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From: Glenn Petersen7/12/2023 7:22:37 AM
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Russian Wikipedia’s Top Editor Leaves to Launch a Putin-Friendly Clone

The move is seen as a potential precursor to a ban on the original version.

By Noam Cohen
Bloomberg Businessweek
July 12, 2023, 4:01 AM UTC

When a group of armed mercenaries seized a Russian regional capital and began marching toward Moscow in late June, verified information was hard to come by. Vladimir Putin’s propaganda machine largely ignored the Wagner Group’s mutiny at first, while government censors quickly blocked access to Google News through the country’s largest internet providers and hid results for certain searches, such as those for the rebels’ leader, Yevgeny Prigozhin, on the Russian search engine Yandex.

An exception was the crowdsourced encyclopedia Wikipedia, which posted a detailed article in Russian about the uprising that incorporated new reporting as it happened. The article, “The Mutiny of the Wagner Group,” cited sources ranging from news media outlets that the Kremlin labels “foreign agents” for not toeing the party line to US newspapers and Russian state media, and is thousands of words long. It drew more than 270,000 page views on its first day.

Wikipedia is one of Russia’s most popular websites, with about 95 million visitors a month, including about 10,000 active editors who maintain its nearly 2 million Russian-language articles. Its enduring presence in Putin’s Russia is a bit surprising, given the Kremlin’s aggressive attempts to control what is said about the government and its policies, a tendency that’s only accelerated since the invasion of Ukraine. Wartime censorship has brought new laws against supposed “disinformation” and bans of news websites, civic organizations and even environmental groups.

While Wikipedia has remained in operation in Russia so far, there are signs that things are shifting against it. From March 2022 through this June, the government repeatedly sanctioned the site, levying fines totaling almost 23 billion rubles ($255 million), according to the Wikimedia Foundation Inc., the San Francisco-based organization that hosts the servers that operate Russian Wikipedia and is thus legally responsible for what is published.

Jacob Rogers, a lawyer who represents the foundation in Russian litigation, says it wouldn’t agree to any of the government’s requests to remove content and is challenging the fines in court. “We think that Wikipedia is full of pretty good information overall, that it’s got good reliable sources representing a variety of different perspectives on these issues, that the users are doing a good job of making it be written in a neutral point of view,” he says.



A worker removes a PMC Wagner Center logo from the Wagner Group’s closed office in St. Petersburg on July 2. / Photographer: Olga Maltseva/AFP/Getty Images
-------------------------------
Putin has long made his displeasure with Wikipedia clear, vowing in 2019 to support an alternative that “will be reliable information, presented in a good, modern way.” This April, Valery Fadeyev, the chairman of the Human Rights Council, a Kremlin-backed mouthpiece on civil society issues, said Wikipedia’s coverage of Ukraine justified replacing it with a more cooperative local alternative. The same month Maksut Shadayev, Russia’s minister of digital development, told journalists that the government had no plans to do so, but hardly offered the encyclopedia a vote of confidence. “We are not blocking Wikipedia yet,” he said, according to the Interfax news agency. “There are no such plans for now.”

In what was widely interpreted as an ominous sign, a near-copy of Russian Wikipedia appeared online on June 27. (Wikipedia’s license allows users to “fork” the service, copying a version and starting an alternate version from that snapshot, under certain conditions.) Articles on topics that Russia has banned—like the one about alleged human-rights abuses in Bucha at the start of the war—had been removed. An article on the Wagner Group appeared, but it didn’t mention the mutiny. Gone, too, was an article about a profane chant against Putin that’s popular among Ukrainian soccer fans.

The new site is called Ruwiki, a common shorthand for Russian Wikipedia. It’s the work of Vladimir Medeyko, the long-serving leader of Russian Wikipedia editors. His colleagues were shocked that he’d quit a project he’d worked on since 2003—and even more taken aback that he said his reason for leaving was to create a Kremlin-compliant rival.



