Hypotenuse AI wants to take the strain out of copywriting for ecommerce

Imagine buying a dress online because a piece of code sold you on its ‘flattering, feminine flair’ — or convinced you ‘romantic floral details’ would outline your figure with ‘timeless style’. The very same day your friend buy the same dress from the same website but she’s sold on a description of ‘vibrant tones’, ‘fresh cotton feel’ and ‘statement sleeves’.

This is not a detail from a sci-fi short story but the reality and big picture vision of Hypotenuse AI, a YC-backed startup that’s using computer vision and machine learning to automate product descriptions for ecommerce.

One of the two product descriptions shown below is written by a human copywriter. The other flowed from the virtual pen of the startup’s AI, per an example on its website.

Can you guess which is which?* And if you think you can — well, does it matter?

Screengrab: Hypotenuse AI’s website

Discussing his startup on the phone from Singapore, Hypotenuse AI’s founder Joshua Wong tells us he came up with the idea to use AI to automate copywriting after helping a friend set up a website selling vegan soap.

“It took forever to write effective copy. We were extremely frustrated with the process when all we wanted to do was to sell products,” he explains. “But we knew how much description and copy affect conversions and SEO so we couldn’t abandon it.”

Wong had been working for Amazon, as an applied machine learning scientist for its Alexa AI assistant. So he had the technical smarts to tackle the problem himself. “I decided to use my background in machine learning to kind of automate this process. And I wanted to make sure I could help other ecommerce stores do the same as well,” he says, going on to leave his job at Amazon in June to go full time on Hypotenuse.

The core tech here — computer vision and natural language generation — is extremely cutting edge, per Wong.

“What the technology looks like in the backend is that a lot of it is proprietary,” he says. “We use computer vision to understand product images really well. And we use this together with any metadata that the product already has to generate a very ‘human fluent’ type of description. We can do this really quickly — we can generate thousands of them within seconds.”

“A lot of the work went into making sure we had machine learning models or neural network models that could speak very fluently in a very human-like manner. For that we have models that have kind of learnt how to understand and to write English really, really well. They’ve been trained on the Internet and all over the web so they understand language very well. “Then we combine that together with our vision models so that we can generate very fluent description,” he adds.

Image credit: Hypotenuse

Wong says the startup is building its own proprietary data-set to further help with training language models — with the aim of being able to generate something that’s “very specific to the image” but also “specific to the company’s brand and writing style” so the output can be hyper tailored to the customer’s needs.

“We also have defaults of style — if they want text to be more narrative, or poetic, or luxurious —  but the more interesting one is when companies want it to be tailored to their own type of branding of writing and style,” he adds. “They usually provide us with some examples of descriptions that they already have… and we used that and get our models to learn that type of language so it can write in that manner.”

What Hypotenuse’s AI is able to do — generate thousands of specifically detailed, appropriately styled product descriptions within “seconds” — has only been possible in very recent years, per Wong. Though he won’t be drawn into laying out more architectural details, beyond saying the tech is “completely neural network-based, natural language generation model”.

“The product descriptions that we are doing now — the techniques, the data and the way that we’re doing it — these techniques were not around just like over a year ago,” he claims. “A lot of the companies that tried to do this over a year ago always used pre-written templates. Because, back then, when we tried to use neural network models or purely machine learning models they can go off course very quickly or they’re not very good at producing language which is almost indistinguishable from human.

“Whereas now… we see that people cannot even tell which was written by AI and which by human. And that wouldn’t have been the case a year ago.”

(See the above example again. Is A or B the robotic pen? The Answer is at the foot of this post)

Asked about competitors, Wong again draws a distinction between Hypotenuse’s ‘pure’ machine learning approach and others who relied on using templates “to tackle this problem of copywriting or product descriptions”.

“They’ve always used some form of templates or just joining together synonyms. And the problem is it’s still very tedious to write templates. It makes the descriptions sound very unnatural or repetitive. And instead of helping conversions that actually hurts conversions and SEO,” he argues. “Whereas for us we use a completely machine learning based model which has learnt how to understand language and produce text very fluently, to a human level.”

There are now some pretty high profile applications of AI that enable you to generate similar text to your input data — but Wong contends they’re just not specific enough for a copywriting business purpose to represent a competitive threat to what he’s building with Hypotenuse.

“A lot of these are still very generalized,” he argues. “They’re really great at doing a lot of things okay but for copywriting it’s actually quite a nuanced space in that people want very specific things — it has to be specific to the brand, it has to be specific to the style of writing. Otherwise it doesn’t make sense. It hurts conversions. It hurts SEO. So… we don’t worry much about competitors. We spent a lot of time and research into getting these nuances and details right so we’re able to produce things that are exactly what customers want.”

So what types of products doesn’t Hypotenuse’s AI work well for? Wong says it’s a bit less relevant for certain product categories — such as electronics. This is because the marketing focus there is on specs, rather than trying to evoke a mood or feeling to seal a sale. Beyond that he argues the tool has broad relevance for ecommerce. “What we’re targeting it more at is things like furniture, things like fashion, apparel, things where you want to create a feeling in a user so they are convinced of why this product can help them,” he adds.

The startup’s SaaS offering as it is now — targeted at automating product description for ecommerce sites and for copywriting shops — is actually a reconfiguration itself.

