Shopifreaks E-commerce Industry News Recap ?? Week of Aug 5th, 2024

Hi LinkedIn - I'm Paul Drecksler and I follow the e-commerce industry closely for my Shopifreaks E-Commerce Newsletter.

This is a summary recap of the 185th Edition published Aug 5th, 2024. Check out the full edition for links and sources and subscribe here.

STAT OF THE WEEK: So far this year, more than 5 billion items have arrived the same or next day globally—a new record for Amazon and an increase of 30% YoY.

Etsy introduced its first-ever buyer membership program called Etsy Insider. The company says the Amazon Prime-like membership is part of a larger effort to change how consumers think of the platform, with a goal of making Etsy a place to begin their shopping journeys, instead of just visiting the site when looking for something very specific. The membership will offer free US domestic shipping, a birthday bonus, a limited edition annual gift designed by an Etsy seller, first access to special discounts and select merchandise, and double impact on donations to Etsy's non-profit fund which supports entrepreneurship.

Hundreds of Chinese sellers swarmed Temu's offices in Guangzhou, China last week to protest fines and refund policies that they said were destroying small merchants' profits. The anger was directed at Temu's policies on fining merchants if they receive refund requests or complaints and Temu refunding customers even if they don't send back the product. Around 80 of the merchants were able to break through security and gather on the 30th floor of the office building, hoping to confront the company's top executives, but they were unsuccessful at securing a meeting. The Chinese media outlet Yicai reported that employees were told to stop working after the protesters entered the office, and that the merchants left after the police arrived.

Wix released a suite of AI-powered tools that can come up with content ideas and then turn those ideas into near-ready SEO-optimized articles. The tools enable website owners to generate ideas for content, create outlines or full posts, fine tune the content to resonate with your audience, enhance blog titles, images, and existing text with AI-driven suggestions, and optimize the posts for SEO. Wix said that sites with blog posts get 85% more organic traffic compared to sites without blogs, and its new tools will help more users produce top-notch content. The Verge's Jess Weatherbed criticized the release, saying, “The result will be a web further filled with AI-generated garbage at the expense of legitimate, genuinely useful information.”

Google Ads experienced a significant glitch that impacted advertisers' ability to manage campaigns and access performance data, and even worse, exposed sensitive information to competitors including item IDs, product titles, and Merchant Center information. The glitch left merchants in a scenario where advertisers can potentially identify direct competitors by searching exposed product titles. The issue was flagged on LinkedIn by Ingvar Kraatz, COO of Bidnamic, a shopping ads agency, and was subsequently reported by Search Engine Land. Google recognized the issue on their Ads Status page, noting that the issue was resolved on July 31st, but that they paused access to certain reports on Aug 1st. All reporting services were restored on the 4th.

The CFPB set a deadline of Aug 1st for companies to adhere to the new BNPL rules and opened up a commentary period during the previous two months. Klarna argues that the CFPB's approach is misguided and that BNPL products are fundamentally different from credit cards and should not be regulated under the same framework. I shared similar sentiment when the news first broke. Affirm also urged the CFPB to create specific rules for BNPL products rather than applying existing credit-card regulations. Affirm's Chief Legal Officer Katherine Adkins wrote, “Requiring BNPL providers to comply with rules designed for open-end credit cards creates compliance challenges and confusing outcomes for consumers. The actual information Affirm must include on the account opening disclosure is largely unhelpful and likely confusing.” BNPL firms have requested that the rules take effect at the beginning of next year, petitioning the CFPB that “an extension is necessary for BNPL lenders to test and responsibly implement necessary changes before civil liability attaches to these additional requirement.”

The South Korean government created a $445M rescue package to bail out merchants who used two e-commerce platforms owned by Qoo10 that have failed to pass on payments for several weeks. The issues began in early July, when merchants on WeMakePrice and TMON — both owned by Qoo10 — began noticing that payments weren't being made on time. Qoo10 blamed the late payments on a glitch in its payment system, but the company could only hide behind that lie for a short period of time before their house of cards came toppling down. By the end of July, TMON and WeMakePrice filed for court receivership, requesting that the court take control of their management. Qoo10 CEO Ku Young-Bae apologized for the incidents and pledged to use his own assets to help compensate affected customers and vendors. Qoo10 told the Financial Services Commission that it plans to scramble together $50M to apply to the debt. Ku Young-Bae also issued a statement offering to sell off his shares in the business to raise money to solve the matter, noting that his stake in Qoo10 was most of his assets.

