You see, recently, TikTok somehow discovered one of my greatest vices and then served it up to me on a digital platter: a 4.6-ounce bag of spicy Mexican chips, costing only $1.51 after a discount, shipped for free to my East Coast home all the way from a candy shop in Pasadena, Texas.

Yes, that’s an absurd deal that makes absolutely no financial sense. No, I didn’t feel great about the environmental impact of my online impulse buy after clicking “Buy Now.” 

As a reporter who has covered e-commerce for the past decade, I had a lot of questions. So while I awaited the shipment of my guilty pleasure, I contacted the merchant behind the 4.6-ounce bag of Cruijtos “Queso y Chile” chips to try to work through the improbable math. Luckily for me, he was happy to chat. 

Manny Barba is the owner of Las Delicias Mexicanas, a small chain of Mexican candy shops with brick-and-mortar stores in Houston and nearby Pasadena. Barba’s wife, Abigail, encouraged them to start selling through TikTok’s commerce platform, TikTok Shop, after it launched to U.S. app users in the fall. And since then, she’s the one who has mostly been responsible for the growth of their presence on the shopping platform under their handle “lasdeliciasmexicanas_2.” 

There, they’ve been selling single bags and variety packs of Mexican chips—12 small bags for around $25—as well as Mexican candies, jerky, and Chamoy pickle kits. In early December, a simple live video of a store employee showing off various chip varieties in Spanish went viral, attracting more than 1 million views and helping draw attention to their online storefront. A few deals with affiliates—TikTok users with decent-sized followings who would promote their shop for a cut of sales—also helped. 

Soon, the Barbas were overwhelmed, hiring extra staff to help field 300 to 400 TikTok Shop orders a day, and working around the clock just to stay above water. Over a two-month period, their TikTok store generated more than $100,000 in sales. The new sales channel had quickly become for them equal parts blessing and curse. Around the same time, massive issues at Houston area U.S. Postal Service facilities led to a large backlog of orders and delayed shipments. Negative reviews from TikTok customers began pouring in, and the Barbas found themselves on the hook for thousands of dollars in refunds.

Those challenges, Manny Barba said, “have been a nightmare.” 

The Barbas then slowed down on posting new videos to the site and pulled back on their affiliate partnerships. They also switched from USPS to FedEx for their shipping. Now, finally feeling dug out from the holiday backlog, they are considering stepping on the gas once again.

“Going viral can change your life,” Abigail Barba said. 

TikTok Shop is just one of a few online shopping experiences with roots in China that have taken the U.S. consumer by storm recently. TikTok, which is owned by China-based ByteDance, along with shopping apps Temu and Shein, are selling billions of dollars in goods to U.S. customers each year. While their business models and strategies vary, much of their appeal centers on the same thing: ridiculously low prices. As a result, U.S.-based retailers from Amazon and Walmart to dollar store chains, fast-fashion brands, and department stores, are now on high alert. 

So back to my $1.51 bag of chips: Who exactly is losing money on that? It sure isn’t Barba. Both the 30% discount I received, as well as the free shipping offer I was presented with as a first-time customer of their shopping section, came courtesy of TikTok. Even on other orders, TikTok is subsidizing a large portion of the shipping costs too. Last week, for example, Barba said his TikTok store racked up more than $2,100 in shipping fees on $6,000 in sales. That said, TikTok only charged his business $396 for shipping, plus a tiny 2% commission on sales. 

If that sounds too good to be true, it’s because it is. Soon, TikTok’s cut will increase from 2% to 6%, and then to 8% by the summer. Manny Barba assumes that TikTok will reduce the shipping subsidies eventually too, but by then many sellers will feel locked in.

“They’re going to get us used to the platform, and then sink their teeth in,” he said. “But by that time, you’ll be so used to it that you’ll just think, ‘It is what it is.’”

Jason Del Rey

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NEWSWORTHY

KOSA gathers steam. It seems the Kids Online Safety Act now has enough support to be passed by the Senate. The law would oblige tech companies to “exercise reasonable care” when designing services to protect kids from things like depression and harassment, provide straightforward parental controls and privacy-protecting default account settings for young people, and make it easy for young users to delete their data. But, as the Washington Post reports, it’s unclear if there’s enough support in the House, where many lawmakers want a privacy law that protects users of all ages.

Apple breaks web apps in EU. Apple has confirmed that it deliberately broke iPhone web apps in the latest beta version of iOS, 17.4. As TechCrunch reports, it claims it was forced to do so by the new Digital Markets Act, which will in a few weeks force Apple to allow third-party browser engines (i.e., ones that aren’t Apple’s WebKit) on iPhones. So where EU users could previously put web apps on their home screens, those will now be replaced with links that will open the web app in the user’s default browser instead—without features like the ability to tap into local storage.

Microsoft’s new Xbox play. Microsoft is releasing four Xbox titles—it’s unclear which yet, though they aren’t the recent hit Starfield or the upcoming Indiana Jones and the Great Circle—on rival platforms. The Verge published the internal memo from Microsoft Gaming CEO Phil Spencer, in which he hailed “a future where players have a unified experience across devices.” In an interview, Spencer told the publication the move would be a learning experience that ought to grow the communities around the games, but “if the net result is that other things are punitive to the Xbox platform and try to limit our growth, then we’ll have to think more carefully about how we support those other platforms.”

ON OUR FEED

“My greatest desire of all of them would be to interview Taylor Swift and Dolly Parton together and only talk about business. I’ve asked Dolly Parton over and over again. Same thing with Taylor Swift’s person. I want them to talk about IP. Maybe I’ll get lucky. I doubt it. I don’t think I have enough heft yet.”

—Tech journalist Kara Swisher, who says she’s “sick of” tech people, chats with Wired’s Steven Levy about her new memoir, Burn Book

IN CASE YOU MISSED IT

OpenAI just shifted the generative AI battle to Hollywood with its new AI text-to-video product, by Kylie Robison

ChatGPT’s ‘memory’ experiment offers a glimpse into what AI assistants will become, by Sage Lazzaro

Exclusive: AuditBoard, risk management software provider, is generating $200 million in annual recurring revenue, by Allie Garfinkle

Ford CEO, who’s been worrying about China’s EV dominance for years, says ‘the world has changed’ and he’d work with rivals on a cheaper battery, by Steve Mollman

Biden’s campaign is joining TikTok just as Americans are evenly split between those who want to ban it and those who don’t, by the Associated Press

BEFORE YOU GO

Google’s “right to be forgotten” shift. In the decade since the EU courts first gave people the right to have the internet forget about some of their past transgressions, Google has complied with many people’s requests to have news articles referring to them delisted from its search results—but it’s also given the publishers of those articles a heads-up when doing so. No longer. As the Guardian reports, Sweden’s data protection authority decided informing publishers of listing removals was in itself a privacy infringement for the person who had requested the delisting. Google disagreed but was denied leave to appeal. The Guardian argues the move “leaves journalists unable to identify situations where the right to be forgotten has been misused to hide legitimate reporting on serial miscreants, and hampers their ability to challenge the most serious abuses of the right.”