The initial idea was to build a “digital personal shopper” to personalize the ecommerce experence. But the team realized they were getting ahead of themselves. “We only started focusing on this two weeks ago — but we’ve already started working with a number of ecommerce companies as well as piloting with a few copywriting companies,” says Wong, discussing this initial pivot.

Building a digital personal shopper is still on the roadmap but he says they realized that a subset of creating all the necessary AI/CV components for the more complex ‘digital shopper’ proposition was solving the copywriting issue. Hence dialling back to focus in on that.

“We realized that this alone was really such a huge pain-point that we really just wanted to focus on it and make sure we solve it really well for our customers,” he adds.

For early adopter customers the process right now involves a little light onboarding — typically a call to chat through their workflow is like and writing style so Hypotenuse can prep its models. Wong says the training process then takes “a few days”. After which they plug in to it as software as a service.

Customers upload product images to Hypotenuse’s platform or send metadata of existing products — getting corresponding descriptions back for download. The plan is to offer a more polished pipeline process for this in the future — such as by integrating with ecommerce platforms like Shopify .

Given the chaotic sprawl of Amazon’s marketplace, where product descriptions can vary wildly from extensively detailed screeds to the hyper sparse and/or cryptic, there could be a sizeable opportunity to sell automated product descriptions back to Wong’s former employer. And maybe even bag some strategic investment before then…  However Wong won’t be drawn on whether or not Hypotenuse is fundraising right now.

On the possibility of bagging Amazon as a future customer he’ll only say “potentially in the long run that’s possible”.

Joshua Wong (Photo credit: Hypotenuse AI)

The more immediate priorities for the startup are expanding the range of copywriting its AI can offer — to include additional formats such as advertising copy and even some ‘listicle’ style blog posts which can stand in as content marketing (unsophisticated stuff, along the lines of ’10 things you can do at the beach’, per Wong, or ’10 great dresses for summer’ etc).

“Even as we want to go into blog posts we’re still completely focused on the ecommerce space,” he adds. “We won’t go out to news articles or anything like that. We think that that is still something that cannot be fully automated yet.”

Looking further ahead he dangles the possibility of the AI enabling infinitely customizable marketing copy — meaning a website could parse a visitor’s data footprint and generate dynamic product descriptions intended to appeal to that particular individual.

Crunch enough user data and maybe it could spot that a site visitor has a preference for vivid colors and like to wear large hats — ergo, it could dial up relevant elements in product descriptions to better mesh with that person’s tastes.

“We want to make the whole process of starting an ecommerce website super simple. So it’s not just copywriting as well — but all the difference aspects of it,” Wong goes on. “The key thing is we want to go towards personalization. Right now ecommerce customers are all seeing the same standard written content. One of the challenges there it’s hard because humans are writing it right now and you can only produce one type of copy — and if you want to test it for other kinds of users you need to write another one.

“Whereas for us if we can do this process really well, and we are automating it, we can produce thousands of different kinds of description and copy for a website and every customer could see something different.”

It’s a disruptive vision for ecommerce that is likely to either delight or terrify — depending on your view of current levels of platform personalization around content. That process can wrap users in particular bubbles of perspective — and some argue such filtering has impacted culture and politics by having a corrosive impact on the communal experiences and consensus which underpins the social contract. But the stakes with ecommerce copy aren’t likely to be so high.

Still, once marketing text/copy no longer has a unit-specific production cost attached to it — and assuming ecommerce sites have access to enough user data in order to program tailored product descriptions — there’s no real limit to the ways in which robotically generated words could be reconfigured in the pursuit of a quick sale.

“Even within a brand there is actually a factor we can tweak which is how creative our model is,” says Wong, when asked if there’s any risk of the robot’s copy ending up feeling formulaic. “Some of our brands have like 50 polo shirts and all of them are almost exactly the same, other than maybe slight differences in the color. We are able to produce very unique and very different types of descriptions for each of them when we cue up the creativity of our model.”

“In a way it’s sometimes even better than a human because humans tends to fall into very, very similar ways of writing. Whereas this — because it’s learnt so much language over the web — it has a much wider range of tones and types of language that it can run through,” he adds.

What about copywriting and ad creative jobs? Isn’t Hypotenuse taking an axe to the very copywriting agencies his startup is hoping to woo as customers? Not so, argues Wong. “At the end of the day there are still editors. The AI helps them get to 95% of the way there. It helps them spark creativity when you produce the description but that last step of making sure it is something that exactly the customer wants — that’s usually still a final editor check,” he says, advocating for the human in the AI loop. “It only helps to make things much faster for them. But we still make sure there’s that last step of a human checking before they send it off.”

“Seeing the way NLP [natural language processing] research has changed over the past few years it feels like we’re really at an inception point,” Wong adds. “One year ago a lot of the things that we are doing now was not even possible. And some of the things that we see are becoming possible today — we didn’t expect it for one or two years’ time. So I think it could be, within the next few years, where we have models that are not just able to write language very well but you can almost speak to it and give it some information and it can generate these things on the go.”

