The “Amazon Killer”? How JD's Joybuy Invades Europe | PLUS: Meta's Zero-Click Threat

Episode Transcript

00:00:00 Mike:
Welcome to Growing Ecommerce. I’m one of your hosts, Mike Ryan. With me is our other host, Chris.

00:00:15 Chris:
Hey.

00:00:17 Mike:
So, Chris, we’ve got a couple of interesting topics today. We’re going to talk about a new, but old, but fake new zero-click experience in Meta ads. We’ll talk about that, and then we’re going to have a couple of follow-ups on some popular past topics, one of which has been the market penetration of Temu in Europe. We’re going to compare that to Amazon, and we have a lot more data with us this time. We also mentioned a couple of weeks back that another Chinese giant, JD, has launched their Joybuy ecommerce platform in Europe. We’ve got a little bit more data on how that’s shaping up—a clash of the titans: Joybuy vs. Amazon vs. Temu.

00:01:03 Chris:
Interesting. Let’s get into it. Should we start with Meta? Last episode, we were talking about some of these zero-click features inside of OpenAI. We’ve talked about these features inside of Google’s AI mode. And what a surprise, Meta is going for this too. As we’ve said on here, it’s a war for the data and control of the customer. For these platforms, it’s very attractive if the transaction can exist inside the platform for obvious reasons.

00:01:29 Mike:
For brands and retailers, it looks different. If you’re a brand, it can make sense as distribution; you don’t necessarily need to own all of your customer data. But as a multi-brand retailer, they need that data a whole lot more. They are much more reliant on this type of traffic because they just don’t have the brand power to be the sole player.

00:02:14 Mike:
Meta has partnered with Stripe, the payments processor, to deliver an in-ad checkout experience. We also talked a while back about Google working on a landing page ad checkout thing. We see where this technology will go, but in the intermediate phase, it’s just the checkout. You click on an ad and, rather than clicking out to the advertiser’s or merchant’s website, you’re able to complete your purchase right there. This is not a novel experience; Google and Meta have had similar technology before. It’s a new attempt, this time in partnership with Stripe.

00:03:07 Mike:
The interesting part here is that Stripe is one of the main partners on ACP—the Identity Commerce Protocol—from OpenAI, Stripe, and other partners. We mentioned in the last episode that OpenAI is facing some challenges with their commerce initiative, so this is a plus for them. Meta is a big player, and anything they do on ACP instead of UCP (Google’s Universal Commerce Protocol) is a big win.

00:04:02 Chris:
It’s the war of the standards—like Tesla versus others or Tesla versus BYD. These protocols will likely make a huge difference to the dominance of big players in the future of ecommerce. I’m not into the technicalities of UCP versus ACP, but I suspect Meta went with ACP because UCP comes from Google. Meta probably views Google as the bigger competitor and went with the more “open” standard. But Mike, as the technical guy, why do we even need a protocol for just a checkout feature?

00:05:49 Mike:
It’s a great question. Maybe they have something planned for a more agentic workflow in the future. This is technology that you can definitely build without generative AI; it’s been built before and worked fine on Google. It feels a bit hyped to me, like things being built on blockchain just for the sake of it. From today’s standpoint, this has nothing to do with AI; it’s Meta testing the waters again because of the massive advantages for platforms to control the purchasing journey.

00:07:17 Chris:
The major takeaway is that they are going with ACP, not UCP. But the most interesting question will be: is this working? Last episode, we discussed how Walmart’s chat purchase option with OpenAI failed, with conversion rates three times lower. I’m super interested to see if this works for Meta. If this test fails as well, it’s a telling sign that consumers might not be ready.

00:08:16 Mike:
It’s a crowded graveyard at this point. Google and Meta have tried similar tech in the past without AI and it didn’t work. OpenAI didn’t work. TikTok is one of the only counter-examples, and that’s probably due to their overall user experience and impulse buying. Retailers don’t necessarily want to give up control. When Google tried this before, they had no leverage; even when they offered it for free, retailers said no.

00:09:27 Chris:
I want AI to succeed in improving the ecommerce experience, but for online retailers, it has to translate into better performance. Why should I give away control if the numbers aren’t better?

00:10:27 Mike:
I’ll disagree with you there. If platforms start drawing users away—if users stop visiting websites because Google is pulling them into an AI search mode—retailers might not have a choice. But if they do have a choice, they will look at the numbers. They are starting with Facebook and moving to Instagram, and eventually, this will be optimized across their full experience, likely inside Advantage+.

