The Future Of Online Shopping | CNBC Marathon

Temu has become the most downloaded

shopping

app in the United States. Temu is cheaper, aggressively promoted, programmed to sell you useless stuff, and totally addictive. She will be available on Amazon. Think of it as the all-

online

Home Shopping Network for Gen Z and Millennials, hosted by famous creators like Sandler, who have millions of followers on social platforms. Walmart is definitely doubling or tripling its e-commerce business, doing everything it can to take market share from Amazon or catch up to them. However, the truth is that they still have a long way to go. It's February 12, 2023. The Super Bowl.

Philadelphia Eagles versus Kansas City Chiefs and a record 200 million people are watching this moment. No, wait. That's too far away. Rewind. Download the Temu app and shop like a billionaire – right there! Pause. Wait, what is Temu? Well. Let's go back. It's February 12, 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 prices and the chance to shop like a billionaire with not one but two commercials per a total of 14 million dollars. . The Super Bowl ad catapulted the promising shopping app into the mainstream: App downloads increased by 45% and daily active users increased by 20% just one day later.

At the end of the first quarter, Temu had amassed 19 million downloads in 2023. I'm sure you've seen this site, Temu, right? Temu shopping app has become the most downloaded shopping app in the United States. Temu is cheaper, aggressively promoted, programmed to sell you useless stuff, and totally addictive. The company says it can pass those cost savings on to American consumers. Wish.com, AliExpress and the others started a decade ago. They were like MySpace paving the way for Facebook, or BlackBerry paving the way for an iPhone. But where does Temu come from and how does he make money selling very cheap products?

And how did a relatively new shopping platform end up at the center of a political storm targeting Chinese e-commerce? So you see the Super Bowl commercial and decide to download the app. You'll probably come across something like this. Spinning wheels, countdown clocks, $100 coupons, 25% off, 50% off, under $0.99, act now, hurry up, fast. And even without those discounts, you start to notice that things are cheap. Really cheap. Headphones for $19, designer knockoffs for $10, household items for pennies on the dollar. Wow, is that a $10 smartwatch? Let's go ahead and add that to the cart. It's really about extreme discounts socialized with mega variety, gamified and socialized to generate traffic, but most importantly, to build a subscriber base and get customers and consumers to download your app.

Temu is an

online

bargain shopping marketplace. Just like on Amazon, individual sellers list products through the site, but at deeply discounted prices. Based in Boston, Temu quietly launched in the summer of 2022, and within a few weeks, the app was already topping the Apple App Store charts, surpassing Amazon, Walmart, and even Shein. All this is thanks to a huge advertising budget focused on social networks. In January alone, Temu bought 8,900 ads on Meta platforms, and this is all part of a broader user acquisition strategy because right now Temu isn't worried about sales, it's about you. They are paying great rewards and referral fees for you, me, and every other consumer to bring someone to the site, download the app, and make that first purchase.

They could traverse the social sphere and they will find people recruiting. others to earn up to $100 per day in referral fees. Or if you are an influencer, you can earn up to $5,000 a month. The idea is that once people get on the site, they start browsing and see all these different types of devices, gadgets, and things that are offered. They see the low prices and think, well, let's try it. And what Temu has discovered is that once people have tried it once, they come back and buy more. And some people get quite addicted to Temu. It's very easy to buy and it's also very easy to do it in a pretty thoughtless way, because you're not spending hundreds and thousands of dollars on things.

The individual prices are quite low, so many people order in very high volumes. By some estimates, Temu is expected to spend $1.4 billion on advertising in North America in 2023 alone, hoping to increase its user base by approximately 100 million people. The value of a monetizable daily active user, we call it mDAU in the industry, is worth between $236 and $726 per active user per year in top-line revenue, and they are acquiring these customers at a fraction of the cost of what Amazon or anyone else had to pay to get them. Again, this begs the question: where did Temu come from and how did he 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, which went public on the Nasdaq this morning. Pinduoduo, one of China's big three e-commerce sites with a market capitalization of more than $100 billion, Temu is the retailer's first big push into the overseas market, where competitors JD.com and Alibaba already have presence. Pinduoduo used its already established strategy and logistics network to get Temu off the ground quickly, meaning that although Temu is based in the US, its products actually come from distributors in China. They have a supply chain advantage that was built on the success of Pinduoduo in China, which began representing rural farmers, producers and agricultural suppliers, and extended to all small merchants in China.