TikTok is looking to hire a handful of workers in the US to enhance its shopping experience with features like virtual try-ons and generative AI shopping tools, according to jobs posted in its portal. The new hires will focus on building tools for “product creativity generation” and the “generation and optimization of product materials,” as well as virtual try-ons and other shopping features. TikTok's job postings make it clear that the company is prioritizing its TikTok Shop and competing harder in the US market, as about a third of its current US job openings are for e-commerce roles right now.

In other TikTok news… TikTok Shop is raising its seller commission fees in the UK from 5% to 9% in September as it focuses on building the “marketplace of the future” by prioritizing live commerce and shoppable content. The company is also introducing a “seller missions” program, which enables UK sellers to reduce their fees if they create a target number of TikTok live or shoppable videos. TikTok also plans to launch a co-funded free shipping model in September, enabling sellers to offer free shipping by sharing part of the cost. The initiative aims to increase order conversions by expanding the range of products available with free shipping for customers. Sounds like it's thinking like Etsy!

Lastly in the world of TikTok, the US Justice Department and the FTC filed a civil lawsuit against TikTok and ByteDance for violating the Children's Online Privacy Protection Act, which prohibits website operators from knowling collecting, using, or disclosing personal information from children under 13, unless they obtain consent from those children's parents. According to the complaint, TikTok knowingly permitted children to create accounts and view / publish videos on the platform, while collecting and retaining personal information from the children.

Jason Del Rey, author of Winner Sells All (great book), and Fortune writer, published an expose entitled “Jeff Bezos' famed management rules are slowly unraveling inside Amazon. Can they survive the Andy Jassy era?” In the article, Rey, through interviews with current and former Amazon employees, breaks down how the culture at Amazon has changed, what's responsible for the shift, and the obstacles ahead for Amazon as a result. Most workers who spoke to Fortune don't point to the Bezos-Jassy transition as the main fault line, and instead blame the disruption caused by the pandemic and the subsequent doubling of Amazon's headcount in two years. Those who joined right before or during the pandemic had little time to learn and adapt to the culture, which is fundamentally harder through videoconferencing. Others point blame to the fact that many longtime veterans at Amazon have left the company in recent years, and that there were not enough people left to teach the culture to new hires.

The US Consumer Product Safety Commission?ruled?that?Amazon?is responsible for handling recalls of unsafe products sold on its site and must improve its process. The regulator said that Amazon's alerts were not sufficient to convince its customers to stop using certain recalled products and ordered the retailer to submit a new plan for how it will respond. The decision follows its lawsuit against Amazon in 2021 for distributing more than 400k hazardous items, including faulty carbon monoxide detectors.

Alibaba?is?launching?an AI-powered conversational sourcing engine in September, which will synthesize information on its website, interpret sourcing needs using natural language processing, and match buyers with products and suppliers with improved accuracy. Alibaba says that the new approach tackles the inefficiencies of conventional search methodologies, which are often time consuming, manually intensive, and involve laborious data categorization processes. I'm curious if the engine will ultimately “choose winners” based on which products and suppliers currently have the best data and reviews, and subsequently drive more business to a smaller pool of vendors.?

Brick and mortar stores?like Walmart and pharmacies?locking up their toiletries?is good for Amazon, according to CEO Andy Jassy, because the loss prevention practice is pushing more customers to shop online with Amazon instead of asking employees to unlock a glass case. In a Harris Poll from last November, 71% of shoppers said glass cases made them less likely to frequent a store, and Joe Budano, the CEO of Indyme, told Axios that the cases can cause sales to drop between 15% and 25%.?

P.Louise, a UK_based cosmetics company that sells makeup and skincare products,?broke the UK record?for the most revenue generated on TikTok Shop by a UK brand after earning ￡1.5M in just 12 hours. The previous record was held by fellow beauty brand Made By Mitchell, which sold $1M in 24 hours last month.