Medeyko in Moscow. / ]Source: Ruwiki
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Medeyko says he isn’t working for the government. He says he sought to reform Wikipedia from within for more than a decade before the split, which was made possible after he found like-minded investors that he declines to identify. The new site features less free-for-all Wikipedian crowdsourcing. In its initial form, Ruwiki can’t be edited by outsiders at all, though Medeyko’s plan is to allow such volunteer contributions on most articles, while also having panels of experts vet the material. "Experts are not interested in participating in Wikipedia because they don’t want to argue with people without a proper education who have exactly the same rights,” he says.Ruwiki will follow Russian laws while maintaining its neutrality, according to Medeyko. “There will be particularly strict requirements for the quality of sources and indisputable phrasing regarding current events,” he says. Its article about the invasion of Ukraine never refers to it as an invasion, simply noting that “Military operations in Ukraine began on February 24, 2022. This was preceded by a crisis in relations between Russia and Ukraine.”

While Medeyko says he opposes blocking Wikipedia, some hard-liners within the government see his project as a way to do just that. Alexander Khinshtein, the chair of the digital committee in the lower house of the Russian parliament, wrote on his Telegram account the day after Ruwiki went live: “As I’ve said many times, Wikipedia can only be completely blocked when a domestic analogue has been created. Now, that’s no longer an issue.”

Russian Wikipedians fear a similar outcome. “If they want to block us, they can,” says Stanislav Kozlovskiy, who’s replaced Medeyko. He says the Putin regime has targeted fewer than 200 articles—a tiny fraction. He also says it’s hard to satisfy government censors entirely. “We try to maintain neutrality, and any sensitive issues are reviewed by moderators,” he says. “We limit the use of Russian or Ukrainian sources for current events, but that doesn’t stop the criticism. In Russia, officials think our articles are written by Ukrainians, while some Ukrainians seem to believe that they’re written in the Kremlin.”

Russia isn’t the only country where Wikipedia has found itself in conflict with local officials. Turkey shut it down for more than two years after it refused to remove material describing the nation as a state sponsor of terror because of its support of militant groups in Syria. The Turkish government said the accusations were part of a smear campaign that threatened the public order and national security. A Turkish court restored Wikipedia in 2020, saying the ban violated the country’s constitutional guarantee of freedom of expression.

Pakistan shut down Wikipedia for a weekend in February for posting what it considered to be sacrilegious content. In May, India told the foundation it would block the English version of Wikipedia locally if it didn’t follow an Indian law that says all maps must match its national border outline, including disputed areas such as Kashmir. The community is debating whether to comply.

One of Wikipedia’s best defenses against such actions is its popularity. When China, the only major country to ban Wikipedia outright, began blocking the site, it softened the blow by first cultivating a government-friendly alternative: the collaborative encyclopedia Baidu Baike. The new site allowed registered users to create their own content but was also careful to follow China’s censorship rules, giving users a service with a similar feel that posed less of a threat to the government.

Medeyko also plans to replicate some of Wikipedia’s crowdsourced formula. He’s said that Ruwiki will look for editors who don’t find Wikipedia inviting, either because of political controversies or other reasons.

Creating the site has made him a heretic in the eyes of his former community. When Medeyko announced his plans, Wikipedia’s other editors immediately deleted his account—his handle was DrBug—which he had used to make more than 25,000 edits and create hundreds of articles. But if Ruwiki does supplant Wikipedia in Russia, editors who worked on the original site will have to decide how they feel about it, and how to engage with it. Nikolay Bulykin, a frequent contributor to Russian Wikipedia who uploads photographs of historic churches and castles taken by drone, shrugs his shoulders at the thought of the thousands of hours he’s devoted to creating content for Wikipedia ending up on a site that could replace it.

“I’m not going to forbid anyone from using my work,” he says from Kazakhstan, where he relocated after the Russian army began drafting men to fight in Ukraine. “That’s not what free knowledge is all about.”

Russian Wikipedia Editor Leaves to Launch a Putin-Friendly Clone - Bloomberg (archive.ph)

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From: Ron7/14/2023 7:56:29 PM
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Amazon still on track to open a new home internet service, via satellites by 2025
cordcuttersnews.com

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From: Glenn Petersen7/16/2023 7:47:25 PM
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You’re Not Imagining It: Social Media Is in Chaos

By Sriram Krishnan
Mr. Krishnan is a general partner at Andreessen Horowitz, a venture capital firm.
New York Times
Guest Opinion
July 15, 2023

War is breaking out on social media, and it could radically change how the internet works and how we experience it.