*Per Wong, Hypotenuse’s robot is responsible for generating description ‘A’. Full marks if you could spot the AI’s tonal pitfalls

Cannabis VC Karan Wadhera on why the industry, which took a hit last year, is now quietly blazing

Early last year, excitement over the burgeoning cannabis industry was palpable in Silicon Valley, with a small number of venture firms writing their first checks to cannabis-related startups. Among them is the cross-border venture firm DCM, which even hosted an “inaugural” cannabis “tech summit” in May 2019 that drew so many investors that finding a seat was difficult.

Yet the buzz began to fade soon after, owing to a confluence of events, including a bubble in publicly traded cannabis companies; legalization that moved more slowly than hoped in certain states like New York; and an outbreak of lung injuries tied to vaping last fall.

The industry is still navigating around some of these trends, but it’s also proving more durable than outsiders might imagine, according to Karen Wadhera, a managing partner at Casa Verde Capital, the cannabis-focused venture firm founded by Snoop Dogg back in 2016. “Four plus months into COVID, cannabis has really proved itself to be a non-cyclical industry,” he said in a chat late last week, where we talked about what went so wrong, what’s happening right now, and whether he ever worries that Casa Verde might be too early to the cannabis party. Parts of that chat, edited for length, follow.

TC: The last time I saw you in person, last year, there was a lot of interest in cannabis. Since then, the headlines have pretty consistently been bad. What’s going on?

KW: What happened to the public perception of the cannabis industry is not too dissimilar to the dotcom bubble of the late ’90s, where there was a lot of hype — a lot of it driven by public companies — and a lot ofspeculative trading and valuations that weren’t really founded in reality. [We’re talking about] projections multiple years out into the future, and then crazy revenue multiples on top of that. Things just got really frothy, and that eventually burst, and last April or May was sort of apex of that of that moment. It’s when things started to trade off. And it’s been those names, the public names in particular, that have been hit particularly hard.

TC: Why?

I don’t know if it was driven purely by scarcity value, but there was definitely an incentive to go public. So you had a lot of companies go public well before they were prepared to. And then you’ve had a lot of companies, which are just, quite frankly, poorly run, with poor management teams, and some with even real ethical concerns [regarding] how they ran their businesses. So I think that all started to come to a head and led to a pretty serious implosion.

It was pretty painful, for sure. But what’s so interesting is that even though that has been the public perception based on these stocks, the reality is the macro has continued to improve. Sitting here today, four-plus months into COVID, cannabis has really proved itself to be a non-cyclical industry. Cannabis has been deemed an essential business everywhere across the U.S. We had record sales in March, April, and May, and the trend has has continued. And now that we are getting into an environment where governments are going to be looking for additional sources of tax revenue, the potential urgency around cannabis legalization is going to be there, which is going to be massively positive for the industry.

TC: I thought the governor of Massachusetts was concerned about people bringing COVID into the state, but I guess he reversed course on dispensaries as essential businesses?

KW: Yeah, he was the one outlier, and he reversed course. What’s been interesting is first, as you can imagine in a moment where people are especially anxious, cannabis has been something many people have been turning to. Then, beyond that, what’s also been interesting is that like many other areas of the economy, we’ve seen e-commerce really [take off]. One of our businesses, Dutchie, which enables retailers to launch their own e-commerce and have their own delivery and pickup, has seen its gross merchandise value increase by like 600% [since March].

TC: You’re also an investor in [the same-day delivery startup] Eaze, where former executives were accounting for consumer sales as if they were transactions made to third party vendors. What do you think of that situation? 

KW: It’s certainly in the past, but as you know, there’s always been a massive issue with the cannabis business [in that it] can’t really access traditional banking like other industries can, and one of the big issues there is credit card processing. So it sounds that an issue earlier in Eaze’s history was that it was able to process credit card payments potentially by not fully disclosing what was actually being transacted. I don’t know a ton of the details and where that lies currently, but I know that’s not anything that Eaze is involved in anymore.

TC: Bigger picture, does it tarnish the industry and make it harder for everyone to raise money? What are you seeing? Are new investors coming to the table? Are early investors still believers in this opportunity?

KW: It’s been fascinating for sure. The conversations have changed dramatically from when I first entered the industry to today. Initially, we [as a venture firm] were unable to get in front of a lot of pensions and endowments to have those conversations. Now, we’re at least having those conversations and they’re interested to hear about what we’re doing. I’m not quite sure if they’re ready to pull the trigger, but certainly even just the fact that they’re interested in understanding the industry better is a huge change.

TC: What are the biggest pockets of opportunity you see in cannabis investing right now?

KW: We have two main areas of focus. We love the ancillary tech-lead opportunities for businesses that are going to benefit from the overall macro theme of legalization and globalization of the cannabis industry, whether it’s software for retailers or manufacturers, or ancillary services like staffing and financial services. One of our businesses is Bespoke Financial, which helps with short-term financing for the industry. So we still see a lot of development in those areas.

We’re also very interested in consumer-facing brands. For a long time, cannabis sales were driven by potency and price. To use the alcohol equivalent, it would be as if every consumer made their decisions by walking into a liquor store and asking what’s the highest-proof vodka for the best price. We know that’s not how decisions are made.

TC: You and I talked before about precision dosing, soon after you’d invested in a vaping company that made it easier to understand how you’ll be impacted by what you’re ingesting.

