September 23rd, 2024: Shopify’s progress in the enterprise market, Biden White House makes de minimis announcement, Amazon’s return to office memo code for layoffs, Salesforce’s release announcements
—Today’s episode of The Watson Weekly Podcast is sponsored by Mirakl
It’s September 23, 2024 and this is the Watson Weekly - your essential eCommerce Digest!
Today on our show:
Shopify’s Progress in the Enterprise Market
Biden White House Makes Deminimis Announcement
Amazon’s Return to Office Memo Code for Layoffs
Salesforce Makes Several Release Announcements at Dreamforce - Or Does It?
- and finally, The Investor Minute which contains 5 items this week from the world of venture capital, acquisitions, and IPOs.
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[PAUSE]
BUT FIRST in our shopping cart full of news….
Shopify’s Progress in the Enterprise Market
I often get asked if Shopify is making progress in Enterprises. The answer is of course yes, but often you can't see the progress beneath the surface. You only see it when the train comes out the other end of the tunnel.
Primarily the installations heading in the Shopify direction in Enterprise are vintage 2010-2014. Many are some level of hybrid-custom system, but many are some flavor of Demandware (depending on the vintage year - often SFRA pipelines or controllers), frustrated by the huge Salesforce bills that seem to be getting ever higher for a stack which is increasingly harder to maintain for something not improving at the same rate.
Still, Enterprise Sales takes time. You need credibility, convincing, comfort, and patience. Shopify has the "earned media" power that most platforms would envy. That might start a conversation that ends up going nowhere.
These deals need to pass a lot of hurdles for Shopify to even have a chance at bat:
* Investor event, platform EOL support, or contract coming up.
* Digital Organization comfortable with SaaS/Shopify (usually it starts here in traditional IT organizations - often the business teams come from other places)
* An IT organization stretched thin and beaten down, or a retiring IT leader.
Even then, you still need pass what I call the "arc of skepticism" with the IT organization through a progressive series of meetings over a 6 month to a year period:
1 * "Shopify is a toy."
2 * "Maybe we should take another look, but do we really want a new vendor in the mix?"
3 * "It does seem to be more flexible than we thought before."
4 * "OK maybe we admit there could be some advantages here."
5 * "We might even look like heroes."
Somewhere in between steps 4 and 5 the CEO and CFO get together and step in. The traditional Shopify story of TCO and Innovation is great for the mid-market but in Enterprise IT settings, it is often not enough only for the Business teams to keep trying to push the rock (Shopify) up the hill (IT) like Sisyphus.
Whether this arc of skepticism takes 3 months or 3 years depends on how rigid the IT organization is, the requirements of the business and IT, how large the company is, privacy/data/security audits needed, and sometimes whether or not the old IT leader is on the way out or not.
Even then, a successful sale might lead to an implementation disussion that can be an interminable nightmare of delays, sequencing, budgeting. Shopify can solve the platform, but the integration problem is another story altogether. Integrating Shopify with a complex Enterprise is its own beast of an operation, and the primary reason that these implementations might delay or some may not ever even see the light of day.
This is what Shopify has signed up for and I see many in some stage of this "arc of skepticism" and others in the "interminable implementation" stage. Of course some are live too 😀
[References:]
https://www.linkedin.com/posts/ecommercestrategyconsulting_shopify-on-the-slow-and-steady-train-to-enterprise-activity-7240318465046171648-nYZS?utm_source=share&utm_medium=member_desktop
Our Second Story
Biden White House Makes Announcement on Deminimis
Whitehouse Executive Deminimis Announcement Puts the Train on the Tracks
Not Much Yet, But More to Come... Possibly on Deminimis.
What's the Deminimis Exemption?
A shipment is eligible for the de minimis exemption if the aggregate fair retail value of the articles imported is $800 or less. De minimis shipments enter the United States with less information than other imports and are not subject to duties and taxes.
The new announcement from the Biden administration issued a notice of proposed rulemaking. Which is basically legalese for sometime soon we will think strongly about releasing a plan which might lead to some action.
What Exactly Happened?
Not Much, Yet.
* We are asking Congress to do a bunch of things.
That's it? Pretty much at this point yet. A lot of heat and light over a wait and see.
Isn't this the same US Congress which can't fund the country's existing obligations on time each year without shutting itself down?
Yes this same Congress.
What numbers did they release?
* Number of items with deminimis exemptions increased from 140 million to over 1B a year in the last ten years.