And now they have extended it to North America. China is really the lynchpin of Temu's strategy. Many of the products sold at Temu are made in China. They ship directly from China to the US, so those labor costs compared to manufacturing in the US and elsewhere are really low. As a result, Temu was able to keep those prices very, very low for customers. So that $10 smartwatch probably came from a factory somewhere in China. And like other Chinese e-commerce sites, that allows Temu to sell items at extremely low prices. What Temu sells is very generic material. They are not very well-known brands.

Again, that keeps the prices very, very low because you're not paying for the brands. But the same reputational risks affecting other Chinese retailers like Shein could reach Temu. And as far as Temu is concerned, his problems simply became federal. So you downloaded the app, spun the wheel, searched for discounts, ordered your $10 smartwatch, and now you're waiting for your watch to come from a factory in China. But there are a couple of hiccups. Not all Chinese manufacturers can sell products in the United States. In fact, a genocide against the Uyghur people is spreading in a place called Xinjiang province, in the far northwest of China. 23 million Uighurs are having their cultural identity erased and more than 2 million are in concentration camps.

As a consequence of this, we passed something called the Uyghur Forced Labor Prevention Act, because one of the things that is happening along with the genocide is that hundreds of thousands of Uyghurs are being forced to work in factories, making all kinds of products. There are countless goods entering the United States in violation of the law. In a recently released report, the US House of Representatives found instances of items on Temu's website being sold or made with materials from China's Xinjiang region, in direct violation of US import laws. Our American and other companies, which actually follow the law and make sure their products do not come from Xinjiang, are now at a real competitive disadvantage relative to those fast fashion companies that do not follow the law.

Most online e-commerce retailers and marketplaces have policies in place that directly prohibit the sale of products from the Xinjiang region, but the US government found that Temu only had vague, repetitive language that did not directly mention Xinjiang. . When pressed, Temu's defense was "Temu is not the importer of record", meaning they are 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 suppliers and they're basically pointing the finger at them saying it's up to them to police this situation. But you know, that's not going to work.

And it goes beyond that. Remember those ultra-cheap prices? These help Temu take advantage of something called de minimis shipping, which the government is also quite skeptical about. Under our Customs and Border Patrol law, products under $800 shipped directly from China to residential homes escape all tariffs and duties, and don't actually have much information about their place of origin. Therefore, they can also potentially circumvent laws banning goods from Xinjiang. To put it in perspective, other companies like H&M and Gap spent hundreds of millions of dollars on import duties at US borders in 2022. Temu and Shein paid nothing.

Combined, they accounted for between 30% and 50% of all de minimis shipments to the US. That's an estimated 600,000 packages each day, evading customs, paying no import duties, and flying under the radar. CBP is already under a lot of stress regarding the inspection of packages of $800 or more. And so when you have this explosion of packages under $800, coupled with the fact that they don't have the data that would otherwise be necessary to do a specific inspection regime, you basically make it almost impossible for CBP to do their job. . . This also puts other companies at a clear disadvantage. When those tariffs or duties don't exist, those products end up looking much cheaper than other products.

And so, not only are taxpayers losing rights, but American companies and others that are doing the right thing, potentially, are losing business. Companies like Temu and Shein not only take advantage of this rule, but it is directly related to the rapid success of these types of companies. If the de minimis rule were changed, it would be a major setback for Temu's operations. That would be very detrimental to Temu, because what it would mean is that the packages would have to enter the US and go through full customs processes, which would cost a little more and, more importantly, take a lot longer to reach the end. user, or they would have to develop some warehouse capacity in the US, because that has a cost attached to it, and it starts to undermine some of that low-cost model, which is really important for those low prices.

It's not just the federal government that is worried. Temu. Some states have taken action on the app itself, citing cybersecurity concerns. Earlier this year, Montana banned the app on government devices along with TikTok, WeChat and Telegram. In a statement, Montana Gov. Greg Gianforte said Temu, along with several other apps, are linked to subpoenaing foreign adversaries and cited the fact that Temu's parent company, Pinduoduo, is based in Shanghai, China. , and that those fears are not unfounded. Pinduoduo came under increased scrutiny this year when it was removed from the Google Play store in March after versions of the app were found to contain malware.

According to a US government report, that malware was used to exploit vulnerabilities in Android phones, access users' text messages, change settings, view data from other apps, and even prevent users from accidentally deleting the app. complete. So a question arises: what is Temu doing with your data? So let's recap. You downloaded the app, reviewed hundreds of listings, and decided to take a chance on a $10 smartwatch. It's then manufactured by a Temu supplier and shipped to a Temu warehouse in China. The warehouse then ships the watch from China to the US, paying a total of $0 in customs. It is then shipped via the US Postal Service to your destination, and this all happens in about a week.

