00:05:06 · Aman Narain, Zubin Vandrevala
[00:05:06] S0: I know you love saying that. Now By the way, actually. [00:05:10] S1: Yeah. Hang on. Hang on. Hang on. I have a side story with Piggly Wiggly. Way back, this is, I'm talking, 2005 or 2006, I actually did a side project where I was at Kellogg doing business school with a dairy farmer out of Wisconsin, really analyzing his entire distribution, which led me to guess who? Piggly Wiggly. And I'd never ever heard of this brand before, and I've actually been to one of them. [00:05:31] S0: So to answer your question on which one Piggly Wiggly removed and take you back to your business school days, I think none, strictly speaking. It moved the work. But look at what it created. Once there's no clock recommending the soap, the box has to do the selling itself. Self-service forced the brands into packaging and national advertising your business school was very famous for, so they could sell themselves straight off the shelf. The shelf became a medium. Attention as a business was seeded, if you'd like, in 1916. [00:06:06] S1: So going back to the point I was trying to make, retail's media's founding father is a pig. [00:06:13] S0: A very successful pig. [00:06:16] S1: Alright. Then information and a date that every shopping or commerce person should care about. The June 26 in 1974, a Marsh supermarket in Troy, Ohio. A cashier scans a pack of Wrigley's Juicy Fruit gum with a barcode on it. [00:06:35] S0: And and the store starts to know things.
00:06:35 · Aman Narain, Zubin Vandrevala
[00:06:35] S0: And and the store starts to know things. [00:06:38] S1: Every item, every lane, every day. That data lets stores automate, I don't know, replenishments. It powers the big boxes, Walmart and Costco, and category killers like Home Depot. The barcode's real gift wasn't a faster queue. It was a retailer who knew more than anyone else standing in it. [00:07:00] S0: And then, Zubin, came trust, is, of course, your patch. [00:07:03] S1: Yeah. Let's let's talk through that. Right? '9... Nineteen fifty Diners Club, 1958 Bank of America, which later became Visa, we've done an entire episode on it. A network now separates the moment you buy from the moment you pay. The merchant trusts the network to settle. The issuer trusts the cardholders to pay. Nobody in the store has to trust any [00:07:23] S0: And and a trust layer dressed up as plastic, if you'd like, which brings me to the story I want you to remember. China 2003. EBay is in the market through a local site, EachNet, with the brand, the technology, and the money. Alibaba out of Hangzhou launches Taobao against it. Zero listing fees, a chat tool so buyers can haggle with sellers, and in 2004, Alipay with one rule: The buyer's money sits in escrow, and the seller isn't paid until the buyer confirms the goods have arrived as described. [00:08:02] S1: In a market full of counterfeits, that's not a feature. That's a product.
00:08:02 · Zubin Vandrevala, Aman Narain
[00:08:02] S1: In a market full of counterfeits, that's not a feature. That's a product. [00:08:06] S0: It really was, Zubin. I was there to see it. And it drove eBay out of China. EBay had the technology, but Alibaba had the trust layer. And hold that thought. We'll come back to it at the very end. [00:08:20] S1: Aman, as we were researching this, we took this to India as well. Right? And every big emerging market built its own bridge. Flipkart unlocked India's ecommerce in 2010 with cash on delivery for shoppers wary of putting a card online. We relived this with in in 2014 where over the lunar New Year, WeChat's red envelopes had people linking bank accounts by the millions. And then, I don't know, take April 2016, a a time when we really lived much more closer together, India launched UPI, a public rail for instant account on account payments with no merchant fees. [00:08:56] S0: Yeah. And we've both done time at Google Pay. So the last one is very personal and relevant as India debates adding a small merchant fee. [00:09:04] S1: Well, I'm gonna I'm gonna take what I said back in me being capitalist. You're right. Right? I'll give you act one. Cost was the motive every time, but each one shipped with a trust device bolted on. [00:09:16] S0: I'll take that.