00:11:47 Chris:
We stated a year ago that zero-click events would return, and we are right there. It won’t happen overnight, as seen in adoption struggles, but Meta is trying again. Let’s move on to some follow-ups.

00:12:33 Mike:
Let’s start with Joybuy. JD has launched in Europe, starting with Germany, the UK, the Netherlands, and France, directly competing with Temu and Amazon. I view it as more Amazon-like in terms of assortment and value proposition. We’ve got updated data on their ads. They started the month of March very strong, especially for brand-new campaigns in new markets.

00:14:18 Chris:
This chart is super interesting. They had a big bang start with deep pockets and a lot of products. They could play the same game as Temu, but one possibility is they are going for a different strategy: establishing a base and efficiency levels that are sustainable. Unlike Temu, which was losing $30 per conversion at its peak, Joybuy seems to be trying to establish a more efficient basis to scale from.

00:15:29 Mike:
That’s almost certainly true. Temu was just throwing money with no regard for efficiency, trying to buy market share and app users. JD looks like it’s operating more like a conventional advertiser, and their website seems more important to them than it was for Temu.

00:16:30 Mike:
One auction metric Google provides is “outranking share.” Initially, the median advertiser outranked Joybuy about two-thirds of the time. But that’s trending down; it’s now below 50%, meaning it’s a coin toss who’s in a stronger position.

00:17:32 Chris:
This strategy has a bigger chance of winning in the long run because they are establishing efficiency and trust. Once they hit the sweet spot, they can scale. For the typical European retailer, I don’t know if this is a good sign because the scale will happen for sure.

00:18:15 Mike:
I think they are a more serious player. At its most delirious heights, Temu was so dominant in auctions that it actually had a halo effect for others because trust in Temu was so low. Joybuy feels way more premium and reputable. They are in here for the long run.

00:19:33 Chris:
The CPC inflation won’t be as hard-driven by them as it was with Temu, but it will be a steady pressure. My concern is that Joybuy is a hybrid of Amazon and Temu, which is terrifying.

00:20:58 Mike:
Let’s segue to Amazon. We talked about Temu’s market share in Europe based on monthly active users (MAU). I’ve improved this math and I’m calling it market penetration. I’ve taken the MAU that platforms submit to the European Commission and divided it by the total number of internet users in the market. Amazon is dominant in high-GDP, Western European markets where they have dedicated domains and logistical hubs.

00:24:42 Mike:
Meanwhile, Temu is very dominant in Central and Eastern Europe—markets Amazon has somewhat neglected. Amazon’s service model is about price, speed, and convenience, requiring heavy logistical investment. Temu has focused on price and hasn’t focused as much on speed, allowing them to be much more opportunistic across all of Europe.

00:25:41 Chris:
There’s no feeling of shame about buying from Temu anymore. Amazon has a better product-market fit with high-GDP countries, while Temu’s value proposition was a benefit for lower-GDP markets. The big question is: what can Amazon do?

00:27:11 Mike:
Amazon is in a bind. They were always shy of strong local incumbents like Allegro in Poland or eMAG in Romania. Temu was not shy at all. Now those homegrown giants are still there, Temu is there, and Alibaba is investing in those markets. Amazon missed the chance to use Poland as a hub for further markets years ago.

00:29:25 Chris:
Amazon is a conventional player with shareholder interests and profitability guardrails. Temu doesn’t seem to have that same pressure, which is why they play the game so ruthlessly.

00:30:12 Mike:
PDD, the owner of Temu, is publicly listed, but the transparency standards are different. Chinese companies are looking to other markets for growth because their own market is so competitive. They see Europe as “lunch.” Amazon will fight back, but being in the middle of Amazon, JD, and Temu is not a good place for retailers to be.

00:32:06 Mike:
I saw some Google research showing that while there are persistent trust issues with Temu, once people buy, their satisfaction and willingness to recommend it are actually quite high. The product works.

00:33:27 Chris:
Their growth path is straightforward: invest in convenience and delivery, and then they become a real challenger to Amazon.

00:34:07 Mike:
We ended on a negative note again! Thank you, Chris. This has been another episode of Growing Ecommerce, brought to you by Smarter Ecommerce. To learn more, visit smarter-ecommerce.com. If you enjoyed this episode, please share it and give us a five-star rating. It means a lot. Thank you.