* Over half of all deminimis exemptions come from Chinese founded eCommerce platforms. (As if the country of founding makes a difference -- notice they have all moved headquarters). This number of updated from last year's CBP report saying "likely almost half".
I can believe this number did surge given public reports.
What are the reasons they are doing this?
* They do not get as much information about deminimis shipments which makes it hard to track illicit and unsafe items.
Items subject to tariffs cannot be tracked if they are under the deminimis.
* Consumers are being harmed by bad products entering the country.
How have consumers been harmed specifically that they presented?
No specific instances of harm were called out, but I am sure they are compiling this.
What are they interested in doing?
* Adding additional specific protections for US textile manufacturers.
* Asking Congress to force electronic collection of 10 digit HTS codes (which are very specific) about all shipments coming in, even under the deminimis.
* Setting restrictions on who is claiming the exemption.
* Ensuring the Consumer Product Safety Commission gets electronic Certificates of Compliance for all items, including under the deminimis.
Why Now?
Do you really have you ask? It's an election year!
Isn't this the same Administration that has a 50/50 chance of being voted out this year?
Yes that's correct. However, there does seem to be broad bipartisan support on this issue. Which that and $2.90 will get you on the subway.
All told, this ruling does sound like a boon for Avalara and other cross-border players with technology to automate HS code classification and filing. It also highlights the fact that without Congress, we will be in a waiting game with lots of important sounding rhetoric until a reform bill is passed and signed
[References:]
https://www.linkedin.com/posts/ecommercestrategyconsulting_whitehouse-executive-deminimis-announcement-activity-7241409248398643200-LImI?utm_source=share&utm_medium=member_desktop
Our Third Story
Amazon’s Return to Office Memo Code for Layoffs
Andy Jassy is a great executive, I really believe that. Most anyone could have something to learn from him. However, I do believe that he's fundamentally wrong about the way the world works now.
Frankly the way I grew up at companies, it's deader than dead. Why?
Talent finds talent. Wherever it is.
I mean, you used to have to distribute AT&T teleconference codes to have a three way call with different people about a topic. The world works differently now. Collaboration tools are better and communication is 24/7 across continents.
And did I mention talent? If you are forced to find talent only in a single city, how limited are you? You will overpay for that talent for lower productivity.
So about that memo, what did he say?
* Jassy has been at Amazon 27 years, and wants things to work the same way to preserve the culture. Back to 5 days a week except for the rare exceptions.
>Sorry, you can't put the remote genie back in the bottle. and by the way, Amazon did not have the same culture at each remote office.
* Org structure. Amazon has too many layers apparently. Asking organizations to increase ratio of individual contributors to managers by 15%? Worried about pre-meetings.
>Seriously? Seems like an arbitrary number. Amazon with Shopify-envy at this point? Next up? Following Tobi's canceling of Slack channels due to too many pineapple on pizza discussions.
And by the way, the fact that this is slid into a "return to office or else" memo... umm... this is a layoff memo.
* A new bureaucracy mailbox to root out inefficiency or unnecessary process.
>I can't even comment on this without laughing. Umm, we installed a new suggestion box in the mailroom, if anyone has any ideas please put them in there. As you just heard, everyone is in the office now so you can use that new mailroom suggestion box.
The upshot? Disagree and commit was the requirement for 3 days back to office in a previous 2023 post. Now? It's up or out.
Jassy is calling this a 5 Day Back to the Office. I have a different name:
Back to the Stone Age. Given that everyone in any office these days is on Zoom calls 24/7, it does not seem this will have much benefit unless they plan to move everyone back to Seattle as well.
The genie will resist being put back in the bottle and Amazon's talent will suffer for it. But by the way? Amazon wants a lower cost structure in terms of people, and this memo is nothing more than a forcing function for those changes.
[References:]
https://www.linkedin.com/posts/ecommercestrategyconsulting_andy-jassy-return-to-office-memo-crouching-activity-7241780793499348992-YtM-?utm_source=share&utm_medium=member_desktop
[PAUSE]
And Our Last Story
Salesforce Makes Several Release Announcements at Dreamforce - Or Does It?
Dreamforce may only be a dream: Lies, Damned Lies, and Press Releases
Two things: disclaimers and the state of Salesforce.
I was going to write about Agentforce and some of the chatbots that were released by Salesforce. Except "released" was overplayed. There are a number of what you might call chatbots they announced: "Agentforce". Sounds like a new feature they will be upselling you soon. "Autonomous" agents apparently, but we used to call these chatbots. Now they are autonomous which sounds creepy to me.
