Shopify Is Shrinking. And Your Staff Might Not Be Real.

When Shopify reported strong revenues in Q1, we openly wondered if this was because the tariff reckoning had not been fully baked in yet.

And it seems like that might be coming to pass.

Discussions of a wave of Shopify store closures hit the DTC community this week. We’ll dig in to see what it might mean for the ecosystem.

Also: Is your FT really a FT employee? And how to leverage TikTok now that it has been “unbanned” for another 90 days.

Today:

🧱 Macro: The Great Shopify Clearing
What Shopify store shutdowns reveal about demand, margin compression, and the limits of the DTC playbook.

🧠 Trends: The Staff Illusion
A hiring scandal sparks a broader rethink on labor, accountability, and the modular future of teams.

⚙️ Tactics: TikTok’s Sticking Around — Here’s How to Leverage It
The algorithm insights and UGC systems helping brands win attention at scale, while they still can.

⚡ Quick Hits
Check out Ridge’s Prime Day playbook, 21 scroll-stopping ads, and how that Jaguar rebrand is going (🤢)

Macro: The Great Shopify Clearing

So it seems the Shopify ecosystem is contracting…

• Store closures are now outpacing installs for the first time, as shared by Stuart Chaney (link)

• Consumer spending sentiment is the weakest it’s been since 2023, based on DTC Index data shared by Jeremiah Prummer (link)

• Smaller DTC brands are down 20–25% YoY in June revenue, according to Varos CEO Yarden Shaked (link)

This revelation spurred a podcast roundtable with Taylor Holiday Common Thread Collective), Rishabh Jain (Fermat), Yarden Shaked (Varos), Jeremiah Prummer (NoCommerce), and Steve Rekuc (CTC) broke the discussion wide open:

The general consensus: a structural clearing is underway.

Operators are feeling the pain, but the bigger story is why this is all happening at once.

• Acquisition efficiency is falling fast. AMER (new customer media efficiency ratio) is trending downward, and the slope between spend and performance is steeper than it’s been in years.

• Repeat revenue is disguising flat or negative growth. Many brands are pulling forward retention dollars to offset weak new customer acquisition.

• Margins are getting crushed. Tariffs and inflation are hitting hard, and brands without a cushion are folding. In April alone, Finaloop reported that 1% of its clients filed Chapter 11, equal to all of last year. (link)

• Many categories are nearing saturation. COVID pulled TAM forward. Now, demand is flattening or falling in categories like home goods, beauty, and apparel (Alex Partners survey via CNBC).

The problem runs deeper than consumer sentiment. It’s embedded in the structure of how many brands were built.

Brands that grew based on cheap CAC, lightweight plug-and-play tools, and operational simplicity are hitting their limits. The ecosystem isn’t built to support this many brands in a demand-constrained, capital-scarce environment. Especially with the shock of a massive tariff increase.

What we’re seeing now is a necessary (but painful) clearing of:

• Under-margined businesses

• Overleveraged operators

• Unrealistic expectations

Takeaway: Some brands are still growing. Most are not. And if you’re stuck somewhere in the middle (stagnant but not dead), this is your wake-up call.

This quarter marks the beginning of a deeper rebalancing across the ecosystem. A thinning of the herd. And, possibly, a healthier reset for the industry in the long run.

As Taylor says, "Generally useful. Specifically useless." The macro view matters. But what matters more is how you respond.

The real test is what you do next.

🧠 Trends: The Staff Illusion

A wave of tech startups just discovered they were all unknowingly paying the same full-time employee.

Soham Parekh, operating under false pretenses, held simultaneous jobs at numerous companies, deceiving employers, collecting multiple salaries, and delivering just enough work to stay under the radar.

This may not seem relevant to DTC, but…

Zach Stuck (Homestead marketing agency and DTC brand owner) noted that he’s caught multiple employees working other full-time jobs while on his payroll. His take: finding loopholes is clever until it becomes theft from small businesses.

This might be a sign of something deeper shifting across hiring, accountability, and team structure:

• Remote work has fractured visibility. Geography and hours no longer mean anything. A lot of work is not out of sight and async.

