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Walmart and OpenAI Go Shopping Together & Silver Takes Gold
00:28:25
Shopping with a touch of AI & Silver is slick
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Good Morning Brew Daily Show. I'm Neal Freyman.
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And I'm Toby Howell.
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Today, couch potatoes are on notice. Furniture tariffs have gone into effect.
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Then Walmart is teaming up with ChatGPT so you can go shopping. It's Wednesday, October 15th. Let's ride.
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Good morning. If Toby and I seem a little nervous this morning, it's because there's a celebrity coming into the studio later today. Chicago Fed President Austan Goolsbee. It's very exciting. I'm going to have him sign my Adam Smith jersey. Jokes aside, we're planning on talking with Goolsbee for tomorrow's show about what the heck is going on with the economy given the data blackout from the shutdown and learned what actually happens inside the room where the Fed makes interest rate decisions. And we'd love your help.
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Yes, we want you to send us questions to ask Austin. This guy is in the room where it happens. So if you've ever wanted to know which data they're valuing the most, if they feel pressure when voting, or what cologne Jerome Powell wears, this is your chance. You can DM us a question on Instagram or shoot us an email at Morning Brew. Daily at Morning Broadcom. Very excited for this, Neil.
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And now a word from our sponsor. Remarkable. Toby, how's your focus during meetings?
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I think it's pretty strong. I stay very focused on my social media feeds.
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You can try Remarkable paper Pro for 100 days for free. If it's not what you're looking for. Get your Money back. Visit remarkable.com to learn more and get your paper tablet today. That's remarkable.com for decades, online shopping revolved around one interface, the search bar. But that system, built by Google and perfected by Amazon, is starting to break, and OpenAI is the one holding the hammer. Yesterday, the company announced a partnership with Walmart to weave Chat CBT directly into the shopping experience. Walmart CEO Doug McMillan called it the end of search bars and item lists, ushering in a new era of more conversational shopping. What he means by that is instead of Neil firing up Google and searching for pickleball shoes then scrolling through a bunch of results, he would instead ask ChatGPT what are the best shoes for beating My co host Toby maybe ask some follow ups about ankle support. The Then if a Walmart item comes up, he can check out straight from Chat cbt the integration comes as part of Walmart's broader AI push. It already has its own in house bot Sparky, but the OpenAI partnership plugs Walmart into the biggest consumer AI ecosystem that powers millions of daily questions. It's a logical step for the retailer. Even before the partnership was announced, ChatGPT had quietly become one of the most powerful new traffic engines in retail. Data from similar web shows that in August, 20% of Walmart's referral clicks came from chatbots. Etsy, Target and eBay also all saw over 10% as well. Consumers are increasingly clicking through products links embedded in AI responses, which has prompted ChatGPT to make its own play to become the checkout cart for the Internet. Also, Neal, as OpenAI looks to crank up its money making abilities, taking a cut of product sales made directly through ChatGPT seems like a pretty decent start.
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And the pattern we've seen over the past few weeks where OpenAI inks a partnership with a company and that company sees its stock rise happened once again. Walmart stock was up 5% after this announcement. People are shopping a lot on chat. This is what we are learning. Around 2% of all ChatGPT queries involving involved shopping. And now while that may not seem like a large percentage, that is about 50 million queries per day for a lot of retailers like Walmart, Etsy, Shopify, FI are seeing major boosts in traffic and Walmart thinks this is the leading edge of where E commerce is going. It thinks there's a paradigm shift in how people are going to shop on the web moving forward. They think it's going to be AI first and that's why they're inking this partnership, because they want to get ahead of the trends.
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And I want to compare and contrast Walmart's approach with Amazon's approach because Amazon has actually blocked AI crawlers from combing its database of products. Meaning that if you ask for pickleball shoes on ChatGPT, you are not going to get any results Surface from Amazon because Amazon has this very, very large advertising ecosystem is $56 billion advertising business last year, and that relies on shoppers staying in the cozy walled garden of Amazon. They don't want you coming from chat cbt. They want you going to Amazon and shopping on their app so you can see the ads that are popping up there. So it's going to be fascinating to see them kind of trying to invest in their own AI bot on their own platform called Rufus, which is. Whereas Walmart is saying, hey, we like all traffic is good traffic, please come to us via chat cbt. Clearly all of you guys are doing it already. We think this is a smart idea. So fascinating to see the differing approaches.
