Shopify’s new features, Stripe plans to go public, David’s Bridal launches wedding vendor marketplace, and Shopify’s Q4 earnings
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It’s February 20, 2023, and this is the Watson Weekly - your essential eCommerce Digest!
Today on our show:
Shopify Announces Over 100 New Features
Payments Provider Stripe Plans to Go Public Next Year
David’s Bridal Launches Wedding Vendor Marketplace
Shopify Reports Q4 2022 Earnings
- and finally, The Investor Minute, which contains 5 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….
Shopify Announces Over 100 New Features
Shopify recently made a big announcement called Shopify Editions which encapsulates a huge set of changes completed in the last 6 months.
With over 100 features, it’s hard not to be impressed with the release overall. I can’t help but notice that this comes on the heels of the company canceling all its internal meetings in the name of productivity. Maybe they should have canceled all their meetings sooner?
Here are the highlights:
* First, Checkout is the star of the release.
The Editions release is huge, but if I had to pick one overarching focus of the release it’s checkout. The fact that Shopify is doubling down on strengths is smart, and this follows through on previous promises -- mostly for good. Checkout gets additional customization through various means, One-Page Checkout, and more.
* Second, agencies and developers should be the happiest with the release.
There are new APIs, and more customization. These are helpful for developers and agencies because they enable new customer workflows and features for websites.
Overall my favorite new feature is the new MetaObjects, which allows you to create your own custom objects that can be used within Shopify. Complex objects and object relationships are key to Shopify's Enterprise future.
* A few obvious big wins in the release are the One-Page Checkout, the release of Bundles, and a number of Product Search & Recommendations improvements. One-Page Checkout is not yet released, but it’s coming sometime in 2023.
* This was also the release where Shopify clarified the positioning of Plus versus Components. While Shopify Plus API rate limits increased by ten times, it’s clear that Components is the focus for larger brands and retailers with unlimited rate limits for APIs. It used to be Plus was the Enterprise version Shopify. This release made it clear that the Enterprise version of Shopify is now called Components.
* Shopify launched a feature called Shop App Minis, which allows you to customize your Shop App store. If you don’t remember Shop App, it started as the buyer tracking app called Arrive, which Shopify renamed to Shop App a few years ago. Shop App is also the app which appears to be where Shopify is experimenting with its vision for a marketplace future, although right now one without a multi-vendor checkout.
But back to Shop App Minis. This feature reminds me of an evolution of customizing your own Amazon storefront. The goal for Shopify is to keep Shop App as a central app, but allow each brand to customize the look and feel of its storefront within Shop App.
Shopify did this by releasing a set of SDKs to developers which allow them to create a set of mini-apps that brands can adopt to customize their Shop App storefronts.
* There were a few disappointments in the release. Shop Cash, which is like a Shopify earnings points program, seems like a double-edged sword to me.
Shopify also released a feature called “Sign-in with Shop,” which allows buyers to login to your storefront using their Shop ID.
Does it feel to anyone else that we are recreating Paypal, except that with Shopify, Paypal now runs your whole storefront?
I thought the brand wanted to own the buyer’s identity. Why does any real brand want Shopify to own this?
I am starting to worry that if you want real control over your destiny, Shop Pay may not be your friend. While Shopify is enabling a lot of new features, each one ties you closer to Shop Pay and Shop App.
Shopify also released some functionality for small merchants including an email collection form app and some events tied to it which mimic some of the basic Klaviyo triggers.
When you look at all the functionality Shopify released, it’s hard not to be impressed as there’s a little something in here for everyone.
[References:]
Our Second Story
Payments Provider Stripe Plans to Go Public Next Year
I was joking on LinkedIn the other day that I mention at the top of the show I cover IPOs here in our Investor Minute, but since no IPOs are actually happening should I remove that text?
Well, it looks like Stripe heard me. Recently, the Collison Brothers who founded Stripe told employees that the company will finally list itself in the public markets, or allow employees to privately sell their shares. This is according to reporting done by The Information.
Given how popular Stripe is, it’s more likely than not that the company will pursue a direct listing instead of a traditional IPO process. Of course that could depend on if it wants to raise money as part of its IPO. It has approached Berkshire Hathaway, among other investors.
Stripe is an important company and a global player in the space, and is doubly important because both Amazon and Shopify rely on it for their payments.
Given the fact that Stripe recently cut 14% of its staff, it’s not surprising that the company will choose to go public sometime in the near future.
[References:]
Our Third Story
David’s Bridal Launches Wedding Vendor Marketplace
Retail Dive reported that David’s Bridal, a retailer with over $1 billion in revenue, has launched a number of new initiatives.
* The first element is a wedding planning platform called Pearl, which allows couples to get advice on and plan their weddings in one place.
* The second element is a vendor marketplace which allows couples to find different vendors, and get discounted rates to those vendors.
* In the past, David’s has made other moves like acquiring Rustic Wedding Chic, which focuses on non-traditional weddings (such as those not held in ballrooms and churches) that are becoming increasingly popular.
Overall, I would say that the wedding space is extremely competitive with vendors like Zola, TheKnot, and Wedding Wire out there, which makes a digital-only play a difficult one.
