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Those ultra-cheap retail platforms have some hidden costs. From American Public Media, this is Marketplace Tech. I'm Megan McCarty Carino.
Ecommerce sites like Timu and Shein might not be quite as cheap as they were a week ago now that tariffs are kicking in, even on small dollar imports. But these platforms known for selling low-cost goods from China have also sought to cut costs on delivery. They contract in the U.S. with companies like UniUni, which promises to dispatch packages for three bucks a pop or less, well below the industry standard.
How UniUni delivers on those low rates is the subject of a recent investigation by reporter Theo Waite at The Information. He says drivers are hired through a network of subcontractors, and UniUni pays them per item rather than an hourly wage. Oftentimes they will recruit drivers on Chinese language social media apps. A lot of the drivers are immigrants who don't speak English or who prefer speaking Chinese.
And they will also deduct pay when they flag issues with deliveries. Like I spoke with one driver who was delivering a package for Shein and couldn't fit the package in a mailbox or get it through the gate to this house.
And so they left it on the ground next to the mailbox. And they were told leaving a package on the ground is unacceptable. And they had over $100 deducted from their paycheck for that mistake, which is the kind of thing that, you know, even if Amazon would like to do that, they know they couldn't get away with it. And a lower profile company seems to think that they can in some cases.
You also looked into conditions in this company's warehouses. What can you tell me about that? So the most disturbing case that I found was a warehouse in Connecticut where in January police found a bunch of beds in the back of the warehouse that apparently a bunch of drivers for the company had been staying in. It
at least for a few days, probably a bit longer around the holiday package rush over Christmas. And the company's line on this was basically, this shouldn't have been allowed and we...
you know, have upped our labor standards and our scrutiny of our warehouses, you know, following this. But, you know, it makes sense that it would happen within the incentive structure that they've created for their subcontractors and for drivers, right? Because if you're getting paid per package and you're not making a lot of money, you're going to want to work as many hours as possible and...
The logical extension of that in the end is sleeping in the warehouse between shifts and not having to pay rent somewhere, it seems like.
And again, I mean, this is a business that is pretty low margin. You know, big companies like Amazon have come in for a lot of scrutiny in terms of, you know, how they kind of eke out efficiencies in their warehouses and with delivery. But a company like this is trying to undercut even Amazon, right? That's right. You know, say what you will about Amazon, they do not have people sleeping in their warehouses because they know that they would get caught and killed.
they know that there's a lot of scrutiny of their practices. And, you know, as part of this story, I talk to a lot of this company's competitors and
There are people in the industry that I think are disturbed by this and really don't... It makes everyone's lives harder, right? Because UniUni is there and is able to underbid everyone else. And that affects everyone and can put other people out of business. Like UPS. I wouldn't attribute this directly to UniUni necessarily, but UPS announced they were laying off
I believe it was 20,000 people last week. And, you know, that's a function of intense competition in a low margin industry and UPS being one of the remaining players that treats its drivers quite well. And they're having a tough time with that. We'll be right back. You're listening to Marketplace Tech. I'm Megan McCarty Carino. We're back with Theo Waite, reporter at The Information.
As you note in your piece, these platforms that sell ultra cheap goods from China, Timoshin, they are under increasing price pressure now. They had been exempt from tariffs under this kind of exemption for small dollar shipments. But the Trump administration eliminated that exemption as of last Friday. So how might this affect kind of the whole ecosystem that has built up around these e-commerce platforms, including China?
delivery companies like UniUni? Well, I think if Timu and Xian are going to survive, they're going to have to find a way to eke out even more cost efficiency. And they were already being incredibly efficient and cutthroat. So,
I would expect that's going to lead them to demand even more cost savings from their vendors that they have any leverage over. And a company like UniUni is quite reliant on volume from Timu and Shien, so they will have to figure out how to respond to that. I think kind of broadly to this
gets at something that I think consumers in the US should understand about Chinese e-commerce companies, which is there's this intuitive understanding that I think a lot of people have that overseas there's probably something going on that is a bit unsavory that can make a lot of these products so cheap. But I think people also need to understand that
you know, these business models affect people who are living and working in their communities in the U.S. as well, even if they don't always see them. And how has UniUni responded to your reporting? You know, they didn't really deny a whole lot of it. They just basically said that our reporting shows conditions that would not comply with their labor standards. After the Connecticut incident in particular, they said that they have tightened scrutiny of, you know, how they operate their warehouses.
I should also note that Timu gave me a statement saying that they had asked Uniuni to confirm it was aligning with Timu's code of conduct, which requires compliance with labor laws, and said that they would take further action if they found that they were not doing so. That was Theo Waite at The Information.
We'll have a link to Theo's full investigation at our website, MarketplaceTech.org. Back to that tariff change known as the de minimis exemption, which went away last Friday. Timu says it has halted shipments from China to the U.S., selling only products that are already in U.S. warehouses. CBS News reports the change came after customers complained about prices doubling in some instances.
Meanwhile, Reuters reports Xi'an and Timu's considerable ad spending has shifted away from the U.S. and increased in countries like France and the U.K. Theo noted UPS announced 20,000 layoffs last week, largely due to a drop in business from Amazon and other shipments from China. UPS CEO Carol Tome said on an earnings call this was the biggest disruption to trade in more than 100 years.
Jesus Alvarado produced this episode. I'm Megan McCarty Carino, and that's Marketplace Tech. This is APM.
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