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Shopify Secures Victory in Patent Infringement Case
In-Store Security Measures Cause Frustration
Amazon vs TEMU and SHEIN
UK Government to Unveil Plans to Regulate Buy Now, Pay Later
E-commerce Giants Focus on Checkout Efficiency to Drive Growth
ECOMMERCE NEWS
Shopify Secures Victory in Patent Infringement Case, Patents Ruled Invalid
Shopify has successfully defended itself in a patent infringement lawsuit, with a US judge ruling the patents in question invalid, according to Bloomberg Law.
The case was heard in the US District Court for the Central District of California, where Judge Hernán Vera found that the patents held by DKR Consulting were not eligible for protection. DKR had accused Shopify of infringing on four e-commerce patents related to social media retail technology, including an embeddable buy button and e-commerce stores integrated into social media platforms.
Shopify argued that the patents were directed toward an abstract idea, referencing the US Supreme Court’s Alice Corp v. CLS Bank International decision, which requires inventions to have additional elements to be patentable. Judge Vera concurred, stating that the patents did not advance computer functionality and merely described a generic process of online communication between servers and devices.
This ruling marks another legal win for Shopify, which previously had a $40 million patent infringement decision overturned in Delaware earlier this year. Shopify was represented by Wilmer Cutler Pickering Hale and Dorr, while DKR Consulting was represented by Daignault Iyer and Perkowski Legal.
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ECOMMERCE TRENDS
Amazon CEO Highlights Shift to Digital Channels Amid Frustration with In-Store Security Measures
Consumers are increasingly turning to digital channels to avoid the growing inconvenience of locked display cases, cable ties, and electronic tags in physical stores, according to Amazon CEO Andy Jassy.
During Amazon’s earnings call on Thursday (Aug. 1), Jassy pointed out that these theft-prevention measures are driving customers toward Amazon Pharmacy. He noted that the “speed and ease” of ordering online contrasts sharply with the “tough experience” of navigating stores where many items are locked away.
Retailers have intensified security measures to combat rising shoplifting and organized retail crime, encasing products from high-end cosmetics to everyday essentials in plastic or metal, accessible only with assistance. While this may reduce theft, it creates significant friction in the shopping experience, leading to customer frustration and longer wait times.
This added inconvenience is eroding customer loyalty as shoppers feel treated like potential thieves and face disruptions in their shopping flow. In an era where convenience is key, such hurdles are pushing consumers to opt for online shopping where they experience fewer impediments.
Retailers are now seeking alternatives, such as AI-powered smart carts, to balance security and customer satisfaction effectively.
ECOMMERCE NEWS
Amazon Faces Growing Competition from Chinese E-Commerce Giants Temu and Shein
Temu and Shein are rapidly expanding in the U.S. by offering ultra-cheap goods, such as $3 shoes and $15 smartwatches, directly from China. Their success is challenging U.S. e-commerce giants like Amazon, eBay, and Etsy, fueled by aggressive online marketing and exploiting a trade loophole known as the de minimis exception, which allows packages under $800 to enter the U.S. duty-free.
Amazon’s top public policy executive, David Zapolsky, expressed concern over this issue, noting the lack of scrutiny on Chinese supply chains and the potential subsidization of these business models. Zapolsky emphasized the need for competition by saying, “We know we have to compete with them,” highlighting Amazon’s focus on delivery speed and competitive pricing.
As Temu and Shein continue their U.S. blitz, Amazon plans to counter with a discount store, leveraging the same de minimis rule. However, shipping times remain a challenge for the Chinese platforms, with Amazon still dominating U.S. e-commerce, capturing roughly 40% of the market in 2023.
ECOMMERCE DIGITAL PAYMENTS
UK Government to Unveil Plans to Regulate Buy Now, Pay Later Industry
Britain’s new Labour government is set to introduce updated regulations for the Buy Now, Pay Later (BNPL) industry soon, according to a Treasury spokesperson.
This follows comments from Tulip Siddiq, the newly appointed economic secretary to the Treasury, who emphasized the importance of regulating BNPL products to protect consumers and provide certainty for the sector.
BNPL services allow consumers to purchase items and pay off the debt later, often without interest or late fees. However, the lack of standardized practices across the industry has led to concerns about consumers—especially younger ones—accumulating significant debt.
Gerald Chappell, CEO of Abound, highlighted the issue, noting that some customers are amassing “thousands of pounds” in debt from multiple BNPL providers.
Previous efforts to regulate the sector were delayed under the former Conservative government, partly due to political instability and industry lobbying. However, the Financial Conduct Authority (FCA) is expected to implement regulations within the next 24 months, as industry leaders like Klarna and Clearpay express support for appropriate regulation to ensure consumer protection and industry innovation.
ECOMMERCE CONVERSION
E-commerce Giants Focus on Checkout Efficiency to Drive Growth
This earnings season, eCommerce leaders like PayPal, Amazon, and Shopify are honing in on the checkout process—the crucial final step in online shopping. Streamlining checkout is seen as a key competitive advantage, crucial for converting browsers into buyers and securing customer loyalty.
PayPal’s recent earnings revealed strong momentum in its Fastlane checkout, a one-click guest option, now available to U.S. merchants. Fastlane users are converting at nearly 80%, far surpassing industry averages.
Shopify, reporting soon, has also seen significant growth in its Shop Pay service, which processed $14 billion in gross merchandise volume last quarter. Shopify further strengthened its checkout capabilities with the acquisition of Checkout Blocks, allowing merchants to customize their checkout experience.
Amazon continues to expand its Buy with Prime initiative, enabling merchants to use Amazon’s logistics network and branded checkout button. Merchants using this service have seen a 25% increase in shopper conversion.
As these platforms refine their checkout processes, the competition to offer fast and seamless transactions is intensifying, shaping the future of eCommerce.
Signing off,
The Merchant @CartHustle