June 12th, 2023: Stripe’s new charge card program can help Shopify, Amazon may be considering mobile phone service, Apple Vision Pro thoughts, and Buy Buy Baby could get bought
Today’s episode of the Watson Weekly podcast is sponsored by Commercetools.
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It’s June 12, 2023, and this is the Watson Weekly - your essential eCommerce Digest!
Today on our show:
Stripe’s New Charge Card Program Can Help Shopify
Amazon May Be Considering Mobile Phone Service
Apple Vision Pro Thoughts
Buy Buy Baby Could Get Bought
- and finally, The Investor Minute, which contains 7 items this week from the world of venture capital, acquisitions, and IPOs.
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To hear new episodes of the show every Monday morning, subscribe now at rmwcommerce.com/watsonweekly and wherever you get your podcasts.
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BUT FIRST in our shopping cart full of news….
Stripe’s New Charge Card Program Can Help Shopify
Stripe has been one of the most successful payment companies in the world by making it dead simple for developers and small businesses to integrate credit card processing.
Back in 2018, Stripe went beyond payment processing, however. The company launched a new (and now) fast-growing line of business called Stripe Issuing. The "issue" with issuing in the past, however, was that it only worked for pre-funded cards - i.e., a stored value card.
Not for credit.
This changed in the past week with the launch of charge cards by Stripe Issuing. This allows Stripe to bring its ease of payment and financial innovation beyond the pre-funded card market to charge cards.
It's not hard to guess that Shopify Balance (a stored value card launched in 2020) is based on Stripe Issuing, given its reference customer status on the Stripe Issuing Homepage.
What could charge cards enable? A deeper tie between Shopify and not just businesses, but also consumers.
Imagine earning Shop Cash whenever you use Shopify's Credit Card (unannounced) with greater cashback and discounts on Shopify's stores.
Imagine using Shop Cash wherever you see Shop Pay, not just in the Shop App.
Chase has 450 shops in its Chase Shopping portal.
Rakuten has 2,500 retailers in its Rakuten Points program.
Shopify has millions of Shopify merchants.
It's not hard to see how even if this wouldn't add significant revenue to each Shopify merchant, it could add substantial revenue to Shopify in the aggregate.
It's coming, folks. And it's not even that hard to predict.
Shopify is going to be a credit card issuer. The only thing left to figure out is this: what is the biggest hook and distribution mechanism to do so?
This is another reason Shopify needs Shop App to succeed. It can only pollute its merchant checkout experience so much (or at all) with Shopify offers. It needs its buyer-facing distribution channel to monetize this.
[References:]
https://techcrunch.com/2023/06/01/fintech-giant-stripe-is-getting-into-the-credit-game/
https://help.shopify.com/en/manual/finances/shopify-balance/account
Our Second Story
Amazon May Be Considering Mobile Phone Service
The Internets went crazy last week with a report from Bloomberg that Amazon is in talks with wireless carriers to create its own mobile phone service integrated with its Amazon Prime loyalty program.
Just the news itself sent shares of telecom stocks lower last week. Here’s what the report states so far:
Amazon is in talks with Verizon, T-Mobile and Dish about providing nationwide service for free or virtually free.
Of course, an Amazon spokesperson immediately denied this claim because that’s what you do when you are working on something new that leaks out.
My take on this is as follows:
* First, it seems like something could happen here because where there’s smoke, there’s fire. The story makes sense, especially when you consider that Amazon has two huge assets: the greatest customer loyalty program in the world in Amazon Prime, and the fact that Amazon is one of the largest electronics retailers on the planet. Consistently electronics is far and away its most successful category, especially on Prime days.
* Second, there is the question of cost. How could Amazon offer this for free? I would think about it like the Kindle, which might come for free with an ad-supported version or paid with fewer ads. Unlike Apple, Amazon is not trying to make money on the phone.
To continue on this ads point for a moment, Amazon desperately needs surface area to power its advertising ambitions. Millions of consumers on an Amazon phone could provide that.
* Third, despite the fact that telecom stocks immediately went down, ultimately Verizon and others just got another big customer. In fact, their stocks should be going up and not down.
* Of course the reason stocks went down is that Amazon tends to disintermediate its key suppliers in the long-term and do it yourself. Amazon is building Kuyper, but it doesn’t have the ability to disrupt terrestrial networks anytime soon due to cost. I don’t buy it and think the market is reacting strangely.
* Finally, there is the question of why would Amazon do this? Like Amazon tried before with its ill-fated Fire Phone, Amazon is trying to build its own distribution platform so that it reduces the risk from Google or Apple cutting them out of future advertising revenue. Amazon needs devices to have a direct and most importantly zero risk distribution channel to consumers. Amazon building on top of Apple platforms always comes with an existential risk.
An ad-supported cell phone service would be a low-risk bet by Amazon, with high risk of failure, and potentially huge upside potential. Sure it could end up like another Fire Phone, but that sounds like a bet worth making at Amazon’s scale.
[References:]
Our Third Story
Apple Vision Pro Thoughts
After watching Apple’s presentation at its Worldwide Developer conference, I thought I would write down a few notes to spur some thoughts. I came away excited, and more than a little depressed.
That said, Apple won before it started with 4 decisions:
1 - The company successfully reframed the narrative from VR and the Metaverse to spatial computing. This was phenomenal positioning and on a footing where Apple excels - compute and experience.
