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.