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Shades of Apple creating that walled garden and Microsoft blasting their operating system all over the place. In the technology sphere, yes, Amazon is creating a fortress around its marketplace. It makes over $50 billion in advertising there. But perhaps it's ceding some ground to Walmart. Should I be the new SH shopping frontier and Walmart is happy to gain, you know, all of that exposure to all these people shopping online. Well, it'll be very interesting to see how many people use AI tools to shop during the biggest holiday shopping season, which is coming up in the next few months. I don't think I've used it for shopping a lot as that much because I just feel like it's going to surface a lot of Reddit stuff because we know that Reddit is a big source of traffic from a big source to chatbots. And I think I just don't totally trust it when making decisions on buying something over 100, $200. Pickleball shoes are pretty expensive, so I think there is a trust gap, at least in myself personally. I do like to do a little of the discovery online without going to AI. But what do you think?
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Well, here is where they might respond that it's only going to get better over time because chatbot recommendations are actually based on relevance to user prompts that you've asked it in the past. So it has contextual data like potentially their budget or previous presences, preferences that are stored in its memory feature. So maybe the more you use it the better will get it starts to become your personal shopper. If you say hey I don't like black pickleball shoes, I like white ones, then maybe it will only surface white ones going forward. So maybe you just need to put some more reps in and it will become it will start to learn your preferences more and more. Just an interesting future for shopping, especially this idea of AI optimization. Aio remember we've just been on the backs of SEO search engine optimization. Now how are brands going to surface their results so they show up higher in AI queries as well? I don't even know necessarily how you do it, but agencies are surely popping up left and right saying hey, we can promise to get your results up first. So fascinating just to see the next evolution of e Commerce.
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Basically eventually OpenAI is going to ask people to pay to surface at the top right there at their feed ads what Google did and turned it into one of the most valuable companies on earth. Moving on. Maybe tariffs haven't impacted you personally just yet, but they are about to hit home. Literally. Starting yesterday, tariffs on imported furniture and lumber went into effect, part of President Trump's plan to make more cabinets and couches here in the US specifically, the US slapped a 10% tariff on imported wood and timber, 25% on imported upholstered furniture like sofas and chairs, and 25% on kitchen cabinets and bathroom vanities. Rates on most of those products are scheduled to Spike to between 30% and 50% come January 1st. In announcing the tariffs last month, Trump wrote that taxing imports will make North Carolina, which has completely lost its furniture business business to China and other countries, great again. And no doubt, North Carolina and the American furniture industry broadly has been devastated by jobs moving overseas to places like China, Vietnam and Malaysia, where labor is cheaper. And many US Companies are excited by the move, which would give them a leg up against foreign competition for the first time in decades. But others are concerned this is going to backfire because so many American manufacturers import goods to make their own household products, and tariffs will force them to raise costs for consumers or or absorb them. And then there's the plight of homebuilders, whose key input wood is about to get more expensive, which is the last thing the unaffordable housing market needs right now. Toby, I can guarantee you one winner from these furniture tariffs. Facebook Marketplace Seriously, I'm going to do.
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A little bit shopping myself, but I do think that North Carolina is relatively pleased by this, because let's go back to 1999. The state had 80,000 furniture manufacturing jobs that has fallen a lot since then. Right now only 28,000 remain. So if you were to look at where the furniture industry could bubble up and become relevant again, it's going to be in North Carolina. And a lot of these domestic producers are cautiously optimistic, but some are constantly not pessimistic because they say that even though we might make some of this stuff here, we still have input costs that are coming from abroad. So this is going to just make things more expensive. But then the biggest gap in revving up the furniture industry in North Carolina is just labor. There aren't necessarily we skipped a generation of trained upholsterers, we skipped a generation of knowledge because all these jobs migrated overseas. So they say, great, you want us to make stuff here, we don't have workers to make it. And it echoes other kind of protectionism that we've had in the United States. If, hey, we want to make iPhones in the US people aren't trained to make iPhones. You need the labor force to actually execute on these things. So that is one of the pushbacks.
