August 29th, 2022: Google SEO content update, Amazon’s TikTok-like feed, Walmart eyes new payment opportunities, and Shopify launches Collabs
It’s August 29, 2022, and this is the Watson Weekly - your essential eCommerce Digest!
Today on our show:
Major Google SEO Content Update Could Test Your Relevancy
Amazon Testing a TikTok-like Feed in its App
Walmart Eyes New Payments Opportunities to Continue its Business Model Shift
Shopify Launches Collabs yo Become its Own Affiliate Network for Creators
- and finally, The Investor Minute, which contains 5 items this week from the world of venture capital, acquisitions, and IPOs.
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BUT FIRST in our shopping cart full of news….
Major Google SEO Content Update Could Test Your Relevancy
This week Google is rolling out what it calls a "helpful content update" -- meaning it will advantage helpful content and actively demote content and websites that seem to be written for SEO.
* It starts rolling out this week and could take up to 2 weeks to be in full effect.
*I've seen many SEO agencies, particularly in the eCommerce industry, write incredibly thin content on a regular basis. That may need to change, or the value of those pages is lost and could potentially affect your site if it's overdone.
This is one of the most interesting parts my point of view is this:
* Entire sites can be classified as having "unhelpful content" (it seems like there will be a score). This is not an action taken by a human, it's based on a model which will continuously monitor websites, and it seems like it can penalize at the site level if there is too much of it. A site can recover from it if "unhelpful content" is removed.
No word from Google on if its Search Console will be updated to report these metrics.
Let’s get this out of the way first… is there any actual non-SEO content in this day and age? Asking for a friend here.
Seriously what does this mean for brands, retailers, and service providers? What would I do if I were you?
First, I would look at all the content on your site, particularly low-converting content with a jaundiced eye. If you outsource any content, start there. Don’t just ask yourself if it can generate traffic.
Instead, think about whether you should rewrite this content to make it more helpful. Will I be upset later on if there is too much content like this to be penalized? Take this page and put it on a to be rewritten list.
Second,. consider removing content that is misleading. Hopefully you don’t have too much like this, but the possibility can’t be ignored.
If you find yourself with a lot of content that you think needs to be rewritten, you might even consider taking some of it down if more than 25% of your content falls into this category. Understand that Google might seriously consider you a bad actor within a few months from now.
[References:]
Our Second Story
Amazon Testing a TikTok-like Feed in its App
The Internet exploded last week with reports from AI company Watchful that Amazon is testing a TikTok-like feed in its app. Of course this has produced a range of opinions from a new sign of the apocalypse to more evidence that Amazon is taking over.
If you think about what Amazon has that others don’t have — it’s really people looking to be inspired in terms of what to buy someone. This is different than the TikTok audience just looking to be entertained. Someone who visits Amazon already has their credit card on-file.
There are another two considerations for these new tests.
First, Amazon is heavily courting the influencer and creator crowd to ensure there is enough content out there directing consumers to Amazon products. Given that the standard for creator marketing right now is short-form video, it makes sense that Amazon needs a home for this content on the website and is not in a hurry to give this hard-earned money to YouTube or TikTok.
As you might be able to tell, I am somewhat down on the idea of a completely separate Amazon feed that consumers need to find and change their behavior for, but as a source of content for existing landing areas it makes a lot of sense.
Second, the image swipe on the product or brand page has become extremely critical real estate in the Amazon app these days. Consumers need more information here beyond what a flat image or infographic can provide, and Amazon needs essentially an endless supply of content to ensure that its algorithm can surface the most relevant content for middle and head terms like “best tennis rackets for new players,” which compared to 10 years ago, consumers are increasingly typing into Amazon.
Finally, those who say that Amazon won’t succeed here haven’t closely watched its moves with regards to Google in the past 15 years. 15 years ago I would estimate that less than 25% of people started their purchase journey on Amazon. Now, those numbers are closer to 70%. The reality is, social media is efficient at two things: anger or entertainment.
Is it the most efficient way to get inspired about a purchase? Amazon is betting no, and I for one would not be in a hurry to bet against it.
[References:]
Our Third Story
Walmart Eyes New Payments Opportunities to Continue its Business Model Shift
One of the trends that has been interesting to watch in Walmart’s business model in the past few years has been its investments away from its traditional retail roots. In addition to investing in far out items like drones, Walmart continues to invest in diversifying its revenue streams in new areas such as advertising, subscriptions, fulfillment and delivery services, even enterprise software. On earnings reports in the last year or so, Walmart’s CEO Doug MacMillion called this “changing the shape of Walmart’s P&L.”
The reality is that retail, particularly at Walmart, is only ever going to be so profitable, even at scale. Walmart has traditionally floated at about 5% net operating margins. That means anything that could add even half a point to its operating margins long-term is a tremendous opportunity for the firm because of how many profit dollars are generated. Even 1% in net operating margin would raise its net profit 20%, which is definitely the reason retail media is such a big push in their new Walmart Connect offering.
