The Future Of Online Shopping | CNBC Marathon

Summary

The video script explores the meteoric rise of the bargain shopping app Temu, which has become the most downloaded shopping app in the US. It delves into Temu's aggressive pricing strategies, fueled by its Chinese parent company Pinduoduo, and examines concerns surrounding its sourcing practices and potential violations of US trade laws. Additionally, it tracks Walmart's efforts to boost its e-commerce presence and catch up with Amazon's dominance, detailing innovative fulfillment strategies like drone delivery and in-home services. The script also investigates the emerging trend of live shopping, popularized in China, and its adoption by platforms like Amazon, social media giants, and startups targeting the lucrative US market.

Takeaways

• 😮 Temu, a Chinese e-commerce app, has become the most downloaded shopping app in the US by aggressively offering ultra-low prices and luring customers with steep discounts and promotional deals.
• 🕵️ Temu is facing scrutiny from US authorities over potential violations of import laws, including selling goods from China's Xinjiang region, where forced labor is allegedly used, and exploiting 'de minimis' shipping rules to avoid paying import duties.
• 🏪 Walmart is doubling down on its e-commerce business, expanding its online marketplace, adding more sellers, and leveraging its vast physical store network as fulfillment centers to compete with Amazon's dominance.
• 📺 Live shopping, popularized in China, is emerging in the US, with platforms like Amazon Live, social media apps (TikTok, Instagram), and dedicated startups facilitating real-time product demos and purchases hosted by influencers.
• 🛒 US retailers are embracing live shopping as a way to differentiate products, build trust with consumers, and drive impulse purchases, though adoption and conversion rates in the US remain lower than in China.
• 🌐 While Amazon Live keeps buyers on its platform through the entire purchase process, social media platforms are still working on seamless in-app shopping experiences to capitalize on live shopping's potential.
• 💰 Top live shopping creators on platforms like Amazon Live can earn significant income through commissions on sales, flat fees for going live regularly, and sponsored brand deals.
• 🇨🇳 Temu's parent company, Chinese e-commerce giant Pinduoduo, utilizes its established logistics network and suppliers in China to offer ultra-low prices on Temu, raising concerns about labor practices and lack of transparency.
• 🚚 Walmart is investing in various delivery options, including drones, autonomous vehicles, and even in-home delivery, to enhance its e-commerce capabilities and compete with Amazon's logistics prowess.
• 💻 US live shopping platforms are still in their early stages, and their long-term success will depend on resolving issues like seamless in-app purchases, building trust with consumers, and overcoming regulatory hurdles.

Q & A

What is Temu and how has it gained popularity?

Temu is a Chinese e-commerce shopping app that has recently become the most downloaded shopping app in the United States. It has gained popularity due to its heavily discounted prices, aggressive promotional strategies, and its ability to sell products at extremely low costs by sourcing from Chinese manufacturers.

What are the concerns surrounding Temu's business practices?

There are concerns regarding Temu potentially violating U.S. import laws by selling products made with materials from the Xinjiang region of China, where forced labor is being used. Additionally, Temu takes advantage of the de minimis shipping rule, which allows goods under $800 to be shipped directly from China to residential homes without paying tariffs and duties, giving it an unfair advantage over other retailers.

How is Walmart responding to the threat of e-commerce giants like Amazon?

Walmart is investing heavily in its e-commerce business, trying to catch up to Amazon. This includes building more fulfillment centers, launching a membership program called Walmart Plus, investing in local delivery programs (including drones and in-home delivery), and enticing third-party sellers to join its marketplace.

What is live shopping, and how is it becoming popular in the U.S.?

Live shopping is a model where creators and influencers with large social media followings host live streams to demonstrate and promote products directly to viewers, who can make purchases during the stream. This model has been hugely successful in China and is now gaining traction in the U.S., with platforms like Amazon Live, TikTok, Instagram, and YouTube offering live shopping capabilities.

What are the advantages of live shopping for brands and creators?

Live shopping allows brands and creators to differentiate their products, build trust with viewers through authentic demonstrations and reviews, and drive higher conversion rates compared to traditional e-commerce platforms. Creators can earn commissions on sales and sponsored deals, while brands can leverage the large followings of popular creators.

What challenges does live shopping face in the U.S.?

One of the main challenges is that many social media platforms don't allow direct purchases within the app, requiring users to navigate away to complete transactions. There is also hesitancy from U.S. consumers to make purchases directly through social sites, and concerns around data privacy and potential bans on platforms like TikTok due to its Chinese ownership.

How does Temu's business model differ from traditional e-commerce platforms?

Temu's business model is focused on rapidly acquiring a large user base rather than generating immediate sales. It offers heavily discounted products, gamified promotions, and incentives for users to refer friends and make their first purchase. Temu's parent company, Pinduoduo, plans to eventually introduce social shopping features similar to its successful model in China.

What is the significance of Temu's Super Bowl commercial?

Temu's decision to run two commercial spots during the 2023 Super Bowl, spending $14 million, was a major marketing push that catapulted the relatively new app into the mainstream. It led to a 45% increase in app downloads and a 20% increase in daily active users just one day after the Super Bowl.

How is Walmart leveraging its physical stores to compete in e-commerce?

Walmart is using its vast network of physical stores as fulfillment centers for online orders, offering services like curbside pickup, in-home delivery, and even drone delivery from select stores. This allows Walmart to leverage its existing infrastructure and workforce to offer speedy local delivery options that Amazon cannot match.

What challenges do platforms like Amazon Live and TikTok Shop face in the live shopping space?

While Amazon Live benefits from keeping users on its platform for the entire purchase process, it struggles to drive traffic and audiences to its live streams. Social platforms like TikTok Shop face challenges around allowing direct purchases within the app and concerns around data privacy and potential bans due to their Chinese ownership.

Outlines

00:00

🔥 The Rise of Temu: A Disruptive Shopping App Takes Center Stage

This paragraph introduces Temu, a rapidly growing shopping app that has become the most downloaded shopping app in the United States. It highlights the app's aggressive promotional tactics, low prices, and addictive nature. The paragraph also discusses Temu's Super Bowl commercial debut, which catapulted the app into the mainstream, resulting in a significant increase in downloads and daily active users. The success of Temu is attributed to its steep discounts, gamified shopping experience, and the ability to offer low prices by sourcing products directly from China.

05:03

⚠️ Temu's Potential Legal Troubles: Navigating Forced Labor and Import Laws

This paragraph delves into the legal and ethical concerns surrounding Temu's operations. It discusses the Uyghur Forced Labor Prevention Act, which prohibits the importation of goods made with materials from the Xinjiang region of China due to ongoing human rights violations. A report by the U.S. House of Representatives found instances of Temu selling products that violate this law. The paragraph also highlights the issue of Temu taking advantage of the de minimis shipping rule, which allows goods under $800 to be shipped directly from China to residential homes without paying tariffs or duties, potentially skirting laws prohibiting goods from Xinjiang.

10:05

💰 Temu's Business Model: Acquiring Users and Exploring Social Commerce

This paragraph explores Temu's business model, which focuses on acquiring users and growing its user base rather than immediate sales. It discusses Temu's aggressive advertising and referral strategies, offering incentives for users to download the app and make purchases. The paragraph also hints at Temu's potential plans to launch social shopping features, similar to its parent company Pinduoduo's successful model in China. This strategy involves creating a social network where users can band together to earn quantity discounts, known as "team up, price down." The paragraph suggests that Temu is laying the groundwork for a similar social commerce experience in the U.S.