So yes, we actually purchased a Temu smartwatch for $10. It took about a week to ship it from China to us here in New Jersey. And yes, it really only cost about $10. First impressions of the box. It looks and feels like an Apple box. And we know from the ads we saw for the original watch that that was the look this company was trying to replicate because the watch face looks a lot like other smartwatches on the market. The ringThe side and buttons are almost identical to what you would find on an Apple Watch. The watch straps are also made of rubber, very similar to the Apple Watch.

The only major visible difference is the charging port. While it has a circular charging port, it requires a two-prong charger, and the charger itself was made very cheaply. The watch also turned on immediately. The apps also looked almost 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 perfectly. Even the internal icons of some of the apps were almost identical. Overall, it's a pretty good hoax. If I was looking for a smartwatch and didn't care about quality, I would probably buy this one.

To most people on the street, it just looks like an Apple Watch. Every app needs a great app, right? The best app here are these great variety discounts. That's what attracts them. But they have combined product sales with social networks. And they are starting to take advantage of the existing social network in North America. But they will create their own social network when they post team payments, like they did with Pinduoduo in China. Team payments are the viral catalyst driving growth to 1 billion users beyond China. Remember earlier when we said that Temu doesn't care about sales, he cares about you.

Marketing and e-commerce experts say it's not a mistake. Temu is spending a lot of money to add a user base. Many suspect that Temu is preparing to launch social shopping here in the United States, a wildly successful shopping model that Pinduoduo uses in China. Pinduoduo in China really takes it to another level. They use group purchasing, where you can meet up with friends and family for quantity discounts. It is known as team up, price down. This aspect of social commerce is what allowed them to grow to number three and reach almost a billion users in China.

In the US, Temu has not yet launched the team's purchasing capability, but you can see them laying the groundwork to do so because they are experts in social marketing. So as Temu continues to grow and expand its user base, it could be preparing to change the shopping experience for American retailers. But will consumers bite? The potential for social shopping definitely exists and will grow, but it won't reach the scale it has in China. It's a different type of consumer, it's a different type of market. But I certainly think it's sensible for Temu to add something. And even if Temu continues to grow its US user base, can it survive the regulatory and legal scrutiny to continue operating? 92% of us say we will trust a recommendation from a friend or family member, and that's what social marketing does.

Therefore, it is irrelevant whether Temu is owned by a Chinese company or not, because you are actually purchasing first thanks to the trust and recommendation of a friend or family member based on a socialized promotion. And also, my goodness, we'll give you 20 dollars for each one you bring. Boxes flying down the line at this 2.3 million-square-foot distribution center are sorted, scanned and labeled, then loaded onto trucks destined for the shelves of the nation's largest retailer. Walmart employs more people than any other company in the world and 90% of Americans live within ten miles of a Walmart. However, when it comes to e-commerce, Amazon is the undisputed leader, with 39.5% of the market share, compared to Walmart's 7%.

And now that the global pandemic is helping to change shopper behavior forever, mastering online shopping is now paramount. Last year, people spent more at Amazon than Walmart for the first time. Now Walmart has a new playbook and new leadership in its race to catch up. We have 4,700 locations in the US, and if the store acts as a fulfillment center, we can ship those items the shortest distance and in the shortest time possible. In recent years, Walmart has built more than 30 warehouses like this one, some with robots and people, entirely dedicated to fulfilling online orders. Store workers are also picking and packing online orders as Walmart converts dozens of stores into microfulfillment centers.

It added the Walmart Plus membership program to compete with Prime, invested heavily in local home and drone delivery programs, and began packing and shipping orders for third-party sellers as it works to attract them to Walmart.com. I would say that the assortment is the lynchpin of this plan, and then the sellers are a means to get to the assortment. They're looking at Amazon's market share and saying, "How can we increase this market share? We need more sellers. We need more selection." Customers trust us for food supplies, they trust us for general merchandise, but they look for every item they can think of.

We want to make sure we can do that for them. CNBC went to Walmart headquarters in Bentonville, Arkansas, for the first public interview with Walmart's new e-commerce chief, Tom Ward, to find out the truth behind his big plans to capture Amazon online. Walmart was founded in 1962 by Sam Walton, and grew to nearly 2,000 stores when Jeff Bezos founded Amazon in 1994. Despite its dominance in stores, Walmart was notoriously slow in the e-commerce game and did not launch its third-party marketplace. until 2009. It made no real progress until 2016, when Walmart bought online discount retailer Jet.com for $3.3 billion, tapping founder Mark Lowry to lead e-commerce, where he remained until last year.