Last week, Meta rolled out Threads, a social media product similar to Twitter that quickly got over 100 million sign-ups. This is more than just a tech founder cage match — it is the latest incident in a pattern of increasing chaos. Large parts of internet community site Reddit went dark recently in a user protest over its decision to charge other companies more for using its data. This came right after the livestreaming platform Twitch walked back restrictions on creators after boycott threats. There’s change in the air in social media, and it is spreading fast.

I spent most of the past decade working at large social media companies. I briefly helped Elon Musk after his acquisition of Twitter, in which my firm is an investor. My firm is also an investor in Substack, Reddit and other social media companies, and our general partner Marc Andreessen is on the board of Meta.

I believe the skirmishes of the past few weeks are connected to one another and are worth paying attention to. They represent a fundamental rejection of how the internet and large tech companies have worked for several decades. Instead of being limited to a few large companies, we may be at the start of an era of many online spaces, where consumers could have more power and rights than they’ve ever had.

Think of the current large social networks as various European nations at the dawn of the 20th century. Often ruled by monarchs and autocrats (C.E.O.s), they exist in an uneasy balance with their own users and with one another.

Users and social networks have an unspoken agreement: In return for entertainment, utility and an audience, users hand over control. If the network chooses to kick you out, you’re out in the cold. Choosing to leave one platform means losing your audience forever. You can’t take it with you.

Large social networks act like geopolitical neighbors in an uneasy Westphalian peace with one another. They often move in lock step, swiftly introducing similar features. Stories on Snap? Copied by Instagram and YouTube. TikTok reels? See Reels and YouTube Shorts.

They are also aligned ideologically on what content to censor. Major companies agreed on how to handle theories on the origin of Covid or stories about Hunter Biden’s laptop, leading to what Evelyn Douek, a Stanford law professor, calls “content cartels.” In many ways, there has been a prevailing monolithic culture on how things get done.

In 1914, Europe seemed to be at relative peace, but there were cracks and tensions emerging. All it took was an assassination, initially seen as insignificant, to plunge the world into conflict. Similarly, in the first half of 2023 there has been a succession of online dominoes smashing the status quo of social media to smithereens, causing uprisings in several places.

The first domino was economic. As interest rates started to rise, social media companies discovered they weren’t immune to macroeconomic forces. C.E.O.s reacted with an increased emphasis on products that make money directly from the consumer and reducing employee head count.

The second domino was the introduction of A.I. assistants like ChatGPT. While many were blown away by their possibilities, they forced social media websites to re-evaluate how their data is used externally. Historically many websites like Reddit and Stack Overflow allowed some of their content — especially the discussions among their users on various topics — to be available free. This was typically done to allow search engines to find this content and send users back to these sites. Want to compare two highly recognized San Francisco restaurants? Enter their names and “Reddit” in Google, and recent Reddit conversations are likely to appear. Click on one of the links, and you’re now in Reddit (thereby boosting its business). Third-party developers also tapped this data to build useful tools on top of this content.

A.I. assistants rely on enormous amounts of such data and would hoover up that conversation about San Francisco restaurants. So if you ask an A.I. assistant for the names of San Francisco’s best restaurants, it could well use that Reddit discussion to generate its answer. But it won’t tell you that Reddit was a source for its answer. It won’t send you to Reddit. And as of now, it pays Reddit nothing for the help.

The third domino was Elon Musk’s purchase of Twitter. Whether or not you agree with Mr. Musk’s moves after he bought Twitter, they have sparked a chain reaction. Reddit’s C.E.O. cited Twitter as a template for how to cut costs. Meta’s Facebook and Instagram followed Twitter in charging for verification of individual users. Meta introduced Threads, the Twitter alternative. While it’s early days to see how this plays out, it is clear the social media landscape has shifted quickly and profoundly.

