D2C Digest #41 | Klaviyo's new service business, Temu spent $2B on Facebook, and more

Hey there, great people of the D2C community who are building fantastic things! This is your host Berkay writing.

Take a 5-minute break and dive into D2C Digest for a quick overview of what’s happening in the D2C market worldwide!

🤯 Klaviyo has entered the services business

Klaviyo has recently ventured into the services sector, causing a stir among agencies and marketers. This decision seems to be a response to their recent earnings report, which disappointed investors and left them searching for new sources of revenue. While it's understandable given their circumstances, some believe it could be a shortsighted move.

This shift blurs Klaviyo's identity as either a technology or services company and has unsettled their partners who played a significant role in their success.

Klaviyo now offers implementation, email flow building, template design, and support services, but notably lacks full campaign deployment, optimization, and retainer-like services.

While some see this as a positive step, others anticipate Klaviyo will eventually offer full-stack management services. Agencies and marketers are urged to view this development as an opportunity to enhance their skills and adapt to changes in the industry. However, concerns linger about potential conflicts between Klaviyo's priorities and those of its partners, which could strain their relationship.

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😯 Temu spent $2B on Facebook in 2023

Temu, the Chinese fast fashion brand, has become a significant advertiser on Meta Platforms' Facebook and Instagram, spending around $2 billion on ads last year alone.

This amount represents 10% of Meta's ad revenue, nearly double what it was two years ago.

Temu's aggressive advertising strategy includes placing millions of ads on platforms like Google and Meta, leading to increased scrutiny from US lawmakers due to concerns about labor practices. The rise of Temu and Shein as digital advertising heavyweights poses a threat to traditional American retailers like Amazon and Walmart, prompting calls for action from policymakers.

This surge in advertising spending, primarily by Chinese fast fashion brands like Temu and Shein, has greatly contributed to Meta CEO Mark Zuckerberg's wealth, who is now among the top five richest individuals globally.

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📈 Gen Z and Millennials ask for AI in Shopping

PYMNTS research indicates that while many consumers are uncertain about the future of artificial intelligence (AI) in commerce, younger generations are generally more receptive.

Specifically, their survey found that 69% of Gen Z consumers and 54% of millennials and bridge millennials are interested in integrating AI technologies into their shopping experiences.

This trend coincides with the increased adoption of AI by brands, retailers, and marketplaces to enhance customer engagement.

Examples include Etsy's AI-powered gift hub and the use of AI-driven chat and recommendations by direct-to-consumer brands like Bellabu Bear.

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🤓 Reading recommendations

1. Shopify SEO Guide

Ahrefs recently published well-rounded guidelines for SEO for Shopify merchants. Check it out!

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2. Transform Fans Into Customers with TikTok for Ecommerce

We recently shared how TikTok appears as the top search engine. Check out Shopify’s latest article on how to fully utilize TikTok as a customer acquisition channel!

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