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1. Shopify (SHOP) -- Commerce Components by Shopify
This week, Shopify debuted an offering for large merchants called “Commerce Components by Shopify.” This package allows massive enterprises to select bits and pieces of the Shopify commerce operating engine to integrate into their own systems. Shopify has always allowed its merchants to select individual offerings most relevant to their ecosystems. But that flexibility really worked best for smaller companies.
For larger companies that more commonly wanted to keep parts of their legacy tech stacks, this à la carte-styled selection process did not work as well. Leadership often avoided legacy software integrations as it saw plugging into antiquated technology as diminishing the flexibility, innovation & utility needed in a rapidly evolving commerce landscape. Rather than providing what it viewed as a sub-par tooling for these large brands, it simply declined to parse its valuable tech stack.
Shopify (thankfully) has reconsidered that philosophy in a move to ease large enterprise on-boarding friction. Now it believes that its infrastructure is powerful and configurable enough to provide these un-ideal integrations without sacrificing quality of service. Not all of these brands are eager to rip and replace their entire ecosystems -- this is Shopify letting them do so in a user-friendly, step-by-step manner. It’s now willing evolve with large brands vs. requiring more of an overhaul of their infrastructure like in the past
This new package was built for the Fortune 500 clients like Netflix, Chipotle, Unilever & Match Group to transition more to Shopify while being able to keep & integrate whichever pieces of their tech stacks they want to. It features the cross-channel eligibility, omnipresent legacy compatibility and endless scalability required by giant brands like Mattel -- which will be the first to publicly use it.
Vitally, Commerce Components by Shopify offers limitless API calls (there used to be a hard cap) meaning that these large brands don’t have to pick and choose which pieces of their technology to integrate or which 3rd party apps to select. APIs are how merchants integrate the custom features, apps and designs they require for their stores. Now they can have as many of those custom features as they want while taking advantage of Shopify’s best in class checkout conversion, marketing tools and large built-in consumer base. Shopify will never be willing to fully custom build individual stores from scratch for large merchants. But by unleashing limitless integration opportunities, it accomplishes the same objectives as a custom build… and does so without crippling the nimbleness and expedient malleability of these stores.
As a company born to “arm the rebels” and “remove the barriers to entrepreneurship,” it hasn’t always been the easiest partner to work with for giant brands. This decision, plus tightening relationships with selling partners like Accenture, EY and Deloitte, point to its commitment to change that. Specifically, Deloitte was a key piece in designing this feature.
2. SoFi Technologies (SOFI) -- Savings APY Boost
This week, SoFi raised its savings annual percent yield (APY) to 3.75%. In terms of chartered bank competition, you’d be hard-pressed to find a competing rate. Looking elsewhere, Robinhood offers 4% if you pay a $60/year subscription fee and Marcus is running a temporary 4.3% promotion. But in terms of highest yield with no fees, no time limits and no deposit maximums, 3.75% is in elite territory.
Obviously, SoFi raising its APY to attract more direct deposit dollars for originations worsens its loan unit economics -- all else being equal. But all else is not equal. It’s imperative to consider that just last year, SoFi was routinely paying in excess of 5% for origination funds via warehouse facilities. With its charter in hand, it can finally use direct deposits to fund its loan business, and 3.75% cost of funds still leaves it far better off than pre-charter.
This APY also functions as a wonderful top of funnel to feed the rest of SoFi’s businesses. Direct deposit usage greatly bolsters debit interchange fees (one of its highest margin revenue streams), raises usage of investment products and even sharpens SoFi’s loan underwriting thanks to all of the financial activity data that coincides with it.
The stock remains utterly hated, the company remains in flawless execution mode. Student loans will come back eventually (no clue when). It will be exciting to see what this company will look like then considering it’s already compounding at over 35% and expanding margins without it.
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3. The Trade Desk (TTD) -- Galileo
The Trade Desk debuted an extension of its Solimar ad buying platform called Galileo this week. The tool is an end-to-end customer data management solution which takes all the headaches out of integrating & leveraging a brand’s first party data. With advertising channels frequently popping up, signal loss from walled gardens, and privacy at the top of everyone’s mind, Galileo delivers. How?
It provides a secure process for uploading, organizing, contextualizing and utilizing all company 1st party data. And it does so while providing entirely open ad measurement vs. the “trust me” approaches that walled gardens such as Google take.
With this new product, advertisers can now upload 1st party data from ANYWHERE: directly into Solimar, through a cloud provider or via customer data platforms and clean rooms. No longer must advertisers concede to uploading their data in pre-set ways – it’s now entirely up to them. Galileo also enhances open internet reach by allowing for data matching across all TTD channels including connected TV. This creates full control over ad frequency in ALL channels.
And for icing on the cake, Galileo perfectly meshes with UID2 (The Trade Desk’s open internet identifier) and the rest of its platform. That frees advertisers to actually understand their audiences and to merge 1st party data with all relevant 3rd party data sources for even more precise targeting. Seamless 1st party data usage, an elite roster of 3rd party data partners to augment those first party data sets, and over a decade of model seasoning is how The Trade Desk will preserve its large return on ad spend (ROAS) leads vs. its space.