Modern Retail Rundown: Getir acquires Fresh Direct, TikTok shuts down Creator Fund, Amazon & Meta partner on in-app ads

0:03Hello, and welcome to the Modern Retail Rundown. I'm your host, senior reporter, Gabby Barco, and I'm here with Editor-in-Chief, Kale Guthrie-Weisman. Good morning, Kale. Good morning, Gabby. How are you? I'm doing okay. How are you? I'm good. It's another day in paradise. Yeah, exactly. All right. Well, let's get ready to close out the week. We have Fresh Direct getting acquired by Get Here, the instant delivery app. And then we're going to be taking a look at TikTok shutting down its much criticized creator fund after three years. And finally, we are going to be talking about Amazon striking a partnership with Meta.

0:44They're going to be partnering on some in-app shopping features, which seem like a pretty big deal. So we will get into that. But yeah, first up, let's talk about Fresh Direct. This came, I guess, as somewhat of a surprise, but essentially the company, which is like a, I feel like a very New York, you know, area grocery delivery service, was acquired just three years ago by Ejol Delhais, which is a Dutch grocery conglomerate. And they decided to sell it this week to get here so that they could focus more on their actual grocery chains and physical retail. Because they also own things like Stop and Shop, Giant Food.

1:33They also operate Peapod, which is a very beloved delivery service. Yeah, Peapod. I remember this is really dating me, but I don't remember the year. It was the OG, right? It was super OG. I have a family friend who was telling my mom back in the day when, you know, houses only had like desktop computers that she ordered via Peapod. And I remember it very vividly. Yeah, she was ahead of her time. Yeah. Yeah, so I think maybe we can talk about what some of these moves speak to as far as this category, because like a lot of delivery services, Fresh Direct saw a lot of growth. It was already growing pre-COVID, but of course that accelerated during the pandemic.

2:21That actually led to the whole acquisition. But it's hard to tell whether things slowed down, but they have been pulling out of some of their expanded markets like DC and Philly. And then, of course, this news has arrived. So why don't we maybe zoom out a little bit and see why these delivery apps are maybe – I mean, it's very obvious, I know, but we could talk about why they're not doing as well as they were even two years ago. There's a lot of interesting things here. I mean, clearly, grocery delivery was the big promise and the big growth spurt of the pandemic. And it saw a huge jump in 2020, 2021, because people were ordering their food, you know, online.

3:06They didn't want to go into grocery stores. And so a lot of investment, a lot of inflated valuations followed. and in many ways it seemed like a company like Fresh Direct, given that it was around for so long, seemed really solidly placed to be able to grow with it. But also, grocery is the lowest of margin business. Grocery delivery requires an insane amount of infrastructure. I think Fresh Direct has something. I'm trying to forget how many employees it has, but in the tens of thousands. And so it's hard to turn a profit through that. And, you know, we could talk about who are the so-called winners.

3:45Really, there's only one, which is Instacart, which was able to go public. And the reason why Instacart is doing better than the competitors is because it's growing its ad business. You know, so it seems like what's going on here is just more of the consolidation that's happening in the overall digital grocery space. And then there's the other side of it, which is Gatier. And I'll just note parenthetically that both of these names, a whole Del Hayes and Getier are things that I've said completely differently when I've read them. And so thank you for telling me how to say them correctly. It's our European segment.

4:22Yeah, exactly. But Getier was also an insanely highly valued company for instant delivery. And that one, like that entire area has just been decimated. There have been companies that have completely closed down. Many of them have been sold for pennies on the dollar. I mean, Gatier had, I think, like an over$2 billion valuation, and it's been getting out of markets. It's had layoffs earlier this month. It cut 11 % of its employees in August of this year because it was working on a global restructuring. So there are just a bunch of different things at play here. I think it's interesting that Gatir was able to make this purchase, but it clearly means that Fresh Direct probably was not sold for very much.

5:11Yeah, I think so, too, because we saw, you know, it felt like we just started covering these so-called 15-minute delivery apps that were really huge, especially in, you know, cities like New York, Boston, that are very condensed around 2021. And they raised literally billions in funding, actually, collectively. Yeah, exactly. And so, yeah, of course it's going to be hard. I mean, just reading that Gatir was burning$100 million a month. That's a staggering amount of money. And obviously the orders that are coming in were not going to be offsetting that. They also had a lot of issues with calling themselves fulfillment centers in especially places like Manhattan and Brooklyn.