Is?eBay?using dark patterns to deceive customers? Value Added Resource?reports?that eBay is displaying a section of ads titled “Sponsored Items From This Seller”, but that the items are not actually listings from that specific seller. The oddity, which could also just be a glitch in eBay's system, was noticed by users across listings from various sellers.?

Glossier, a millennial beauty and skincare brand,?launched?a shoppable scavenger hunt across New York, Los Angeles, and Chicago, as part of a collaboration with Shopify's Shop App. When fans found posters and scanned a QR code, they were directed to Glossier's store within the Shop App where they could order the new product called Boy Brow Arch from Aug 2nd to Aug 5th, as long as they're within one of those three cities. The campaign leveraged Shop's geo-gated location tech so that anyone outside of those areas wouldn't have access to the new product until its wider launch on Aug 6th.

Facebook?is experiencing a resurgence among Gen Z users, while?TikTok?is gaining traction with Baby Boomers, according to a?report?by eMarketer. The number of Gen Z Facebook users in the US is expected to jump from 33.9M users in 2024 to 40.5M users in 2028, while 1M boomers in the US are expected to adopt TikTok in the next year, bumping that age group up from 8.7M to 9.7M users.?

Albertsons?and?Instacart?are?expanding their partnership?to include nationwide pickup and delivery in as little as 30 minutes via a virtual store called Albertsons Rapid, as well as offering same-day delivery for Haggen Food & Pharmacy in Washington. By the end of August, pickup for orders placed through Instacart will be available from more than 2,000 Albertsons locations including Safeway, Albertsons, Shaw's, ACME, Jewel-Osco, Randalls, and Vons.

Meta?is?continuing to run ads?on Facebook and Instagram for illicit drugs, despite a federal investigation into the practice. After clicking on the ads, users are taken to a third-party site or messaging app, such as Telegram, to facilitate the purchases. The Wall Street Journal reports that it found dozens of ads in Meta's Ad Library during the month of July.

Twitch?is?revamping its mobile app?to display a TikTok-like feed front and center, which displays videos the user might like, instead of videos from creators that they follow. Last August, the company experimented with this type of discovery feed, which it rolled out to all users in April and is now making the new landing experience in the app.

Digital ad platforms?in the US?saw slowing ad spending?last quarter, according to a new report from Tinuiti. Ad spend on Meta rose 10% YoY in Q2, down from 16% in Q1, while Google grew by 14% YoY, down from 17%. Walmart, on the other hand, saw advertisers boost their spending by a whopping 45% YoY, which marks its fifth consecutive quarter over 30% growth.?

Additional US States?are?exploring the idea?of taxing e-commerce delivery fees for road repair revenue. Proposed solutions include collecting a percentage of the fee consumers pay to have e-commerce packages delivered to their homes or offices to pay for road repair and related projects. Colorado and Minnesota previously passed bills that collect a percentage of e-commerce delivery fees for fixing roads, bridges, and transportation infrastructure, and now Washington, New York, Ohio, and Nevada are considering similar legislation.

41% of TikTok users?say creators' content on the platform?feels authentic, and that the authenticity transfers to the brands they represent. 55% of users say they are more likely to trust brands when they hear about them from creators, as compared to other ads in their feed, according to a new report by CreatorIQ.?

Visa credit card users?around the world of all types including Discover, Monzo, Capital One, and others are?reporting?mysterious $1 or $0 charges from Shopify-charge.com appearing on their bills, even when they did not attempt to purchase anything. Shopify-charge.com is a legitimate website operated by Shopify that informs users that the charge came from a subscription fee or purchase at a Shopify store. Shopify recently suffered a third-party data breach at one of its vendors, but experts are unsure yet if that is related as the breach did not contain credit card of payment information.

Workers at Amazon's only unionized warehouse?in the US, located in Staten Island,?elected new union leaders, marking the first major change for the labor group since establishing an alliance with the International Brotherhood of Teamsters in 2022. Conner Spencer, a prominent organizer with the union who recently led a dissident group that sued the union last year to force a new leadership election, will take over the leadership role from Chris Smalls, the former Amazon worker who spearheaded the union.?

