sean Hollister has been chronicling the case, writing nearly 600 updates from the courtroom. Closing arguments are happening this afternoon.

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6. Venmo users will no longer be able to pay for their Amazon purchases through the service, beginning Jan 10th. From Jan 10th onward, customers will still be able to use their Venmo credit and debit cards, just as they would any other bank card, but they will be unable to directly link a Venmo account. Neither company offered further explanation as to why the payment partnership was coming to an end after just over a year.

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7. The Office of the Comptroller of the Currency shed light on key risks facing the federal banking system in its Semiannual Risk Perspective for Fall 2023, which include credit risk increasing due to higher interest rates, rising deposit rates negatively impacting investment portfolio values, increased risks such as cyber threats, and AI, which could present challenges and risks relating to compliance, credit, reputation, and operations.

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8. The OCC also issued guidance to U.S. banks around offering BNPL to their customers and addressed some of the risks of BNPL including borrowers overextending themselves or not being fully able to understand BNPL loan repayment obligations, lending to applicants with limited or no credit history, and the lack of clear, standardized disclosure language that could obscure the true nature of the loan resulting in consumer harm.

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9. Did you know that many Chinese apps invite users to serve as juries that weigh in on disputes between sellers and other customers? I never knew this! Although it's not technically news that happened last week (which is what I usually cover), I wanted to share because the system is quite fascinating. A customer makes a complaint on an app, such as their food being cold after ordering delivery from a restaurant. The restaurant appeals the review if it feels that it is unfair, fraudulent, or malicious. A case is opened and jurors, comprised of both users and other sellers, read the customer's review, evaluate the original order and delivery records, and consider additional information provided by the restaurant and customer before casting a vote for one side. If they find in favor of the seller, the review is removed.

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10. Elon Musk is moving forward with his plans to turn X into an “everything app” that includes its own payments system. The company was granted three additional money transmitter licenses in the U.S. states of South Dakota, Kansas, and Wyoming, bringing the total number of states where X is allowed to engage in money transfers to 12. The other states where X is licensed are Arizona, Georgia, Iowa, Maryland, Michigan, Mississippi, Missouri, New Hampshire, and Rhode Island.

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11. Amazon filed a lawsuit against REKK, an international group of cyber criminals, for allegedly exploiting the company's return and refund system to steal millions of dollars. The group manipulated Amazon's system to log fake returns, stealing high-priced items like laptops and game consoles. REKK advertised its services to a Telegram channel with 30k followers. The criminals would take additional payment as part of the item's original price. Then they'd manipulate Amazon's systems to log a return that never happened. The customer would only be out REKK's fee and not incur any cost for the item itself.

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12. Amazon filed a motion to dismiss the FTC antitrust lawsuit against it, alleging the company of using monopolistic practices against its competitors and customers. Amazon is arguing that the FTC did not provide evidence that its practices have driven up prices or harmed consumers.

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13. Mail carriers in rural Minnesota were warned by U.S. Postal Service management not to use the word “Amazon” when customers ask why the mail is delayed, and instead to use words like “Delivery Partners” or “Distributors”. They were also told that their jobs could be at risk if they speak publicly about post office issues. Last week I reported that rural postal workers are being overrun with Amazon orders, causing carriers to quit or stage strikes.

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14. Amazon is being accused by union organizers of breaking the law for not allowing off-duty workers access to its facilities to persuade co-workers to join a union. Amazon says its off-duty access rule is “a lawful, common-sense policy.” Several former Amazon employees have also claimed that their firings were a response to their union organizing efforts, but Amazon says the recent disciplinary actions were strictly due to rule violations, not union organizing.

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15. In other Amazon logistics news, pilots for Air Transport International, a cargo airline that operates half of the 80 U.S. aircraft currently in service for Amazon, voted to authorize a strike last month, which could upset Amazon's logistics network in the coming year. Federal law requires airline labor disputes to be mediated by the U.S. Government's National Mediation Board, which will implement a 30-day cooling-off period if it determines the parties have reached an impasse and they refuse arbitration, which comes to an end at the start of the year.

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16. Meta launched the Purple Llama project to develop parameters around generative AI tools in order to prevent “risky AI outputs”, as well as to create cybersecurity safety evaluations for large language models. Meta, which is also working in partnership with Microsoft, Amazon, Nvidia, and Google (among others) with the newly established AI Alliance, says its Purple Llama project is designed to “bring together tools and evaluations to help the community build responsibly with open generative AI models.”