KW: So that is business called Indose, which has created a medical-grade device that [enables users to] dial in the exact amount that they’re taking in . . . It’s much more of a business that’s going to be working with other consumer brands and allow them to use its technology to have that precision.

TC: How are these consumer-brands reaching customers? Do they have to be more . . . careful?

KW: Yeah, I mean, again, with cannabis businesses, that’s another huge restriction that a lot of them face. You can’t use a lot of the traditional channels that would be available to to non-cannabis businesses, so no Facebook ads, no Instagram, no Google AdWords, things like that, which is now a lot of the new brands’ playbook. So you have to be creative. There’s a lot of marketing happening in store within the dispensaries. You can rent billboards. Experiential marketing, pre COVID, was something that was people were very actively doing. There is also influencer influential marketing online that can still happen through Instagram channels or [channels] that a brand may own. But oftentimes those get get shut down as well. So yeah, it’s a tricky world from a marketing perspective for cannabis businesses.

TC: From a 20,000-foot level, one of the limitations of investing in cannabis would seem to be exit opportunities. There aren’t a whole lot of companies that are in a position to buy a cannabis business because of legal issues in part. How do you address that?

KW: There are a few ways to look at that. I think for ancillary, periphery businesses, there will be a lot of acquisition opportunities in the future from strategics that decide that they want exposure to the cannabis industry and may get it by buying a point-of-sale business or an e-commerce player or a financial services businesses, because that’s less directly touching the plant.

It’s going to be a question of how comfortable you are on the risk curve. Until we see kind of full-scale legalization, or until we see at least some of the the current bills in front of Congress passed or the rescheduling of cannabis from schedule 1 to schedule 2 or lower [by the Drug Enforcement Agency], some companies are going to be concerned about jumping into the space. But that’s the opportunity, as well, and as long-term investors, that’s how we see it.

In the meantime, we’ve had a couple of exits driven mainly by follow-on investors who want portions of our business, [including] a private equity firm that’s pursuing the roll-up of a particular category, and [to] a financial investor.

TC: Do you see the climate changing around acquisitions and legalization with a Biden administration?

KW: I think regardless of who’s in office, we’re going to see we’re going to see a lot of progress in the next four years. And that’s because this is no longer purely a partisan issue. I think Biden will be very helpful. He has laid out many of the things that he wants, and [while] he isn’t taking it as far as full-scale legalization, he’s certainly in favor of full-scale decriminalization, [meaning] letting states have full authority over what happens with their businesses, and also the rescheduling of cannabis down from the current schedule 1 level. So all of that will be incredibly helpful and will bring a lot more players who will feel comfortable investing in the space and potentially acquiring some of these businesses, as well.

To listen to this interview in its entirety, you can find it in podcast form here.

Walmart Marketplace seller additions surge following Shopify deal, up 3x from January

Walmart’s recent partnership with Shopify to expand its online marketplace appears to already be paying off.  The retailer in June announced it was opening its marketplace to Shopify’s small business sellers with the goal of onboarding 1,200 new sellers by the end of 2020. Following the Shopify announcement, the marketplace added 3,000 more sellers in June and is expected to exceed 3,600 in July, according to a new report from research firm Marketplace Pulse. That’s triple how many sellers it was adding at the beginning of 2020, the firm’s numbers indicate.

The e-commerce intelligence firm, which works directly with retailers and marketplaces and produces industry analysis, looked into Walmart Marketplace’s accelerated growth following the Shopify deal. It found that within the first six weeks after the June 15th partnership announcement, Walmart’s Marketplace added over 5,000 new sellers.

In comparison, Walmart’s Marketplace added only 1,296 new sellers in January 2020. That figure grew to 2,290 in April, then 3,296 by June. With July’s estimates included, the marketplace will have topped 15,000 new sellers in 2020 by this month’s end. To date, the marketplace has surpassed 50,000 sellers — which is double in size from June 2019.

Walmart’s marketplace growth is much slower than Amazon’s, the firm notes. But this is, in part, due to its process around adding sellers. Its marketplace requires sellers go through an approval process, which is something it does in an attempt to avoid counterfeiters and other issues. Amazon, meanwhile, adds thousands of sellers daily.

Of course, not all this recent growth can be attributable to Shopify. The pandemic has sent a surge of customers to shop online and sellers are arriving to meet that demand. But Marketplace Pulse believes Walmart has already surpassed its goal of 1,200 new Shopify sellers by year-end.

These newly added Shopify stores aren’t distinguished from other sellers on the website, so there’s not an automated way to count their numbers. But the firm says manually checked dozens of new additions to confirm their Shopify affiliation and believes the accelerated marketplace growth is closely tied to the new e-commerce deal.

Of course, seller growth is not the only metric used to judge a marketplace’s success. Walmart’s catalog size has actually decreased despite all the new additions, the report noted. Since the start of 2020, the total number of products has shrunk by nearly 15 million, from around 50 million down to 36 million, the firm said. This was related to a few large sellers delisting their catalogs of mostly products in the Home and Books categories, though. Walmart disputes this figure, saying it still has 75 million, not ~35 million, which is stable year-over-year.

