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- Shopify's strong quarter, the Gen Z dilemma, and USA tarrifs | D2C Digest
Shopify's strong quarter, the Gen Z dilemma, and USA tarrifs | D2C Digest
Weekly D2C News
Berkay Erol
November 13, 2024
In partnership with
Hey there, great people of the D2C community who are building fantastic things! This is your host Berkay writing.
Take a 5-minute break and dive into D2C Digest for a quick overview of what’s happening in the D2C market worldwide!
🧑💻 Shopify’s doubling down on AI and Unified Ecom Tools
Shopify had an amazing Q3:
MV was up 24% Year over Year in Q3, revenue accelerated to 26%, gross profit grew 24% Year over Year, and their Free Cash Flow Margin expanded to 19%.
📈 But their latest earnings call revealed one thing: they’re doubling down on making it easier for merchants to connect with customers, anywhere customers want to shop.
Shopify President Harley Finkelstein broke down how they’re doing it:
👉 By linking their platform to the digital spaces where consumers hang out, like YouTube, TikTok, Roblox, and Instagram. The goal? A seamless shopping experience that connects every key touchpoint across the web.
💡 And AI is at the center of it all. From Shopify Sidekick, an AI assistant that makes store management easier, to new tools like Shopify Flow, Finance, and Shop App, they’re aiming to create a platform that helps merchants build authentic connections with their audiences, without the usual hassle.
And it’s paying off — with a 26% revenue increase this quarter and big brands from diverse industries joining the platform.
As larger companies shift to platforms that can do it all, Shopify’s unified commerce system is looking more and more like the future.
Check out Shopify Presiden Harley Finkelstein’s post on their strong Q3 performance👇
🤔 Gen Z's love for fast fashion: The paradox of sustainable values vs. buying behavior
According to Fashion United, unauthorized pop-up shops claiming to be Shein outlets, pop-up shops that pretend to be by the Chinese internet giant but are simply riding on the brand's popularity, have been cropping up in Dutch cities, drawing crowds with ultra-cheap prices.
These pop-ups are a clear reflection of Shein’s ongoing popularity despite its controversies over environmental and human rights practices.
This situation highlights a big paradox: consumers—especially Gen Z—talk about wanting sustainable fashion but continue to buy from fast-fashion giants like Shein and Temu.
Why?
It often comes down to affordability, convenience, and the pressure to keep up with constantly changing trends on platforms like TikTok and Instagram.
Despite Gen Z's eco-conscious values, research shows a gap between what they say and what they do. For example, a ThredUp study found that 72% of college students bought fast fashion last year, with many purchasing items for one-time events or scrolling fast fashion sites daily.
Is Gen Z to blame?
It’s complicated. The industry’s focus on trends and “newness” constantly drives demand for cheap, disposable fashion, making sustainable options feel out of reach for young consumers. And as Dutch fashion expert Ellen Haeser notes, there’s a long way to go—even among fashion students, only a small fraction were willing to cut their wardrobes in favor of quality pieces.
But there’s hope: studies show that when young consumers learn about the environmental costs of brands like Shein, their buying intentions change. With greater transparency and accessible information, the fashion industry can help shift buying habits toward sustainability.
What do you think?
🌍 US & Europe politics shaking up trade: What’s Next?
With Trump back in office and Germany's coalition government on shaky ground, international trade could be in for a rough ride.
Bahadir Efeoglu, Co-founder and CEO of Fabrikatör Inventory Management, has shared a list of what brands should expect—and how they can adapt to the changes ahead. 👇👇
TL;DR:
Trump’s proposed tariffs could push DTC brands to rethink supply chains, with potential moves toward local manufacturing and sourcing beyond China. EU-US trade tensions might also force European brands to focus more on local markets. Rising import costs could mean higher prices for consumers, making sourcing diversification and cost-cutting essential for brands navigating these changes.
And just as expected, brands started making strategic changes.
Steve Madden’s CEO, Edward Rosenfeld, announced plans to cut the brand's reliance on Chinese imports by as much as 45% if Trump’s re-election leads to new tariffs on Chinese goods.
On a recent earnings call, Rosenfeld explained that the company is bracing for possible tariff increases of up to 100%, setting a plan in motion to source from alternative locations like Vietnam, Mexico, and Brazil. This shift aims to protect nearly half of Steve Madden’s imports currently at risk of tariff hikes, with the goal to significantly reduce exposure to Chinese tariffs within the next year.
We’re witnessing a radical change in how business is run as we know it over the last 40 years.
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