As 2017 comes to a close, it's only fitting to devote our last episode of the year to 2018 ecommerce predictions. Dave and I listed what we think will happen in the ecommerce world next year, from sales tax to Bitcoin. It's always fun to make these predictions and then revisit them by the end of 2018 to see how many of them actually happened.
It would've been great to have Dave on the episode as well, but he is still in China as of recording this, so I will just cover his predictions here. This will also be our last full-length episode for the year and we will resume with new episodes twice a week next year. I also recorded a short special for Christmas Day next week, stay tuned for that!
Here are our predictions for ecommerce next year:
- Amazon will start collecting sales tax for sellers in multiple states (it will begin collecting sales tax for merchants in Washington State early next year)
- Shopify will continue to dominate hosted ecommerce platforms but its stock will dive when investors realize there's a finite number of ecommerce store owners to grow their customer base with
- Facebook will start to monetize messaging near the end of 2018
- Amazon will continue to get bad press for counterfeits and knockoffs, do a major crackdown which will benefit brand owners but probably hurt sellers selling third party merchandise
- China will continue the crackdown on factories heavily contributing to pollution
- Facebook ads will continue to get more expensive – way more expensive
- Amazon will increase fees substantially (Amazon has just announced fee increases beginning February, probably with more increases to come)
- Amazon will actually do something about the review debacle
- More sites accepting Bitcoin in ecommerce–especially international
- Amazon will continue to grab market share
- Amazon will start or acquire a transportation network
Many of these predictions bring terror to us sellers–especially Amazon FBA fee increases and sales tax–but ecommerce in general is expected to grow over the next few years and we are hoping to ride along on that growth.
Thanks as always for listening. Until next year, happy selling!
Full Audio Transcript
Mike: This is Mike, and welcome to episode number 107 of the EcomCrew Podcast. You can go to EcomCrew.com/107 to get to the show notes for this episode. And this is going to be our last full length episode of 2017. It's crazy how quickly the year has gone by. But the way that the holidays fall out this year, our Monday episode which will come out would actually be on Christmas Day and then the following one is on New Year's Day. And it's like why have a podcast in the middle of all that since it's the holidays and everyone is on holiday brain.
I did record a little special message that's going to go out on Christmas Day. Listen to that, it’s just a couple of minutes. But it's basically a big thank you guys for giving us, the EcomCrew Podcast an awesome 2017. Today's episode before we end the year here is going to be our predictions for 2018. Now that 2017 is basically in the books, what do Dave and I think is going to happen in 2018?
So that's this episode. We have about ten things here we're predicting for 2018. These are always fun things that just kind of kick around, and look back at, at the end of next year and see kind of where we're at with them. I don't think we did one of these last year. So when we get to the end of 2018, we'll come back and do a follow up on our predictions, and see how many came true. That's always fun to look back a year later.
A year in ecommerce time is like a year in dog years. It goes by so darn quick, it's kind of nuts. So again everyone thank you so much for an awesome 2017. I hope you guys had a great 2017 as well, and here's to an awesome 2018. And to kick that thought process off; here are our predictions for 2018. Thanks again guys for making it a great year and enjoy this episode.
Hey guys, welcome to the prediction episode of the EcomCrew Podcast. Today I'm going to be talking about things that Dave and I are predicting are going to happen in ecommerce 2018 style. We don't really have a crystal ball, but there's some things that we've seen kind of coming down the pike that we're predicting are going to happen.
Unfortunately Dave is still over in Asia and it's hard for us to record together. I would have loved to have had him on this episode with me, but he did submit his list in Basecamp. So I’m going to go over his list first and kind of talk about whether I agree with it or disagree with it. And actually a couple things that were on his list were on my list, so that's two things I need to talk about.
The first one he has here is Amazon will start collecting sales tax for sellers in multiple states. As a lot of you probably know, starting on January 1st, 2018 the state of Washington — I don't know if you want to use the word forced or tip their hand, or whatever the right way to put it is. But Amazon is going to start collecting sales tax for all transactions, FBA transactions in the state of Washington, which is pretty big news. There's a couple of states that agree with this approach, several that don't. So we'll see how it shakes out in 2018.
But I agree with Dave. I think that FBA sellers are not going to be forced to collect sales tax in any way, shape, or form. I think that Amazon controls the process in every way, shape, and form except for the one thing that makes it convenient for them, which is them saying that you have to pay sales tax. And it's crazy because you don't own the customer in any way. You can't contact them in any way. And they made it even more difficult in 2017 to get a hold of your customers.
