January 17th, 2022: Reactions to Shopify’s App Store Changes, Accenture’s Predictions About Social Commerce, Walmart Expands In-Home Delivery, and IKEA’s Price Changes
It’s January 17, 2022 and this is the Watson Weekly - your essential eCommerce Digest!
Today on our show:
Shopify’s App Store Changes Have Some Developers Upset, But There’s Really Nothing to See Here
Accenture Predicts Social Commerce Will Grow 3 Times Faster Than eCommerce
Will you let Walmart in your Garage? Its In-Home Delivery to Expand to 30 million US households this year
Pricing Moving On Up at IKEA, In Step With Trends From Many Brands and Retailers
- 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….
Shopify’s App Store Changes Have Some Developers Upset, But There’s Really Nothing to See Here
There is a little bit of "Who Moved My Cheese?" going on with the recent Insider article around Shopify's App Store changes.
The big lesson is the App Store is a marketplace. Shopify doesn't treat its employees as family (Tobi has said as much), it's more like a sports team. It doesn't see its app store partners as family either.
Some reminders for everyone:
1 - In a marketplace, you are the "help". Your job is to provide inventory. Your ranking will rise with your number of installs, results, and ratings.
2 - The reason marketplaces work is because of conversion. If you land on a page, you need places to go if (for whatever reason) the page you landed on doesn't fit the needs of the buyer.
People have been arguing about this since the days of eBay. You don't own the page.
3 - Shopify App Store is still relatively early in its marketplace journey. The fact that related app inventory is being shown that is not paid for, in 2022, is actually unique.
Wait until later this year when ad inventory takes over more. Smaller developers are generally not going to be advantaged going forward.
4 - I'm sure Shopify will make some adjustments, but still, this is all a tempest in a teapot. A new equilibrium will be established, new winners and losers. If you were relying on a specific niche or hack, time to find a new one.
Shopify isn't going to lose a single developer over these changes. They are not the "prime mover" in the flywheel, they are the accelerant. The prime mover is the adoption and growth of new entrepreneurs and merchants.
My advice?
Better to direct your energy away from being furious with Shopify, and instead focus on your overall product, marketing, and service.
[References:]
Our Second Story
Accenture Predicts Social Commerce To Grow 3 Times Faster Than eCommerce
RetailDive reported on a recent Accenture study which highlights that the format will grow from half a billion in 2021 to $1.2 trillion dollars in 2025.
Now you may ask yourself just what is Social Commerce?
Essentially, it’s any transaction you begin on a social media platform and your transaction is finished without linking off to another platform.
Now the growth of social Commerce is big to watch. However, most brands I talk to are getting very minimal uptake on social commerce, unless they are limited edition or drops. So much so that the most common question I get is social commerce worth it.
And some of you may be aware that I’ve written and tracked the livestreaming commerce space as well, which is a subset of overall social commerce. These concepts are growing but have not become the primary way to shop for oldsters like me.
As you might expect, much of the growth in social commerce is being reported in the digital native generation which means millennials and Gen Z.
My contention is that the brands who are taking advantage of social commerce in a big way, this is most of their goto-market strategy because of their large fan bases. Those who are using social media for advertising to drive people to a website for signups aren’t seeing results.
These traditional brands who aren’t seeing results are the same group that for years asked what the ROI of social media was. If you have to ask, then probably it’s not going to work out for you.
And that’s fine. Those brands that want to make a change, would really have to follow the path of a social media creator and ask themselves — if I wanted to launch my own eCommerce brand, why would I even need all this Shopify foolishness? My brand is my content and my fans love me.
The big challenge is most social feeds for large brands are produced by an agency, and it’s hard to buy authenticity in an outsourced provider.
But I wanted to end on a note about Shopify here. If you are an up and coming digitally native creator with your own clothing line, it’s hard to imagine why you would even need a Shopify store. For this market segment, which is increasing, it just seems like extra Enterprise baggage. Why do I need to install 10-20 apps just to setup a store?
For all Shopify’s focus on entrepreneurs, it sure looks vulnerable to low-end disruption in this segment if you ask me. If Shopify is going to blunt this trend, it would need to introduce some kind of Shopify Creator edition which is vastly simplified.