This takes us to the first key shift that may reshape how the internet works: decentralization. For over a decade, all major internet platforms have been “centralized” — services are run by a central team, often based in Silicon Valley.
\
Decentralized services try to bring modern democratic ideas to internet platforms. While social media giants endure a constant stream of accusations that they curate their content in a way that furthers political agendas, the goal of decentralization is a network that is credibly neutral in the way it works. The network should be able to resist attempts by any party to seize power and become centralized. Most important, no centralized gatekeeper can delete a user’s account or data — and you should be able to take your audience with you wherever you go.

Interest in decentralized services has been increasing for some time, as various groups have disagreed with the management of the platforms they use. One such service is Farcaster, a decentralized social network in which I’m a direct investor. Others are apps like Bluesky and Mastodon. Instagram has said Threads will support some flavor of this in the future.

The second major development is that large internet sites are fighting back against A.I. models with the internet equivalent of raising the castle drawbridge. The coding site Stack Overflow, Reddit and others have raised the prices for their data to be used. In Reddit’s case, the change had the effect of blocking some popular third-party applications, setting off continuing protests and blackouts.

We will need a fundamentally different mechanism for websites to exchange value with A.I. assistants. Otherwise, expect more raised drawbridges and more user protests. Some industry experts believe the answers are in legal action and older sites forming content alliances.

As a technologist, my hope is that the answers lie in code rather than lawyers and that we see creative technology solutions to help keep the internet open.

For far too long, the online world has been in stasis limited to a few options dominated by a few large companies. Technological breakthroughs and unrest were needed to shake things up, and that has happened. A pessimist might say that this is going to lead to chaos and challenges. As an optimist who invests in technology entrepreneurs for a living, I believe we are in for an age of major innovation, with all of us having more options and say in how things are run online.

Either way, it’s going to be one heck of a ride.

Opinion | Threads, Twitter, and the Future of Social Media - The New York Times (archive.ph)

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From: Ron7/20/2023 6:00:40 PM
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Pioneering hacker Kevin Mitnick, FBI-wanted felon turned security consultant, dead at 59
apnews.com

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From: Ron8/22/2023 7:06:49 PM
2 Recommendations   of 6760
 
New site: 404 Media: The Secret Hacking Weapon Used to Dox Ordinary Citizens
404media.co

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From: Ron10/19/2023 4:55:49 PM
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Thousands of IT workers contracting with US companies have for years secretly sent millions of dollars of their wages to North Korea to fund its weapons programs. They worked remotely with companies around US and used false identities to get jobs, per FBI- Associated Press

apnews.com

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From: Ron12/15/2023 3:42:47 PM
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McDonald’s Ice Cream Machine Hackers Say They Found the ‘Smoking Gun’ That Killed Their Startup
wired.com

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From: Ron12/23/2023 11:11:35 AM
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The Hank Show: How a House-Painting, Drug-Running DEA Informant Built the Machine That Rules Our Lives- A deeply unsettling exposé of an exploitative tech genius.
kirkusreviews.com

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From: Glenn Petersen12/31/2023 12:24:16 PM
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How AI-created fakes are taking business from online influencers

Hyper-realistic ‘virtual influencers’ are being used to promote leading brands — drawing ire from human content creators

Cristina Criddle in London
AN HOUR AGO
Financial Times



Aitana Lopez, an AI-generated influencer, has convinced many social media users she is real © FT montage/TheClueless/GettyImages
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Pink-haired Aitana Lopez is followed by more than 200,000 people on social media. She posts selfies from concerts and her bedroom, while tagging brands such as haircare line Olaplex and lingerie giant Victoria’s Secret.

Brands have paid about $1,000 a post for her to promote their products on social media — despite the fact that she is entirely fictional.

Aitana is a “virtual influencer” created using artificial intelligence tools, one of the hundreds of digital avatars that have broken into the growing $21bn content creator economy.

Their emergence has led to worry from human influencers their income is being cannibalised and under threat from digital rivals. That concern is shared by people in more established professions that their livelihoods are under threat from generative AI — technology that can spew out humanlike text, images and code in seconds.

But those behind the hyper-realistic AI creations argue they are merely disrupting an overinflated market.
“We were taken aback by the skyrocketing rates influencers charge nowadays. That got us thinking, ‘What if we just create our own influencer?’” said Diana Núñez, co-founder of the Barcelona-based agency The Clueless, which created Aitana. “The rest is history. We unintentionally created a monster. A beautiful one, though.”