15:07

🛒 Walmart's Ambitious Plan to Catch Up with Amazon in E-Commerce

This paragraph shifts focus to Walmart's efforts to compete with Amazon in the e-commerce space. It discusses Walmart's strategies, including building fulfillment centers, investing in delivery programs, and launching initiatives like Walmart Plus to rival Amazon Prime. The paragraph also highlights Walmart's push to attract third-party sellers to its marketplace, offering them incentives and opportunities to reach brick-and-mortar stores. Additionally, it covers Walmart's partnerships with companies like Shopify and its international expansion efforts in the e-commerce arena.

20:07

🌐 Expanding Assortment: Walmart's Quest to Attract Sellers and Brands

This paragraph delves deeper into Walmart's efforts to expand its assortment and attract more sellers and brands to its e-commerce platform. It discusses Walmart's stringent vetting process for new sellers, the opportunity for sellers to get their products into Walmart's physical stores through programs like Open Call, and the advantages Walmart offers in terms of lower advertising costs and better profit margins compared to Amazon. The paragraph also addresses potential concerns about Walmart allowing sellers with questionable practices, such as buying reviews, onto its platform.

25:09

🚚 Walmart's Delivery and Fulfillment Strategies: Leveraging Stores and Innovation

This paragraph focuses on Walmart's delivery and fulfillment strategies, highlighting its efforts to leverage its vast network of physical stores as fulfillment centers. It discusses Walmart's investments in various delivery programs, including Express Delivery, in-home delivery, drone delivery, and autonomous vehicle delivery pilots. The paragraph also covers Walmart's GoLocal program, which allows other retailers to utilize Walmart's last-mile delivery capabilities, and the benefits of Walmart's proximity to customers through its stores.

30:10

📺 Live Shopping: The Next Frontier in E-Commerce and Social Media

This paragraph introduces the concept of live shopping, a growing trend in e-commerce and social media. It discusses how popular creators and influencers host live streams to showcase and sell products, leveraging their social media followings and building trust with their audiences. The paragraph highlights the success of live shopping in China and the efforts of various platforms like Amazon, TikTok, Instagram, and YouTube to integrate live shopping capabilities. It also explores the potential benefits of live shopping, such as increased engagement, product demonstrations, and frictionless buying.

35:10

💸 The Business of Live Shopping: Creators, Commissions, and Brand Collaborations

This paragraph delves into the business aspects of live shopping, focusing on how creators and influencers generate revenue through commissions, brand collaborations, and sponsored livestreams. It features insights from successful creators like Tiana Young Morris and Myriam Sandler, who share their experiences and strategies for building trust with their audiences, managing brand partnerships, and monetizing their live shopping efforts. The paragraph also discusses the potential earnings for top creators and the importance of maintaining authenticity and transparency.

40:13

📱 Social Platforms and Live Shopping: Challenges and Opportunities

This paragraph examines the challenges and opportunities faced by social media platforms in integrating live shopping capabilities. It discusses the advantages of platforms like TikTok, Instagram, and YouTube in terms of user engagement and reach, as well as the potential for viral product discoveries. However, it also highlights the barriers to success, such as the need for users to navigate away from the platform to make purchases and the lack of conversion data owned by social sites. The paragraph also explores the efforts of startups like TalkShopLive and partnerships between platforms like Shopify and YouTube to streamline the live shopping experience.

45:15

🌐 The Future of Live Shopping: Adoption, Challenges, and Regulatory Concerns

This paragraph explores the future of live shopping and its potential for mainstream adoption in the United States. It discusses the ongoing competition between platforms like Amazon Live, social media giants, and dedicated live shopping startups. The paragraph also addresses the challenges faced by live shopping in China, including increased government scrutiny and concerns over data privacy and user security. Additionally, it examines the hesitancy of U.S. consumers to make purchases directly on social sites and the need for a seamless shopping experience across platforms. Overall, the paragraph assesses the viability of live shopping as a long-term trend or a temporary phenomenon fueled by the pandemic.

Keywords

💡E-commerce

E-commerce refers to the buying and selling of goods or services over the internet. It is a central theme in the video, which discusses various e-commerce platforms such as Amazon, Walmart, Temu, and more. The video explores their strategies, competition, and the evolving landscape of online shopping. For instance, it mentions Walmart's efforts 'to catch up to' Amazon's dominance in the e-commerce market.

💡Marketplace

A marketplace is an online platform that facilitates the buying and selling of products from multiple third-party sellers. The video highlights the importance of marketplaces for e-commerce giants like Amazon and Walmart, which allow independent sellers to list their products on the platform, expanding the overall product assortment. For example, Walmart is focused on 'increasing assortment' on its marketplace to attract more customers.

💡Live shopping

Live shopping, also known as livestream shopping, is an emerging e-commerce trend where creators or influencers demonstrate and promote products through live video streams, allowing viewers to interact and make purchases in real-time. The video explores the rise of live shopping in the U.S., highlighting platforms like Amazon Live, TikTok, and specialized startups. It also contrasts the U.S. market with the more mature live shopping ecosystem in China, which generated billions in sales.

💡Social commerce

Social commerce refers to the integration of e-commerce capabilities within social media platforms, allowing users to discover, share, and purchase products without leaving the social app or website. The video discusses the potential of social commerce, particularly in the context of live shopping on platforms like TikTok, Instagram, and YouTube. It explores how social media influencers and creators are leveraging their audiences to drive product sales.

💡Supply chain

A supply chain is the network of processes and entities involved in the production, distribution, and delivery of goods or services. The video touches on supply chain advantages of companies like Temu, which can leverage its existing logistics network in China to source and ship products globally at low costs. It also mentions challenges faced by U.S. customs in inspecting the high volume of small shipments from companies like Temu and Shein.

💡Fulfillment

Fulfillment refers to the process of receiving, processing, and shipping orders to customers. The video discusses the fulfillment strategies employed by e-commerce giants like Amazon and Walmart, including their investments in fulfillment centers, robotics, and last-mile delivery solutions. For instance, Walmart is leveraging its vast network of physical stores as mini-fulfillment centers to enable faster and more efficient order delivery.

💡User acquisition

User acquisition refers to the strategies and tactics employed by companies to attract new users or customers to their platform or service. The video highlights the aggressive user acquisition efforts of Temu, a newcomer in the U.S. e-commerce market, which is spending heavily on advertising and offering incentives to acquire new users and drive app downloads. This strategy aims to build a large user base before focusing on monetization.

💡Assortment

Assortment refers to the variety and range of products offered by a retailer or e-commerce platform. The video emphasizes the importance of assortment for e-commerce platforms like Amazon and Walmart, as they strive to offer a comprehensive selection of products to meet customer needs. Walmart, in particular, is focused on expanding its assortment by inviting more third-party sellers to its marketplace and launching its own private-label brands.

💡Influencer marketing

Influencer marketing is a form of marketing that involves endorsements and product promotions from individuals with a significant online following or influence within a particular niche or community. The video explores how e-commerce platforms like Amazon and social media sites are leveraging influencers and creators to drive product sales through live shopping events and sponsored content. It also discusses the potential for influencers to earn substantial income through commissions and brand partnerships.

💡Last-mile delivery

Last-mile delivery refers to the final stage of the delivery process, where goods are transported from a transportation hub or fulfillment center to the customer's doorstep. The video highlights the investments made by companies like Walmart and Amazon in last-mile delivery solutions, such as independent driver networks, autonomous vehicles, and drone delivery, to improve speed and efficiency while reducing costs.