In 2018, it spent big to enter India's booming online market with Flipkart and also bought online fashion brands such as Bonobos and Eloquii. Then in 2020, Walmart shuttered Jet.com, although CEO Doug McMillon says he would buy it back. If you look at the trajectory of our business, it changed when we made that acquisition. The Walmart brand has really spread to reach all types of people, wealthy customers, younger customers, and urban customers. We were going to need a brand to be able to attract some of the brands that didn't want to be in our stores yet. Also in 2020, Walmart partnered with Shopify to attract thousands of mom-and-pop sellers to Walmart Marketplace.

Those are the terms used to differentiate items sold by third-party sellers from in-house merchandise purchased and sold by Walmart. Walmart Plus and Walmart Fulfilment Services were also launched in 2020 to compete with Amazon or FBA, but taking advantage of stores and their integrated workforce to keep costs low. Walmart definitely, you know, wants to double or triple its e-commerce business, doing everything it can to take market share from Amazon or catch up to them. However, the truth is that they still have a long way to go. Last year, Walmart opened its marketplace to international sellers. This summer, Walmart Plus Weekend will take place 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 Walmart closest to your customer is the one in your pocket. It is also the ultimate store. It should be an infinite variety. It should be completely packed with solutions for whatever customers are looking for. And increasingly, marketplace sellers are actually helping us achieve this. We attended a lively conference for e-commerce sellers in Las Vegas in March, which is usually dominated by Amazon talk. For the first time in the seven-year history of the thriving fair, Walmart also had a significant presence. Because they are smart and they know that this program is where the sellers are and they want to have many more brands on the Walmart.com channel.

It's the only other platform that could really compete with Amazon. Michael Lebhar started selling at Walmart seven years ago, when he was just a sophomore in high school. At first, my mom wasn't happy because my entire 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 generated about $3.5 million in sales on Walmart.com last year, up from less than half a million on Amazon. At Walmart, our profit margins are also so good and people always say, oh, Walmart's price is competitive, and you're right.

Sometimes you can't charge that much. But on Amazon you spend much more on advertising. Like you don't even realize you're so depressed about it. The cost of advertising on Amazon has increased. But people always will because, more than ever, it seems like if you don't advertise on Amazon, they won't see you. As a leader. Amazon may charge sellers more for listings, seller account support, and fulfillment services. Jare' Buckley-Cox used to work at Amazon and now helps run Walmart's fulfillment services, which launched in 2020. WFS has not 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 attracts sellers to the program is the fact that they believe this is a market designed for them. But for now, Walmart still has about a tenth of the sellers and a tenth of 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. I think the fact that there are many fewer sellers on Walmart creates less competition, and the result of that is that Walmart sellers generally have a more profitable business than Amazon sellers.

Surveys conducted earlier this year found that 95% of Walmart sellers make a profit, compared to about 76% at 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 I talk to talk about “How can I diversify more?” About a year ago, we estimated 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 leads business strategy for mDesign, one of Amazon's largest home storage brands, with $310 million in online sales last year. mDesign began selling at Walmart in 2019 and began investing more there during the pandemic.

Because everyone was at home. That's when we really stepped up our strategy to go into different markets and specifically Walmart. Diversify the risk, diversify the reward and reach more customers. Stark says mDesign will likely generate about $5 million in sales at Walmart this year, compared to $280 million at Amazon last year. We're seeing, you know, really good year-over-year increases at Walmart. Stark says Target has been even more successful because there is even less competition. Only brands invited by Target can sell on their site. On the contrary, it is relatively easy for anyone to start selling on Amazon and the competition is fierce.

You can take, you know, some product that's stereotyped as oversaturated on Amazon, like a garlic press or something like that, where there's 200 of the same thing. There are 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. Again, customers can come and find whatever they are looking for and receive it in whatever medium they want. Walmart is also adding assortment by launching a growing collection of its own brands, especially in clothing and home, appearing first online and then in stores. But as Walmart's third-party assortment grows, so does the risk for bad actors like Mpow and Aukey, two big electronics sellers that generate nearly $1 billion in sales.