The report also added that what matters most is not the size or the number of sellers, but rather the sellers’ performance. On that front, the firm recently found that Walmart’s marketplace, though smaller, was outperforming both Amazon and eBay, driven by the significant increase in Walmart.com shoppers during the pandemic. That increased traffic was also aided by Walmart’s merging of its Grocery app into its main app, a transition that is still underway. Around a month after the merge began, the Walmart app on May 13th became the number one shopping app on iPhone.

 

Instagram launches its redesigned Shop, now powered by Facebook Pay

Earlier this month, Instagram href="https://techcrunch.com/2020/07/07/instagram-swaps-out-its-activity-tab-for-shop-in-new-global-test/"> began testing new navigation in its app that gave its shopping destination a more prominent position. Today, the company is moving forward with its plans to promote Instagram as a place to shop with the launch of its new Instagram Shop, a place to shop from inside Instagram Explore, as well as the launch of Facebook Pay for purchases and donations in the U.S.

Both initiatives were announced previously, this year and in 2019, but had not yet rolled out.

Instagram Shop is described as a place to browse products from favorite brands and creators, as well as curated collections published by the Instagram-run @shop account. In the Shop tab, you’re able to filter by categories like beauty and home, for example, and then checkout directly in the app.

In its original announcement, Instagram Shop was to launch before the company swapped out the Activity tab for the Shop tab in the bottom nav bar, but the company chose to begin testing that latter change first. If you don’t have the Shop tab, you’ll have to visit Instagram Shop directly from Explore.

While there was already a way to shop within Instagram before today — and even check out from select accounts without leaving the app — the new Instagram Shop has been designed to encourage even more browsing and discovery of brands, creators, and products.

Shop itself grew out of how Instagram users were already using the platform to find new things to buy. The photo-centric app had naturally drawn in users who posted creative content, often including well-styled photos of fashion, beauty products, art, home décor, and more. And thanks to the rise of influencers and their numerous brands deals, Instagram was often a place where you’d find products being demoed and discussed, encouraging purchases.

Meanwhile, Instagram ads and their nearly perfected targeting capabilities would appear in your feed eerily suggesting the very thing you’re likely to buy.

The new Instagram Shop is the culmination of all this data and insight, put into its own destination. How well it will covert as a standalone product, however, remains to be seen. After all, Instagram’s ability to connect users to brands was often due to the massive amount of time users spent inside the Instagram app scrolling through photos — eventually, they’d see something they liked.

The new Instagram Shop experience is personalized to the end user. There are rows with your favorite brand and creators, for example, underneath large, attention-grabbing images at the top of the screen. There’s also a personalized “Suggested For You” section at the bottom.

Facebook Pay, meanwhile, was introduced last year as a way to transact securely across Facebook, Messenger, Instagram and WhatsApp.

In Instagram, it will allow U.S. users to make purchases as they shop, as well as donations to the businesses they’re supporting because of the coronavirus outbreak and related shutdowns, because of destruction by rioters, or any other reason.

If the business is using Instagram’s own Checkout feature a selling fee is involved. At scale, this could produce a new stream of revenue for the company, particularly now as consumers are shopping more online amid the pandemic.

The new features are rolling out starting today in the U.S.

Amazon US sellers will have to display their name and address starting Sept. 1, 2020

Amazon on Wednesday informed its U.S. sellers they will soon have to display their business name and address on their Amazon.com seller profile page. For individual sellers, this will include the individual’s name and address. A similar system is already in place across Amazon’s stores in Europe, Japan and Mexico, due to local laws. Amazon says it’s making the change to ensure there’s a more consistent baseline of seller information across its platform, so online shoppers can make informed buying decisions.

The change, of course, is not just about transparency.

Amazon’s U.S. marketplace is its oldest and largest, with 461,000 active U.S. sellers out of its 2.2 million worldwide actives. In total, there are 8.6 million registered sellers worldwide and Amazon adds around a million more per year, according to Marketplace Pulse data.

Amazon’s marketplace also accounts for around half the retailer’s sales. But as it has grown, it has been afflicted by a variety of issues and fraud, including problems with counterfeit goods.

Though Amazon has long been accused of avoiding these issues, it’s more recently pledged to spend billions to address the problem. Amazon even inserted itself into legal battles with fraudulent sellers and counterfeiters over the past couple of years, including those with designers and accessory makers, as well as others participating in the fake reviews economy.

Last year, Amazon also launched a set of tools for brands and manufacturers under its “Project Zero” initiative, which work to proactively combat counterfeiting.

And just this April, Amazon announced it was piloting a new system aimed at verifying the identity of third-party sellers over video-conferencing — a shift from its in-person verifications that had to stop due to the coronavirus outbreak. Through this system, Amazon checks that the individual seller’s ID matches the person and the documents they shared with their application, among other things.

Now Amazon is telling its U.S. sellers their business name and address will need to be on their profile by September 1, 2020.

The change will help businesses fighting fraud or taking legal action against sellers over counterfeit goods. Consumers will also have an address in case the product has caused harm and they need to contact the seller or even initiative legal action of their own.

Once the new system goes live in the U.S., the seller’s storefront on Amazon.com will display an expanded set of information about their business.

A photo from Marketplace Pulse shows how this may look, with a comparison of a U.K. seller page with its current U.S. counterpart:

Image Credits: Marketplace Pulse

In a statement, Amazon says the change is about consistently, avoiding the topic of online fraud.