2 - Apple getting rid of controllers and replacing it with eyes and hand motions was inspired. If anyone remembers the movie Minority Report, we have finally seen it, and Apple is working on it. Controllers as a first-class interface are a dead-end and it’s obvious.
3 - The Vision Pro gives consumers the ability to "see through" the device. I literally laughed out loud to see that Apple tried to coin a new term "EyeSight". Good to see Apple hasn't lost its bluster, and, more importantly, blinding a user to a virtual screen only is another dead-end. You want to be able to know if someone wants your attention, and Apple made it as simple as entering your field of vision.
4 - Rather than going big, Apple is manufacturing a limited batch of 500,000 devices to bootstrap the device. Apple is saying two things with this move.
First, Apple is saying that for this device to work, the first version needs to be insanely great for a small number of people, not average for many people.
Second, Apple is telling Meta to hold my beer. Apple thinks Meta is attempting to scale its Meta Quest Pro device too quickly before nailing the experience.
Here are some of my more positive thoughts on Apple’s Vision Pro:
* You have just seen the future of immersive entertainment, amusement parks, education, and training.
The first version could succeed with education, hardcore gamers, military and remote workforce alone. As a Pro device, the use cases will be specialized and likely geared towards hardcore users in a controlled or workspace setting. Of course Apple was careful to leave open the possibility of consumers using it, but the reality of it seems far off. This device is not for us Watsonians yet.
* The introduction of Disney in the launch was extremely interesting. As soon as I saw the Main Street light parade on a countertop, I knew that both parties were thinking outside the box here. If you don’t think you will want this, try convincing 4-year-old kids of that once this is a $1,000 device in 10 years. From my point of view, 10 years is the beginning of the broad consumer application timeframe for Apple Vision Pro.
* As part of its presentation, Apple led the viewer through a lengthy discussion about the great leaps in computing being enabled by changes in input modalities like the mouse, click-wheel, multi-touch, and now gestures and eyesight. This was one of the most interesting parts of the presentation for this amateur computing historian.
Of course, I did have some concerns with this device.
First, is this how humanity is supposed to interact in the future? It’s sad and depressing that so much innovation is being put into place which further tips the playing field between the haves and have-nots, and further separates us from each other. The picture of the father using a headset during his daughter’s birthday party was literally the saddest part of the whole presentation.
Second, I am more than a little worried about having that much computer strapped to my face. I guess we are not worried about radiation anymore?
[References:]
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And Our Last Story
Buy Buy Baby Could Get Bought
It looks like the Chapter 11 bankruptcy of Bed Bath and Beyond continues with its Buy Buy Baby division. Wow, that’s a lot of B’s.
Babylist is among the bidders that want to purchase the digital assets like the customers. If Babylist wins the bid, it’s likely that the domain will shut down and just redirect to Babylist instead.
Other bidders I have seen mentioned for Buy Buy Baby include Overstock.com, as well as the pirate equity owner of kid’s clothing brand Janie & Jack, Go Global Retail.
This is an expected move as part of this bankruptcy because each of the different assets owned by the parent company Bed Bath and Beyond have value to different types of buyers, which means that the court must split up the various assets to maximize their values.
[References:]
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Hey, Watsonians, this is Rick. Want to get my take on a burning question and have me answer on this podcast? You can start a topic on the RMW Commerce Community and just ask!
The Community is full of eCommerce diehards just like you talking about important eCommerce issues. Last week, I wrote an article about Shopify’s history with Artificial Intelligence. Check it out and let me know what you think.
You can contribute to the conversation at community.rmwcommerce.com.
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It’s That Time, Friends, for our Investor Minute. We have 5 items on the menu today.
First
Real-time pricing and promotions monitoring solution Datasembly Raised a $16 million Series B.
The company claims to have a proprietary data collection engine, which is likely reselling and combining online and offline datasets. It’s primarily used by large retailers and CPGs looking to monitor competitive pricing data.
Second
Amazon service provider Amify raised a $4.2 million Series B.
It’s not often that an agency raises venture capital so I thought it was interesting fundraising to call out. Amify is a full-service Amazon agency that helps with management, advertising, creative, and supply chain services for Amazon brands.
Link: https://www.citybiz.co/article/420913/amazon-enabler-amify-closes-4-2-million-series-b/
Third
Indian kids fashion brand Hopscotch raised $20 million in a funding round led by Amazon.
Amazon investing in fashion brands in foreign markets? It’s a little hard to believe but I suppose that Amazon is always running different kinds of experiments.
Fourth
Organic and specialty food provider KeHE Distributors is set to acquire distributor DPI Specialty Foods.
KeHE Distributors acquired DPI Specialty from private equity firm Arbor Investments. Seems like a territory expansion as DPI Specialty is mentioned as serving the Western United States.
Link: https://www.bevnet.com/news/2023/kehe-distributors-to-acquire-dpi-specialty-foods
AND FINALLY …
Wellplaece raised a seed round for its procurement marketplace for dentists.
Wellplaece is spelled w-e-l-l-p-l-a-e-c-e and the funding is coming from Eniac Ventures. The goal is to help independent dental practices get supplies more easily. Sounds awfully specific.
On the other hand, I guess it’s the right time to start a B2B marketplace right?
What time is that you might ask?
Tooth-hurty.
Link: https://techcrunch.com/2023/05/30/wellplaece-dental-marketplace-commerce/
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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 Jose Baez; 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.