It’s with this lens that I analyze Walmart’s new CFO John Rainey’s recent statements. Recall that Mr. Rainey recently joined in April from Paypal of all places, which seems like an unlikely source of talent for a traditional retailer.
I would say that’s true from a backward looking perspective, but not from a forward looking perspective. In fact, what’s the long-term upside from more modern payments practices for the firm? Possibly even a doubling of net operating margin just from this sector alone. What’s going on here?
First, the company has hired two Goldman Sachs executives to launch a new financial services app business, perhaps even competing with Goldman’s Marcus service in the future.
It’s worth noting that Walmart is making similar payments investments in India as well where its Flipkart entity is a big player. Having been close to the cross-border industry in my career a few times, there are still major treasury and payments inefficiencies between buyers and sellers worldwide, not to mention Flipkart itself has made two acquisitions in this arena.
Given that Amazon has benefited from an early-mover advantage in the logistics space, Walmart might be wise to continue to invest in payments given the new CFO’s Paypal background. Similar to Walmart’s continued expansion in vision and pharmacy, it could be a natural boost to the company’s customers in the future.
[References:]
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Shopify Launches Collabs to Become its Own Affiliate Network for Creators
An undeniable trend in the past few years has been the rise of influencers and creators who are trying to make a living endorsing various products that fit their social media following, either on YouTube, TikTok, Instagram, or otherwise.
In some ways you can consider these types of business models the natural successor to the old-school affiliate publishers - most of them bloggers - who recommended various types of products to their subscribers. In the 2020s, however, blogging is so passe’ and the creator economy is where it’s at.
Over the past few years, there have been a number of platforms and agencies with businesses designed to recruit or connect you with various influencers relevant to your niche.
Apparently Shopify took a look at these companies and said, “Why can’t we do this?” Enter Shopify Collabs.
Creators can establish a connection with a Shopify brand that they would like to promote and make money via social media.
The benefit to this platform is that the Shopify platform is the biggest and so the selection could be great. The downside to this platform is what happens when the brand you want to create content for is not on Shopify, but instead on Salesforce, WooCommerce or Bigcommerce? You are kind of out of luck.
One thing that is not clear from this offering is Shopify’s business model in this whole operation. Affiliate networks sometimes come with agencies and so there are multiple layers of fees in this market.
Creators can keep track of which brands owe them what. On the other side, brands can search through lists of influencers, and send them unique products and codes right from Shopify’s interface.
This is just one small example of how Shopify thinks differently than other eCommerce platforms.
[References:]
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It’s That Time, Friends, for our Investor Minute. We have 5 items on the menu today.
First
Right on the heels of Shopify’s Collabs announcement, Digital creator marketplace Clutch announced $1.2 million in pre-seed funding from Precursor Ventures.
This is an increasingly crowded space, so the marketplace would be wise to pick a niche to focus on and really nail that experience. To that end, the marketplace is already highlighting the fact that over 75% of its creators are people of color.
Second
Walmart acquired Volt Systems to improve its supplier software.
This acquisition seems like an acquihire in an area that Walmart saw the need to beef up. A couple of the areas that Volt Systems focused on are conversational commerce and vendor shelf data visibility.
Link: https://www.pymnts.com/acquisitions/2022/walmart-to-acquire-volt-systems-bolster-supply-management/
Third
Ulta Beauty launched a new $20 million fund, Prisma Ventures, to invest in startups.
The areas that Ulta says it will focus on include AR/VR, data-driven technology, and personalization. The new fund will select its applications from seed-funded ventures and give them access to Ulta’s innovation team as a resource, which seems extremely helpful for an early stage company.
Fourth
Qualcomm led a Series B investment in smart cart company Shopic.
Unlike other smart cart solutions, it looks to me like Shopic’s platform can be applied to any existing shopping cart rather than designing the entire cart from the ground-up. Long-term this may not be the best approach, but in the short-term it might help some digitize their stores incrementally for lower cost.
AND FINALLY …
Online jewelry brand Blue Nile was acquired by Zales owner Signet.
Blue Nile has had an interesting history over the years both going public and being taken private, but still there is no one in the online jewelry market that matches its reach. The tie-up was in some ways inevitable at some point, given the margin pressures of purely online retail.
Link: https://www.cnbc.com/2022/08/09/zales-owner-signet-buys-online-jewelry-brand-blue-nile.html
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That’s all for this week! Till next time, Watsonians.....
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Hi, I’m Rick Watson, CEO and Founder of RMW Commerce Consulting and host of the Watson Weekly podcast - your essential eCommerce Digest.
Our production partner for the series is CitizenRacecar. The show is produced by Alex Brouwer; Production Manager, Gabriela Montequin.
To hear new episodes of the show every Monday morning, subscribe now at rmwcommerce.com/watsonweekly and wherever you get your podcasts.
