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.