• AI and VA labor are becoming invisible amplifiers. High-output employees might not be doing all the work themselves, and you may never know.

• Fractional work is accelerating. More founders are leaning on part-time specialists or execs. In some cases, this might actually outperform standard staffing (as long as things are transparent and above board).

The problem is no longer about whether someone is "on the clock." The problem is knowing what you're actually buying when you employ someone FT:

• Time?

• Loyalty?

• Creative input?

• Results?

There’s also a trust issue downstream. Operators are rethinking:

• What constitutes a team?

• Who owns output?

• How much transparency matters in an AI-augmented world?

The question is, will labor move from an FT/9-5, exclusive contract to something more modular, distributed system?

• Fractional strategists

• Offshore executors

• AI agents as support staff

• Clear incentives tied to visible output

Takeaway: Catching deception is only one layer of the issue.

The deeper shift is that output is becoming untethered from headcount, and traditional structures are struggling to keep up.

In a world where one person can do the work of three (or disappear while pretending to), founders and leadership will need a new framework for building resilient, accountable teams.

And it might start by redefining what full-time even means.

⚙️ Tactics: TikTok’s Sticking Around (Here’s How to Leverage It)

TikTok just bought itself more time. President Trump extended the U.S. ban deadline by another 90 days, giving ByteDance until September 17 to find a U.S. buyer, or face shutdown (NBC News).

That gives brands some (short-term) certainty: TikTok is still wide open.

Here are some tactics to take advantage:

A blueprint for finding virality on TikTok…

1. Optimize for retention, not just hooks.
Watch time is TikTok’s most important metric. It measures value, not just curiosity.
→ Build for progression and payoff — content that rewards full viewing, not just a strong first 3 seconds.

2. Stick to content themes that train your "account DNA."
TikTok uses your past content to forecast future engagement.
→ Avoid random one-offs. Focus on 1–2 visual/editorial styles that teach TikTok who your content is for.

3. Let weak early performance breathe.
Initial impressions (~200 users) are about audience matching, not final judgment.
→ Don't kill a video too soon. TikTok builds "positive" and "negative" target groups iteratively.

4. Embed interest signals.
TikTok correlates audience behavior across sounds, hashtags, and viewing patterns.
→ Use niche cues that cluster you with successful content in your category.

Don’t “game” the algorithm. Align with it.

But if the algorithm is the engine, creator content is the fuel. And Obvi has built one of the most operationally tight pipelines in DTC.

Ashvin Melwani (Obvi CMO) recently dropped a full 7-step TikTok UGC playbook that shows how to systematize creator-driven growth on the platform. (Full thread here)

Here’s how it works:

1. Cast a wide net for creator sourcing.
→ Automated outreach bots, Insense, Discord groups, and AI influencer tools.

2. Be generous with commissions.
→ 25–30% base plus 10% on Spark Ad GMV. Creators earn without extra effort.

3. Simple test loop.
→ Send product → Give brief → Post → Boost with GMV Max → Analyze.

4. Filter sample requests.
→ Accept based on actual GMV + posting frequency (not follower count).

5. Build the creator community.
→ Discord hub with winning videos, tips, campaign updates, and Spark codes.

6. Incentivize aggressively.
→ Example: $2K GMV = iPhone. $10K GMV = vacation. Gamifies performance.

7. Spark everything.
→ Every video gets ad spend support. Top performers go further, faster.

Result: A flywheel that scales awareness, content volume, and GMV but with minimal internal overhead.

TikTok remains a volatile channel. But the brands building systems (not just creative) are the ones who consistently win reach, trust, and revenue.

Takeaway: TikTok success in 2025 will belong to brands that align with its algorithm, scale UGC with operational rigor, and turn creator chaos into repeatable outcomes.

Quick Hits

• Great thread featuring scroll-stopping creative 👆

• Motion Creative’s AI Agents are now 100% free

• Your Prime Day playbook from Connor MacDonald of Ridge

• Grammarly acquires Email platform Superhuman

• Remember Jaguar’s “rebrand”? Their April sales in Europe plunged 98% 😬

• Microsoft presents medical superintelligence