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We'Re seeing Right in the Hickory, North Carolina area had an unemployment rate of 15% during the Great Recession after a bunch of factories closed there. But today it is. The unemployment rate is 3.7%. Even furniture for America, which is a trade group that represents the furniture industry, says that we can't reopen factories that no longer exist because we just don't have the people to make them. The unemployment rates 3.7%. Everyone who has a job, who wants a job, has a job job here in our area. And the ones who have a job are likely have moved on to the tech industry. And obviously there's going to be a lot of focus on furniture prices with these tariffs coming into effect. They've already been creeping up over the summer. In August, furniture and bedding prices were up 4.7% year over year, which was the biggest 12 month increase since December 2022. And then in particular, living room, kitchen and dining room furniture prices were up 9.5%, also the biggest rise in three years. Those were on of existing reciprocal tariffs that have been in effect. Now we have specific tariffs on this sector. In particular, look for those prices to rise whenever we get the inflation report, which we were supposed to get today, but it has been pushed back for a few weeks. Gold may be on a historic run this year, but it's actually not in line for 2025's gold medal investment. That would be silver, which reached a record high on Monday, eclipsing its peak in 1980 during a commodities trading scandal that would inspire the Eddie Murphy movie Trading Places. Silver prices are up 70% this year, compared to gold's gain of 55%. And to be sure, silver is surging for many of the same reasons as gold. It's a safe haven asset that investors embrace when fiat currencies look shaky, geopolitical storms start raining down, and government deficits look out of control. But silver differs from gold in that it also has practical applications in industry. As an outstanding conductor of electricity, silver is used in everything from solar panels to batteries to EVs, as well as for jewelry and the making of coinage. With supplies coming in lower than demand, for years, investors have been scouring the globe to hoard silver, a sort of panic buying that's depressed stockpiles even more. In London, the mecca of the global silver trade, inventories have fallen by about one third since mid-2021, leading to a price squeeze that's gone parabolic. Toby Silver is not gold, never will be. But in many ways, it's a more dynamic commodity because it's involved in a lot more aspects of the economy than its shinier cousin.
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Yeah, you have this air and energy transition that needs a silver right now. It's almost more akin to copper in that regard, with just how much it's used in very practical applications of renewable energy like solar panels, in things like EVs as well. And then you also have the haven aspect as well. No one's really plowing into copper as a safe haven. A lot of people obviously plow into gold as a safe haven. Silver occupies that middle ground. That's kind of, it's. It's the middle child of, you know, the precious metal markets because it has both applications available to it. I also do just want to go back to this crazy story of the 1970s and 80s of the original silver boom. It starts the Texas oil heirs of a billionaire, H.L. hunt, started buying silver silver as an inflation hedge. But then they looked at their wallets are like, wait, we have a ton of money here. Let's try to corner the market, essentially. So what they started to do is buy up more. They started borrowing against that collateral and using that to buy more. And the more that they bought, the more valuable their hoard became. So the more they could borrow. And you see how this cycle just perpetuates and perpetuates. They. Their influence on the silver market was insane. They brought it from $11 an ounce, nearly $50. They had controlled over half the world's deliverable silver supply at their peak. And then the public panic came. People started melting down their grandfather's coin collections and selling that into the market. Regulators started to take notice. They cracked down on the amount of collateral you actually had to put up to crack down on these speculative purchases. And silver Thursday came and the market absolutely collapsed. And it has taken literally until these past few weeks for the market price of silver to recover to that 1980 peak. So a fascinating story. Go watch the Eddie Murphy movie Trading Places if you want to see more about why these futures trades are illegal now.
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And now you know there's no quartering of the market going on. Exactly. By three billionaire brothers. But there is just such a wide influence, a wide array of events that have influenced silver prices going up. One of them is the threat of tariffs on silver, which is why investors have been moving silver in cargo planes from London to New York to get ahead of potential tariffs. And then when I'm talking about a wide variety of sources, I mean that because Diwali, which is a Indian festival, is happening, is culminating on October 20th. That requires a lot of demand for jewelry. So that's another reason why prices are going higher. You have the renewable energy transition mines that don't have a lot of output and the safe haven overall vibe of the market. So all these things are combining together to send silver higher than gold this year.
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All right, we're going to take a quick break and come back with a delayed version of Toby's trends.
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Toby, you've done some traveling recently. Have you ever been on the way to your next destination and realized you won't have time to eat for the next four hours?
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I'm sorry to say it happened on my last trip in the hangry. Toby ended up coming out.
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That can be avoided by carrying David protein bars with you. They have 28 grams of protein, 150 calories and 0 grams of sugar. So they're perfect for when you need a quick, high protein snack.
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A David bar definitely would have come in handy. 75% of its calories come from protein and that's 50% higher than any competitor.
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The bars tend to sell out online, but you can always check their store locator to see where you can purchase in person.
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Right now, when you buy four cartons of David bars, you get your fifth one free. Head to davidprotein.commbd to get yours. That's davidprotein.commbd.
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Actually, yes, that's exactly it. Reaching high value audiences at scale.
