Amazon Gets Ready to Compete with Shein and Temu | Pivot

1. KSKara Swisher0:00

   ... Amazon is planning to launch a new budget storefront to compete with, uh, uh, Shein and, uh, Temu. Uh, the storefront was announced at a closed-door event for sellers in China. Many items will be under $20, and Amazon will ship products directly from China to the US within nine to 11 days. It's not announced a launch date, um, but will begin accepting products in the fall. Uh, I think it's probably smart to do this, correct? Presumably.

2. SGScott Galloway0:23

   I'm, I'm shocked it took them this long.

3. KSKara Swisher0:24

   Yeah.

4. SGScott Galloway0:24

   The biggest trend, the biggest trend in what I'll call, I don't know, w- with big tech, or the firms that... Any firm that's added more than $50 billion in market capitalization within a 12-month period has one thing in common, and that is, it's an asset-light business model. And whether it's Uber, whether it's Airbnb, and obviously the best example is Nvidia, that decided they didn't even need a chip plant to make chips. Uh, basically Shein, and to a lesser extent Temu, use machine learning and AI to look at activity on a website, and based on that activity on their website, they can emu- the software, the brains, you know, this villain if you will almost, says this is how many, uh, tie-dye tops are gonna be in demand in the next 24 hours. It immediately figures out, again using technology, in a nanosecond, which of their factories should produce these tops and exactly how many. It immediately starts sending messages to the transportation infrastructure, and using all of this, without stores, without warehouses, without factories, (laughs) without trucks, without any assets, it's able to get people apparel for 40 to 60% less than say Zara or H&M. And in an economy where young people are making less money but still have a desire to express individuality, coming into their mating years, you are seeing Shein this year will be bigger than Amazon in apparel, and next year will be ba- bigger than Walmart in apparel and be the biggest apparel company in the world. So, this makes all sorts of sense to have, to get into this category that I think you can loosely call on-demand retail.

5. KSKara Swisher2:02

   Yeah.

6. SGScott Galloway2:02

   And obviously Amazon has a really big platform, but these-

7. KSKara Swisher2:04

   It's sort of beyond fash fa- fast fashion, right? It's, it's even faster I guess.

8. SGScott Galloway2:09

   I, I call, it's not fast fashion, it's on-demand fashion. And-

9. KSKara Swisher2:12

   Right.

10. SGScott Galloway2:12

    ... they don't, there's no, I mean, the thing about this Kara, is when you talk about efficiencies and boring things, there's almost no returns 'cause it's so inexpensive.

11. KSKara Swisher2:21

    Yeah.

12. SGScott Galloway2:21

    There's almost no, um, sales or waste because they can perfectly-

13. KSKara Swisher2:26

    Yeah.

14. SGScott Galloway2:26

    ... calibrate demand.

15. KSKara Swisher2:27

    Yeah.

16. SGScott Galloway2:28

    Uh-

17. KSKara Swisher2:29

    Yeah, that's interesting.

18. SGScott Galloway2:29

    ... you have-

19. KSKara Swisher2:29

    On-demand. (laughs)

20. SGScott Galloway2:30

    ... you, you're able to get products from China to a home in Wisconsin. It comes in, in these, like plastic bags and a kid for 80 bucks can get three dresses, two pairs of jeans and four tops.

21. KSKara Swisher2:44

    W- w- would you outline the criticism you get when you push this company for people to understand?

22. SGScott Galloway2:48

    Yeah, that I'm p- that I'm a climate terrorist. That I'm not addressing, I'm ignoring everything from forced labor to the environmental disaster that is fast fashion. And that, you know, it that I'm a total fucking hypocrite when I pretend to be a progressive and I'm out there investing in a company that is bad for the environment. And my defense is I believe that, uh, young people need inexpensive things and much of this rhetoric is being fueled by the incumbents. And when, and I have gotten to know the chairman and the vice-chairman of this company pretty well. They do no business in China, they have huge supply chain in China. And what I would say is, at least they've convinced me that whatever standards you want to put on Amazon, Nike or Apple, they will comply with and try and set the bar. And everything about forced labor, cotton coming out of a certain region, they now source their cotton out of Brazil. And whenever anybody says, starts complaining about Shein or I say, "Okay, now do Nike, now do Apple."

23. KSKara Swisher3:46

    Yeah, I would agree. That's-

24. SGScott Galloway3:47

    I have seen no evidence-

25. KSKara Swisher3:47

    That's why I wanted you to say this 'cause I think one of the things you were just talking about, fast fashion versus on-demand fashion. I think I've always thought it should be, we should know exactly what we need to make so we can be more efficient rather than this-

26. SGScott Galloway4:00

    That's exactly right.

27. KSKara Swisher4:00

    ... spray and pray kind of thing where they just have so much stuff and then they throw it out or they redo it or it gets, goes into landfill. Or goes to other countries, you know, where they sort out T-shirts and things like that. We spend a lot of time figuring out what to do with the clothes after we have too many of it 'cause it's not correctly judged on how much they should make. I always thought fashion should've been much more, everything should be more efficient, food production, everything else. And this is one way to, this is the way to it, but I like the idea of on-demand retail.

28. SGScott Galloway4:29

    I think young people need more stuff for less money. Uh, and, I also think China and the US need to kiss and make up and start doing business together. I think there are real concerns around the amount of resources that go into making a T-shirt. (laughs) The amount of water it takes. I think there are real issues around a consumptive society that has embraced fast fashion. What I say to people is, uh, these guys have fooled me into believing that whatever standards you want to imply on the entire industry, they will match or try and be better. But, it, it, there are real issues, but like I said, now do Apple, now do Nike.

29. KSKara Swisher5:03

    Yeah. Yep. That's a really good point.

30. SGScott Galloway5:03

    I like these guys. I love, I love that a 24-year-old that is making less money than me or someone in their 30s can actually feel pretty good about themselves.

Episode duration: 5:58