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April 21, 2025 13 mins

If you've spent any time on TikTok lately, you might have come across videos from people claiming to be Chinese warehouse operators selling products directly to consumers. These videos, part of a trend called "TikTok Warehouse," promise to deliver products from well-loved brands for a fraction of the usual retail price. In today’s podcast, we're going to explain what's happening with this trend, why it's controversial, and if it has fundamentally changed the relationship between retailers and consumers.

Hosts: Zara Seidler and Sam Koslowski
Producer: Orla Maher

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Episode Transcript

Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Already and this is this is the daily This is
the Daily OS. Oh, now it makes sense. Good morning,
and welcome to the Daily OS. It's Tuesday, the twenty
second of April. I'm Sam Kazlowski.

Speaker 2 (00:19):
I'm Zara Sidler.

Speaker 1 (00:20):
If you've spent any time on TikTok lately, looking at you, Zara,
you might have come across videos from people claiming to
be Chinese warehouse operators selling products directly to consumers. These
videos are part of a trend called TikTok warehouse and
owners are promising to deliver products from well loved brands
from Louis Vuitton to Lululemon for a fraction of the

(00:43):
usual retail price. The videos have gained significant traction amongst
US consumers, especially as they claim to bypass the recent
one hundred and forty five percent tariffs placed on Chinese
exports to the US. In today's podcast, we're going to
explain what's happening with this trend, why it's controversial, and
if it has fundamentally changed the relationship between retailers and consumers.

Speaker 2 (01:09):
Sam, there's a lot of context to this story, and
I suddenly, for one, have seen it coming up a
lot on my for you page, and I have been
asking you to explain this to me for a little
while because it seemingly came out of nowhere, But of
course that's not the case. Can we start at the beginning, though,
Say someone has never listened to a TDA podcast before.

Speaker 1 (01:28):
Well, firstly, welcome, welcome, thank god you're here.

Speaker 2 (01:31):
If they haven't listened to a TDA podcast before, and
they're not sure what you're referring to when you talk
about tariffs, let's start there. What are the tariffs you're
talking about?

Speaker 1 (01:40):
Well, firstly, the word tariffs are starting to not sound
like a word because I've said it so much. It's
starting to just sound like a syllable. So it is, though,
really important to get it. So, since the beginning of April,
all exports from China to the US have been subjects
to what is now on one hundred and forty five
percent tariff. And this is all part of the Trump
administration's trade policy designed to drive US consumers towards purchasing

(02:03):
more domestically made products, because naturally, now products from China
are immediately more expensive than they were at the beginning
of the year. Now, the tariffs affect all retailers who
produce goods in China, from luxury brands to the new
players on the scene, these famously low cost fast fashion
outlets like Timu and Sheen. We've already seen mainstream retailers

(02:26):
forecasting double digit growth declines in the current quarter, especially
if they're publicly listed, and so stocks in brands like Nike,
lu Lemon, and under Ama have really crashed in the
last couple of weeks.

Speaker 2 (02:38):
It's so fascinating. And so American consumers who I guess
once paid one hundred dollars for a pair of exercise leggings,
now looking at the price going up to two hundred
and forty five dollars, should the retailer I guess, pass
on the entire tariff to the consumer that full one
hundred and forty five percent. But then how are these

(02:59):
warehouse operators on TikTok claiming to get around these tasks?
Because that's what they're saying.

Speaker 1 (03:04):
Right exactly. They're saying if they post a package directly
to you in America and they're in China and it's
just got one pair of leggings in it, they can
slip through what's called the d Minimus loophole. Now, under
current US trade law, if a shipment is valued under
eight hundred bucks, it's exempt from taxes or tariffs when
it enters the US. Fascinating, and now this loophole has

(03:26):
been around since nineteen thirty eight, but it's become particularly
relevant now with these high tariffs. And so if you
think about those leggings, right, let's think about those one
hundred dollars leggings. If you produce those leggings and you
import more than eight, because then the value would be
over eight hundred, you have to pay taxes and tariffs
on that. So as soon as that container hits the port,

(03:47):
you have to hand over a check to the US
government with the taxes and tariffs, which is a lot
more than you paid a month ago. But if you
import just one pair because you've ordered it, and you're
living in and Diego and you order exercise leggings online
from a Chinese warehouse directly, you skip past that point
because the.

Speaker 2 (04:07):
Ships they're just sending one pair of legs, exactly. It's
not this mass.

Speaker 1 (04:10):
Order exactly right, So it's exempt under this loophole, which
is designed to kind of not target small producers. But
that loophole might not be there for very long.

