Shopifreaks E-commerce Industry News Recap ?? Week of July 1st, 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 180th Edition published July 1st, 2024. Check out the full edition for links and sources and subscribe here .

Amazon is taking a page from the Shein and Temu playbook and open a new online store featuring low-cost items shipped directly from China. The marketplace will focus on selling unbranded clothing (Shein) and household items (Temu) priced under $20 and weighing less than a pound. The orders will take up to 11 days to arrive and will ship tariff-free under the de minimis threshold. Amazon informed select Chinese sellers in an invite-only meeting last week in Shenzhen that it would start signing up merchants this summer and begin accepting inventory in the fall. Amazon also noted that sellers who join the marketplace can determine their product selection and pricing, and can produce in small batches to test the demand for new products.

Amazon confirmed that its 10th annual Prime Day sales event will be held this year from July 16-17. The event will feature another round of invite-only deals, where Prime members can request an invitation to exclusive deals that are expected to sell out. However other retailers aren't letting Amazon have all the fun this year…

TikTok is challenging Amazon's Prime Day with its own sales event this month called “Deals For You Days” starting on July 9th. The announcement came a few days after Amazon revealed the dates of this year's Prime Day. TikTok says the event will offer deals on fashion, beauty products, backyard entertainment, home decor, summer reading best sellers, and more, featuring exclusive sales on products from L’Oréal Paris, Maybelline New York, NYX Professional Makeup, Our Place, Too Faced and Zwilling USA. During the sales event, brands and merchants will participate in content challenges for short videos and live shopping events, where they can interact with their followers and offer discounts on popular products in real time.

Walmart is kicking off its Walmart Deals event on Monday, July 8th this year and running it for four full days until midnight July 11th. Walmart+ members will get early access to deals starting at 12pm EST on July 8th, a full five hours before the event opens to the general public.

Best Buy is holding its “Black Friday in July” event from July 15 to July 17th with members of its loyalty program getting access to exclusive deals.

Target is running its Circle Week from July 7th to July 13th, offering savings up to 50% off thousands of items.

Amazon is working on an AI chatbot to compete directly with OpenAI's ChatGPT, according to Business Insider. The secret internal project is code-named “Metis” in reference to the Greek goddess of wisdom and is designed to be accessed from a web browser like other AI assistants. Metis is powered by an internal Amazon AI model called Olympus, which is a more powerful version of the company's publicly available Titan model. Metis, like other AI chatbots, gives text and image answers in a conversational manner, as well as shares links to the sources of its responses and suggests follow-up queries. Metis will use an AI technique called retrieval-augmented generation (RAG), which means it will be able to retrieve information from beyond the original data use to train its underlying model. In other words, it can search the web.

Amazon has been hit with another competition lawsuit in the U.K. seeking ￡2.7B in damages (or around $3.4B) before the U.K.'s Competition Appeals Tribunal. The case is being brought by Andreas Stephan, a professor of competition law at the University of East Anglia, on behalf of more than 200,000 third-party Amazon sellers in the U.K. The lawsuit is “opt-out” meaning that eligible sellers are automatically included at no cost unless they ask not to be included. The lawsuit argues that Amazon favored its own retail offerings over those of third party sellers, favored its own FBA logistics service, unfairly conditioned access to its Prime membership on the use of FBA, and made it harder for third-party sellers to sell cheaper on other platforms.

Apple is extending its 30% fee on Facebook and Instagram ad purchases made through iOS devices to advertisers worldwide, starting today. Back in February, Apple made policy changes that required iOS users in the U.S. to pay through Apple Pay when boosting a post on Instagram or Facebook, instead of with their card on file at Meta. This meant that Apple would now be getting a 30% cut of the advertising transaction, as they do with other mobile purchases like gaming and music / video streaming subscriptions. This change prompted Meta to begin adding an “Apple service fee” to each boost transaction to cover the cost of the Apple tax. At the time, Meta published an announcement advising Facebook and Instagram users to boost content from their websites instead of the apps to bypass the new fee. Now Apple's requirement that Instagram and Facebook users on iOS pay for their boosts via Apple Pay is now expanding globally, which means advertisers around the world will have to absorb the 30% Apple tax if using their iPhones or iPads to boost posts.

Arkansas Attorney General Tim Griffin filed a lawsuit against Temu for allegedly violating the state's Deceptive Trade Practices Act, as well as its Personal Information Protection Act. The lawsuit calls for an end to Temu's “deceptive trade practices and violation of users' privacy” and seeks to impose civil penalties and other “monetary and equitable relief.” Griffin didn't mince words about Temu, calling the platform a “data-theft business that sells goods online as a means to an end.” He went on to say: “Though it is known as an e-commerce platform, Temu is functionally malware and spyware. It is purposefully designed to gain unrestricted access to a user’s phone operating system. It can override data privacy settings on users’ devices, and it monetizes this unauthorized collection of data.”