They were kicked out of Amazon but remain active at Walmart. He got kicked out for buying reviews and I was sad to see that Walmart allowed Mpow and Aukey to now sell on the .com platform. As positive as I am about Walmart, I'm a little disappointed that they allowed those two brands to carry out their practices, something the FTC says is illegal. You can't buy reviews. Walmart says it investigated the allegations and did not find the same behavior from Mpow and Aukey on its site as it works to boost selection. Walmart also opened its marketplace to international sellers last year.

We know that Amazon cracked down last summer on fake reviews. I think it was the one that mainly affected Chinese sellers the most. That, combined with Walmart allowing international sellers, we saw a huge increase in the percentage of Chinese sellers inWalmart. Still, sellers say Walmart remains stricter than Amazon when it comes to approving new sellers. We are very proud of the history of having high standards for sellers to be vetted before entering the program, and we are going to continue that. Another big way Walmart is attracting sellers, which Amazon can't match, is the opportunity to bring products to thousands of physical shelves.

Because, you know, every store has to have so many boxes in stock. I mean, it's game over if you're like a private label seller, being able to have your product in Walmart stores is like a holy grail. Our product was at one time number one in the category on Walmart.com. We got an email from a Walmart shopper saying, you know, would you be interested in more talks? This year, for the first time, Walmart.com sellers had exclusive access to a program called Open Call, where sellers pitch their products to gain shelf space in Walmart stores.

About 2,000 vendors showed up. We have a real mission to increase assortment, so it made sense that when sellers offered a high-quality assortment, we wanted to make it available to our customers in our stores or online. Walmart's huge number of stores also makes it the undisputed king of the grocery sector. Amazon bought Whole Foods in 2017 and is trying to disrupt the space by making two of them cashier-less, but Amazon.com and Whole Foods each accounted for less than 1.5% of the grocery market, compared to 18% for Walmart. Groceries are less profitable than general merchandise, but the real power for Walmart is getting customers to fill their virtual baskets with a mix of groceries, general merchandise and third-party items.

You may be purchasing just one product from the Walmart grocery store, but at least there is traffic and it is intense and there are many more eyes on your products. Now, despite major bullish trends during the pandemic, shares of Walmart and Amazon fell sharply after first-quarter earnings were reported, as supply chain issues and rising costs squeezed profits. . But Walmart's long reputation as a low-price leader 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 bring together more parts of its vast retail empire, it recently combined what used to be two separate apps, one for Walmart's own products, primarily groceries, and another for its third-party marketplace products.

And wherever there is friction in that process, wherever there are two applications and there should be one under one roof, we are now working to eliminate all that friction. Walmart Plus, launched in 2020, also combines benefits for loyal grocery customers with online shopping advantages. It's Walmart's answer to Prime, which Amazon launched 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 more than 2,000 cities, access to deals of Prime Day and to the entertainment arm of Amazon 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, delivery from stores, free shipping on Walmart's own merchandise, cashier-less scanning and shopping at select stores, and exclusive access to big sales events like Walmart Plus weekend taking place on June 2nd. to fifth place this year.

And amid record gas prices, Walmart just added additional fuel discounts for its plus members, who now get 5 to 10 cents off not only at Walmart pumps but at some 14,000 participating stations, including Exxon Mobil , Murphy and Sam's Club. Walmart is also using its stores, and specifically its proximity to customers, as an advantage, investing heavily in fast local delivery programs. People come to us for burgers and hot dogs, but they can buy a new smoker. They can get a completely new bathroom set. They can get all of that under one roof, in one app, in one place, and we can deliver at great speed because of our size.

Last year, Walmart launched Express Delivery for Walmart's own merchandise that can arrive at your door in two hours or less for a fee of $10, 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 to them, too. We can tell a customer, hey, add these items you want tonight, but if you want that very specific item, we can also offer it to you very quickly. Walmart has been ramping up its logistics operations since at least 2017, building 31 separate fulfillment centers dedicated to e-commerce and investing heavily in robotic e-commerce fulfillment following Amazon's lead.

Like Amazon, Walmart has independent drivers, what it calls the Spark Network, who handle much of the cumbersome and expensive last-mile delivery. We can activate drivers to come pick up items and deliver them to our customers. But as density grows, the cost goes down. So much so that last year Walmart began delivering products for other retailers in a program it calls GoLocal. We've announced some really interesting clients like The Home Depot and Chico's, and others including small and medium-sized businesses. And what we're seeing is that they share our last mile capabilities, our density increases and the cost for both of us decreases.