6:02So all of that contributed to it. But I think it was just maybe also emblematic of it seemed like such a great idea when we were all still sort of inside. And now most people, especially in these areas, you could very easily just go down and get something around the corner that you might be getting on these apps. you have something like GoPuff, which is differentiated a little bit because they specialize in more like working with CPGs. And they also just launched, you know, advertising and all these sort of partnerships. So it's still going. It's interesting because I guess owning FreshDirect, to me, FreshDirect seems like kind of the antithesis of 15-minute delivery because you're putting in...

6:48Yes, exactly. Sorry, I got to that point a little late, but you're putting in an order like days ahead of time. And, you know, it's a very sort of analog type of ordering grocery. Yeah, that's what I was thinking when I saw this, because the promise of Gutierre, the promise of Gorillaz R.I.P., the promise of all of those was about, I want this now, I'm going to get it now, which didn't really play out in terms of scale. and fresh direct is much more of a i'm going to buy my 200 grocery purchase here's my list i'm going to set the schedule time for tomorrow at 5 p.m and then it'll be delivered to me um and it like i feel like they as while they're both in grocery they're not the same thing and so it sort of gives a sense that maybe gatier is trying to expand what its business is to make it work more with consumption patterns, I guess you could say.

7:45It's super, it's really fascinating. We'll see if it works. I'm sure for Gatir, the bottom line is that they probably got a really good deal on this. And also it's just their users. There are people who have used FreshDirect for years. So like they're going to get that many more just instant like customers out of this. Yeah. Also just a quick correction. I just want to say Gorillaz is still operating. Oh, sorry about that. Yeah, I did. We don't want to mix them up, but it's operating, but I think they've scaled back since. But yeah, with that said, I guess it'll be interesting to see whether there will be any integration.

8:24But other than that, it seems like this is a good way to get into a very established delivery service that has a pretty loyal following. Most people, I think, stick with Fresh Direct for a while. Yeah. And I'll be interested to see on the operational side what exactly changes. Like Fresh Direct is very much has had its own systems. It's had its own delivery employees. It's had its own fulfillment centers. Keteer, I'm sure, has its own system too. And, you know, they work very differently from, you know, say Instacart, where it's about going into an existing store using essentially gig work to pick and pack, you know, pick and then deliver all these items.

9:04So will these operationally on the back end, will they come together? Will they be separate? You know, there's questions I have about how the two will mesh with each other. All right. Well, next up, we are going to be talking about TikTok, more specifically their creator fund. This was a program that was announced in 2020, I believe. I think originally it was about$200 million. Then it turned into a billion, then$2 billion. A lot of money. Yeah, it was supposed to be, this was supposed to be used to pay out essentially creators for their content. So it's supposed, you know, it's to encourage and incentivize posting.

9:45But it did receive some criticism. And we will get into that and talk about why it shut down and has been essentially replaced. Yeah, Kale, do you want to give us some numbers on that? Sure. So, I mean, you gave the numbers of just how huge the fund was. It was as much as$2 billion. You had to qualify in order to participate in the fund, and it was usually based on you being a really, really big creator who got in millions of views. But then there were a lot of stories that came out earlier this year, like at the start of 2023, about how even the biggest of stars were getting paid essentially pennies on the dollar.

10:23according to one count for every thousand views you got paid as little as two cents and so you know there were even huge stars that have millions and millions of followers like Mr. Beast who called out the creator fund specifically saying you're trying to bring us into TikTok and pay us but you're paying us hardly any money we can't make a living depending on TikTok alone so the fact that it's now TikTok is now going into a different monetization strategy isn't so much a surprise and we'll probably talk about that but it is noteworthy because clearly tiktok has been hearing this probably pretty constant feedback from creators like this this fund is not working right and so uh this year actually just a few months ago they also um they launched uh this creativity program i like i like the name it's very it's very nice it's not a creator fund And it's a creativity program.