“Over the years, we have developed many ways for sellers to share more about their business, including through features like the seller profile pages, ‘Store’ pages for brand owners, and Handmade ‘Maker Profile’ pages,” an Amazon spokesperson said. “These features help customers learn more about sellers’ businesses and their products. Beginning September 1, we will also display sellers’ business name and address on their Amazon.com seller profile page to ensure there is a consistent baseline of seller information to help customers make informed shopping decisions,” they said.

US online grocery sales hit record $7.2 billion in June

Despite the slow reopening of the U.S. economy over the past several weeks, online grocery shopping is continuing to reach ever-higher numbers as Americans seem to be in no rush to return to the store. According to new research released today by Brick Meets Click and Mercatus, U.S. online grocery sales hit a record $7.2 billion in June, up 9% over May, as 45.6 million households turned to online grocery pickup and delivery services for a larger portion of their grocery needs.

This figure is higher than the $4 billion seen in March 2020, when the U.S. first went under coronavirus lockdowns. Since then, online grocery sales have been growing quickly — jumping to $5.3 billion in April, then $6.6 billion in May, as more consumers shifted their shopping to online services, grocery included.

The customer base for online grocery also grew from 39.5 million monthly actives in March to now 45.6 million as of June, the report found.

Remarkably, only 16.1 million customers were using online grocery as of August 2019, totaling then just $1.2 million in sales.

The growth isn’t just due to a large influx of new customers to online grocery, but also due to more frequent orders. Customers may be ordering from online services not only for their large “stocking up” trips, but also for those smaller grocery runs they would often do in between — to grab ingredients for their weekly recipes or to replace the more quickly depleted items, like milk, bread and other staples, perhaps.

Image Credits: Brick Meets Click / Mercatus

According to the new research, order frequency ticked up from 1.7 orders per month for active households in May to 1.9 orders in June, demonstrating this increase.

In addition, more retailers, including independents, have added capacity for online order fulfillment amid the coronavirus pandemic to meet consumers’ changing needs. This has also resulted in an increase in sales as more customers are able to shop online and get a time slot for delivery or pickup.

Walmart Grocery in April even began pilot testing a way to offer two-hour “Express” grocery delivery service to customers who were willing to pay an upcharge. The company said this was a direct result of its newly added capacity aimed at serving its online grocery customer base. Instacart, meanwhile, added new features in April aimed at opening more delivery windows. And many retailers — including Amazon, Walmart, Instacart and Shipt, among others — have been hiring to help address the growing number of online orders.

When asked about their increased usage of online grocery in June, consumers reported fears of contracting coronavirus as their main concern, the report said. Specifically, 44% of households claimed they had “high levels” of concern about someone in their home being infected, up 2 percentage points from the prior month. This increase was also almost entirely driven by the 9% increase among shoppers in the over-60 age segment.

But on the downside, the increased choice in online grocery providers has made it more difficult for services to attract repeat usage, the data indicates. As of June, the likelihood of a shopper to use a specific online grocery service again within the next 30 days now sits at 57%. While this figure did grow by 1 percentage point since May, it’s still far below the pre-COVID 74% repeat rate seen back in August 2019. 

General interest in online grocery was also growing. Among both active online grocery shoppers and those not active, 32% said they were either “extremely” or “very likely” to use a service in the next 90 days — up 2 percentage points from May. The interest, not surprisingly, was strongest in households that had used an online grocery service in June, with 57% showing strong interest, compared with only 17% of the non-active households.

The data for the research was sourced from 1,781 U.S. adults in June (6/24-6/25), with responses weighted by age to reflect the national population of U.S. adults. The firms’ prior surveys also used a similar methodology, timing and sampling.

“Even though some retailers have seen sales decline within their respective business, the new reality of increased capacity across the market – and related greater choice (or options) for shoppers – means that all grocery retailers will need to accelerate their efforts to make shopping online even more seamless to thrive going forward,” said David Bishop, partner and research lead, Brick Meets Click, in a statement.

Mexico City’s Jüsto raises a $12 million bridge round for its delivery-only grocery stores

Jüsto, the Mexico City-based, delivery-only grocery store chain, has raised another $12 million in financing as it looks to expand its now pandemically relevant business of “dark stores” across the country.

The COVID-19 pandemic is changing consumer habits and increasing the use of delivery services across the world, and consumers in Mexico are no different.

A recent Nielsen study cited by the company found that 11 percent of respondents had purchased fresh food online for the first time in 2020, as lockdowns in cities across the world restricted movement for everyone but essential workers — with 70 percent of those surveyed saying they’d do it again within the year.

“Despite Covid-19 dramatically accelerating the curve of adoption of e-commerce, the penetration rate of e-grocers is still less than 1 percent,” in Latin America, according to Jüsto founder and chief executive, Ricardo Weder, in a statement. “That means there’s an enormous opportunity—and all the right conditions—to disrupt the grocery industry in Latin America.”

With the new bridge round, Jüsto’s financing has hit just over $20 million in less than a year. Part of that can be attributed to the pedigree of the company’s founder.

Weder was instrumental in Cabify’s growth in Latin America, according to Rodolfo Gonzalez, a partner at Foundation Capital, which led the firm’s investments into Jüsto. Gonzalez also saw the opportunity in the company’s business model.

