The Delivery Roundup, Volume 3
“Congressman, the iPhone is made by a different company. And so, you know, I mean…”
This was Alphabet (Google parent company) CEO, Sundar Pichai’s reaction when asked by congressional representative Steve King during 2018 testimony about notifications on his granddaughter’s iPhone.
Last week, congress had another chance to question Pichai, along with the CEOs of competing giants Apple, Microsoft, and Amazon. This time, they had iOS, Android, and even now, deprecated Windows Mobile and Fire OS creators in one place. But did they make the most of it and what could the testimony mean for e-commerce?
We’ll cover that, the real truth on the USPS, and much more, in Volume 3 of The Delivery Roundup—our no-BS, straightforward collection and analysis of the latest happenings in the world of e-commerce.
The REAL truth on USPS delays. We’ve got the raw data from millions of shipments…
You’ve almost certainly seen the USPS in the news as of late. The new Postmaster General, operational changes, and suspected mail delays have all been hot topics of conversation.
While most reports of delays have been anecdotal thus far, we’ll give you the real numbers. At Shippo, we see millions of USPS shipments per month, allowing us to show a statistically significant trend line.
Let’s take a look at the USPS’s most popular services and how delivery times have changed over recent months.
Looking at data through 7/27/20 (more recent data is skewed since there are still packages out for delivery from last week), we’ve seen spikes in delivery times for First Class and Priority Mail, though at least as of now, the increases have not been exponential.
First Class Mail has recently been closer to a four-day average delivery time compared to under three days in early March. Priority Mail on the other hand, is up closer to a half-day on average from two and a half days to just over three more recently. Priority Mail Express, the USPS’s fastest service, has not seen any significant fluctuations.
For now, at least in aggregate, the USPS remains a fairly reliable option. At most, you can expect to see an extra day in transit compared to pre-COVID levels. We’ll continue to monitor and keep you apprised of any changes.
While shipping delays are never fun for anyone, based on our research, we’ve found that consumers tend to be a bit more understanding given everything that is going on amid COVID-19. The best thing you can do, well, other than spending more on express services, is to be transparent and let your customers know that orders may take an extra day to arrive.
The worst thing you can do is to set a false expectation and not deliver, if you’re upfront with customers about what they should expect with shipping, you’ll be much less likely to disappoint.
Bezos’s BIG admission. So, are you using seller data or not?
Foundational to the questioning of Amazon CEO Jeff Bezos by Congressional representatives, was the company’s rocky relationship with small businesses, and its suspected conflict of interest when it comes to third-party sellers.
Perhaps the most shocking and telling exchange from the entire hearing came when Rep. Pramila Jayapal asked Bezos whether the company “accesses or uses third-party sellers’ data when making business decisions?”
While not going as far as to directly admit to anti-competitive operations against third-party sellers, Bezos did concede that although the company has a policy against using seller-specific data to aid its private-label business, “I can’t guarantee that policy has never been violated.”
This admission, or potential admission depending on how you view it, should not come as a surprise to those familiar with the ongoing controversy. In April, The Wallstreet Journal published an article detailing a specific example of this behavior by Amazon.
What if your competition had access to your acquisition costs, advertising strategy, pricing data, conversion rates, and customer behavior?
I’m going to assume that you’d prefer to keep this information confidential.
Specific to Amazon’s ongoing controversy, AmazonBasics (Amazon’s private label brand) launched a trunk organizer product to compete with third-party brand, Fortem, who had previously dominated the category on Amazon.
Amazon’s stance on such practices is that it only uses “aggregate data” when analyzing products, meaning that it only looks at product data in cases where there are multiple sellers of a product as to not “give it insight into proprietary seller information because the figures would show lots of different seller behavior.”
In the case of Fortem, the company sold over 99.95% of all Fortem trunk organizers. The other 0.05%? Those sales came from Amazon’s own, “Amazon Warehouse Deals” clearance account. Even if the only other seller is Amazon itself, selling returned or refurbished versions of an item, that is enough to constitute “aggregate data,” which is permissible for review by Amazon employees.
