What's Causing Those Strange Brands To Appear In Your Instagram Feed

Using social media, cheap Asian manufacturers and ecommerce to create a new online retail sector. JL


Alexis Madrigal reports in The Atlantic:

Shopify is the Wordpress of e-commerce, enabling completely turnkey online stores. It has 500,000 merchants, a number that’s grown 74% per year over the last five years. Around Thanksgiving, they were doing $1 million in transactions per minute. Shopify serves as the base for an ecosystem that solders digital advertising through Facebook onto Asian manufacturers who rep their companies on Alibaba. It’s a new retail world, a mutation of globalized capitalism that’s growing in the cracks of mainstream commerce.

It all started with an Instagram ad for a coat, the West Louis (TM) Business-Man Windproof Long Coat to be specific. It looked like a decent camel coat, not fancy but fine. And I’d been looking for one just that color, so when the ad touting the coat popped up and the price was in the double-digits, I figured: hey, a deal!
The brand, West Louis, seemed like another one of the small clothing companies that has me tagged in the vast Facebook-advertising ecosystem as someone who likes buying clothes: Faherty, Birdwell Beach Britches, Life After Denim, some wool underwear brand that claims I only need two pairs per week, sundry bootmakers.
Perhaps the copy on the West Louis site was a little much, claiming “West Louis is the perfection of modern gentlemen clothing,” but in a world where an oil company can claim to “fuel connections,” who was I to fault a small entrepreneur for some purple prose?
Several weeks later, the coat showed up in a black plastic bag emblazoned with the markings of China Post, that nation’s postal service. I tore it open and pulled out the coat. The material has the softness of a Las Vegas carpet and the rich sheen of a velour jumpsuit. The fabric is so synthetic, it could probably be refined into bunker fuel for a ship. It was, technically, the item I ordered, only shabbier than I expected in every aspect.

I went to the West Louis Instagram account and found 20 total posts, all made between June and October of 2017. Most are just pictures of clothes. Doing a reverse image search, it’s clear that the Business-Man Windproof Long Coat is sold throughout the world on a variety of retail websites. Another sweatshirt I purchased through Instagram—I tracked down no less than 15 shops selling the identical item. I bought mine from Thecuttedge.life, but I could have gotten it from Gonthwid, Hzijue, Romwe, HypeClothing, Manvestment, Ladae Picassa, or Kovfee. Each very lightly brands the sweatshirt as its own, but features identical pictures of a mustachioed, tattooed model. That a decent percentage of the brands are unpronounceable in English just adds to the covfefe of it all.
All these sites use a platform called Shopify, which is like the Wordpress or Blogger of e-commerce, enabling completely turnkey online stores. Now, it has over 500,000 merchants, a number that’s grown 74 percent per year over the last five years. On the big shopping days around Thanksgiving, they were doing $1 million in transactions per minute. And the “vast majority” of the stores on the service are small to medium-sized businesses, the company told me.
Shopify serves as the base layer for an emerging ecosystem that solders digital advertising through Facebook onto the world of Asian manufacturers and wholesalers who rep their companies on Alibaba and its foreigner-friendly counterpart, AliExpress.

It’s a fascinating new retail world, a mutation of globalized capitalism that’s been growing in the cracks of mainstream commerce.
Here’s how it works.

“What is up everybody?!” a  fresh-faced man with messy brown hair shouts into the camera. Behind him, two computers sit open on a white desk in a white room. By the looks of him, he might not be an adult, but he has already learned to look directly into the camera when delivering the ever-appealing gospel of Easy Money on the Internet.
“In this challenge, I’m going to take a brand new Shopify store to over one thousand dollars,” he says. “So I invite you to follow along with me as I take this brand new store from 0, literally 0, to over one thousand dollars in the next seven days.”
In the corner of YouTube dedicated to e-commerce, these videos are a bit of a phenomenon, racking up hundreds of thousands of views for highly detailed explanations of how to set up an e-commerce shop on the Internet.
Their star is Rory Ganon. Though his accent is Irish (“tousand”), his diction is pure LA YouTuber. He’s repetitive, makes quick cuts, and delivers every line with the conviction of youth. He appears to live in Ratoath, a small Irish commuter town about half an hour outside Dublin. His Facebook page describes him as a 17-year-old entrepreneur. His success finding an audience seems predicated on the fact that when he says he’s going to show you everything, he really is going to show you everything. Like, you will watch his screen as he goes about setting up a store, so anyone can follow along at home. He’s a Bob Ross of e-commerce.

