A Note From Me

What happens when the 321 Loophole is closed

In 1929, Joseph Kennedy Sr (JFK’s dad) was working as a Wall Street stockbroker when he decided to get out of the market and take short positions after overhearing a shoeshine boy giving stock tips. Subsequently, the stock market crashed, leading to Black Monday and Black Tuesday, and Kennedy profited immensely, earning an estimated $150 million, equivalent to $3.5 billion today. He spotted a bubble when everyone was talking about it. I think the bubble today exists around 321. When I first wrote about the 321 exemption in 2019 it was a little known trick known only to logistics nerds. Today it’s a common term frequently used by marketers and TikTok influencers.

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What We’re Reading

• Target to launch paid membership program to rival Amazon Prime, Walmart+: Target has launched a paid membership program called Target Red to compete with Amazon Prime and Walmart+. The program offers benefits such as free shipping, discounts on groceries and essentials, and exclusive deals for members. (RetailDive)

• Two Canals, Two Big Problems—One Global Shipping Mess: Due to rising geopolitical tensions and concerns over security, some shipping companies are opting for longer routes to avoid potential hazards. This has led to increased shipping activity in alternative routes, such as those around Panama and the Cape of Good Hope, rather than through the Red Sea and the Suez Canal. (WSJ)

• Labor unions, domestic manufacturing groups launch coalition to reform de minimis import loophole: Lawmakers and stakeholders are forming a coalition to address concerns over the de minimis import loophole, which allows duty-free shipments under a certain value. They argue that this loophole disadvantages domestic businesses and undermines fair trade practices. (CNBC)

• Australia to Abolish Nearly 500 So-Called Nuisance Tariffs: Australia plans to eliminate nearly 500 "nuisance tariffs," which are small duties on imported goods, to simplify trade and reduce costs for businesses. This move aims to streamline trade processes and promote economic growth by removing barriers to international trade. (WSJ)

• Exclusive: Investors push Zara owner Inditex to publish full supply chain: Investors are urging Zara's parent company, Inditex, to disclose more information about its supply chain practices amid growing concerns about environmental and social impacts. The pressure from investors reflects a broader trend of companies facing increased scrutiny and demands for transparency regarding their supply chain operations. (Reuters)

• A wave of acquisitions is hitting the DTC home category: A surge in acquisitions is reshaping the direct-to-consumer (DTC) home goods sector, driven by the desire of larger brands to expand their market share and diversify their product offerings. This trend underscores the competitive landscape in the DTC space, with companies seeking strategic acquisitions to fuel growth and gain a competitive edge.(ModernRetail)

• OnTrac to Deliver Packages 7 Days a Week: OnTrac, a regional delivery company, is expanding its operations to include Sunday deliveries in response to the increasing demand for faster shipping times. The move aims to better compete with larger carriers like UPS and FedEx, offering customers more flexibility and convenience in their delivery options. (WSJ)

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New Episode of Ecommerce On Tap

In our latest episode, Nathan and I uncap the bottle on Temu's dizzying ascent – from its humble $3 million beginnings to a billion-dollar behemoth in under a year. But it's not all cheers and celebration – we're asking the tough questions:

- Is Temu's strategy sustainable, or is it a splash in the pan?

- Can their gamified shopping experience outmaneuver the likes of Amazon?

- What about the shadows lurking behind those unbeatable prices?

🚀 Temu's Marketing Bazooka

Brace yourselves because Temu's not skimping on publicity. A staggering $3 billion on marketing means you can't scroll, swipe, or click without seeing their ads. Is this a war chest spent wisely or corporate cash burning at both ends?

🛒 Discount Spinners & Gaming Galore

Discounts and games within an app – that's how Temu's keeping users glued to their screens. It's disruptive. It's engaging. But does it have longevity?

🥩 Farm-to-Smartphone? Nathan's Beef with Direct Sourcing!

Our very own Nathan ponders the viability of a direct farm-to-consumer model following a meaty gift from Sourcify's CEO. Could this be the next disruption in fresh produce e-commerce?

🧨 Pinduoduo: The Blueprint behind Temu

Temu didn't emerge out of thin air – it's riding on the coattails of China's e-commerce power player, Pinduoduo. We're delving into the very fabric of Pinduoduo's success and its umbilical ties to Temu's strategy.

🔒 Ethical Supply Chains & Temu's Tightrope

Cheap doesn't come free. We're addressing the elephant in the room – from allegations of forced labor to the potential pitfalls of their supply chain. And with Temu on Meta's top advertiser list, we're prodding at the moral compass of influencer marketing.

🕵️‍♂️ The Temu Effect on Dollar Stores

Is the dollar store dynasty at risk? As Temu carves out a 17% market slice, traditional discount players might need to rethink their strategy.

🚚 Ingenious or Infringement? Temu's Shipping Game Plan

From mixing parcel weights to dominating air freight – Temu's logistics are as intricate as a puzzle. They've got a shipping system that would make even the savviest e-commerce player do a double-take.

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