On the other hand, as an adjunct to the company’s already robust stores business, this could have some legs. There are a lot of brides who maybe wouldn’t have used an online planning service, but are happy to find one that supports the dress purchase they just made and could find it very useful.
Plus, the new service could be a way to support David’s Bridal existing loyalty program.
[References:]
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And Our Last Story
Shopify Reports Q4 2022 Earnings
Last week Shopify reported Q4 2022 earnings, and while the stock market was a little concerned about their 2023 earnings, their revenue growth, operating expense control, and continued momentum left a lot to like.
Here are a few of the details:
* Shopify’s Q4 revenue was up 26% y/y, and Full Year 2022 revenue up 21% y/y
* Shopify’s Q4 Gross Merchandise Volume was up 13% y/y, which is consistent with their Full Year 2022 GMV growing 12% y/y.
* These two stats by themselves show you revenue is accelerating faster than GMV. This is due to the increased penetration of Plus, and the company’s point of sale solution to a lesser degree, and the attached payments GMV that comes with it.
* The company’s net operating margin came in at -11%, which may not sound great but it’s an improvement from -25% in Q3 2022. It’s a good sign if the company can continue chipping away at it.
* Shopify’s Q4 Payments volume processed was up to up to 56% of their total GMV, compared to 51% previous year. To me, this means there is a lot of room to run overall, but as the company increasingly focuses on Enterprise businesses, it may run up against the large incumbent payment providers who are already entrenched.
* In the interesting statistics department, the President of Shopify Harley Finkelstein said that Shopify now represents 10% of US eCommerce, which is a datapoint I haven’t heard before. I imagine there is some seasonality to that number.
* Shopify seems to have regained some measure of control over its operating expenses — Q4 operating expenses were essentially flat to Q4 after adjustments, and Q1 2023 is only expected to be slightly up. If you combine this with the CFO’s assertion that Fulfillment Network CapEx will be minimal in 2023, it means there is a good chance that the company’s net operating margin will keep improving throughout 2023.
* The call revealed that Shopify actively speaking with Amazon about its Buy With Prime service, but were focused on brands having control over the experience. There is no news to report here yet, but there is motivation from both sides to make a deal happen. If you ask me, I think Shopify has the leverage here, but that’s not the way the market overall seems to see it right now.
* Tobi was asked about Shopify’s ranked priorities in the next 12 months, and while he didn’t exactly answer the question, the major themes were increasing the pace of innovation, making the company more efficient, and addressing the needs of larger merchants.
* One warning sign for the Shopify business is that I get the feeling Subscription Solutions would be flat without Plus and Point of Sale. Smaller plans like Startup were described as a kind of "headwind" due to people trying the product and not completing trials. In short, Shopify is no longer the business of rebels.
In the final analysis:
It’s good to be the king, and if you thought Shopify was already putting pressure on other major eCommerce platforms before, then I expect that to only increase going forward.
* Wall Street however, was disappointed by their guidance where Q1 2023 was put in the “high-teens” year over year revenue growth. Of course, the markets always want everything to grow faster, but lower guidance now from the company is smart because it gives them an easier way to beat that guidance in the future.
[References:]
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Hey Watsonians, this is Rick. If you’re looking to discuss eCommerce topics with other listeners, you can find it all at the RMW Commerce Community. There, you’ll find a trusted group of fans just like you who are passionate learners of eCommerce. So don’t delay, just visit community.rmwcommerce.com to sign up for free.
It’s That Time, Friends, for our Investor Minute. We have 5 items on the menu today.
First
Grocery delivery company JOKR raised $50 million to focus on Brazil.
This is quite a fall for the formerly high-flying JOKR which has raised almost $500 million in its history, and at one point was losing $10 million a month. The company left the US market last year.
Link: https://techcrunch.com/2023/02/03/jokr-brazil-instant-grocery-delivery/
Second
Freight network Warp raised $5.7 million in additional seed funding.
The company is one of a number of new middle-mile solutions that aim to optimize this part of the supply chain journey. The company seems focused on ground freight and plans to use the funding to scale its network.
Link: https://www.citybiz.co/article/377893/warp-raises-5-7m-in-additional-seed-funding/
Third
Art marketplace Peggy raised $10.8 million Canadian dollars and officially launched its new app.
The company has a digital fingerprint and authentication solution that enables transparency and royalties for artists, and – perhaps in a sign of the times – is not based on blockchain.
Fourth
Sequoia Capital Southeast Asia backed cross-border payments startup Tazapay.
The company was created to combine both real-time and credit card payment methods in markets like India and Singapore, but the company operates in about 40 core markets, with credit card coverage beyond this.
Link: https://techcrunch.com/2023/02/10/tazapay/
AND FINALLY …
Tusk Logistics raised $1.6 million in pre-seed fFunding from TitletownTech
Tusk Logistics has created a network of regional parcel carriers. In a partnership I find unbelievable, TitletownTech is a venture capital firm formed by a partnership between the Green Bay Packers and Microsoft.
Congrats to Watsonian Ben Emmrich the founder of Tusk on this new funding!
Link: https://www.ibmadison.com/titletowntech-invests-in-tusk-logistics/
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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.