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Get started@disney campaignmanager.com that's disney campaignmanager.com It's.
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Wednesday, which is basically Tuesday because of the short week, which means I get to bring you a special edition of Toby's Trends, the segment where I take a deep dive into the business world to emerge with a trend you should keep your eye on. And today's trend is about artists releasing more than one version of their albums in the hunt for more record sales. Unsurprisingly, Taylor Swift is the one driving the boat here. I want you all to take a second to guess how many different versions of the the Life of a Showgirl Swift release to the world. Was it 1020? Try 38. Between CDs, vinyls, digital and cassettes, Swift offered various accoutrements in the form of acoustic tracks, voice memos, bonus artwork, or even jewelry to entice Swifties to buy, buy, buy. And it worked to the Life of a Showgirl set the record for most first week album sales, beating Adele's 2015 three and a half million for her album 25, which seemed impossible to top in the streaming era. While Taylor has perfected the art of the multi album release cycle, she's far from the only artist doing it. The average top 10 album in 2023 came out in 8.9 different physical variants, compared to just 3.3 in 2019. The top 10 albums by physical sales averaged 22 versions each. Critics call it chart gaming, where you're just using volume to build sales, but super fans seem more than happy to snap up their favorite artists in any shape or form. Neil, most of these buyers don't even own a record or cassette player and yet they buy anyways. Maybe the new Labubus are just Taylor Swift deluxe wood editions featuring Travis Kelsey's face on them.
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Yeah, I mean, I think you said it correctly. These are becoming collectibles in line with the boo boos. Maybe you know, the order is reversed there or bobbleheads at baseball game. And you're right, people don't really even listen to these records. So Showgirl sold 1.33 million copies last week as a vinyl LP. But a survey from Illuminate found that only 50% of consumers who paid for vinyl over the past year actually had a record player. So this is all about supporting your favorite artist or having as many possible versions of any particular album as possible in order to show your love and fandom for particular musical artists. And Swift maybe pioneered this gaming of the system or, you know, interesting business model that artists are using to juice more sales in their first week of their record. But she's not the only one.
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Yeah, she's not the only one. And also if attention is the currency of, you know, the music game, then of course flooding the zone with more albums is going to lead to more attention. Because if you release 30 different variants, fans go on social media to debate which one they buy. They post their unveilings on the TikTok, more fans see it, the charts surge. So it's a self perpetuating cycle. And you have seen some of these face offs happen between other artists. The one I'm thinking about is Travis Scott versus Sabrina Carpenter. Back in at 2024, Travis Scott released six different digital variants in a single day. And then Sabrina Carpenter came back with three. She won by fewer than a thousand units to become the, you know, the biggest album of the month of the year. So it was fascinating to see artists are looking at their album sales going, oh, we're lagging behind right now. Let me just release some other versions into the wild to try to jumpstart that cycle again. So maybe don't hate the player, just hate the game because it's clearly working right now.
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Well, people are hating the game. There is a lot of backlash to what Taylor Swift is doing with these 38 different variants. They're calling it exploiting her fans or a very blatant money grab. The Reddit pages have been blowing up with people saying, what are you doing, Taylor Swift? Like this is, you are becoming a more ruthless business mogul than Jeff Bezos. Here by releasing all of these different variants. What about actually just putting out your music to the world and letting your fans love it rather than introducing every single day it seems like there's been a new one that she's asking people to buy and they are buying it. So completely understand that this may be the business environment that everyone's operating in, but there's maybe concern that down the line people are going to remember Taylor Swift more for her business ventures or acumen rather than her musical arts industry.
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Maybe we do Morning Brew Daily Morning Brew Daily Acoustic version Morning Brew Daily Neil and Toby's special deluxe version. I don't know. Let's just drive up some downloads as well.
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All right, let's run to the finish with some final headlines. Instagram is borrowing a page from the movie industry, slapping a PG13 rating for teen accounts. The meta owned social media app said it would start limiting the content its teen users can view to something you'd find in a PG13 film, a response to growing scrutiny of the platform's child safety features. And crucially, the PG13 rating also applies to conversations with its AI chat bots, an area where things have taken a dangerous R rated turn for some kids. The PG13 announcement builds on major changes Instagram introduced last year for teen accounts, including making them private by default, silencing notifications overnight, and blocking DMs from strangers. It said that it chose the PG13 concept because it was already familiar to most parents who have a general understanding of what content falls into under that umbrella. Maybe a few swears, maybe some adult themes, but nothing human Centipede level yeah.