Shopify notified users in Europe that Amazon Pay will no longer be available as a payment option from August 6th onward, but did not provide any reason why. Amazon's only response was an e-mail to merchants the next day informing them that Amazon Pay may require an additional reserve amount in between now and then to ensure that the merchant's account is sufficiently funded for outstanding claims and refunds. ChannelX summed it up nicely: “This looks like a typical ‘Mom & Pop’ disagreement with both sides likely holding out for a better deal. We’ve seen it with Amazon and Visa back in 2022, although they came to a last minute deal to continue to accept Visa credit cards and frankly it’s just tiresome for merchants.”

Amazon Web Services started an investigation into Perplexity AI to determine whether the search engine, which is hosted on AWS, is ignoring the Robots Exclusion protocol (or robots.txt file), which contains instructions on whether bots can or cannot access a particular page. Complying with those instructions is not a legal requirement, however it is required by AWS in order to use their servers. Despite being legally voluntary, crawlers from reputable companies have generally respected the Robots Exclusion protocol since the standard went into place in the 90s. Scrutiny of Perplexity's practices follows a report from Forbes that accused the startup of stealing at least one of its articles. WIRED investigations confirmed the practice and found further evidence of scraping abuse and plagiarism by Perplexity’s search chatbot.

Walmart began accepting applications for its 11th annual Open Call event, which invites small business owners in the U.S. to apply for the opportunity to pitch their products to be sold on Walmart and Sam's Club shelves and websites. At last year's event, Walmart heard over 1,000 pitches from more than 700 businesses from all 50 states. Applications are open until July 15th.

Wix launched a new tool that allows designers to export their Figma designs into the Wix Studio platform and generate fully functional websites using AI. The import automates no-code animations and even works in conjunction with Wix's built-in business solutions and CMS.

Thousands of South Africans have signed an online petition protesting the government's introduction of a higher import tax of 45% plus VAT on clothing items ordered from Shein and other foreign retailers. The South African Revenue Service says it's looking to impose measures like this to ensure local firms manufacturing or selling clothing items can compete on a fair basis with global online retailers. Opponents of the tax claim that it will have a detrimental impact on individuals, local couriers, cargo businesses, and the economy at large.

2024 is on track to be an even worse year for Amazon aggregator funding than 2023. Just two equity funding rounds were closed through June 27th, compared to five at the same time last year and a total of 12 last year. In 2021, at its peak, Amazon brand acquirerers spent more than $6B across 80+ acquisitions, whereas this year they've only spent $100M.

Shopee agreed to make changes to its services in Indonesia after admitting to the country's antitrust agency that it had violated anti-monopoly rules by directing customers to certain delivery services after being accused of breaches last month. The company said that it has proposed changes on its user interface to demonstrate compliance in according with the feedback from the agency.

Hibbett, an athletic fashion retailer headquartered in Birmingham, AL, is now offering same-day and next-day delivery via Walmart GoLocal, the company's white-label delivery service for retailers. Hibbett customers can now place orders for sneakers, apparel, and accessories and have them fulfilled same day or next day via Hibbett's over 1,000 stores nationwide.

Microsoft unveiled details of an AI security flaw called Skeleton Key that can bypass ethical safeguards built into AI models of OpenAI, Google, Meta, and others, and pose a risk to e-commerce platforms, fintechs, and customer support operations. Skeleton Key works by using a multi-step strategy to cause a model to ignore its guardrails, allowing malicious users to manipulate AI systems to generate harmful content, provide inaccurate financial advice, or compromise customer data privacy, raising concerns about the integrity of operations at businesses that use AI chatbots and recommendation engines.

Shopify announced the winners of this year's Shopify Build Awards at its Editions.dev event. Best app awards went to Bundle Builder, O:Request a Quote, Seguno Email Marketing, Combine, Glossier, Nour Hammour, and Post Familiar Wines.

Amazon is combining its Amazon Clinic telehealth service into its primary care business, One Medical, to simplify its medical care offering for customers. The service has now been rebranded to Amazon One Medical Pay-per-Visit and costs $49 for a video call or $29 to text message a doctor.

Albertsons partnered with Grubhub to provide grocery delivery services from 1,800 of its 2,200 supermarkets across the country including Albertsons, Safeway, Vons, Jewel-Osco, Shaw's, Acme, and Tom Thumb. The partnership marks the first national grocery partner for Grubhub as the restaurant delivery service looks to compete in the grocery delivery arena.

