Edition 19

A deeper dive on eCom than expected

In recent news…..

A Bad Wish

In 2018 wish.com was the most downloaded Shopping app in the USA, the 3rd largest eCom marketplace, and had over 600,000 stores selling goods at up to 98% off, by Jan 2021, it was worth $18.5bn.

Yet this week it sold to Qoo10 for $173 Million, which isn’t bad considering it was making a loss of about $400m per year.   It’s quite strong proof that selling very cheap stuff from very far away with no quality control, for very low prices, may not be the workings of a brilliant Tech mind, but a rather bad way to think about Retail.

The current excitement around Temu, suggests people are not paying attention.

Temu seems to be on many peoples minds, fingers and lips.

1. This week lots of Ad people and normal people are talking about Temu because it made a very simple ad and played it several times in the Superbowl and people seemed to notice it.
   This breaks all the rules of fancy pants advertising agency folk, who deep down just think this is cheating as it circumvents their “films” and storytelling prowess. 

   
   Note; generally speaking ads that ad people hate, perform very very well.

2. Some people are talking about Temu because it’s fast growing, Chinese and therefore it must be spying on us or something, which is not especially true, and odd because nobody cares about TikTok, what I believe to be one of the greatest threats to sanity.

3. But business minds are talking about it because they spent $3bn on online advertising in the US in 2023 alone, and look to spend even more in 2024,  but generally lose about $7 for every order.

You do have to wonder what the playbook really is? What do they have that Wish didn’t?

Years ago we had Alibaba, a thin online marketplace that was rooted primarily in B2B ( not Consumer ) sales, but actually was a media company that made all their profits from advertising. Amazon stole this idea and took all the credit. Alibaba has thus made a lot of money most years.

2010 was a big year for Marketplaces, Alibaba added B2C with AliExpress, introducing for many the idea of “Dropshipping” where "Retailers” never had to own any stock. Commerce became democratized and anyone with an idea or a following or a good work ethic could become a retailer, and the era of Shopify, DTC brands, Influencer brands resulted.

The same year wish.com launched as an ultra ultra cheap retail marketplace based on making shopping fun and somewhat gamified.And around this time Shein launched as an ultra cheap commerce retail marketplace…… spot the theme.   

So AliExpress had scale, Wish had fun, and Shein’s model was based on commissioning tiny quantities from Suppliers, and essentially using the entire platform as a A/B/C/D/ to infinity test.Anything that sold was made in ever larger numbers. Now customers indirectly commissioned what sold.

Slowly we became used to everything being airfreighted directly from China to our homes as individual items, taking 3-4 days, being ultra cheap, and generally abysmal quality. This satiated the impulsive needs of younger Consumers who claim to care about sustainability and worker treatment, but care more about Loom bands or making goo, or fidget spinners or Stanley cups knockoffs or “Unbrush hair brush” , or NcmRyu shapewear or whatever the thing of the month is. Never before has retail felt so faddish.

Into this foray, Pinduoduo launched Temu, which one could say has the fun of wish.com , the scale of Aliexpress, the prices and dynamism of Shein.

In reality it’s a genuinely terrible website, it makes some of the most random digital ads around, their newsletters are awful, but everything they sell is extraordinarily cheap, and based on my experiences so far, reasonable quality.

You do wonder where this all goes and lots of questions arise.

• How can Temu ever make money? Is this just the same “build an audience, sell things at cost price, get lots of data, sell advertising, sell data, sell listing spots, sell insights play? This seems to be the model du jour, but can’t work that well if the sellers are already close to cost price.

• What does this mean to Amazon, I’d guess almost nothing. The one thing it does is suggest them spending billions on super fast shipping because people accepted it, was a bad idea

• Why is Temu going against all best practise in retail? The website Do they know something we don’t or are they just spending money in place of thinking. The real answer really is that Temu is the back end to Instagram, TikTok, Snap and Pinterest, the idea is people are sold on the idea there and deep linked to buy on Temu, where a million more special offers are send to buyers over time.

What this is all about it a shift from retail towards Headless commerce, where every site, every image, every billboard, every TV show…..everything becomes the shelf. Where everything can be bought in two clicks, from a “retailer” that merely passes orders on to factories to supply direct. It’s less ultra fast fashion and more ultra thin.

At this point retail just becomes a dumb pipe in the background, Branding becomes as important as ever, but what really matters is building an audience. Anyone with an audience now becomes a retailer, and view counts or shares become footfall.

Thats enough for now, let’s just share a few quick things.

Little things…..

1. Signup to join my free webinar on 13th March, which will also talk about my new Digital Transformation course, but it’s primarily there to talk about “transformational thinking”. If you want me to address any particular topics or questions, please reply to this email with what you want it to cover.

   

2. Why email remains the future of work, despite AI and the metaverse. My latest Podcast for Euronews with the CEO of Superhuman, Rahul Vohra.

3. First African country to ban ICE cars appears. Now I'm a huge fan of battery powered vehicles, but I am also aware of the reality of potholes, this could be interesting. More often that not Politicians can get headlines for well intentioned policies, happening so far in the future, it won’t ever be their issue.

4. Considering that so many think “AI will kill search and Google” , so far the evidence seems scant. Now I use AI as much as I can, I’m using search more than ever to double check everything. The idea AI will change shopping is ludicrous, people make illogical choices and enjoy it.

5. For some reason I’ve fallen in love with new screens that do things simply, like this or how about a poetry clock or this family calendar screen. Truth be told I want to make a portable screen that tells you the global weather in beautiful maps in real time.

6. For me the most amazing thing about the Apple Vision Pro is that it has 2 OLED “screens” that fit 11 million pixels in an area of around 1 inch square. This is bananas. Miniaturization should really big a big tech theme for the future, like we talked about in the 1990’s.

7. I’ve long thought TV makers should realize they could do ad insertion and make lots of money from Advertising. This explains why Walmart wants to buy Vizeo. Would make more sense if Disney, Meta or Comcast bought them, for some reason this industry is obsessed with needing customer data to make better ads, just make better ads.

8. It’s always weird we hold signatures or ID’s in such high regard when it comes to proper documentation  when they are all so easily faked. We need to just bypass passports, ID’s and other documents as proxies for ID and just use parts of our body.

9. Legacy car makers are not sure what to do about charging, should they just ask Tesla nicely, should they assume other companies will take care of this, like Energy companies or startups, or real estate companies, or should they just build an alliance and do it themselves?

10. One of the more balanced and thoughtful pieces on the Apple Vision Pro internet on your face contraption

Thats all for now.
Tom