But I guess you can't charge Enterprise prices for essentially service chatbots. It wasn't even this that caught my eye (although it would have been if not for the next point).
Instead it was a dislaimer at the bottom of their 3,000+ word page which I will link below:
"Any unreleased services or features referenced here are not currently available and may not be delivered on time or at all. Customers should make their purchase decisions based upon features that are currently available."
May not be delivered on time. Or at all. In other words, don't trust what we say.
Seriously Salesforce? Legalese much? This is not even fine print, this is full size print at the bottom of what is supposed to be a major software release.
It sounds like instead of an inspiration, Dreamforce has become more of a fever dream. Features that might seem cool one day if we could only get around to implementing them or making them work.
It's simple - you either deliver or you don't. If I didn't know better, I would think Salesforce is playing directly into the hands of Shopify with this kind of foolishness. I even saw very well-meaning Dreamforce posts very confused about what Salesforce is just playing nice to talk about, what things they are actually releasing. Including from Marc Benioff himself.
This shouldn't be that hard. It's a serious failure of Marketing and Product Management, and it's not only Salesforce's Commerce products that are at risk here. It's Marketing and Service Cloud too.
The rent is too damn high, and those who have been customers for 5-10 years are tired of the same dream which their business teams have woken up to a nightmare.
The barbarians are at the gates of Salesforce, and more companies are choosing simplicity and actual innovation over complexity and nice talk. I've seen nothing this week that will reverse the giant sucking sound going from Salesforce to Shopify primarily but it's the entire stack that is being recreated off Salesforce - it's other marketing and data platforms that are benefiting as well.
More acquisitions will not help Salesforce. Of course it will help their sales teams, but is anyone convinced the same thing will not happen to Predict Spring POS what happened to Demandware? A lot of new customers, followed by slow decline and increasing irrelevance and apathy.
Salesforce's acquisition strategy is similar to Oracle before it - a shell game of growth to cover up declines.
[References:]
It’s That Time Friends, for our Investor Minute. We have 5 items on the menu today.
First
Cassandra Grey Partners With Private Equity Investor To Buy Violet Grey Back From Farfetch
Founder Cassandra Grey has partnered with 888 Midas Partners to purchase Violet Grey from Farfetch for an undisclosed amount. When Farfetch closed its beauty category, the brand became for sale at a lower price. This will not save the brand but it could extend its life a bit.
Second
European Quick Commerce Startup Flink Raises $150M
Flink, a European quick commerce startup that operates in Germany and the Netherlands, raised a new $150M funding round. Who knew that quick commerce was still a thing and that Flink could raise funding from investors?
Third
DSV Buys DB Schenker for $15.9B
Danish freight forwarder DSV has agreed to purchase German transportation and logistics provider DB Schenker for $15.9B from Deutsche Bahn. The acquisition will allow Deutsche Bahn to focus on its core rail business, reduce its debt, and assist DSV to grow its business in Germany. I wonder how regulators see this transaction?
Link: https://www.ttnews.com/articles/dsv-buys-db-schenker
Fourth
Startup Ecomtent Raises $850k in Pre-Seed Funding
Toronto-based AI and e-commerce startup Ecomtent raised $850k in pre-seed funding that will be invested in its technology, the hiring of talent, and the scale of its operations. The startup believes conversational search will become the new normal, and proposes a way to help brands become part of the conversation.
AND FINALLY …
Apparel Supply Chain Sustainability Platform Retraced Raises €15M
Apparel supply chain compliance and sustainability platform Retraced has raised €15M in Series A funding. As the EU Supply Chain Directive (CSD) came into effect in July, this sector will grow as brands need to better communicate with customers due to the European Digital Product Passport (DPP). Brands that operate in Europe have another important regulatory requirement related to the sourcing and compliance of their apparel.
Link: https://www.esgtoday.com/apparel-sustainability-platform-retraced-raises-e15-million/
Today’s final word for the week of Temuhosen:
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[PAUSE]
Did you know that RMW Commerce has a brand new podcast? Check out The Watson Weekend for an unfiltered and lively eCommerce chat each week with me, Rick Watson, my co-host Jess Lesesky, and an array of interesting guests and topics. All focused on eCommerce. You can find the Watson Weekend by searching for it on iTunes, Spotify, or Youtube.
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.