Over the past few years, there have been high-profile partnerships between luxury brands and virtual influencers, including Kim Kardashian’s make-up line KKW Beauty with Noonoouri, and Louis Vuitton with Ayayi.

Instagram analysis of an H&M advert featuring virtual influencer Kuki found that it reached 11 times more people and resulted in a 91 per cent decrease in cost per person remembering the advert, compared with a traditional ad.

“It is not influencing purchase like a human influencer would, but it is driving awareness, favourability and recall for the brand,” said Becky Owen, global chief marketing and innovation officer at Billion Dollar Boy, and former head of Meta’s creator innovations team.
Brands have been quick to engage with virtual influencers as a new way to attract attention while reducing costs.

“Influencers themselves have a lot of negative associations related to being fake or superficial, which makes people feel less concerned about the concept of that being replaced with AI or virtual influencers,” said Rebecca McGrath, associate director for media and technology at Mintel.

“For a brand, they have total control versus a real person who comes with potential controversy, their own demands, their own opinions,” McGrath added.

Human influencers contend that their virtual counterparts should have to disclose that they are not real, however. “What freaks me out about these influencers is how hard it is to tell they’re fake,” said Danae Mercer, a content creator with more than 2mn followers.

The UK’s Advertising Standards Agency said it was “keenly aware of the rise of virtual influencers within this space” but said there was no rule where they must declare they are generated by AI.



Maia is another model created by The Clueless using artificial intelligence © The Clueless
Many other markets are contending with the problem, with India being one country that forces virtual influencers to reveal their AI origins.

Although The Clueless discloses Aitana is fake through the hashtag #aimodel in her profile on Instagram, many others do not do so or use vague terms such as #digitalinfluencer.
“Even though we made it clear she was an AI-generated model... initially, most of her followers didn’t question her authenticity, they genuinely believed in her existence,” said Núñez, who added that Aitana has received multiple requests to meet followers in person.

One of the first virtual influencers, Lil Miquela, charges up to hundreds of thousands of dollars for any given deal and has worked with Burberry, Prada and Givenchy.

Although AI is used to generate content for Lil Miquela, the team behind the creation “strongly believe [the storytelling behind virtual creators] cannot be fully replicated by generative AI”, said Ridhima Kahn, vice-president of business development at Dapper Labs, who oversees Lil Miquela’s partnerships.

“A lot of companies are coming out with virtual influencers they have generated in a day, and they are not really putting that human element [into the messaging]... and I don’t think that is going to be the long-term strategy,” she added.

Lil Miquela is considered by many to be mixed race, and her audience of nearly 3mn followers ranges from the US to Asia and Latin America. Meanwhile, The Clueless now has another creation in development, which it calls a “curvy Mexican” named Laila.

Francesca Sobande, a senior lecturer in digital media studies at Cardiff University, has researched virtual influencers with racially ambiguous features and suggests that the motivations behind giving some of these characteristics are “simply another form of marketing” in order to target a broader audience, when “something has been created with a focus on profit”.

“[This] can be very convenient for brands wanting to identify global marketing strategies and trying to project a hollow image that might be perceived as progressive,” said Sobande, who added that “seldom does it seem to be black people” creating the virtual avatars.

Dapper Labs emphasised that the team behind Lil Miquela is diverse and reflects her audience. The Clueless said its creations were designed to “foster inclusivity and provide opportunities to collectives that have faced exclusion for an extended period”.

The Clueless’s creations, among other virtual influencers, have also been criticised for being overly sexualised, with Aitana regularly appearing in underwear. The agency said sexualisation is “prevalent with real models and influencers” and that its creations “merely mirror these established practices without deviating from the current norms in the industry”.

Mercer, the human influencer, argued: “It feels like women in recent years have been able to take back some agency, through OnlyFans, through social media, they have been able to take control of their bodies and say ‘for so long men have made money off me, I am going to make money for myself’.”

But she said AI-generated creations, often made by men, were once again profiting from female sexuality. “That is the reason behind growing these accounts. It is to make money.”