“We’ve seen that type of model of warehouse and D2C for groceries be very successful in other geographies,” Gonzalez told Crunchbase, when Jüsto announced its previous $10 million seed round. “But that model didn’t quite exist in Mexico yet.”

Other investors in Jüsto’s round include Mountain NazcaFEMSA VenturesQuiet Capital, and 500 Startups.

The Mexican company prides itself on selling both local and international brands in categories, including fresh produce, dry goods, personal hygiene and beauty care, home and cleaning goods, beverages, organic food, and pet supplies.

“We have these darkstores and hold the delivery,” says Manolo Fernandez, a spokesperson and member of Jüsto’s founding team. “At traditional supermarkets the fill rates are lower and the product is less fresh. One of our core tenets is to reduce waste. We don’t have fruits and vegetables sitting outside in the store.”

Jüsto also claims that its prices come in at roughly equivalent to those of a regular supermarket. The company has delivery options ranging from express delivery, same day, and next day delivery.

The company isn’t the first startup to look at unused real estate and internet shopping habits and see an opportunity.

Darkstore is a company that has raised nearly $30 million to convert empty space into third-party fulfillment centers. Istanbul’s Getir, which recently raised $25 million from Sequoia’s Michael Moritz, is doing the same thing. And Samokat has adopted a similar strategy in Russia, promising over 3,000 SKUs and an under-45-minute delivery time fulfilled via their urban darkstores.

These companies are focused on being third-party logistics players for delivery rather than creating their own brands, but Jüsto shows that there’s an opportunity for purpose built direct to consumer grocery businesses to use the same infrastructure and create actual brand loyalty.

We have the technology, talent, and infrastructure to scale our expansion to more cities in Mexico and begin our international expansion, beginning with Colombiam” Weder said. 

Nacelle raises $4.8M for its headless e-commerce platform

As e-commerce companies aim to capitalize on the online spending boom connected to shelter-in-place and keep the party going as physical retailers open back up, more are turning their attention to how they can juice the functionality of their online storefronts and improve experiences for shoppers. Enter Nacelle, an LA-based startup in the burgeoning “headless” e-commerce space.

The startup bills itself as a JAMstack for e-commerce, offering a developer platform that delivers greater performance and scalability to online storefronts. Nacelle has raised about $4.8 million to date in fundings led by Index Ventures and Accomplice. Some of the company’s other angel investors include Shopify’s Jamie Sutton, Klaviyo CEO Andrew Bialecki and Attentive CEO Brian Long.

Nacelle builds an easier path for e-commerce brands to embrace a headless structure. Headless web apps essentially mean a site’s frontend is decoupled from the backend infrastructure, so it’s leaning fully on dedicated frameworks for each to deliver content to users. There are some notable benefits for sites going headless, including greater performance, better scalability, fewer hosting costs and a more streamlined developer experience. For e-commerce sites, there are also some notable complexities due to how storefronts operate and how headless CMSes need to accommodate dynamic inventories and user shopping carts.

“We asked how do you pair a very dynamic requirement with the generally static system that JAMstack offers, and that’s where Nacelle comes in,” CEO Brian Anderson tells TechCrunch.

Anderson previously operated a technical agency for Shopify Plus customers building custom storefronts, a venture that has led to much of the company’s early customers. Nacelle also recently hired Kelsey Burnes as the startup’s first VP of Marketing; she joins from e-commerce plugin platform Nosto.

Though Anderson described a flurry of benefits regarding Nacelle’s platform, many are the result of reduced latency that he says converts more users and pushes them to spend more. The startup has a particular focus on mobile storefronts, with Anderson noting that most desktop storefronts dramatically outperform mobile counterparts and that the speedier load times Nacelle enables on mobile can do a lot to overcome this.

Image Credits: Nacelle

As more brands embrace headless structures, Nacelle is aiming to manage the experience. Nacelle is optimized for Shopify users to get up-and-running the most quickly. Users can also easily integrate the system with popular CMSs like Contentful and Sanity. All in all, Nacelle sports integrations for more than 30 services, including payments platforms, SMS marketing platforms, analytics platforms and more, the goal being to minimize the need for users to migrate data or learn new workflows.

The company is unsurprisingly going after direct-to-consumer brands pretty heavily. Some of Nacelle’s early customers include D2C bedding startup Boll & Branch, cozy things marketplace Barefoot Dreams and fashion brand Something Navy. Most of Nacelle’s rollouts launch later this summer. Last month, Nacelle went live with men’s toiletries startup Ballsy, and says that the storefront has already seen conversions increase 28%.

Nacelle is far from the only young entrant in this space. Just last month, Commerce Layer announced that it had raised $6 million in funding from Benchmark.

Google brings free product listings to its main Google Search results

Earlier this year, Google made a significant change to its Shopping search tab in the U.S. to allow the service to primarily feature free product listings selected by Google’s algorithms, instead of paid ads. Building on that change, Google is today introducing a shift to free product listings in the main Google Search results page in the U.S. Before, it would only showcase sponsored links in its “product knowledge panel.”

This panel appears when a Google user searches for a product that has matching listings on e-commerce website. But until now, those links were paid ads. Google says, starting this summer, these panels will instead feature free listings.

This change will roll out first in the U.S. on mobile, followed later by the desktop.