Speaker 2 (04:20):
Now.

Speaker 1 (04:20):
Why is that, Well, there's been a push from both
sides of US politics to close the loophole, particularly after
the rise of those big fast fashion retailers. Current retailers say,
these brands like Timu and Sheen aren't paying their fair
share of domestic tax because they've got this different business model. Right.
They're directly importing to individual US consumers rather than you know,

(04:43):
lul Lemon importing hundreds of thousands of pair of leggings.

Speaker 2 (04:46):
So what Sheen and tim I mean. I've never understood
the business model of Sheen and tim and suddenly everything
makes sense. They are basically cutting out the middle man
exactly direct from warehouse to consumer.

Speaker 1 (04:58):
In its own package, so they will basically only ship
when somebody's ordered something.

Speaker 2 (05:03):
Rather than a lot of packaging.

Speaker 1 (05:04):
It's a lot of packaging. And there is a whole
discussion to have about the environmental impact of this new
wave shopping.

Speaker 2 (05:09):
That'll be another podcast.

Speaker 1 (05:10):
That'll definitely be another podcast. It's bipartisan the opposition. So
former President Joe Biden, who was a Democrat, he took
steps to close the loophole during his time in the
White House, but that legislation stalled. Now President Trump at
the beginning of his term, he signed an executive order
to close the loophole, but it's going to remain open
until May the second, So that's the deadline day where

(05:31):
those small packages are going to be taxed as big
ones would be.

Speaker 2 (05:35):
I'm really interested to see what will happen to Timu
and Sheen and all of these very low cost fast
the fastest fashion that really exists. What happens then, and
so is what's happening that those warehouse operators are essentially
saying by directly from us before that May second deadline,
before that loophole.

Speaker 1 (05:55):
Closes, Yeah, exactly. And they're only doing that because they're
using TikTok to appeal directly to individual consumers, and they're
telling consumers things like brands and these new tariffs mean
that you're going to have to pay a lot more
for the brands that you love, but it doesn't actually
cost us that much to make, so we're going to

(06:15):
sell it directly to for you know, basically what it
costs to make. And when customers are given the opportunity
to order something tariff free, they're told to go on
Chinese shopping apps like Dhgate or Ali Express, or even
just message the warehouse owners directly on the messaging app.

Speaker 2 (06:31):
Wow.

Speaker 1 (06:31):
The examples can be pretty wild. So one account claims
to manufacture handbags for Louis Vaton and they're selling what
they say is the exact same bag they supply to
the Fashion Giant for fifty dollars. Now, for context, that
bag normally retails for about five thousand US dollars. In
another video, a producer who claims to make leggings for Lululemon,

(06:53):
which we've kind of decided is the example we're going to.

Speaker 2 (06:56):
Use through this precision because I'm wearing Lula Lemon looking
straight at them meant to be the value of not
being able to see me on a podcast.

Speaker 1 (07:03):
So they're saying that those leggings that you're currently wearing,
which are about one hundred dollars US, they'll send them
to you for five bucks. And so it really is
changing the relationship between retailers consumers, especially with so much
uncertainty in the economy.

Speaker 2 (07:19):
I think the thing that comes to mind though, when
you're talking about this, and let's continue on with the
Lulu Lemon example, is are these knockoffs or are these
the real deal? But then I guess I mean not
to get into my own head or anything, but like,
who knows what is real? What is real?

Speaker 1 (07:34):
Well, this is actually.

Speaker 2 (07:35):
Welcome to our existential crisis by Salmon Zara.

Speaker 1 (07:37):
Well, this would actually be a really interesting discussion to
have again as its own episode. Is what makes a
product real? And is it the fact that it has
a brand name on it or a label on it
that makes it real? If you took that brand name
or label away, but it's exactly the same product made
of the exact same material, would you call that a jupe?
Would you call that replica? Would you call that a fake?
So there's lots of different kind of definitions that are

(07:58):
floating around, And it is worth mentioning that for every
video of a warehouse operator saying I'll send you this
for a lot cheaper, there are hundreds of videos of
US consumers, mostly young people, who are receiving the products
and giving it really good reviews. So obviously people are
having their expectations matched. But experts doing the rounds in

(08:21):
US media have indeed pointed out that major brands would
likely have non disclosure agreements that prohibit the manufacturers from
publicly disclosing where their products are made, and that is
casting a bit of doubt on some of the claims
being made on TikTok.

Speaker 2 (08:35):
And so have we heard from any of the brands themselves.
I mean, I imagine they wouldn't be thrilled by what's happening.