How AI-created fakes are taking business from online influencers (archive.ph)

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From: Glenn Petersen1/3/2024 7:30:21 AM
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Behind Cheap Stuff From Shein and Temu: A Hard Bargain With Suppliers

Shopping apps throw a lifeline to Chinese exporters, but it is a trade-off

By Yoko Kubota, Raffaele Huang and Shen Lu
Wall Street Journal
Updated Jan. 3, 2024 12:03 am ET

SHENZHEN, China—E-commerce sellers Shein and Temu are offering a lifeline for small suppliers in China’s manufacturing hubs—but it isn’t always a straightforward win.

In recent years, thousands of Chinese factories and vendors have joined the supply chain for Shein and Temu, whose popularity has exploded in the U.S. with their offers of inexpensive made-in-China goods, from T-shirts and handbags to electronics and kitchen items.

The two platforms enable factories and vendors on the ground in China to reach vast new numbers of consumers across the world. Shein sells to more than 150 countries, while Temu sells to more than 40.

But it is a trade-off: Some suppliers that spoke with The Wall Street Journal said they were grappling with razor-thin profit margins and intense pressure to cut prices. Others said they were drowning in unsold inventory and were questioning whether dealing with Shein and Temu would be sustainable in the long run.

Electronics vendor Jason Xie previously sold gadgets such as smartphone screens from a stall in a Shenzhen electronics market to buyers from the U.S., Middle East, Southeast Asia and elsewhere. When those buyers stopped coming during the pandemic, Xie turned to online commerce, first selling on platforms including Amazon.com and Pinduoduo, Temu’s sibling platform in China. In May 2023, he accepted an invitation from Temu’s parent, PDD Holdings, to sell on Temu.

He was hoping to ride Temu’s popularity overseas, but a few months later, he was already questioning the sustainability of Temu’s approach. Intended to be a high-volume, low-margin business, its marketplace was crowded and its profit margins were smaller than on Amazon, Xie said.

While some of his goods have been hits, including a $12 wireless speaker that comes with an LED night light, others have been costly flops. At one point, Xie and his colleagues prepared 1,000 $3 smartphone bands in a variety of colors. With many similar items on the platform, they sold just a dozen or so.



Workers sewing clothes on a production floor of a Shein facility in Guangzhou, China. PHOTO: GILLES SABRIE FOR THE WALL STREET JOURNAL
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There were other issues: Temu suppliers are responsible for many costs related to returns, and suppliers could also face penalties from Temu if consumers file complaints during returns, Xie said.

Temu said that its low-price strategy benefits consumers and that there are manufacturers that excel on the platform, having developed economies of scale.

It pointed to Zhejiang Maibo Industrial, a factory in Wuyi in eastern China, which for years has been making water bottles and tumblers for other retailers. It started selling its products under its own brand on Temu in March, getting a profit margin of 20% compared with 10% when selling for other brands.

Bowen Wang, the head of the factory, said Temu’s barrier to entry was low given that it handles shipping as well as marketing.

New supply-chain modelTemu and Shein have upended the e-commerce supply chain with their on-demand business model; they place orders to suppliers to be delivered in days, rely on real-time data to quickly analyze demand and replenish orders as needed. That cuts down on the need for storage and limits inventory risk.

In some cases, that risk is getting transferred to the suppliers.

Dongguan Michun Clothing, a maker of children’s apparel near Shenzhen, has been supplying Shein for about two years, but in recent months has essentially halted work with the platform, said Zhang Qingwei, the general manager of the factory.



A worker at Zhejiang Maibo Industrial, a factory in Wuyi that produces water bottles and tumblers. PHOTO: ZHEJIANG MAIBO INDUSTRIAL
----------------------------

When Zhang’s factory suggests products, Shein might express interest in purchasing a certain amount, possibly several hundred. But if the product doesn’t sell well, Shein only takes a small share, leaving Zhang’s factory to deal with the rest, but doesn’t let him sell the items on other platforms, he said.
Such scenarios have led Zhang’s factory to swim in Shein inventory, he said. “The risk is too great for the factory,” he said. Revenue from Shein at its peak accounted for some 10% of the factory’s overall revenue, but is now down to around 1%.