Highlights

Temu, a new Chinese e-commerce platform, has become the most downloaded shopping app in the United States, thanks to its aggressive discounting and social media marketing tactics.

Temu's parent company, Pinduoduo, a Chinese e-commerce giant, utilized its established logistics network to quickly launch Temu in the U.S., allowing it to offer extremely low prices by sourcing products directly from China.

The U.S. government has raised concerns about Temu potentially violating import laws by selling products made with materials from the Xinjiang region of China, where Uyghur forced labor is alleged to occur.

Temu is taking advantage of the 'de minimis' shipping rule, which exempts packages under $800 from tariffs and duties, allowing it to undercut competitors on pricing.

Walmart is aggressively expanding its e-commerce capabilities, including building more fulfillment centers, launching membership program Walmart Plus, and investing in local delivery services, in an effort to catch up with Amazon.

Walmart is enticing third-party sellers to its platform by offering benefits like lower advertising costs, free seller support, and the opportunity to get products into Walmart's physical stores.

Live streaming shopping, popularized in China, is emerging as a new e-commerce model in the U.S., with platforms like Amazon Live, TikTok, Instagram, and YouTube enabling creators to sell products to their followers.

Influencers and creators are finding success with live streaming shopping, earning significant income through commissions and sponsorships, while building trust with their audiences through honest product reviews.

Social media platforms like TikTok and Instagram are partnering with retailers like Walmart and Shopify to facilitate live shopping experiences, aiming to drive sales and grow their user base.

While live streaming shopping has exploded in China, generating billions in sales, the U.S. market is still developing, with challenges around user adoption, platform compatibility, and regulatory concerns.

Startups like TalkShopLive, NTWRK, Supergreat, and Trendio are emerging as dedicated live shopping platforms in the U.S., partnering with retailers and celebrities to drive engagement and sales.

The success of live streaming shopping in the U.S. may depend on factors such as social commerce integration, user experience, and the ability to build trust and authenticity between creators and consumers.

Concerns over data privacy and potential Chinese government influence have led some U.S. states to ban TikTok and other Chinese apps on government devices, posing challenges for the platform's live shopping ambitions.

Traditional home shopping networks like QVC and HSN have merged and adapted to the e-commerce landscape, leveraging social media platforms and live streaming to reach younger audiences.

Retailers like Amazon and Walmart are investing in new technologies like autonomous delivery vehicles, drones, and in-home delivery services to enhance their e-commerce capabilities and compete for customer loyalty.

Transcripts

Temu has become the most downloaded shopping app in

the United States.

Temu is cheaper, aggressively promotional,

programmed to sell you useless stuff and it's

totally addictive.

She's going live on Amazon.

Think of it like the Home Shopping Network for Gen Z

and millennials, entirely online, hosted by famous

creators like Sandler, who have millions of

followers across social platforms.

Walmart's definitely doubling, tripling down on

their e-commerce business, trying their

best to take market share away from Amazon or catch

up to them. The truth is, though, they still have a

long ways to go.

It's February 12th, 2023.

The Super Bowl. Philadelphia Eagles versus

Kansas City Chiefs and a record setting 200 million

people are watching this moment.

Wait, no.

That's too far.

Rewind.

Download the Temu app and shop like a billionaire —

Right there!

Pause it. Wait, what is Temu?

Okay. Let's backtrack.

It's February 12th, 2023.

The Super Bowl.

And Temu, a shopping app that launched just five

months ago, makes its TV debut on one of the

biggest advertising nights of the year,

promising bargain basement prices and the

opportunity to shop like a billionaire with not one

but two commercial spots totaling $14 million.

The Super Bowl ad catapulted the up and

coming shopping app into the mainstream, with app

downloads jumping 45% and daily active users up 20%

just one day later.

By the end of the first quarter, Temu had racked

up 19 million downloads in 2023.

I'm sure you've seen this site Temu right?

Shopping app Temu has become the most downloaded

shopping app in the United States.

Temu is cheaper, aggressively promotional,

programmed to sell you useless stuff and it's

totally addictive.

The company says that it's able to pass on those cost

savings to American consumers.

Wish.com, AliExpress, the others started a decade

ago. They were like MySpace paving the path

for Facebook, or BlackBerry, paving the way

for an iPhone.

But where did Temu come from and how does it make

money selling dirt cheap products? And how did a

relatively new shopping platform end up at the

center of a political firestorm targeting

Chinese e-commerce?

So you see the Super Bowl commercial, decide to

download the app. You'll probably be met with

something like this. Spinning wheels, countdown

clocks, $100 coupons, 25% off, 50% off, under $0.99,

act now, hurry, fast.

And even without those discounts, you start

noticing things are cheap.

Like really cheap.

$19 headphones, $10 designer knockoffs,

household goods for pennies on the dollar.

Whoa, is that a $10 smartwatch?

Let's go ahead and add that to cart.

It's really socialized extreme discounting with

mega variety, gamified and socialized in order to

drive traffic, but most importantly, to build an

enrolled base and get customers, consumers to

download their app.

Temu is an online bargain shopping marketplace.

Similar to Amazon, individual sellers list

products through the site but at heavily discounted

rates. Based out of Boston, Temu quietly

launched in the summer of 2022, and within a few

weeks, the app was already topping Apple App

Store charts, surpassing Amazon, Walmart, even

Shein. All of this is thanks to a huge

advertising budget with a focus on social media.

In January alone, Temu purchased 8,900 ads on

Meta platforms, and this is all part of a larger

user acquisition strategy because right now Temu is

not worried about sales, it's worried about you.

They're paying big bounties and referral fees

for you and I and every other consumer to bring

someone to the site, to download the app and to

make that first purchase, you could go across the

social sphere, and you'll find people recruiting

others in order to earn up to $100 a day on

referral fees. Or if you're an influencer, you

can earn up to $5,000 a month.

The idea is that once you get people onto the site,

they start browsing around, they see all these

different kind of gadgets and gizmos and things that

are being offered. They see the low prices and

they think, well, let's give this a try.

And what Temu has found is that once people have

tried it once, they keep going back and buying

more. And some people get quite addicted to Temu.

It's very easy to shop and it's very easy to do

it in a quite a thoughtless way as well,

because you're not spending hundreds and

thousands of dollars on things.

The individual price points are pretty low, so

a lot of people order in very high volumes.

Based on some estimates, Temu is projected to spend

$1.4 billion on North American advertising in

2023 alone, hoping to grow its user base by an

estimated 100 million people.

The value of a monetizable daily active user, we call

it mDAU in the industry, is worth somewhere between

$236 and $726 per active user per year in top line

revenue, and they're acquiring these customers

at a fraction of the cost of what Amazon or anybody

else had to pay in order to get them.

So again, that begs the question, where did Temu

come from and how did it get all this money?

Well, if you haven't heard of Temu, you've

probably heard of its parent company.

Chinese e-commerce company Pinduoduo, going public at

the Nasdaq this morning.

Pinduoduo, one of China's big three e-commerce sites

with a market cap of more than $100 billion, Temu is

the retailer's first major push into the

overseas market, where its competitors JD.com and

Alibaba already have a footprint.

Pinduoduo utilized its already established

strategy and logistics network to get Temu off

the ground quickly, meaning that though Temu

is based in the U.S., its products are actually

coming from distributors in China.

They have a supply chain advantage that was built

out of their success of Pinduoduo in China, that

started out representing rural farmers and

producers and agricultural providers,

and built that out to every small merchant in

China. And now they've extended that to North

America.