In Scottsdale, Arizona, Ward says Walmart completed 5,000 deliveries with Cruise autonomous vehicles. And this vehicle magically appears outside and they can grab it from the back seat. And then, increasingly, they can leave their return in the back seat and send the car to the supercenter. Walmart also just announced the expansion of drone delivery by the end of the year, deploying them from 37 stores to a reach of 4 million homes in Arizona, Arkansas, Florida, Texas, Utah and Virginia. Customers pay $3.99 for items weighing up to 10 pounds total that are delivered by drone in 30 minutes or more. In the same way that the store is starting to act as a logistics center, they are also starting to act as a delivery center with drones.

And there's the growing popularity of online shopping and curbside pickup, a benefit Amazon can't rival. In some of these other areas where Amazon Prime doesn't have it, like delivery to two and three in four hours. But there is a Walmart store nearby. You could live in South Dakota or something and receive your product in 2 or 3 hours. While on Amazon, for Prime, it can take even more than two days. While third-party purchases cannot currently be picked up 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 and some items inside doors and garages, Walmart has a unique delivery program right to your refrigerator for $19.95 a month. It's very good for our older clients who can't go out, or if someone has broken an ankle or something, broken a leg, whatever. Know. Thousands of full-time Walmart associates, like Mike Edwards, spend their days filling a fleet of all-electric vans with groceries and general merchandise. We don't set foot inside the garage or residence without this on. Then take it inside people's homes and store it in the refrigerator. Trusting a stranger to come into your home may seem crazy, 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 your camera is on and working. And so as a customer, if you place an order and you're curious, you'll be able to see the full experience. Delivery associates will also bring some returns to Walmart for customers, and Walmart is expanding the program to include alcohol delivery and other highly sought-after services. He is not ready to reveal it. And then they say, Oh my God, you're here, can you walk the dog?

Can you take out the trash? It's like, how else can you help me? While grocery purchases cannot currently be delivered, it's another way Walmart builds loyalty. In-home offers a single entry point to Walmart for many of our customers because we have a pretty distinguishable offering in the market, and now they're on our website and they're buying groceries, but they see other things that they might want to buy. They are looking at things available on the market. There are things you would never expect to see at Walmart. And now we have them as a loyal customer and in a much more expansive and sticky way than we would have expected.

You know, they're not going to catch up and have 50% market share next year, but if they continue to do the things they're doing gradually, I think they'll continue to eat up more and more market share. Myriam Sandler and her husband Mark are not cleaning their children's playroom. 21 products, 21 products. We're getting ready for a segment on QVC. Tap to join me live. Instead of television, it will be streamed live (it's all set now) on Amazon. Hello 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 as the all-online Home Shopping Network for Gen Z and Millennials, hosted by famous creators like Sandler, who have millions of followers on social platforms.

Hello from Ohio. Hello from San Diego. Hello from Honduras. Hello hello. Alejandra, hello. How are you? We know that the vast majority of Gen Z consumers say they now use social media as their first stop for shopping inspiration, because they have built trust and grown up feeling authentic relationships with these people online. Amazon, TikTok, Instagram, YouTube, Shopify, they're all getting into the game. It's a way to differentiate a product from the millions of others found in oversaturated online marketplaces. One of my favorite cleaning products is the roller brush. They want someone to prove it. They really want someone to show them the product how it works and its effectiveness.

And it's also entertainment. But the United States is far behind China, where 74% of consumers say they bought products via a livestream in 2022. In the United States, 78% say they have never seen one. In China, we're seeing 200 with a B, over 200 billion in sales. How do we imitate that in the United States? And I think we're probably in the low to mid-hundreds of millions. It looks very cute. We go behind the scenes with the creators to find out what it's like to sell via live streaming and what it will take for the emerging model to become a mainstream way of shopping for American consumers.

Very cool. So I'll make some cucumber salad, cut it in half, and then take it out. And I want to give you a little demonstration. Impulse purchases, fueled by compelling live performances, are nothing new. And this is the American egg, and I'll bring it out on D-Day. For the past four decades, the Home Shopping Network and QVC have been broadcasting to tens of millions of American homes. But as e-commerce thrives, traditional retail has been forced to evolve. In 2017, amid a sales slowdown, QVC and Home Shopping Network merged in a $2.1 billion deal as the pandemic left shoppers stranded.

In 2020, the audience of shopping networks increased again by 10%. But its biggest growth, 100% year over year, came on its social platforms. It's no surprise that the model has moved online, where other platforms are also trying it. Live shopping has been something of a 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 trickle down, mainly in Asia, where there was such a large audience ready to buy. Another really cool thing about this label maker is that it doesn't require ink.