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17. Elon Musk filed a petition with the Supreme Court requesting it undo a 2018 settlement with the SEC that requires a company lawyer to vet any X posts he makes about Tesla before he sends them. Musk says that this “Twitter sitter” imposes “unconstitutional conditions” by limiting his freedom of speech.

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18. Twitch is quitting operations in South Korea, citing that network access costs ten times higher than it pays in any other country as its reason for the exit. The company claims that the expensive network fees have caused Twitch to operate at a significant loss in the country.

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19. Block launched Bitkey, a self-custody bitcoin wallet that uses a 2-of-3 multi-signature mechanism for wallet recovery. Rather than rely on seed phrases like traditional wallets, Bitkey prompts a user to provide a combination of one key from the mobile app, another stored in a separate hardware device, and a third held by Bitkey itself.

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20. Affirm CEO Max Levchin told Bloomberg in an interview that BNPL offers a better way for consumers to manage their finances and make sound financial decisions. Levchin said that Affirm’s model provides simplicity, transparency and control over finances. Yeah, okay Max — maybe for the financially literate, but that's not exactly BNPL's target demographic is it?

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21. Meta is rolling out end-to-end encryption for all calls and messages across its Facebook and Messenger platforms, which means that no one other than the sender and recipient (not even Meta) can decipher people's messages. Encrypted messaging was first announced in 2019, but the company says that it's taken years to deliver “because we've taken our time to get this right.”

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22. TIDAL , the music streaming service owned by Block, is cutting more than 10% of its staff, or around 40 workers. Jack Dorsey recently told investors that it plans to cap the number of people at the company at 12,000 (currently over 13,000), and two weeks ago I reported that the company will no longer do performance reviews or performance-improvement plans, which Dorsey feels is a waste of time.

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23. 百事 is working on a “super app” that will offer the company's entire portfolio of products and one central place for managing loyalty points and rewards programs across all their brands. The app will present the full scope of PepsiCo's product selection and help customers find products at various local and online retailers.

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24. Meta's AI character chatbots are fully rolled out across the U.S. for people to chat with across WhatsApp, Messenger, and Instagram. Personalities include Paris Hilton, MrBeast, Kendall Jenner, Tom Brady, and others. Additionally, more of its AI characters will support search powered by Bing, and it will begin experimenting with “long-term memory” in several, meaning the characters will learn and remember your convo when it's over.

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25. Australia Post will soon end daily letter deliveries as part of a series of postal reforms designed to modernize the service and help it turn a profit. Letters will only be delivered every second business day for 98% of locations, but parcel delivery will continue daily. Australia Post delivered 500M parcels last year, but lost A$200M for the year, marking its second time in red since 1989.

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26. Adyen and Klarna are extending their partnership, with Adyen agreeing to serve as the acquiring bank of Klarna to power card payments for its 150M consumers and 500M retail partners. The two fintechs first partnered ten years ago when Adyen started offering Klarna's BNPL technology to its customers.

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27. Walmart Canada plans to invest around $1B in the coming year to update its stores, transforming its infrastructure and customer experience into the “store of the future”. The capital outlay will also be used to expand Walmart Canada's fulfillment network to bolster its online service at its more than 400 stores nationwide.

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28. 萬事達卡 is launching a new generative AI shopping tool called Shopping Muse, designed to help users get personalized product recommendations. The tool is powered by Dynamic Yield, a personalization company acquired by Mastercard in April 2022, and the company says it is designed to “revolutionize how customers search for and discover products in a retailer's digital catalogue.”

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29. In October I reported on a Shopify-Gallup survey which revealed that 80% of shoppers indicated that they planned to begin holiday shopping in November or earlier. I noted that it'd be interesting if Shopify followed up later to see when they actually started shopping. Turns out they did! In their most recent survey, 49% of holiday shoppers in the U.S. said they plan to do the bulk of their holiday shopping in December. How the turn tables!

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30. A Brazilian student's case against Amazon, which aims to hold the marketplace liable for selling a spy camera that was used by her U.S. host to spy on her in the bathroom, is moving forward. The Hidden Clothes Hook Camera was accessible on Amazon's website until recently, and the lawsuit claims that Amazon facilitated illegal usage by accepting keyword searches like “bathroom spy camera” that indicate unlawful intent.

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31. Plus 4 seed rounds, IPOs, and acquisitions of interest including @, a startup developing suction-based robots that can unload truck freight, raising $6.25M in a round led by Amazon's Industrial Innovation Fund.

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I hope you found this recap helpful. For the full editions each week delivered straight to your Inbox with more details and links to sources, subscribe free at https://www.shopifreaks.com

See you next week!

PAUL

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