China is really the linchpin in Temu strategy.

A lot of the products that are sold on Temu are

manufactured in China.

They're shipped directly from China to the U.S.

So those labor costs compared to manufacturing

in the U.S. and elsewhere are really low.

So Temu was able to keep those prices very, very

low for customers as a result.

So that $10 smartwatch is likely coming from a

factory somewhere in China. And just like other

Chinese bargain e-commerce sites, that

allows Temu to sell items at extremely low prices.

What Temu sells is very generic stuff.

It's not well known brands.

So that again, keeps prices very, very low

because you're not paying for the brand names.

But the same reputational risks plaguing other

Chinese retailers like Shein could find their way

to Temu. And as far as Temu is concerned, its

problems just went federal.

So you downloaded the app, spun the wheel, dug

through discounts, ordered your $10

smartwatch, and now you wait for your watch to

come from a factory in China. But there's a

couple of hiccups. Not all Chinese manufacturers

can sell goods in the U.S.

There's actually a genocide being propagated

against the Uyghur people in a place called Xinjiang

Province, in the northwest corner of China.

23 million Uyghur people are having their cultural

identity erased, upwards of 2 million are in

concentration camps.

As a consequence of this, we pass something called

the Uyghur Forced Labor Prevention Act, because

one of the things that's happening along with the

genocide is that hundreds of thousands of Uyghurs

are being pressed into labor in factories, making

all sorts of goods.

There are countless goods coming into the United

States in violation of the law.

In a recently released report, the U.S.

House of Representatives found instances of items

on Temu's website being sold or made with

materials from the Xinjiang region of China,

in direct violation of US import laws.

Our American companies and others, who are actually

abiding by the law, are making sure that their

goods are not sourced from Xinjiang are now put

at a real competitive disadvantage relative to

those fast fashion companies that are not

following the law.

Most online e-commerce retailers and marketplaces

have policies in effect that directly forbid the

sale of products from the Xinjiang region, but the

U.S. government found Temu only had vague,

boilerplate language not directly mentioning

Xinjiang. When pressed on it, Temu's defense was

"Temu is not the importer of record," meaning

they're a marketplace.

They don't make the products, they just sell

them.

Yeah, that's not going to work.

I mean, they have 80,000 vendors and they're

basically pointing the finger at them saying that

it's up to them to police this situation.

But, you know, that's not going to fly.

And it goes beyond that.

Remember those ultra cheap prices?

Those help Temu take advantage of something

called de minimis shipping, which the

government is also pretty skeptical of.

Under our Customs and Border Patrol law, where

goods under $800 that are shipped directly from

China to residential homes escape all tariffs

and duties, and they don't really have a lot of

information about their place of origin.

So they are also able to potentially skirt the laws

that prohibit goods coming from Xinjiang.

To put it into perspective, other

companies like H&M and Gap spent hundreds of

millions of dollars on import duties at U.S.

borders in 2022.

Temu and Shein paid nothing.

Combined, they accounted for anywhere from 30% to

50% of all de minimis shipments into the U.S.

That's an estimated 600,000 packages every

day, skirting customs, not paying import duties

and flying under the radar.

CBP is already under a lot of stress with regard to

inspecting the packages that are $800 and above.

And so then when you have this explosion of packages

under $800, along with the fact that they don't

have the data that would otherwise be required to

do a targeted inspection regime, you basically make

it almost impossible for the CBP to do its job.

This also puts other companies at a distinct

disadvantage.

When you don't have those tariffs or duties in

place, those goods end up looking a lot cheaper than

other goods. And so not only are taxpayers losing

the duties, but also, American companies and

others who are doing the right thing, potentially,

are losing business.

Not only do companies like Temu and Shein take

advantage of this rule, but it's directly tied to

the rapid success of these types of companies.

If the de minimis rule was changed, it would

throw a major wrench in Temu's operations.

That would be very disruptive to Temu,

because what it would mean is that parcels would

either have to come into the U.S.

and go through full customs processes, which

would cost slightly more and more importantly,

would take a lot longer to get to the end user, or

they'd have to build out some warehouse capacity in

the U.S., because that comes with a cost

attached, and it starts to undermine some of that

low cost model, which is really important for those

low prices.

Into not just the federal government that's

concerned about. Temu.

Some states have taken action over the app

itself, citing cybersecurity concerns.

Earlier this year, Montana banned the app

from government devices along with TikTok, WeChat

and telegram. In a statement, Montana

Governor Greg Gianforte said Temu, along with

several other apps, are tied to quote foreign

adversaries and cited the fact that Temu's parent

company, Pinduoduo, is headquartered in Shanghai,

China, and those fears are not unfounded.

Pinduoduo came under increased scrutiny this

year when it was pulled off the Google Play store

in March after versions of the app were found to

contain malware.

According to a report from the U.S.

government, that malware was used to exploit

vulnerabilities on Android phones, accessing

users text messages, changing settings, viewing

data from other apps, and even blocking users from

deleting the app altogether. So that begs a

question, what is Temu doing with your data?

So let's recap.

You downloaded the app, scrolled through hundreds

of listings, decided to take a chance on a $10

smartwatch. It is then made by a Temu supplier

and sent to a Temu warehouse in China.

The warehouse then ships the watch from China to

the U.S., paying a grand total of $0 at customs.

It is then shipped via the U.S.

Postal Service to its destination, and all of

this happens in just about a week.

So yes, we did in fact buy a $10 smartwatch from

Temu. It took about a week for it to ship from

China to us here in New Jersey.

And yes, it really did only cost just around $10.

First impressions of the box. It does look and feel

kind of like an Apple box. And we know from the

ads we saw of the original watch that that

was the look and feel that this company was

trying to replicate for the watch face does look

very similar to other smartwatches on the

market. The ring on the side and the buttons are

almost identical to that you would find on an Apple

Watch. The watch straps are also rubber, very

similar to Apple Watches.

The only major visible difference is the charging

port. While it does have a circular charging port,

it does require a two prong charger, and the

charger itself was very cheaply made.

The watch also did turn on right away.

The apps also looked nearly identical.

The honeycomb effect is very similar to the

current operating system on Apple Watches.

Overall, the watch seemed to emulate an Apple Watch

almost to a tee.

Even the icons for some of the apps internally

were almost identical.

Overall, it's a pretty good dupe.

If I was in the market for a smartwatch and

didn't care about quality, I probably would

just get this. To most people on the street, it

just looks like an Apple Watch.

Every app needs a killer application, right?

The killer app here is these mega variety steep

discounts. That's what brings them in.

But they've married product sales with social.

And they're starting by leveraging the existing

social network in North America.

But they'll create their own social network when

they release team payments, like they did

with Pinduoduo in China.

Team payments is the viral catalyst for

ignition to growing this to a billion users beyond

China.

Remember earlier when we said Temu is not worried

about sales, it's worried about you.

Marketing and e-commerce experts say it's no

mistake. Temu is spending so much money to aggregate

a user base. Many suspect Temu is gearing up to

launch social shopping here in the U.S., a wildly

successful shopping model Pinduoduo uses in China.

Pinduoduo in China actually takes it to

another level. They use group buying, where you

can band together with friends and family in

order to earn quantity discounts.

It's referred to as team up, price down.

This social commerce aspect is what allowed

them to grow to number three to almost a billion

users in China.