Speaker 1 (08:42):
They're definitely not thrilled, and some of them have gotten
on the front foot, Sarah, you're right, and so lul
Lemon has put out the statement warning customers that they
do not work with the manufacturers identified in the online videos,
and so they're telling people to be cautious of fraud.
And one step they talk is they actually released a
list of their production partners in China, which didn't include

(09:03):
any of the viral creators who claim to work with
the company.

Speaker 2 (09:06):
I mean, that's a good point though, the idea that
there's not much you can really do if you receive
something that isn't what you ordered. Yeah, but part of
going through a retailer is that there are quality assurances here.
You can return a product if it's faulty or if
it's not what you ordered. But in this situation, what
can you do if what you ordered is not what

(09:27):
you wanted.

Speaker 1 (09:28):
It's the wild West, right, Like, you can't really do anything.
You also can't really do anything if you pay for
a product and never receive it at all. And that
is an argument that retailers are putting to their customers
is you know, if it seems too good to be true,
it probably is, is essentially what they're saying. So you know,
you're leaving yourself exposed to not only some of those
kind of customer fraud issues that you mentioned, but also

(09:49):
the quality of the product. Is it firesafe?

Speaker 2 (09:51):
Yeah?

Speaker 1 (09:52):
Does it have parts that can fall off and be
a choking hazard for babies? All of that stuff that
goes into designing a product probably wouldn't be there when
it's got no middleman between a producer and a customer.

Speaker 2 (10:03):
I'm really curious to understand whether this TikTok trend has
actually left the app and converted into real life purchases
or if this is something that I'm just seeing a
lot and you know, feeling like is everywhere. Do we
have any I don't know data on how many people
are actually ordering from directly from these Chinese warehouses via TikTok.

Speaker 1 (10:24):
It's a really good question and I searched far and
wide to try and look for some of these providers
actually stating how many orders they've done in the last
couple of weeks. It's very hard to tell. One indicator
I thought was helpful, though, is the app downloads of
the apps that offer these services. So Dhgate, which is

(10:44):
a Chinese online retailer that many of these warehouse operators
direct customers to think like it's kind of an eBay equivalent.
It rose to the second position on the US App
Store charts recently, and that does suggest that more Americans
are downloading it now than they did last month. Then
I looked at the Australian charts and it's clear in
Australia that there has been a pretty widespread adoption of

(11:07):
the apps. I mean, today four of the top ten
apps on the Apple charts are Chinese shopping apps, so
we've got Ali Express, Talboo, d Edhgate, and Tinu.

Speaker 2 (11:17):
I think that's interesting given that we're not facing the
same tariff arrangement as US to China and China to
the US is I mean, I think people in Australia
must have just seen the trend and understood they can
get things for cheaper.

Speaker 1 (11:29):
Well, I think the veil has been lifted on some
of these ideas that retailers probably weren't that too keen
on us understanding and talking about.

Speaker 2 (11:37):
Well, yeah, like what is the bigger picture here?

Speaker 1 (11:39):
Well, I think this really does change the way that
we relate to big retailers. And when young people understand
what goes into a price in retail, they're now asking
more questions around how that price is formulated, and you
can see that sentiment come out in the comments under
a lot of these videos. Is also trying to evalue

(12:00):
whether a brand name on a product is worth that
markup for them, and I think the answer will be
yes for a lot of people, because brands have a
lot of power and that's why we wear certain clothing.
But for a lot of people, especially in a cost
of living crisis, this is another really interesting way to
engage with world commerce.

Speaker 2 (12:17):
I think we just need to reiterate once again that
we have just spoken about quite a narrow part of
this whole world. As we mentioned the environmental impacts of
something like this becoming a global trend, as you will,
but also the kind of supply chain effects and visibility
over labor all of those things. Yeah, exactly. That's a

(12:39):
whole different conversation and one that I think we should
all be having, and certainly one we can explore down
the track on this podcast the sound. Thank you so
much for explaining what I had been seeing on my
for you page every single day for the past week
and a half, and thank you for joining us for
another episode of the Daily Odds. We'll be back with
the headlines later today, but until then we joined the

(13:00):
first day of the working week.

Speaker 1 (13:05):
My name is Lily Maddon and I'm a proud Arunda
Bujelung Kalkadin woman from Gadighl Country. The Daily oz acknowledges
that this podcast is recorded on the lands of the
Gadighl people and pays respect to all Aboriginal and torrest
Rate island and nations. We pay our respects to the
first peoples of these countries, both past and present.
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