[References:]
Our Third Story
Will you let Walmart in your Garage? Its In-Home Delivery to Expand to 30 million US households this year
In an expansion of a program that was started during the Marc Lore era of Walmart, Walmart is looking to expand it’s in-garage delivery program.
Here are the facts as reported by Catherine Douglas Moran of RetailDive:
The program will grow from 6 million to 30 million consumers.
The company will hire more than 3,000 associate delivery drivers to execute the program.
Walmart needs to keep improving its last mile delivery network which currently reaches about 70% of the US for approximately 160,000 products.
First of all, this sounds creepy. No offense to Walmart, but do I really want the average Walmart employee in my garage? I’m just saying.
Second, the details of all the smart-home details required to use this service means that I can’t imagine the adoption will be very high. The service itself costs $20 per month and requires the homeowner have a smart-home unit to acdtivate.
Despite all this, it would not be smart to underestimate Walmart’s moves in the logistics market, as they are one of the most experienced companies in America with regards to retail logistics, considering it’s where Amazon originally learned all of their knowledge from.
In particular, I think their last-mile program GoLocal could be a great service for some brands if they continue to invest in it.
While I’m often covering Amazon and Target in this weekly podcast, I am also bullish on Walmart. They are still the top dog in American retail and they have made smart investments in the last 3 years since leaving behind the crazy ideas of the Jet.com era.
[References:]
And Our Last Story
Pricing Moving On Up at IKEA, In Step With Trends From Many Brands and Retailers
Citing widespread supply chain issues, the owners of Ikea are planning to raise pricing this year by 9% primarily in North America and Europe.
These increased consumer prices are primarily due to rising production and transportation costs. Transporting heavy furniture around the world is particularly expensive and difficult and so I’m not surprised at these changes.
What have I heard from other brands and retailers?
After holding down cost increases for many years, many brands I speak with.
Both Direct to Consumer as well as Amazon brands that I know are raising prices an average of 5 to 10 percent to account for continued rising costs.
The good news for brands - particularly with rising prices on consumer goods and inflation scares - most consumers are expecting price increases which makes executing such changes easier in a chaotic time than it would be in a normal time.
My advice for the average brand that isn’t already considering a price increase to think about it seriously in 2022, as it may give you the opportunity to recover some of those COVID expenses that everyone is paying for.
[References:]
https://www.homeaccentstoday.com/retail-sales/ikea-to-raise-prices-worldwide/
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It’s That Time Friends, for our Investor Minute. We have 5 items on the menu today.
First
Project 44 raised $240 million at a $2.4 billion valuation. Doubled their valuation in the last 6 months. Seems to be the trend these days with investors seeing rounds, and then wanting to follow-on immediately.
Second
Technology platform Avataar raised $45 million to improve the consumer shopping experience with life-sized 3D product evaluation.
This type of trend is only going to increase, so I see more competitors entering this space. Could be an acquisition target for one of the major platforms.
Third
Payments provider Checkout.com just raised $1 billion on a $40 billion valuation. Interestingly, they also provide payment solutions for several major crypto-providers.
https://www.wsj.com/articles/fintech-startup-checkout-com-scores-40-billion-valuation-in-latest-share-sale-11641988805
Fourth
Plainly named eCommerce aggregator ECommerce Brands raises $40 million in equity and debt to deploy checkout as a service model from Cart.com.
It seems to me that we are reaching a new phase in the aggregator movement where more traditional investors are coming on who like the growth of eCommerce but don’t want to do any of that messy operating.
AND FINALLY …
In what is probably the worst-kept secret deal ever, ShipMonk has acquired eCommerce logistics provider Ruby Has. Because there is no press on this deal, it’s a little like a tree falling in the woods. We think it fell, but I don’t think anyone was around to hear it yet?
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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 show is produced by Citizen Racecar. Alex Brower is the producer and also wrote our theme music. The Executive Producer is David Hoffman.
To hear new episodes of the show every Monday morning, subscribe now at rmwcommerce.com/watsonweekly and wherever you get your podcasts.