Shopping ads aren’t going away, however. These ads will appear separately at the top of the page, where they’re marked like Google’s other ad units.

Since its shift to free listings in April of this year, Google says it’s seen an average 70% increase in clicks and 130% increase in impressions across both the free listings and ads on the Shopping tab in the U.S. These metrics were based on an experiment looking at the clicks and impressions after the free listings were introduced, compared with a control group. The control group was a certain percentage of Google traffic that had not been moved to the new, free experience.

Image Credits: Google

 

Google has positioned its shift to free listings as a way to aid businesses struggling to connect with shoppers due to the impacts of the coronavirus pandemic. But the reality is that this change would have had to arrive at some point — pandemic or not — because of Amazon’s threat to Google’s business.

Amazon over the years has been steadily eating away at Google’s key business: search ad revenue. In a report published last fall, before the pandemic hit, analyst firm eMarketer said Google’s share of search ad market revenue would slip from 73% in 2019 to 71% by 2021, as more internet users started their searches for products directly on Amazon.

Now the coronavirus is pushing more consumers to shop online in even greater numbers, much to Amazon’s advantage. The online retailer reported the pandemic helped drive a 26% increase in its first-quarter 2020 revenue, for example. Meanwhile, a new eMarketer forecast estimates that Google ad revenues will drop for the first time this year, falling 5.3% to $39.58 billion due to pandemic impacts on ad spend — particularly the pullback in travel advertiser spending.

Google needed to change its Search service to return more than just paid listings to better compete. Paid listings alone wouldn’t always feature the best match for the user’s search query nor would they show as complete a selection — a problem Amazon’s vast online superstore doesn’t have. But Google’s shift to free listings also incentivizes advertisers to pay for increased visibility. Now, advertisers will need a way to stand out against a larger and more diverse selection of products.

“For many merchants, connecting with customers in a digital environment is still relatively new territory or a smaller part of their business,” notes Google’s, Bill Ready, President of Commerce. “However, consumer preference for online shopping has increased dramatically, and it’s crucial that we help people find all the best options available and help merchants more easily connect with consumers online.”

Amazon launches ‘Smart Stores’ in India to win mom and pop

For Amazon, it’s never too late to try something in India. The e-commerce giant is exploring ways to further spread its tentacles in the largely offline, technology-free neighborhood stores in one of its key overseas markets.

The American firm’s latest attempt is called “Smart Stores.” For this India-specific program, Amazon is providing physical stores with software to maintain a digital log of the inventory they have in the shop, and supplying them with a QR code.

When consumers walk to the store and scan this QR code with the Amazon app, they see everything the shop has to offer, as well as any discounts and past reviews from customers. They can select the items and pay for it using Amazon Pay. Amazon Pay in India supports a range of payments services including the popular UPI, and debit and credit cards.

Amazon told TechCrunch that it piloted this project two months ago and is formally launching it now after seeing the early feedback. More than 10,000 shops, ranging from mom and pop stores to big retail chains including Big Bazaar, MedPlus and More Supermarkets have deployed the company’s system, it said.

The company said these “digital storefronts” are a win-win for both consumers and shop owners. Consumers do not need to stay inside the store and worry about handling plastic cards or cash — that is, to maintain social distance  — and they will also get rewards for using Amazon Pay.

Amazon’s QR code at display at a store. Photo: Amazon

Customers also get the ability to use Amazon’s Pay Later feature that enables them to pay for their purchases in installments. All of this means that merchants, most of whom shut stores until recent weeks to comply with New Delhi’s lockdown order in late March, are seeing increased footfalls and improving their sales. Amazon said it is not taking any cut from merchants or customers.

The company has been aggressively engaging with physical stores in India in recent quarters, using their vast presence in the nation to expand its delivery network and warehouses and even just relying on their inventory to drive sales.

The company’s push in the physical retails, which accounts for the vast majority of sales in India, comes as Facebook, Flipkart, Google, and Reliance Jio Platforms, which recently raised $15.2 billion, also race to capture this market. On Thursday, Google said it plans to offer loans to merchants in India by the end of this year.

These mom-and-pop stores offer all kinds of items, are family-run and pay low wages and little to no rent. Since they are ubiquitous — there are more than 30 million neighborhood stores in India, according to industry estimates — no retail giant can offer a faster delivery. And on top of that, their economics are often better than most of their digital counterparts.

“Amazon Pay is already accepted at millions of local shops, we are trying to make customers’ buying experience at local shops even more convenient and safe through Smart Stores. Further, through EMIs, bank offers and rewards, we seek to make these purchases more affordable and rewarding for customers, and help increase sales for merchants.” said Mahendra Nerurkar, chief executive of Amazon Pay, in a statement.

Amazon’s tardy but increasingly growing interest in the Indian physical retails market is not surprising. The company has often taken longer than most firms in India to study the market and then adds its own spin to tackle those challenges. Another recent case in point: Its foray into food delivery market in India.

Despite ubiquitous interest in the physical retails market, one thing that that no company is talking about yet is just how they plan to commercially incentivize these merchants.

The technology solutions built by these companies is unarguably driving sales for them, but a significant number of these small businesses take cash and under report their revenues to pay less tax. That incentive is multifold of any other incentive for many of them.