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It is a very interesting positioning that they are doing, very interesting messaging by adopting this PG13 moniker, something that the Motion Picture association, by the way, quickly distance themselves from saying it wasn't consulted and it has no connection to the new rules. So even as Metta has gone on this PR push because you're right, it is very easy to wrap your head around exactly what that means. The person actually responsible for giving those ratings, Motion Picture Associates and said this isn't actually PG13, this is just a moniker in this sense. But yeah, zoom out. This is happening across a lot of different AI first companies right now where there's a lot of backlash to OpenAI for, you know, getting entangled with kids who are using their chat bots unsafely. They actually have said that they figured out a way to determine the age of people who are using their chat bots and are going to let adults use it in an adult way. Sam Altman literally said that Erotica is coming out this December as long as you are an adult. So it's fascinating to see kind of the battle lines being drawn around these AI bots and what access you give to children. Instagram is trying to thread the needle with this PG13 moniker. Moving on. If you've ever been listening to a podcast and thought, hmm, this would go great with K Pop Demon Hunters, you're in luck. Because Spotify announced yesterday it is bringing video podcasts to Netflix. The partnership will initially focus on bringing podcasts from the ringer to the streaming company by 2026. So no Neil and Toby on the medium screen just yet. But the idea is to help Spotify continue to fulfill its dream of becoming a multimedia experience company rather than just an audio only one. Both Spotify and Netflix have no doubt seen the success of video podcasts on YouTube and thought, I definitely want to get in on that action too. Neil. More people are tossing up pods on their TV these days. This partnership makes a lot of sense, though. I don't know if we need to see Bill Simmons blowing up on a TV screen.
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If I went back 10 years and told you that people would watch podcast Bill Simmons on Netflix, you would have left me out of the room. But people really do consume podcasts this way, and YouTube is the top podcast platform in the world right now, with more than 1 billion listeners each month. Crucially, with this partnership with Netflix and Spotify, all of the podcasts that are coming to Netflix are going to be taken down from YouTube. So it's very clear that Netflix and Spotify are bulking up in partnership in contrast with YouTube, which is the leader in the clubhouse, by the way.
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I'm going to plug the YouTube version of our show while we're here, because we were at our trivia night yesterday, a lot of people I met didn't even know we had a YouTube version. So if you want to see our smiling mugs, then maybe head on over to YouTube to listen.
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B
And finally, it appears we are past peak plus when it comes to naming streaming services. On Monday, Apple quietly announced that its streaming platform, Apple TV plus, would become Apple tv, marking a potential turning point in companies obsession with slapping a plus sign to denote a streaming service. When ESPN rolled out its newest streamer earlier this year, it called it simply espn. But it's not clear whether removing the plus sign will be a positive change for consumers or just add more confusion because Apple already has two different products with the name Apple tv, a Set Top Box and a content aggregation app. But hey, at least it's not as bad as HBO Max's rebrand to Max, which it reversed after getting bullied into submission.
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C
Yeah, the deep plus ification trend in streaming is alive and well right now. It does look like it's almost a maturation of the streaming environment. When these streamers were first coming out, they wanted to symbolize novelty and say, hey, you're going to get more. This is our new streaming venture now. They almost want to symbolize stability and maturity. Like ESPN is just espn. You go there to watch sports. Apple wants to do the same thing. Like, hey, we are not. This is not a sideshow of our ecosystem. This is just Apple tv. It just grounds it in the ecosystem a little bit more. So I did see people praising it for its simplicity. But then it is so ironic that, like, wow, this is so much more simple now. Even though they have multiple things named the exact same thing, I think they can get away with it because just context, you're not going to say, let's go watch Apple TV and stare at the tabletop box. So I think it's fine. But I do think consumers were ready for the deposit vacation. It's just streaming now. Everyone knows what's going on. No one needs the plus anymore.
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B
All right, that is all the time we have. Thanks so much for starting your morning with us and have a wonderful Wednesday. Got to give a shout out to the winning team at Trivia last night, the Life of a Morning Brew Daily Showgirl. And thank you to everyone who played and said, neil, you're taller than I imagined. If you have any feedback on today's episode, send a note to Morning Brew daily at Morning Broadcom. Let's roll the credits. Emily Milian is our executive producer. Raymond L. Is our producer. Our associate producers are Olivia Graham and Olivia Lake. Hair and makeup has been approved for all audiences. Devin Emery is our president and our show is a production of Morning Brew.
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C
Great show today, Neil. Let's run it back tomorrow.