The Future Of Online Shopping | CNBC Marathon
Summary
TLDRThe 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
🔥 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.
⚠️ 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.
💰 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.
🛒 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.
🌐 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.
🚚 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.
📺 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.
💸 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.
📱 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.
🌐 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.
Mindmap
Keywords
💡E-commerce
💡Marketplace
💡Live shopping
💡Social commerce
💡Supply chain
💡Fulfillment
💡User acquisition
💡Assortment
💡Influencer marketing
💡Last-mile delivery
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.
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