You will never run out of ink because it works with thermal technology. Like the QVC of yesteryear, personalities present products live, now from the privacy of their own homes. The public can react with emojis or stars. A chat window allows them to ask questions that the host can answer live, and links to featured products make shopping easy. OMG, $23 y'all! Thank you all for letting us know! During the pandemic lockdowns, these livestreams took China by storm. Chinese retail giant Alibaba was the first to market there and launched its Taobao live streaming appLive in 2016. In 2020, it exploded in the first 30 minutes of the 2020 China Singles Day shopping festival.

Taobao livestreams generated $7.5 billion in transactions, a 400% increase since the year former. That same year, the live streaming shopping market in China was valued at 171 billion and is estimated to grow to 423 billion dollars in 2022. People are excited about what is seen in China, where rates are seen really high conversion rates on some of these experiences, much higher than maybe a normal website would have. In some cases, potentially up to 40% is seen. You may see much lower return rates because people know what they got. There is also a rapidly growing ecosystem of new live streaming apps in China, such as TikTok's sister app Douyin and Pinduoduo, known for its rock-bottom prices.

Live streamers in China, known as key opinion leaders or KOLs, have made enormous fortunes. There are entire boot camps dedicated to the career madness of becoming a live shopping presenter. KOLs have millions and millions and millions of fans, so even if 10% show up, it's still a million. People want to buy products with meaning or products they can't get anywhere else. And that's really what underpins live shopping in the US, which is very different than China, which is just a massive population. 35% of the market. Alibaba's Taobao Live remains the world's biggest live shopping player, but recent years have seen a flood of US companies also investing in live shopping companies.

The first of them, Amazon. Two pockets. Actually, I love it. I'll show you the material a little closer. Amazon introduced live shopping in 2016 and then launched its creator app in 2020, a tool to make live streaming easier. So the first thing we're going to start with is this gorgeous robe that I just killed my husband. Tiana Young Morris was a practicing attorney when she started live streaming in 2020. The pandemic hit and I was bored at home. He was on TikTok like everyone else, and it just took on a life of its own. Videos of her trying on wigs and reviewing them went viral long before she made money from it.

All the other wigs they were talking about tonight are toss-and-play. Put it on like a hat and walk out the door. Just like in that first viral video, I thought, "Oh, there are a lot of people who will buy the product I recommended." Yes darling. How can I make money with this? And Amazon makes it very easy for you to register for the influencer program. Through the Amazon Influencer Program, creators get their own store where Amazon users can follow them. Now, Young Morris sells almost exclusively on Amazon Live. As a lawyer in private practice, she made about 100 grand, a little over 100 grand, maybe 110 or so.

And now she earned about six times more. The biggest source of income for Amazon Live creators is commission, which is typically 10% or less of sales from livestream clicks, although the rare category can be as high as 20%. Amazon also offers some creators a flat rate to go live regularly, and top creators can earn more from brands that pay for dedicated, sponsored live streams like this one Young Morris did with Dove. This body cleanser, give it all to me. While brands often send free products to live streamers, top creators build trust with viewers through honest reviews. The length of them is not very long.

I feel like it's important to tell the truth about what it is, because if it falls short and a tall woman buys it, then they'll notice when they get it anyway and just return it. . I really want those to be my opinions. I want them to buy it from me as if I spent my own money on this product so I can tell them that this product is worth spending their money on. I probably turn down 75% of the offers I get, and I could have a lot more money if I accepted them, and I would still have community members, but they wouldn't trust me.

Celebrities like Kourtney Kardashian Barker and Paris Hilton also livestream the launch of their own brands on Amazon. Brands like JBL have also seen great success on Amazon Live, where a carousel of linked products on the left allows for frictionless shopping. I have so many amazing Prime Day deals for you and it's actually in collaboration with JBL. Last year during Prime Day, one of JBL's Amazon Lives reached 714,000 views and JBL's Lauren Severson says 83% of purchases were made by new customers. Our portable waterproof speaker. Then there was an 80% increase in the two weeks following the sales. And then we saw a 22% increase in 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, featuring fun recipes and activities she does with her three daughters at her Miami home. My husband was an investment banker for 15 years. One day we realized that we were earning twice as much as he was and that he made a very good living. I thought: let's take a leap of faith. Leave. And he left. It's probably grown four times since then and it's crazy. Sandler's MotherCould brand performs the most on Amazon, but has more followers on Instagram with 1.2 million and TikTok with 730,000 followers and 11.7 billion views.