With this aggregate data, of which 99.95% was from a single third-party seller’s product, Amazon was able to look at pricing, purchase volume, cost of acquisition (since Fortem was running several ad campaigns on the platform) and then compare this data to the $4 margin that Amazon was making on each third-party sale.
With this data, it was easy for Amazon to analyze whether or not it could make greater than $4 per sale if they were to manufacture and promote their own, AmazonBasics-branded trunk organizer. And this wasn’t an isolated case.
Here’s the deal: We’d be lying if we said there were no reasons to sell on Amazon. The platform’s reach and its loyal user base are at the top of the list. However, sellers should engage with their heads up and eyes open. These benefits come with costs, and not just the possibility of Amazon cannibalizing your business. The potentially larger and more universal costs come in the form of a lack of control of the user experience and lack of user data. In other words a direct relationship with your customers.
What about that other massive third-party marketplace?
eBay? I’m thinking of Walmart. Remember, Walmart’s made a series of big moves recently to accelerate its e-commerce wing. The partnership with Shopify aimed to provide greater product and seller variety. Walmart+, which looks to be further delayed, is a big step towards having a legitimate Prime competitor, with a few unique perks.
Well, it looks like the increased investments and launches are trending positively. In January 2020, Walmart added around 1200 new sellers. New merchant additions surged to 3000 in June and over 3600 in July, the first full month under the partnership, a 3x increase in monthly growth since the start of the year.
While it’s worth noting that many of the same costs of selling on Amazon exist on Walmart, with the exception of anti-competitive practices, so far the partnership is shaping out to be a win-win.
The key for Shopify sellers, if they are using or considering expanding to Walmart, is to use Walmart as a boost, not a crutch. Merchants should be doing everything they can to fortify their own first-party channels first and consider Walmart a new supplemental channel, rather than a point of reliance.
Shopify continues to fortify its platform for merchants.
The latest key partnership will see the increasingly popular, BNPL (buy-now-pay-later) feature added to Shopify’s merchant toolkit. Affirm, which has largely been responsible for popularizing financing on everyday e-commerce purchases, will power the experience for Shopify. The program, branded “Shop Pay Installments,” is currently in beta and will soon release to US-based Shopify merchants.
This move aligns with Shopify’s broader vision of democratizing many of the advanced strategies that were previously reserved for the largest and most resource-rich merchants. As evidenced by data from Affirm’s existing direct merchant partnerships, the addition of BNPL functionality should help Shopify merchants boost conversion rates and increase average order values.
CONGRATS BigCommerce + a few more e-commerce stories to tide you over until the next round.
BigCommerce crushes their IPO. CONGRATS!: Our friends at BigCommerce are having a huge week. They ended up raising $216 million in their IPO, which saw their share price soar from $24 up to north of $90 during its first day of trading. And given just how critical e-commerce enablement technology in 2020, we’re not surprised.
Buy on Google is now commission-free: Continuing on the theme of internet giants leaning in on e-commerce, Google has decided to waive their standard commission fee for their “Buy on Google” payment option, which allows shoppers to make a purchase directly and natively from Google properties. Typically, marketplaces will charge commission fees in the range of 5-15%.
BuzzFeed and native shoppable widgets: The popular content publisher has partnered with Bonsai to offer natively shoppable widgets within its content. This will allow readers to make purchases directly from content that talks about various products without leaving BuzzFeed’s property. Think of an affiliate program on steroids. Consumers may benefit from a seamless experience and sellers get to tap into BuzzFeed’s reach and strong audience. Though, like any third-party layer, the added reach comes at the cost of a less direct interaction between your brand and your customers.
That’s all for this round. Be on the lookout for The Delivery Roundup, Volume 4 in the near future, and be sure to share any tips and feedback!