You don't own the listings because you can tell often that they will “change your listings on your behalf,” take images and put them up there “on your behalf,” and lots of other things that are actually pretty egregious. And then for them to say that they don't have to pay sales tax or have control of that transaction is pretty ridiculous.
So I do think more states are going to go that route. I do think that Amazon is going to acquiesce to that. Yes they have a lot of influence and a big footprint, but at the same time now they've had a footprint in states for a long time, and I think that states are going to start to have a little bit more power over Amazon. And the right thing to do is for them to collect sales tax at the end of the day.
That is the right thing to do, the moral thing to do and the right thing to do in my opinion because states deserve that income, and Amazon should be the ones doing it. They have a massive operation in the state and clearly have nexus there where a third party seller doesn't. And they don't even have control of the transaction to begin with.
So, I think Amazon has flexed their muscle to the extent that they could have gotten away with this as long as they could. And 2018 would be the year that the dominoes start to fall, and hopefully they’ll fall in favor for third party sellers. And Amazon will either take the brunt of that, or figure out a way with their legal team to extend that further down the road.
The next one Dave had here was Shopify will continue to dominate the host of ecommerce platform niche, but he's predicting their stock is going to die when investors realize there's a finite number of ecommerce store owners out there for them to grow their base with. And I don't know if I agree with this 100%. I think that Shopify has already grown a footprint large enough to be a monstrous player in the space, and obviously they need to continue to grow revenue, to continue to grow their stock price. But the prediction I'm making is that Shopify is going to start raising their fees.
One of the things that I did this year is I went through all of our stores and prepaid on their three year plan. I’m so convinced of this anyway, plus I want to get those expenses in 2017 as it was. But I do see Shopify as this immense value out there. It's kind of crazy when you look at some of the prices for other SaaS services, it just seems like Shopify is one of the best values out there. It's funny some of the plug-ins for Shopify like Yotpo, which I think is just crazily overpriced, is substantially more than Shopify itself just as a small example.
And I think that Shopify is going to do something to kind of rectify that in 2018. They're in a growth platform mode. So I mean at some point when they're taking their foot off the growth pedal just a little bit, they're going to then squeeze you on fees I think. And we'll see what happens in 2018. That's kind of my prediction. I don't necessarily know that I see their stock price falling although it is trading in a crazy PE or a negative PE or whatever, which worries me. So we'll see how that goes, but that's Dave’s prediction there.
Dave is also predicting that Facebook will start to monetize Facebook messaging near the end of 2018. I’m not sure why he picked that time period, but I do agree with this. I do think that Facebook knows and knew from the beginning that this Facebook Messenger platform is going to be massive moving forward. If you look at just kind of the way that things are shaking out here in 2017 and what we've been able to do with Facebook messenger, it's obviously just going to be an awesome platform.
Facebook kind of has a lock on this in the United States, and I think they would be crazy not to start monetizing this more. So I totally agree with them. I think that the days of sending any type of free messaging are probably limited, and be prepared to start having to pay to interact with customers or definitely that landscape changing in some way where they can monetize it if you have to interact with your customer in x number of days or something like that.
The next one that Dave has here is that Amazon will continue to get bad press for counterfeits and knock offs, and do a major crackdown which will benefit brand owners but probably hurt sellers that are selling third-party merchandise. So, in other words if you don't own your brand and you're buying something at Target or whatever and then reselling it — or at Wal-Mart and reselling it, there was some articles about this in 2017 that people that do this for a living; that this is going to come to an end because they have to protect themselves and their reputation not selling counterfeits and knock offs which will definitely help us as a brand.
A good friend of mine who might come on the EcomCrew Podcast here shortly because we're doing an episode about Amazon and some of these tactics is in the middle of this right now. He's got a situation where someone has descended on his listing and racing into the bottom on price. And he's just trying to get them off the listing and they're selling a counterfeit product. It’s like 100% a counterfeit product. He did not sell to them, he doesn't sell to anyone else. It's just him selling only, and they're hopping on his listing and riding on his coattails of what he's built, his intellectual property which is really pretty ridiculous.
So I do see Amazon doing something about that in 2018, and I don't think that they're going to do it because it's in their best interest to do it necessarily directly. I think it's indirectly in their best interest because of the bad publicity that they're going to continue to get if they don't do something about it. So those were the four things on Dave's list. Let me go into my list. I had a few more than four.
The first one I have is that China will continue to crackdown on manufacturers on this pollution control stuff. We were over there twice this year and it's something that's constantly in the headlines as well. I think that this is in China's best interest. I think that they're realizing the health detriment that's being placed on the country because of the pollution as they continue to grow as a world leader. This is something that they're going to do something about.