In the U.S., Temu hasn't yet released the team

purchasing capability, but you can see them

laying the foundation for doing so because they're

social marketing experts.

So as Temu continues to grow and expand its user

base, it could be getting ready to change the

shopping experience for U.S. retailers.

But will us consumers bite?

The potential for social shopping is definitely

there and it will grow, but it's not going to

become the scale that it is in China.

It's a different type of consumer, it's a different

type of market.

But I certainly think it's a sensible thing for

Temu to add.

And even if Temu continues to grow its U.S.

user base, can it survive regulatory and legal

scrutiny to continue operating?

92% of us say that we'll trust a referral from a

friend or a family member, and that's what

social marketing does.

And so whether or not Temu is owned by a Chinese

company is irrelevant, because you're really

buying first from the trust and referral from a

friend or family based on a socialized promotion.

And on top of that, gosh, we'll give you 20 bucks

for each one you bring in.

The boxes flying down the line at this 2.3 million

square foot distribution center are sorted, scanned

and labeled, then loaded into trucks destined for

the shelves of the country's biggest

retailer. Walmart employs more people than any other

company in the world, and 90% of Americans live

within ten miles of a Walmart.

Yet when it comes to e-commerce, Amazon is the

clear leader, with 39.5% of the market share

compared to Walmart's 7%.

And with the global pandemic helping shift

shoppers behavior for good, dominance in online

shopping is now paramount. Last year,

people spent more on Amazon than at Walmart for

the first time. Now Walmart's got a new

playbook and new leadership as it races to

catch up.

We have 4,700 locations across the U.S., and if

the store acts like a fulfillment center, we can

send those items the shortest distance in the

fastest time.

Over the past few years, Walmart's built more than

30 warehouses like this, some with robots and

people, entirely dedicated to fulfilling

online orders.

Workers at stores are also picking and packing

online orders as Walmart turns dozens of stores

into Micro-fulfillment centers.

It's added membership program Walmart Plus to

compete with Prime, invested heavily in local

delivery programs in homes and with drones, and

started packing and shipping orders for third

party sellers as it works to entice them to

Walmart.com.

I'd say assortment is the linchpin to this plan, and

then sellers are a means to get to assortment.

They're looking at Amazon's market share,

saying, "How can we grow this market share?

We need more sellers.

We need more selection."

Customers trust us for food consumables, they

trust us for general merchandise, but they're

looking for every item that they could think of.

We want to make sure that we're able to do that for

them.

CNBC went to Walmart headquarters in

Bentonville, Arkansas, for the first ever public

interview with Walmart's new head of e-commerce,

Tom Ward, to find out the truth behind his big plans

for catching Amazon online.

Walmart was founded in 1962 by Sam Walton,

growing to nearly 2,000 stores by the time Jeff

Bezos founded Amazon in 1994.

Despite its in-store dominance, Walmart was

notoriously slow to the e-commerce game, not

launching its third party marketplace until 2009.

It didn't make real headway until 2016, when

Walmart bought discount online retailer Jet.com

for $3.3 billion, tapping founder Mark Lowry to lead

e-commerce, where he stayed until last year.

In 2018, it spent big to get into the booming

online market in India with Flipkart and also

bought online fashion brands like Bonobos and

Eloquii. Then in 2020, Walmart shut down Jet.com,

although CEO Doug McMillon says he would buy

it all over again.

If you look at the trajectory of our

business, it changed when we made that acquisition.

The Walmart brand really has extended to reach all

kinds of people, affluent customers, younger

customers, urban customers.

We were going to need a brand to be able to use to

attract some of the brands that did not yet

want to be in our stores.

Also in 2020, Walmart partnered with Shopify to

bring thousands of mom and pop sellers to

Walmart's marketplace.

That's the terms used to differentiate items sold

by third party sellers from the first party

merchandise bought and sold by Walmart.

2020 also saw the launch of Walmart Plus and

Walmart Fulfillment Services to rival

fulfilled by Amazon or FBA, but leveraging stores

and their built in workforce to keep costs

low.

Walmart's definitely, you know, like doubling,

tripling down on their e-commerce business,

trying their best to take market share away from

Amazon or catch up to them.

The truth is, though, they still have a long

ways to go.

Last year, Walmart opened up its marketplace to

international sellers.

This summer, Walmart Plus weekend is happening for

the first time with exclusive online deals for

members just like Amazon's Prime Day.

And in February, Tom Ward took over Walmart's

e-commerce division.

The nearest Walmart to your customer is the one

in their pocket.

It's also the ultimate store.

It should be an endless assortment.

It should be completely, you know, full of

solutions for whatever customers are looking for.

And increasingly, marketplace sellers really

help us do that.

We went to a bustling conference for e-commerce

sellers in Las Vegas in March that's usually

dominated by Amazon chatter.

For the first time in the prosper show's seven year

history, Walmart also had a major presence.

Because they're smart and they know that this show

is where the sellers are, and they want to get a lot

of more brands on the Walmart.com channel.

It's the only other platform that could really

be competition to Amazon.

Michael Lebhar started selling on Walmart seven

years ago, when he was just a sophomore in high

school.

At first, my mom was not happy because my whole

room was just a bunch of USPS boxes.

Now, Lebhar says Walmart.com is his primary

platform for his Spawn Fitness brand, which he

says did about $3.5 million of sales on

Walmart.com last year, compared to under half a

million on Amazon. On Walmart it's our profit

margins, too, are so good and like, people are

always like, oh, Walmart's price

competitive, which you're right. Like sometimes

you're not able to charge as much.

But on Amazon you're spending so much more on

advertising. Like you don't even realize you're

down so much because of that.

The cost of advertising on Amazon has increased.

But people are always going to do it because

more than ever before, it seems if you're not

advertising on Amazon, you're not going to get

seen.

As the leader. Amazon can charge sellers more for

ads, seller account support and fulfillment

services. Jare' Buckley-Cox used to work

at Amazon and now helps lead Walmart fulfillment

services, which launched in 2020.

WFS hasn't yet raised prices and unlike FBA,

offers seller support for free.

Year over year, Walmart fulfillment services grew

500% in GMV.

We add sellers every day.

Our competitive advantage and what's drawing sellers

into the program is the fact that they believe

this is a marketplace that is built for them.

But for now, Walmart still has about a 10th of the

sellers and a 10th the value of merchandise that

Amazon has. Greg Mercer founded seller software

company Jungle Scout, which tracks industry

numbers with regular surveys of thousands of

sellers.

The fact that there are significantly less sellers

on Walmart, I think creates less competition,

and the result of that is the Walmart sellers

typically have a more profitable business than

what Amazon sellers do.

Surveys earlier this year found 95% of Walmart

sellers turn a profit, compared to about 76% on

Amazon.

Five years ago, Amazon sellers just wanted to be

on Amazon. They didn't want to go anywhere else.

But that story has changed.

Most Amazon sellers that I talked to talk about

"How can I diversify more?"

About a year ago, we estimated that there were

75,000 Walmart sellers, and over the past year

we've seen that number double to about 150,000

Walmart sellers today.

Lawrence Stark runs business strategy for

mDesign, one of the biggest home storage

brands on Amazon, with a total of $310 million in

online sales last year.

mDesign started selling on Walmart in 2019 and

started investing more there during the pandemic.

Because everyone was at home. So that's when we

really ramped up our strategy to go on to

different marketplaces and specifically Walmart.

Diversify the risk, diversify the reward as

well and reach more customers.

Stark says mDesign will likely do about $5 million

in sales on Walmart this year, compared to $280

million on Amazon last year.