I make no profit from any other platform you can launch on. Everyone who comes to Amazon Live is basically coming to buy something. They are there for that. I feel like if you're live on Instagram or on TikTok, live on Facebook, they're there to see what's going on. Amazon Live is the most complete end-to-end platform, but we say it's in the BYOA, bring your own audience category. So they have to come and direct traffic there, which is a little difficult, harder than showing up and just turning it on. While Amazon is all about frictionless sales and high conversion, live shopping on social media 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 sets Amazon's social platforms apart. Amazon, you go there to find something you've heard of or are looking for. In 2020, Instagram and TikTok became the first US social platforms to launch live shopping capabilities. TikTok, owned by ByteDance, partnered with Walmart for an hour-long event, where TikTok users could purchase Walmart fashion items featured by the creators. The duo held another livestream in 2021 after reporting that the first event got seven times more views than expected and increased Walmart's TikTok following by 25%.

I think TikTok will be able to surpass all the others because it has a lot of users now. They have 1 billion monthly active users, and every time you use the platform, it learns your behavior, your interests, and offers you what it thinks you like. But right now in the United States, TikTok shoppers have to leave the app to make a purchase, eliminating a huge potential source of revenue. So in the fall, TikTok began testing a new feature called TikTok Shop in the United States. It allows users to shop directly in the app, and while it's currently invite-only to creators and merchants in the US, it's already launched in Southeast Asia and the UK.

Now, Shopify and YouTube have also teamed up for live shopping. Announced in July, the partnership expands live shopping capabilities so viewers can click and shop without leaving YouTube. It's not just that there is something else distracting our young people with selling videos, but it's actually a new way that businesses are evolving and adapting to what the world will look like in the

future

. Business owners like Cassey Ho can post on YouTube and elsewhere to promote their own products. Ho first went viral with this Pilates exercise video under her Blogilates username 13 years ago. Viewers asked him to sell products under her screen name.

I was like, what do you want? Things with my username? And then I thought, okay, so I remember buying these Forever 21 t-shirts and having Blogilates printed on them and posting them on Facebook and then they sold out in a matter of minutes. Shortly after, Ho launched a sportswear brand called PopFlex and began posting TikToks about design processes that garner millions of views. 37 weeks ago I tried to make the perfect leggings. She tries on PopFlex clothing live on Instagram, which she claims generates many more sales than TikTok. Right now, on all my social platforms, we have around 15 million followers and subscribers everywhere and on YouTube over 2 billion views.

And then in terms of sales, PopFlex alone is an eight-figure business. And then Blogilates alone is an eight-figure business. Ho said she had her best sales moment of the year before Black Friday, during an hour-long YouTube live shopping event. Sweatpants, it's happening tonight, it's happening. You have to go get them because I don't think they will last long. There are also a handful of startups developing new platforms in the United States dedicated exclusively to live shopping. There's NTWRK, which focuses on sneakers and collectibles, Supergreat and Trendio for beauty products, and the biggest of 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 has hit the ground running. And TikTok is reportedly in talks with TalkShopLive about outsourcing its live shopping efforts to the US-based startup. TikTok is currently facing bans in several states over concerns that it could hand over user data to China. I have a feeling that before they ban it, they'll probably sell it or do other things to appease the authorities, but I don't think it's going away anytime soon. And it really is the backbone of pop culture right now because it's the platform of choice for Generation Z. Despite trending hashtags like #TikTokMadeMeBuyIt, a survey found that American shoppers are hesitant to pay for products directly on social sites .

In turn, retailers miss out on conversion and click data that belongs to social sites. It's a big barrier to business model success, and it's not a problem for Amazon Live or Alibaba's Taobao Live in China. Being e-commerce platforms and not social networks, they keep buyers on the site throughout the sale. Amazon continues to ramp up its live streaming efforts and launched Amazon Live in India last September. Meta, on the other hand, is reducing its focus on purchases. It stopped live shopping on Facebook in October and removed the shopping tab from Instagram's navigation bar this month. So we're going to bring the build to the bottom, front and center, and remove the stores tab.

And in China, the government is applying greater oversight over private industries, including live shopping. Some of its biggest livestream shopping superstars have received massive fines or taken sudden, unannounced breaks. Well, yes, this is a tablet and this is the case. In the United States, 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 whether Amazon Live and social platforms have created a big enough appeal to stick around forever. One thing I've learned about merchants is that they are incredibly resilient entrepreneurs, and when they find something that works, it spreads.

So yeah, let's hope this is the year we see that real explosion in live sales. Thank you so much. Have a nice day.