Amazon reached a market cap of $2 trillion for the first time last week after seeing its stock gain 52% in the past 12 months, partly driven by enthusiasm for the company's investments in AI. Amazon now joins Alphabet, Microsoft, Apple, and Nvidia in the club of companies worth over $2T.

Google is rolling out a new WordPress specific conversion code for Google Ads, first spotted by David Quaid who posted about it on X and wrote, “Google giving WP specific tracking code has never happened to me before today, I have 25 Ad Accounts.” Others reported seeing the same prompt for Squarespace websites.

Klarna Plus, a membership program that provides subscribers with exclusive benefits like waived service fees, rewards, and access to special deals, reached 100,000 subscribers in the U.S. since its launch earlier this year. The company boasts that members have utilized more than 27,000 discount offers at various retail partners and have saved over $1.8M per month.

Adept, a startup developing AI-powered agents to complete software-based tasks, agreed to license its tech to Amazon with the co-founders and portions of its team joining the company. The deal provides a lifeline for Adept, which has been in talks with Meta and Microsoft over the past few months about a potential acquisition, and bolsters Amazon's generative AI ambitions.

Vevol Media launched their first Shopify theme called Noblesse, a fashion-focused theme that includes a new interactive video storytelling feature that recreates the Stories user experience to showcase products. The company plans on introducing 4 new themes in the next 3 years.

Two members of the US House of Representatives reintroduced the SHOP SAFE Act of 2024, legislation that seeks to protect U.S. consumers from unknowingly purchasing counterfeit goods by incentivizing e-commerce platforms to implement certain guidelines and subjecting the platforms to liability for the actions of third-party sellers. The act was previously introduced without movement, and it remains to be seen whether it moves forward this time toward passage.

Remember Wish.com , the direct-from-China website that was popular for a time before Temu? The company, which sold to Qoo10 earlier this year, launched Wish+ to shoppers in US and Canada, which integrates Qoo10's existing retail platform with Wish.com . From what I could tell, Wish+ appears to look and function like the old Wish.com , but now there's a plus sign in the logo. So we'll see what happens with that.

Sezzle is expanding its Payment Streaks loyalty program to users in Canada, with the except of shoppers in Quebec for some reason, to reward consumers for consistent and timely payments. The program gamifies payments by offering advancement to higher loyalty tiers for accumulating streaks of on-time payments. “Great job you made an on time payment and unlocked the reward of us not dinging your credit score!”

Amazon Canada partnered with Visa to integrate BNPL installment plans at the point of sale on its marketplace. When shopping on Amazon.ca or the Amazon app, cardholders will have the option to select “installments by Visa” as their payment method. Amazon joins around 100 other merchants in Canada offering installment payments enabled by Visa.

eBay promoted a special Elton John Aids Foundation Charity livestream last week that auctioned off clothing from the musician to raise funds for HIV/Aids awareness, but the company completely blundered the event with a terribly pixelated livestream and extreme lag that turned everyone on camera into “unidentifiable blogs of color moving around the screen” according to Liz Morton of Value Added Resource. The technical issues persisted throughout the entire event and were so bad that eBay disabled the replay feature.

Flipkart started rolling out its own payments app called Super.money that allows users to make mobile payments via UPI. To entice customers, Super.money is promising “real cashback” and not “useless rewards” for paying, sending, or receiving money via the app. The company plans to expand its offering in the future to include secured cards and lending.

Last week the WSJ reported that Apple was considering integrating Meta's generative AI model into its new Apple Intelligence system, but according to a new report by Bloomberg, Apple has rejected the move due to privacy concerns. Bloomberg reported that the two companies haven't spoke about using Meta's chatbot in an AI partnership since March when they held “brief talks” about it, during which Apple was courting several companies. Meta must've been like, “You can use our AI if you let us track conversions again on iPhone and stop with this 30% tax on our ads nonsense.”

A recent study by PYMNTS Intelligence found that only a small fraction of consumers paid for their most recent e-commerce purchases using BNPL — roughly 1% in most countries surveyed. The report found that only 0.9% of U.S. consumers used BNPL to pay for their last online purchase compared to 2.5% of consumers in Australia.

Etsy updated their policies on mature content, cracking down on particular categories of items that have spread across the site in recent years. Key changes to the policy include significantly limiting the types of adult toys and accessories that can be sold, prohibiting items that depict certain acts, and introducing stricter criteria for images with mature content.

Plus 10 seed rounds, IPOs, and acquisitions of interest including Klarna's sale of Klarna Checkout to a consortium of investors for $520M.

I hope you found this recap helpful.

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See you next week!

Paul Drecksler