Shein said that its system gives suppliers insight into what customers want as well as capacity, inventory levels and demand.

Shein and Temu, which have been competing for suppliers, also increasingly target the same customers overseas.

China-founded Shein, which is now based in Singapore, soared to American fame first, becoming a fast-fashion juggernaut over the past eight years. PDD launched Temu a little over a year ago, which quickly put pressure on Shein. For most of 2023, Temu has been the second-most popular e-commerce app in the U.S. measured by monthly users, behind Amazon, according to estimates by SimilarWeb, a digital data and analytics company.

By July, Temu’s sales in the U.S. were bigger than Shein’s, data from Earnest Analytics show. In recent months, Shein has forayed beyond fashion into the marketplace model, allowing third-party merchants to sell a variety of goods, putting it into more direct competition with Temu.



Zhang Qingwei, the general manager of Dongguan Michun Clothing, checks its inventory. PHOTO: YOKO KUBOTA/THE WALL STREET JOURNAL
---------------------------------

In the U.S., Shein and Temu each ship an estimated one million packages a day, according to parcel-shipping consultant ShipMatrix.

Shein, for its fashion business, works directly with factories and said it has about 5,400 suppliers, primarily in China. Temu didn’t disclose how many suppliers it has, but also said most are in China.

Six sellers told the Journal they have stopped doing business with Temu because of its strict pricing policies. Temu typically sets the lowest price offered by all suppliers as a benchmark, leaving sellers with tiny profit margins. Shein allows suppliers to set their price within a certain range.

One Temu seller said that if he doesn’t reduce prices to match those set by other suppliers, Temu wouldn’t allow him to replenish inventory in its warehouses, effectively cutting him out of doing business with the platform. The seller said he has decided to stop selling on Temu.

Others say Temu has helped them increase profits. Huang Yilun in Huizhou, a city near Shenzhen, has been making Christmas decorations for export for nearly a decade. Desperate for new channels after the pandemic, which nearly obliterated his business, he started selling on Temu in June. Of 10 samples he sent in, Temu accepted two and told him to drop the price another 20% on one of them.

Even so, he said he was still making better profits than before. For example, he had been selling a Santa Claus cloth decoration that cost him around 14 cents to make for around 40 cents to an exporter. On Temu, he could sell it for at least $1, more than tripling his profit.

But he is struggling to hire workers, whose wages have gone up. Meanwhile, Temu is asking for more price cuts for several items.

“Temu is an attractive platform for me, but pressure has started mounting,” Huang said.

Since Temu’s debut, many other platforms, including TikTok, Alibaba Group’s AliExpress and Shopee by
Tencent Holdings-backed Sea, have also leveraged the Chinese supply chain to give global shoppers more and cheaper options. Amazon also has attempted to revive and expand its global selling program, with Chinese vendors a major target.



Lex Green, visual merchandising coordinator for Shein, organizes items at a Shein pop-up inside Forever 21’s Times Square store in New York. PHOTO: ADRIENNE GRUNWALD FOR THE WALL STREET JOURNAL
--------------------------------------

As the market gets crowded, sellers are testing which platform can bring them the best sales and profits.

Shenzhen-based Bai Yu turned to e-commerce after getting laid off from a private tutoring school in 2021. A few months after she set up an Amazon store for the U.S. market, selling battery chargers for golf carts, Temu called.

She started selling a few hundred golf-cart battery chargers a month on Temu, more than she sold on Amazon, though prices on Temu were often as low as half those of the same charger on Amazon.

Soon, Temu asked her to trim prices further to match other sellers.

“I feel like I have been pushed ahead and I have no choice,” she said about her price cuts. She is now considering trying out TikTok’s new program to sell in the U.S., she said.

—Zhao Yueling contributed to this article.

Write to Yoko Kubota at yoko.kubota@wsj.com, Raffaele Huang at raffaele.huang@wsj.com and Shen Lu at shen.lu@wsj.com

Copyright ©2024 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Behind Cheap Stuff From Shein and Temu: A Hard Bargain With Suppliers - WSJ

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