And I’m… I guess indirectly happy about it because obviously we live on the same planet, and I think them pumping tons of pollution into the atmosphere isn't good for anyone anywhere in the world, and also it's not good for the 1.2 billion people that live over there. I have seen the air first hand and the water, and it's absolutely disgusting in some places, and I'm happy to see them doing something about it.
Unfortunately it's probably going to come at the expense of our business with the cost of goods rising anywhere from 5 to maybe 50% depending on the types of things that they continue to crack down on. But I definitely think that this is going to be a conversation that's going to continue to happen in 2018, and maybe even get more profound than it was in 2017.
The next thing I have on my list is that Facebook ads will continue to get more expensive, and I have here in print this is way more expensive. This is just as a side from Dave's prediction on the Messenger ad, and I’m just talking more about Facebook desktop and mobile feed and all the other platforms. I think that the reality is that Facebook is one of the best advertising platforms, and I would say the best advertising platform in the history of the world.
You can get in front of very specific people in an amazing way unlike any type of traditional advertising on magazines or television, radio, print of any kind. And I think that more and more people are starting to understand this, and it's just a supply and demand thing. Facebook is not growing at the same rate that they were at least in the United States getting new users. So the supply isn’t increasing anywhere near at the same rate that demand is. Internationally, I think that this will not be as bad, and I think that this is a big opportunity.
Actually Facebook ads internationally is something we're going to be working on in 2018. As we get our products in Amazon UK, Amazon Europe, Amazon Canada, we're going to use them for fulfillment for all of our websites and be able to ship things directly from those countries without any duty implications. And at the same time we’ll start taking advantage of Facebook ads in those other jurisdictions where the pickings are still a lot better. So we'll see how that plays out in 2018.
The next one here is actually kind of funny, not funny ha, ha, but funny ironic. My thing on my list here was Amazon will continue to increase fees, and I had in print this is substantially. And I wrote this down right before doing the podcast and right before getting an email from Dave at the same time on a mastermind thread that we're in about Amazon just announced today that they were increasing FBA fees pretty substantially, almost 20% in some cases.
It's a pretty tough pill to swallow, and then also said in the same email that fees for storage will be addressed later in the year. We'll be getting an email about that around February timeframe. So yeah, I think it's going to get more and more expensive to sell on Amazon. It makes me happy that we're continuing to look at higher and higher margin products because I definitely see erosion and profitability because the fees for Amazon are going to continue to go higher, and I’d rather be in front of that curve than behind it.
So yeah, I mean we'll put this in the show notes the fees going up. There was an email that went out today. You can check in your own e-mail box if you're an Amazon seller. For some reason I haven't got an email yet. I think that Dave got it sooner than I did for some reason, but I think it's definitely coming and it's going to hurt.
The next thing I have here is Amazon doing something about the review debacle. I have review debacle in quotes here. I mean this is just completely out of control at this point. People being able to clearly descend upon your listing and leave fake reviews, descend upon your listing and upvote reviews and typically will upvote the bad reviews for you.
So they end up at the top of the top review section which is just devastating people using review clubs behind the scenes and chain the system to get reviews quickly. People swapping out listings, buying listings, or taking listings that are old listings with lots of reviews and swapping them out for new products so they can have 500 or 1,000 reviews or whatever when they start selling a new product.
This stuff has to come to an end. And I also hope that Amazon further takes it to another step where they allow brands to interact with customers that leave negative reviews. So people like us can legitimately try to help correct any negative experience they had not only looking out for our own best interest, but like I want to make people that buy stuff from us happy. I don't want someone out there having a negative experience whether it was Amazon's fault or our own fault on something that we could easily correct and make them happy, because word of mouth advertising certainly is still the strongest form of advertising out there.
So I do think in some respect in 2018 there is going to be a major change to this, and we'll see if they address all the issues or one of them. But I think that the reality is that again Amazon probably will do this for their own best interest because I think that they're going to continue to get a black eye for the way that this is happening. So we'll see how that shakes out in 2018.
The next one I have here is an interesting one because I'm sure a lot of you now have heard about Bitcoin and cryptocurrency. It seems to be getting more and more attention in the mainstream media. And I think that 2018 is going to be the year that you're going to start seeing cryptocurrency accepted more widely on e-commerce websites. And I have here in print this is on this one especially internationally.
I don't know this is going to be a huge trend in the United States, but I definitely see internationally, this becoming a bigger and bigger thing where not only e-commerce sites but brick-and-mortar places accepting Bitcoin or some type of cryptocurrency more ubiquitously than it is now. It's already an official currency now in Japan, and you’ll see lot of places in Japan accepting Bitcoin.