We are seeing, you know, really nice increases year

over year on Walmart.

Stark says Target has been even more successful

because there's even less competition. Only brands

that are invited by Target can sell on its

site. In contrast, it's relatively simple for

anyone to start selling on Amazon, and competition

is cutthroat.

You can take, you know, some stereotypical like

saturated product on Amazon, like a garlic

press or something, where there's 200 of the same

thing. There's maybe like three people selling a

garlic press, for example, on Walmart.com.

But Walmart wants that to change.

We want assortment on the platform.

So again, customers can come and find anything

that they're looking for and get it delivered in

any means that they want.

Walmart is also adding assortment by launching a

growing collection of its own brands, especially in

apparel and home, that appear first online and

later in stores.

But as Walmart's third party assortment grows, so

too does the risk for bad actors like Mpow and

Aukey, two huge electronic sellers doing

nearly a billion in sales. They were kicked

off Amazon but remain active on Walmart.

They kicked him off for buying reviews, and I was

sad to see that Walmart allowed Mpow and Aukey to

now sell on the .com platform.

So as positive as I am with Walmart, I'm a little

bit disappointed that they allowed those two

brands with their practices, which according

to the FTC is illegal to do.

You can't buy reviews.

Walmart says it looked into the allegations and

didn't find the same behavior from Mpow and

Aukey on its site, as it works to boost selection.

Walmart also opened its marketplace up to

international sellers last year.

We know that Amazon had a big crackdown last summer

on fake reviews.

I think it primarily impacted Chinese sellers

the most. That, combined with Walmart allowing

international sellers, we saw like a huge uptick in

the percent of Chinese sellers on Walmart.

Still, sellers say Walmart remains more stringent

than Amazon when it comes to approving new sellers.

We're really proud of the track record of having

high standards for sellers to get vetted

before they get on the program, and we're going

to continue that.

Another big way Walmart is enticing sellers, which

Amazon can't match, is the opportunity to get

products onto thousands of brick and mortar

shelves.

Because, you know, each store has to get, you

know, so many cases in stock. I mean, it's like

game over if you're just like a private label

seller, to be able to have your product in

Walmart stores is like a holy grail.

Our product was like at one point, the number one

in the category on Walmart.com.

So we got an email from a Walmart buyer being like,

you know, would you be interested in more talks?

This year, for the first time, Walmart.com sellers

were given first exclusive access to a

program called Open Call, where sellers pitch their

products for space on Walmart store shelves.

Some 2,000 sellers applied.

We've got a real mission to increase assortment, so

it just made sense that when sellers are bringing

high quality assortment, we want to make that

available to our customers in our stores or

online.

Walmart's huge number of stores also makes it the

undisputed king in grocery. Amazon bought

Whole Foods in 2017 and is trying to disrupt the

space by making two of them entirely cashierless,

but Amazon.com and Whole Foods each accounted for

less than 1.5% of the grocery market, compared

to Walmart's 18%.

Grocery is less profitable than general

merchandise, but the real power play is for Walmart

to get customers to fill their virtual baskets with

a mix of grocery, general merchandise, and third

party items.

Maybe you're shopping for only a Walmart grocery

store product, but at least the traffic is there

and it is heavy and a lot more eyeballs on your

products.

Now, despite big upward trends during the

pandemic, both Walmart and Amazon shares fell

sharply after Q1 earnings were reported as supply

chain issues and increasing costs cut into

profits. But Walmart's long standing reputation

as a leader in low prices brings an advantage right

now, as customers look for deals with inflation

at a new 40-year high.

As part of Walmart's strategy to unite more

parts of its vast retail empire, it recently

combined what used to be two separate apps one for

Walmart's own goods, primarily grocery and

another for its third party marketplace

products.

And wherever there's friction in that process,

wherever there's two apps and there should be one

under one roof, we're now working to remove all that

friction.

Walmart Plus, launched in 2020, also combines

benefits for loyal grocery customers with

online shopping perks.

It's Walmart's answer to Prime, which Amazon

launched all the way back in 2005.

Prime now costs $139 a year for benefits like one

day shipping on more than 15 million items, two hour

grocery delivery in 2,000 + cities, access to Prime

Day deals and Amazon's entertainment branch Prime

Video, Amazon Music, Prime Reading, Prime

Gaming and Amazon Photos.

Meanwhile, Walmart Plus members pay $98 a year for

benefits like free same day, delivery from stores,

free shipping on Walmart's own merchandise,

cashierless scan and go shopping at some stores,

and exclusive access to big sales events like

Walmart Plus weekend happening June 2nd to 5th

this year. And amid record high gas prices,

Walmart just added extra fuel discounts for its

plus members, who now get between 5 and 10 cents off

not only at Walmart's own pumps but at some 14,000

participating stations, including Exxon Mobil,

Murphy and Sam's Club.

Walmart is also using its stores, and specifically

their proximity to customers as an edge,

making big investments in speedy local delivery

programs.

People are coming to us for burgers and hot dogs,

but they can buy a brand new smoker.

They can get a whole new swim set outfit.

They can get all of that under one roof in one

application in one place, and we can fulfill it for

them with great speed thanks to our footprint.

Last year, Walmart launched Express Delivery

for Walmart's own merchandise that can reach

your door in two hours or less for a $10 fee, with

an additional fee of at least 7.95 for non Walmart

Plus members. This doesn't include

marketplace items, but Ward says it drives

traffic for those as well.

We can say to a customer, hey, add these items that

you want this evening, but if you want that very

specific item, we can bring you that really

quickly as well.

Walmart has been ramping its logistics operations

since at least 2017, building 31 separate

fulfillment centers devoted to e-commerce and

investing big in robotic e-commerce fulfillment

following Amazon's lead.

Also like Amazon, Walmart has independent drivers

what it calls its Spark Network, who handle much

of the cumbersome, expensive last mile

delivery.

We can activate drivers to come and collect items and

deliver them to our customer. But as the

density grows, the cost comes down.

So much so that last year, Walmart started delivering

goods for other retailers in a program it calls

GoLocal.

We've announced some really exciting clients

like The Home Depot and Chico's, and others,

including small and medium businesses.

And what we're seeing is, is they share in our last

mile capabilities, our density increases and the

cost for both of us go down.

In Scottsdale, Arizona, Ward says Walmart's

completed 5000 deliveries with Cruise autonomous

vehicles. And this vehicle turns up like magic

outside, and they can grab it out of the back

seat. And then increasingly, they can put

their return in the back seat and send the car to

the supercenter. Walmart also just announced its

expanding drone delivery by the end of the year,

deploying them from 37 stores for a reach of 4

million households across Arizona, Arkansas,

Florida, Texas, Utah and Virginia.

Customers pay $3.99 for items totaling up to 10

pounds to be delivered by drone in 30 minutes or

more.

In the same way that the store is starting to act

like a fulfillment center, they're also

starting to act like a drone launch delivery.

And there's the growing popularity of buying

online and picking up curbside, a benefit Amazon

can't rival.

In some of these other areas where Amazon Prime

doesn't have, like the two and three four hour

delivery. But there's a Walmart store nearby.

You could be living in South Dakota or something,

and you can get your product in 2 or 3 hours.

Whereas on Amazon, for Prime, it might take even

more than two days.

While you can't currently pick up third-party

purchases at Walmart stores, Buckley Cox says

items shipped with WFS will soon be able to be

forwarded to stores for possible same day pickup

or delivery. And while Amazon delivers groceries

to doorsteps and some items inside doors and

garages, Walmart has a unique delivery program

straight into your fridge for $19.95 a month.