Speaking of unions…?Apple?reached an agreement?with unionized employees at its Towson, Maryland retail store that could secure them better pay, job protections, scheduling improvements to support a work-life balance, and a more transparent disciplinary process. The Towson location became the first Apple Store in the country to unionize in 2022, and in May this year, voted to authorized a strike against the company after unsatisfactory negotiation outcomes. The outcome is that workers will be given average raises of 10% over the life of the contract, and starting pay rates for most positions will go up.?

eBay Buyers?are frustrated?with the latest update to the app that inserts intrusive ads into their purchase history. When customers open their purchase history, they are now seeing an ad on every other line in the top 5-10 items, with some seeing hundreds of ads mixed throughout their history, which makes tracking purchases difficult.?

TikTok?launched?a new App Center for business users, which features a collection of third-party tools that can help brands maximize their performance in the app. TikTok says that these apps have been featured because they offer “lightweight solutions,” as opposed to more comprehensive SaaS tools that are better suited for bigger brands.

The DSP rivalry?is?heating up?between the industry's top three contenders, according to AdAge. In recent months, Google and Amazon focused on their DSPs in upfront sales presentations, while Google has also been offering incentives on spending (which it's never done in the past). Meanwhile, The Trade Desk, which is significantly smaller than both rivals, has been changing strategies in recent years to account for signal loss on the web, unveiling new tech to tap more directly into the ad supply of publishers.

Meta?is?courting actors and influencers?like Judi Dench, Keegan-Michael Key, and Awkwafina to have their voices be a part of its AI offering, hoping to wrap up deals quickly so that it can develop and show off the new voices at its Meta Connect conference in September. Apparently Meta didn't learn its lesson on employing celebrities the first time, because less than a year after its debut, Meta has?quietly shuttered?its celebrity chatbot program (the one where you could talk to Snoop Dogg and Kendall Jenner), despite having paid top creators as much as $5M for their likeness. Meta says that it used the lessons from building those celebrity chatbots “to understand how people can use AIs to connect and create in unique ways,” and that it will further their mission to enable every user to have their own AI.?

The mayor of College Station, Texas?is?urging the FAA?to slow down an effort by Amazon Prime Air to expand its drone delivery operations in the city after residents expressed concerns to the City Council regarding drone noise levels, particularly during take-off and landing. He asked the FAA to delay approving an increase in the number of deliveries and expanded operational hours until additional noise mitigation efforts are implemented.

Amazon?filed a federal lawsuit?accusing a group operating on Telegram of stealing more than 10,000 items through fraudulent returns. Amazon claims that since the beginning of 2023, the group known as Chin Chopa, has posted over $1,260,464 in screenshots as proof of refunds received. The lawsuit does not identify the operators of the group, but it does name seven US defendants and one Canadian who are accused of using and promoting the illegal-service to obtain the products.

Flipkart?integrated its various fintech services?into a single vertical named ‘Flipkart Pay,' which now includes services like UPI, bill payments, insurance, and co-branded credit cards. The company has been expanding its fintech offerings over the past few months, launching a bill payment service in July and a new payments app called Super.money in June.

UPS?published?a rate update, revealing that its surcharge fees will jump twice during the upcoming holiday season, first in September and then again in mid-November. The 2024 holiday surcharges are reportedly pricier compared to previous years. UPS CEO Carol Tomé told analysts on a recent call that it anticipates a peak volume that justifies the pricing.

Meta?agreed to a $1.4B settlement?with Texas for allegedly violating biometric privacy laws in the state and collecting and using biometric data from millions of Texans. The settlement is the largest ever obtained by a single state and marks the first settlement under Texas's Capture the Use of Biometric Identifier Act, which was enacted in 2001 to protect individuals' biometric information.

Security researchers?uncovered?a sophisticated information-stealing fraud network, dubbed “Eriakos” after the CDN used by the threat actors, that lures victims to fake web shops via Facebook ads. The specialist claimed to have discovered 608 fraudulent e-commerce websites under control of a single actor or group, mostly registered in China.

Plus 10 seed rounds, IPOs, and acquisitions of interest including Shopify's acquisition of ChannelApe, a cloud-based inventory management platform that helps businesses manage stock levels and create product listings across multiple channels.

I hope you found this recap helpful.

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See you next week!

Paul Drecksler