And I think that this trend is going to continue whether it's Bitcoin or some type of other cryptocurrency. And it just makes sense that electronic currency of some type will continue to gain popularity just since everything is kind of growing electronically anyway in basically every way, shape, or form.
So my next one here is that Amazon will continue to grab more market share and become a bigger 800 pound gorilla than they already are. It was a big year for expansion for Amazon. I think that this is going to continue. E-commerce in general is going to continue to expand. I don't think that that's even really a prediction at this point. And I think that Amazon is going to continue to grow at a larger or continue to grow at a faster rate than the overall e-commerce market will.
They just really hit critical mass with the number of prime subscribers that they have. And once you have Prime, you’re kind of locked in to Amazon being your first choice, your first stop for shopping regardless of price or other factors, people wanting to take advantage of their $99 a year membership fee.
People in the United States have been trained to expect their packages within two days. And that's something that most of the e-commerce places just can't offer anymore, and people are willing to pay more just to be able to get their stuff quicker and have the convenience of being able to get on their app and order something with one click or their fingerprint or their face print once that kind of comes out with the new iPhone X and other phones using facial recognition.
So I think that Amazon is just going to continue to grow and grow there, which is good and bad. I mean as an Amazon seller it's good, as an Amazon seller it's bad, because as they have more power, it's a struggle. As they get bigger and bigger, they're starting to outgrow their own footprint, their own warehouse footprint quicker than they can build warehousing, which is going to just make fees higher both in FBA fees for the fulfillment part of it and storage which is scary. So we'll see how that goes.
And I've saved my big one here for last. The prediction I'm making is pretty bold. I think that Amazon this year in 2018 is going to acquire a transportation network. Either they're going to buy UPS or FedEx or start their own. And I could see it going either way, but I think that the reality is as you've already seen some of this happen already, it looks like they’re kind of nibbling on the edges of this buying some backbone infrastructure in airplanes to be able to move things around, and Amazon also delivers things already to our house.
We get FedEx, UPS, and Amazon. They are all delivering to our office Amazon packages. So sometimes Amazon is already doing delivery, but I think that where Amazon really can grab more control is in the delivery and transportation network. And I think you could potentially even see Amazon being like UPS or FedEx in the fact that you might be able to ship via Amazon if you have packages that you want to ship so they can increase that backbone.
And they've done this with other things. I mean they have TV and things like that. But they also have Amazon Web Services if you think about that because they built their own data centers to be able to do things for themselves, but now that's a major profit center for them. Same thing with their warehousing FBA, that's a big profit center for them. I can see them doing this with transportation, and I think that it's going to absolutely crush and destroy UPS and FedEx if they aren't one of the takeover targets, because they certainly have enough money to buy either UPS or FedEx, and that’s definitely one way it could happen.
But if they start their own transportation network from the ground up which they also could do, it would just absolutely crush UPS, and FedEx because such a large portion of what UPS and FedEx does is Amazon business. And I think it's actually at a loss. It's basically a loss leader for them, for Amazon and UPS — I'm sorry Amazon and — sorry UPS and FedEx to be able to grow their infrastructure. So they're taking this Amazon business on either at a loss or at a very small profit. And if they lose all that business, it could mean a lot of jobs, a lot of infrastructure, a lot of empty buildings; flip UPS and FedEx completely on its head. So we'll see if that prediction comes true in 2018.
So that is Dave and my crystal ball for 2018. This is the last full length episode of the EcomCrew Podcast for 2017. It seems absolutely crazy, but the next episode is scheduled to go out on Christmas Day. So this is Thursday, it’s the 21st of December, and so the next podcast will be on December 25th. I did record a quick little message for that. If you get a chance listen to it, just a couple of minutes for the 25th.
But obviously people are in a holiday mode, holiday brain. It doesn't make sense to be putting a lot podcast around this time of year. This does not mean that we're taking a break long-term. We've already recorded almost all of January because I'm going to be traveling for the bulk of January. So through January we're going to be continuing on these two episode per week path, and I think it's been great for the podcast. We've been able to increase our listenership and downloads because of this. So it's all full steam ahead for the EcomCrew Podcast in 2018.
So I take this opportunity, and if you listen to the episode on the 25th to thank everyone for listening to the EcomCrew Podcast through 2017, and until next year guys, happy selling, and we'll talk to you then.
Thanks for listening to the EcomCrew Podcast. Follow us on Facebook at facebook.com/ecomcrew for weekly live recordings of the EcomCrew Podcast every Monday. And please, do us a favor, and leave an honest review on iTunes, it would really help us out. Again, thanks for listening, and until next week, happy selling.