There's so good for our elderly customers that

can't get out, or if somebody has broken an

ankle or something, broke a leg, whatever.

You know.

Thousands of full time Walmart associates like

Mike Edwards spend their days filling up a fleet of

fully electric vans with groceries and general

merchandise.

We don't step foot inside the garage or the

residence without this on.

Then bringing it inside people's homes and putting

it away in the refrigerator. Trusting a

stranger to enter your home may sound wild, but

the program has been working well enough that

Walmart is rapidly expanding it to reach 30

million homes.

All of our associates wear cameras on their vests,

and every part of the delivery is recorded.

They can't actually access your home until we

confirm that their camera is turned on and working.

And so as a customer, if you place an order and you

are curious, you can watch the full experience.

In-home associates will also take some returns

back to Walmart for customers, and Walmart is

expanding the program to include alcohol delivery

and other highly requested services.

It's not ready to disclose.

And so they're like, oh my gosh, you're here, can you

walk the dog? Like, can you take out the trash?

It's like, how else can you help me?

While marketplace purchases can't currently

be delivered in-home, it's another way for

Walmart to build loyalty.

In-home offers a unique entry point into Walmart

for a lot of our customers because we have

pretty distinguishable offering on the market,

and now they're on our website and they're

shopping for groceries, but they're seeing other

things they might want to buy. They're seeing things

available in marketplace.

There are things that they would never expect to

see at Walmart. And so now we have them as a

loyal customer and a much more expansive and much

stickier way than we would have expected.

You know, they're not going to catch up and be

50% market share next year, but if they continue

to do the things that they're doing gradually,

they will continue to eat more and more market

share, I believe.

Myriam Sandler and her husband Mark aren't

cleaning up their kids playroom.

21 products, 21 products.

We're setting up for a segment on QVC.

Tap to join me live.

Instead of TV, she's going live — You're all

set

— on Amazon.

Hi, everyone. Welcome back.

I'm so excited to be live with you.

I'm Myriam Sandler and I'm the face behind

MotherCould. Think of it like the Home Shopping

Network for Gen Z and millennials, entirely

online, hosted by famous creators like Sandler, who

have millions of followers across social

platforms. Hi from Ohio.

Hi from San Diego.

Hello from Honduras.

Hello, hello.

Alejandra, hi.

How are you?

We know that the vast majority of Gen Z

consumers say that they now use social media as

their first stop for shopping inspiration,

because they have built trust and they've grown up

feeling authentic relationships with these

people online.

Amazon, TikTok, Instagram, YouTube, Shopify, they're

all getting in on the game. It's a way to

differentiate a product from the millions of

others in oversaturated online marketplaces.

One of my favorite cleaning products is a

spinbrush.

They want somebody demonstrating it.

They really want somebody showing the product how it

works and showing its efficacy.

And it's also entertainment. But the

U.S. is lagging way behind China, where 74% of

consumers say they bought products through a

shoppable livestream in 2022.

In the U.S., 78% say they've never even watched

one.

In China, we're seeing 200 with a B, 200 billion plus

in sales. How do we mimic that in the U.S.?

And I think we're probably in the low, the

mid hundreds of millions.

It looks really cute.

We go behind the scenes with creators to find out

what it's like to sell via livestream, and what

it'll take for the emerging model to become a

mainstream way that U.S.

consumers shop.

Very cool.

So I will do like a little cucumber salad and cut

this in half and then bring this out.

And I want to give you a little demonstration.

Impulse purchases, driven by compelling live pitches

are nothing new.

And this is the American egg, and I'm bringing it

out on D-Day.

For the last four decades, the Home Shopping Network

and QVC have been broadcasting to tens of

millions of U.S. households. But as

e-commerce thrives, traditional retail has

been forced to evolve.

In 2017, amid slowing sales, QVC and the Home

Shopping Network merged in a $2.1 billion deal

when the pandemic grounded shoppers in 2020,

viewership for the shopping networks went

back up 10%.

But their biggest growth, 100% year over year,

happened on their social platforms.

It's no surprise the model has moved online,

where other platforms are giving it a go, too.

Live shopping has been sort of the holy grail for

social media platforms for a couple of years.

Instagram tried it, YouTube has tried it.

And then really during Covid in 2020, we started

to see it percolate, mostly in Asia where there

was such a big audience ready for shopping.

Another really cool thing about this label maker is

that it is completely inkless.

It'll never run out of ink because it works with

thermal technology.

Just like the QVC of old, personalities pitch

products live, now from the intimacy of their own

homes. Audiences can react with emojis or

stars. A chat window lets them ask questions the

host can answer live, and links to the featured

products make for easy purchasing.

Oh my god, $23 you guys!

Thank you guys for letting us know!

During pandemic lockdowns, these livestreams took

China by storm.

Chinese retail giant Alibaba was first to

market there, launching its livestream app Taobao

Live in 2016.

In 2020, it exploded in the first 30 minutes of

China's 2020 Singles' Day shopping festival Taobao

livestreams generated $7.5 billion in

transactions, a 400% jump from the year before.

That same year, the livestream shopping market

in China was valued at 171 billion, estimated to

grow to $423 billion in 2022.

People are excited by what you're seeing from China,

where you see really, really high conversion

rates on some of these experiences, much higher

than maybe a regular website would have.

You're seeing potentially up to 40%, in some cases.

You might see much lower return rates because

people know what they got.

There's a rapidly growing ecosystem of new

livestreaming apps in China, too, like TikTok's

sister app Douyin and Pinduoduo, known for rock

bottom prices. livestreamers in China,

known as key opinion leaders or KOLs, have made

massive fortunes.

There's entire boot camps devoted to the career

craze of becoming a livestream shopping host.

KOLs there have millions and millions and millions

of fans, so even if 10% show up, that's still a

million. People want to buy products with meaning

or products that they can't get anywhere else.

And that's really what's the underpinning of live

shopping in the U.S.

that's very different than in China, which is

all about just a mass population.

At 35% of the market.

Alibaba's Taobao Live remains the world's

biggest live shopping player, but the last few

years have seen a flurry of U.S.

companies investing in live shopping ventures

too. First among them, Amazon.

Two pockets. Actually, I love it.

I'll show you the material a little bit

closer up.

Amazon introduced livestream shopping in

2016, then launched its creator app in 2020, a

tool for making it easier to go live.

So the first thing that we're going to start out

with is this lovely I just killed my husband

robe.

Tiana Young Morris was a practicing attorney when

she first started livestreaming in 2020.

The pandemic hit and I was bored in the house.

I was on TikTok just like everybody else, and it

just kind of took on a life of its own.

Videos of her trying on wigs and reviewing them

went viral long before she made money doing it.

Every other wig they were talking about this evening

is baby throw and go.

Throw it on like a hat and out the door.

Like that first viral video, I was like, "Oh,

there are a lot of people that are going to buy the

product that I recommended." Yes, honey.

How can I make money off of this?

And Amazon just makes it so easy for you to sign up

for the influencer program.

Through the Amazon Influencer Program,

creators get their own storefront where Amazon

users can follow them.

Now, Young Morris sells almost exclusively on

Amazon Live.

As an attorney in private practice, I was making

about 100 grand, like a little over 100 grand,

maybe like 110 or so.

And now I make about six times that.