11:21Creativity program, yeah. So this one, it feels pretty similar, but I guess it has some differences. The way it works is that creators are expected to make longer videos, longer than a minute to become eligible. And they could earn reportedly 20 times more than they did with the original fun program. So it seems like they are trying to mitigate that. But so far, I think it seems like there is some positive feedback, but I'm not sure exactly. Yeah, I think it's still pretty early days for it. It was announced, I think, this summer, if I'm not mistaken. And I think the major difference is that the source of the money isn't just this fund that can run dry.

12:07And it's very much tied to specific metrics that users are supposed to hit. And if they hit that, then they get. So, you know, it's a it's a way for them to earn commission on their engagement. And so the idea is that it's probably going to be more systematized and they get a better view into how much they could possibly make. And one of the biggest criticisms that the Creator Fund had, like, you know, we did have stars like Mr. Beast complaining about it. But that meant if you are a quote unquote micro influencer, like if you have only 100 ,000 or 200 ,000 followers on TikTok, you're still amassing a lot of views.

12:42But you were going to make literal dollars on TikTok. And the hope is that with this, if they're still getting consistent engagement, it's longer videos that people are watching. The idea is that they will actually be able to make more of a living with this creativity program. And, of course, this comes at an interesting time for TikTok as it's building out e-commerce. It has an interesting relationship with influencers now that it has things like TikTok shop. Conversion, I know, is always the biggest. It's not an issue, I guess, but it is hard to convert customers or viewers into customers on TikTok, according to brands.

13:22So I wonder whether all of these programs are meant to kind of push us in that direction. Yeah, I mean, it's the constant drum of trying to get more value out of your users, your watchers. It will be interesting to see with the creativity fund, what are, you know, obviously views and how long someone stays on the video will be an important metric by which, you know, a creator can earn commission. But we'll see what other things are added to the mix that would also let them get more money. You know, I wouldn't be surprised if conversion or something along those lines played into that. But, you know, we'll see.

13:57Speaking of conversions, let's talk about Amazon and Meta. I think it's going to, I believe it's both Facebook and Instagram, right, that the integration is happening with. That's my understanding. Yeah, they essentially announced this partnership where there will be more features on, from what I understand, on Facebook and Instagram ads that allow people to more easily shop on Amazon, which I think is a pretty big deal because that was always a point of pain for a lot of people. Yeah, and we should say it hasn't really been announced. Like the way that this was discovered was someone, you know, some LinkedIn user in e-commerce, I'm pretty sure, saw this and was like, oh, this is interesting and posted about it.

14:45And then Marketplace Pulse wrote a story about it. And now there's been a lot of coverage. And Facebook, you know, Meta has confirmed it. But as far as I know, there's not been an official press release explaining it. So I'm guessing this is still very much in beta. But it's really interesting. Like this is a pretty major change for such a small thing that a lot of people won't notice. So yeah, I'm super interested in this one. Yes. Yes. So reported, not announced. But we'll talk a little bit about the features. So I think for me, the biggest one is the buy with Prime button, just because I know Amazon is really trying to present Prime as like this essential utility, I guess.

15:30I say this because my Prime membership is renewing this week. So I'm just thinking about, yeah, the value of it. But I think having it integrated into these social ads that already exist, and most people are already going to Amazon when they see an ad for a product, makes sense. I guess I wonder how well it'll work. Yeah, I mean, the way that the screenshots have been explained is that this is about lowering the barrier of entry for these ads. And so it's important to compare how this worked before. If you were a brand, you wanted to advertise on Facebook and Meta, you obviously would. And you would link just to your product page.

16:06And so you'd click, you would then go to an outside link, and then you would get your full product page with all that. And this program is a scaled down version of the product page that is really prominent with Buy With Prime. And also, and this is really important, allows users to opt in to sign into their Amazon account inside the app. So it pretty much means that if I'm in Instagram, I see an ad for something I like, I'll click on the ad. And then while still in the app, if I'm logged in, I can buy it right then and there. And so that's, you know, it's big for Amazon because it means that it takes away a lot of the UI mess that was there before with trying to get someone to convert.

16:48But there's also a really big point here, which is that Facebook's going to get conversion data because it's done inside its app, which, you know, post iOS 14, post all of the, you know, Apple stuff, it has not been able to get as much of that data. So, you know, there's a big opt-in. If you're on Facebook or Instagram, you're going to have to actually sign into your Amazon account. But I imagine people wouldn't really care about that and probably wouldn't even think about that and then be presented with a page that is pretty much being like, you want to buy this product, you can buy it right now.