00:09:16 · Aman Narain, Zubin Vandrevala
[00:09:16] S0: I'll take that. [00:09:19] S1: Before anyone gets excited about the future, a scorecard for confident predictions made by some very, very serious people that totally missed. Let's let's break these down. One, in 2017, Credit Suisse made a statement, a prediction, a fifth to a quarter of American malls gone by 2022, and the stores with it. Colliers today says stores still take about 85% of US retail sales. Number two, 2018, OCNC voice shopping from $2,000,000,000, $40,000,000,000 by 2022. Smart speakers have really become kitchen timers. Three, twenty thirteen, sixty minutes, Jeff Bezos shows off delivery drones on a two to five year timeline. And I think this is his quote. I know this looks like science fiction. It's not. Well, reality is drones are still a tiny fraction of the last mile delivery problem. And the fourth, which we've talked quite a bit about, in 2022, our favorite, Zach, came on and said the Metaverse. Gartner, in fact, went on and said a quarter of us would spend an hour a day there in 2026. Well, here we are. Let's just say Meta has moved on to Muse and AI agent. Every one of them mistook capabilities for equivalent. What about the bonus round? Right. Let's go back to Zach at f eight in 2016 said messenger bots would become the way we talk to businesses. Well, right interface, wrong decade. The technology worked. The economics, the behavior, the rails, all the rules didn't settle. [00:11:08] S0: So that's the test for the rest of today. Not whether it can be built, whether it settles.
00:11:08 · Aman Narain, Zubin Vandrevala
[00:11:08] S0: So that's the test for the rest of today. Not whether it can be built, whether it settles. [00:11:13] S1: Act two, the present, and a number to set the table. Emarketer via Shopify puts global online retail at $6,880,000,000,000 this year, about a fifth of all retail. [00:11:28] S0: And, Zubin, the footnote is the story. [00:11:30] S1: That's true. That's true. Take China out of it, and that share, I think, falls to under 13%. [00:11:36] S0: Yeah. So 12.8 to be precise, but who's counting? So there isn't one future of shopping. There are three operating systems, in my opinion. There's the Chinese one, which builds vertically inside super apps and warehouses. There's the one in India that's emerging that builds on public rails with private dark stores on top of them. And then there's the West where you live, which is fighting it out between open protocols and world guts. Let's let's take China first a bit. Linwei, another composite, is a 29 year old product manager in Shanghai. On the metro home, she asks Qwen, her assistant inside Taobao, for a low calorie stir fry, as you regularly do yourself. It builds the basket, and twenty four minutes later, it's at her door from a front warehouse nearby. She never sees a checkout. Alipay settles it inside the app. [00:12:35] S1: And down the coast in Fuzhou is Chenbo. 27, also a composite at the other end of an order like hers. An algorithm decides what sits on the front racks. He grabs a bagged order in about ninety seconds, and he's at the door in about twenty three minutes.
00:12:35 · Zubin Vandrevala, Aman Narain
[00:12:35] S1: And down the coast in Fuzhou is Chenbo. 27, also a composite at the other end of an order like hers. An algorithm decides what sits on the front racks. He grabs a bagged order in about ninety seconds, and he's at the door in about twenty three minutes. [00:12:53] S0: And building it costs a fortune. [00:12:55] S1: In 2025, Meituan, Alibaba, and JD fought a subsidy battle worth around 100,000,000,000 yuan. So that's approximately $14,000,000,000. Right? Just to put things in perspective, Alibaba alone pledged about 50,000,000,000 yuan. JD even pitched social insurance for its riders. [00:13:18] S0: Meituan's delivery engine, Core Local Commerce, made an operating profit about 52,400,000,000 yuan in 2024. By Caixin's account in 2025, it lost 6,900,000,000 on revenue that still grew, a swing of nearly 60,000,000,000 yuan in a year. So it brought its own customers back at full price. [00:13:43] S1: Yeah. And and kept them. Right? Coverage of its 2025 results puts its food delivery share at about 60%. And then, of course, we've talked about this. The regulators, say, MR called time. So they stopped buying customers and started buying warehouses. In February, Meituan agreed to buy Dingdong Maicai thousand front warehouses with spoilage of one to 2%. And all three went after Poo Poo, the fazale chain with more than 70% penetration. [00:14:16] S0: I swear I didn't put that in the script for you, but I hope you enjoyed that. Look, subsidies rent habits, and warehouses own.