The biggest moneymaker for Amazon Live creators is

Commission, which is usually 10% or less of

sales from clickthroughs on the livestream,

although the rare category can be as high as

20%. Amazon also offers some creators a flat fee

for going live regularly, and top creators can make

extra from brands that pay for dedicated,

sponsored livestreams like this one Young Morris

did with Dove.

This body cleanser, give it all to me.

While brands often send livestreamers free

products, top creators build viewer trust through

honest reviews.

The length of them is not super long.

I feel like it's important to just tell the

truth about what it is, because if it's short on

me and a tall woman buys it, then they're going to

realize it when they get it anyway and they're just

going to return it.

I really want it to be my opinions.

I want it to be purchased from me like I spent my

own money on this product so I can tell you it is

worth spending your money on this product.

I probably decline 75% of the offers that come my

way, and I could have a lot more money if I

accepted those, and I would still have community

members, but I would have no trust in me.

Celebrities like Kourtney Kardashian Barker and

Paris Hilton also hold livestreams for the Amazon

launch of their own brands. Brands like JBL

have also seen major success on Amazon Live,

where a carousel of products linked on the

left make for frictionless buying.

I've got so many amazing Prime Day deals for you

guys, and it's actually in collaboration with JBL.

Last year, during Prime Day, one of JBL's Amazon

Lives hit 714,000 views and JBL's Lauren Severson

says 83% of purchases were made by first-time

customers.

Our portable, waterproof speaker.

So that saw an 80% increase in the two weeks

following of sales.

And then we saw an increase of 22% of traffic

to any of our JBL pages on Amazon.

Sandler's career as a creator first took off in

2019 with viral videos like this one that has

nearly 80 million views on YouTube, demoing

playful recipes and activities she does with

her three daughters at her home in Miami.

So my husband was an investment banker for 15

years. One day we realized that we were or I

was making double what he was making and he was

making a really good living. I was like, let's

take a leap of faith. Leave. And he left.

It's probably grown four times since, and it's just

crazy.

Sandler's MotherCould brand makes the most on

Amazon, but she has more followers on Instagram at

1.2 million, and TikTok with 730,000 followers and

11.7 billion views.

I don't profit off any other platform that you

can go live. Everyone coming to Amazon Live is

essentially coming to buy something.

They're there for that.

I feel like if you are live on Instagram or live

on TikTok, live on Facebook, they're there

to, like, see what's going on.

Amazon Live is the most complete end to end

platform, but we say it's in the BYOA category,

bring your own audience.

So they have to come and drive traffic there, which

is a little difficult, more difficult than

showing up and just turning it on.

While Amazon is all about frictionless sales and

high conversion, social media live shopping is

more about growing followers and going viral.

Products go viral all the time on TikTok.

And you know, Scrub Daddy is a great example.

Dyson Airwrap is another example.

That's what differentiates the social

platforms from Amazon.

Amazon, you go there to find something you heard

about or you're looking for.

In 2020, Instagram and TikTok became the first

U.S. social platforms to launch live shopping

capabilities. ByteDance owned TikTok partnered

with Walmart for an hour long live, where TikTok

users could buy Walmart fashion items featured by

creators. The duo did another livestream in 2021

after reporting the first event netted seven times

more views than expected, and grew Walmart's TikTok

following by 25%.

I think TikTok is going to be able to leapfrog

everyone else is because they have so many users

now. They have a billion active monthly users, and

every time you use the platform, it's learning

your behavior, learning your interests, and

serving you what it thinks you like.

But right now in the U.S., shoppers on TikTok have to

navigate away from the app to make a purchase,

eliminating a big potential revenue stream.

So in the fall, TikTok started U.S.

testing of a new function called TikTok Shop.

It allows users to buy directly in the app, and

although it's invitation only for creators and

merchants in the U.S. right now, it has already

launched in Southeast Asia and the UK.

Now, Shopify and YouTube have teamed up on live

shopping efforts, too.

Announced in July, the partnership expands live

shopping capabilities so viewers can click and buy

without leaving YouTube.

It's not just like, here's yet another thing that's

distracting our youth with video selling, but

it's actually, here is a new way that business is

evolving and adapting to how the world is going to

look in the future.

Business owners like Cassey Ho can go live on

YouTube and elsewhere to promote their own

products. Ho first went viral with this Pilates

workout video under her screen name Blogilates 13

years ago. Viewers asked her to sell merch

featuring her screen name.

I was like, what you want?

Stuff with my screen name on it?

And so I was like, okay, so then I remember buying,

like, these shirts from Forever 21 and like,

screen printing Blogilates on it and put

it up on Facebook and then it sold out within

minutes.

Shortly after, Ho launched an activewear brand called

PopFlex and started posting design process

TikToks that get millions of views.

37 weeks ago, I attempted to make the perfect

legging.

She tries on PopFlex clothes live on Instagram,

which she says leads to far more sales than

TikTok.

Right now, across all my social platforms, we have

about 15 million followers and subscribers

everywhere and on YouTube over 2 billion views.

And then in terms of sales, PopFlex on its own

is an eight figure business. And then

Blogilates on its own is an eight figure business.

Ho said she had her best sales hour of the year

before Black Friday, during an hour long

YouTube live shopping event. Sweatpants, they

are happening tonight, it is happening.

You need to go get them because I don't think

they'll be lasting long.

There's also a handful of startups developing new

U.S. platforms devoted entirely to live shopping.

There's NTWRK that focuses on sneakers and

collectibles, Supergreat and Trendio for beauty

products, and the biggest among them is

TalkShopLive —

TalkShopLive, TalkShopLive,

TalkShopLive — where Walmart held 150 live

shopping events in 2022, and celebrities like Dolly

Parton, Tim Tebow and Jamie Foxx have gone live.

And TikTok is reportedly in negotiations with

TalkShopLive about outsourcing its live

shopping efforts to the U.S.-based startup.

TikTok currently faces bans in several states due

to concerns it could hand user data over to China.

I have a feeling that before it gets banned,

it'll probably sell or do other things to placate

authorities, but I don't think that it's going away

any time soon.

And it really is the backbone of pop culture

right now because it is the chosen platform of Gen

Z.

Despite trending hashtags like #TikTokMadeMeBuyIt,

one survey found U.S.

shoppers are hesitant to pay for products directly

on social sites.

In turn, retailers miss out on the click-through

and conversion data that's owned by the social

sites. It's a big barrier to success for the

business model, and one that's not an issue for

Amazon Live or Alibaba's Taobao Live in China.

As e-commerce platforms and not social networks,

they keep buyers on site all the way through the

sale. Amazon continues to grow its livestream

efforts, launching Amazon Live in India last

September. Meta, on the other hand, is scaling

back its focus on shopping. It halted live

shopping on Facebook in October and removed the

shop tab from Instagram's navigation bar this month.

So we're bringing create down to the bottom, front

and center, and we're removing the shops tab.

And in China, the government is enforcing

greater supervision over private industries,

including livestream shopping. Some of its

biggest live shopping superstars have been hit

with massive fines or taken sudden, unannounced

breaks.

Okay, so yeah, this is a tablet and this is the

case.

In the U.S., it remains to be seen whether livestream

shopping is just a fad that took off while

consumers were stuck at home during the pandemic.

Or if Amazon Live and social platforms have

created a big enough draw for it to stick around for

good.

One thing I've learned about merchants, they're

incredibly resilient entrepreneurs, and when

they find something that works, it spreads.

So yeah, let's hope that this is the year that we

see that real explosion in live selling.

Thank you so much.

Have a great day.