17:18I think it's also interesting because we have seen Meta really try to push over the years in-app checkout. And it worked to some degrees of success. But yeah, I think maybe this is a little bit more seamless. And people obviously know their Amazon accounts. And it just seems a little bit safer than just checking out on some random page for a product. Yeah. And I think it shows where Meta's priorities are, at least right now. It was really pushing shopping. It had live shopping features for a while, and then it scaled those back so that brands couldn't even tag their products in their live feeds.

18:00you know it had the shop tab it got rid of the shop tab and all the coverage was like well the point now is that you know meta is trying to restart its advertising around if you can say restart it's always been huge but you know read regrow its advertising business especially in the wake of all of the privacy changes of the last few years and i think this is another example of that where pretty much meta is saying that's fine i get it's okay if people aren't using facebook shop to convert this. But if we're able to get the data about what they did buy, that's just as important. And then we can use that for our advertising program purposes.

18:37And so, yeah, I don't think that this means that Facebook is going to stop focusing on commerce. Who knows what they'll come out with in the next few months? Maybe they'll try and relaunch shopping in some iteration. But the fact that it has this partnership with Amazon is really noteworthy just because it's letting Amazon do a lot of that actual conversion legwork. Yeah. And, you know, to bring it back to TikTok, of course, you know, this is it has become this the threat, I guess you could say, to Meta as far as losing usership to them. So I guess in a way, it's kind of like bringing back that competitive spirit between them because TikTok has just accelerated so fast when it comes to e-commerce.

19:23Yeah, I think that this is kind of a tacit admission from both Amazon and Meta that TikTok is a major competitor as it comes to commerce. Like, you know, TikTok is doing very much sort of a Facebook playbook or the original Facebook playbook of trying to build it in-house where, you know, it has its shop program. It's asking creators to load their own products. TikTok's even doing the fulfillment, which is its own can of worms. It's really trying to act similar to the major apps in Asia, like the ones that TikTok's owner owns, like Douyan and all those, where you'll watch your videos, but you'll also shop.

20:04Facebook had tried that sort of for a little bit. In the US, it didn't stick. And now, I think both Amazon... And then we should also mention, actually, that Amazon has tried to do social shopping many times over the years and has never really quite figured it out. They, you know, it has, it has, I forget what it's called, or is it Inspire, the tab on the app where you can sort of go through that looks like TikTok, but that's not the dominant way that people are shopping on Amazon. And I don't think they think of it as a social platform. And so instead, it seems like they both are seeing that there is a potential threat specifically from TikTok.

20:36So they're going to go together and try to like bridge what they're both good at. Amazon selling people things, Facebook advertising. And I just imagine TikTok and all of the headlines over the last six months to a year have been in the back of their mind. And so I think it will be interesting to see whether, I just thought about this randomly, but whether Amazon will ever consider doing this with TikTok itself, because there is that, You know, TikTok made me buy it sentiment already where people do go to Amazon the second they see something. It's just not this like seamless transition. Yeah. And this is also very parenthetical.

21:19But it's something I noticed when I was just looking at the Amazon app somewhat recently and on that video feed. Most of the content in Amazon's video shopping feed is repurposed TikToks. Like you actually like see the TikTok handle on there. And so it's creators who have a TikTok account want to earn an Amazon commission. So they just upload their own TikTok videos there, which, you know, shows that clearly there is some power with TikTok or people see that that content is doing something. So yeah, if Amazon and TikTok work together, that would be that'd be interesting to see. But who knows? Well, that is our show for this week.

22:01Please write and review us on Apple Podcasts, Spotify or anywhere else you're listening. Also, don't forget to subscribe to the Modern Retail Podcast to hear interviews with industry leaders on Thursdays. Cale, do you want to give us a preview of next week's interview? Sure. You're going to like this one, Gabby. I talked with Literary Candles, which is a candle company that launched during the pandemic, but they are known for their collaborations, including such collaborations as The Real Housewives, along with a lot of others. But interesting stuff. All right. Well, I'm sold, so I hope you do it again.

22:34All right. Well, then come back next week for the rundown. And thank you for listening.