These techniques work the same for him as for Gucci. Some Instagram retailers are legit brands with employees and products. Others are simply middlemen for Chinese goods, built in bedrooms, and launched with no capital or inventory. All of them have been pulled into existence by the power of Instagram and Facebook ads combined with a suite of e-commerce tools based around Shopify.
The products don’t matter to the system, nor do they matter to Ganon. The whole idea of retail gets inverted in his videos. What he actually sells in his stores is secondary to how he does it. It’s as if he squirts hot dogs on his ketchup and mustard.
What Ganon does is pick suppliers he’ll never know to ship products he’ll never touch. All his effort goes into creating ads to capture prospective customers, and then optimizing a digital environment that encourages them to buy whatever piece of crap he’s put in front of them.
And he is not alone.
The touchstone investigation into this world—“There’s No Such Thing as a Free Watch”— was conducted by an artist, Jenny Odell. After a visitor to Oakland’s

Museum of Capitalism brought a watch that was “sold” “free” online, Odell endeavored to seek out its origins. The watch was sold by Folsom & Co, one of a constellation of nearly identical companies selling nearly identical watches. These companies are distinguished primarily by their loose relationship with the truth about themselves. The information they provide about the brands is almost certainly fictional. While Folsom & Co claimed to be from San Francisco’s Soma district, SoFi coastal claimed to be from Miami. Both were probably from somewhere else. Another site creates the barest sketch of a supposed founder named “Bradley” who “had a constant desire to present himself well but didn’t believe fashion and style should come with such a high price.” Bradley probably doesn’t exist.

Of course, this is merely a hackneyed version of what all branding does, Odell points out. It creates stories that pump up the value of products. What you can charge depends on the story you tell, which on Instagram means well-lit photos in coffee shops lead directly to higher prices, especially if they feature an “influencer” with a lot of followers.

These new retail sites are also creatures that could only exist in our current economy. They are a reshuffling of the same fast-fashion infrastructure that powers H&M and Zara. West Louis and Folsom & Co are a new a front-end for the Asian factories that make stuff. Stumble onto one—or more likely—find yourself targeted by such a brand’s ads, and you open up one of many highly disposable faces of the globalized economy. It’s just that with companies like West Louis, the seams show, literally and figuratively.

* * *

Ganon’s videos are particularly fascinating in describing the mechanics of digital advertising through Instagram and Facebook.
In the tutorial, he briefly discusses finding a niche for the products in your store, and he uses some business school powerpoint terms. But when he actually selects a niche, it is Lions. That’s right: Lions, the animals.

His reasoning, laid out in video two, is twofold. One, there are plenty of “Instagram influencers”—which is to say popular accounts—who he can pay to run an ad for his store because there are a bunch of “naturey” sites. And two, when he looks at Facebook’s Audience Insights tool, he (and anyone else) can see how large Facebook estimates the audience for certain interests might be. When he types in “lions,” “[Facebook] says I have 5 to 6 million monthly active people I can target,” he says. “But if I add in wildlife, you can see I have 10-15 million monthly active people I can show my ads to. So, if my store is successful, I can scale my store to thousands of dollars per day.”

So, he has his audience, now he needs his store. He calls it Lions Jewel, pulls in some lion pictures, copy and pastes Shopify’s default privacy and return policy boilerplate, and he’s up and running with the empty store.
For products, he turns to, AliExpress, the Alibaba company. The key to the whole scheme is that he doesn’t have to hold any inventory, so he can start up the business with no capital. And AliExpress has many companies that are willing to do what’s called “dropshipping” direct from wherever the item was manufactured or warehoused. That’s why my coat showed up in a China Post package.
There is an app that plugs directly into Shopify called Oberlo, which allows anyone to pull products directly from Aliexpress. Click a button and something that was manufactured in the Chinese hinterlands and marketed in a suburb of Shanghai becomes an item for sale on an Irish kid’s website. Oberlo’s marketing claims that 85 million items have been processed through the system.
Ganon searches out some lion-themed objects, including the one that he anticipates making the most money from, a gold-plated lion bracelet that he puts on sale for $0. He gives some tips for finding popular dropshippable items, too. He sorts Shopify-hosted sites by traffic with myip.ms, and then digs below the most popular stores, which generally sell products they make themselves. Deeper into the top 1000 stores, there are dropshippers reselling Aliexpress goods, just like Ganon is, so if he can ferret out what products are selling at high-performing stores, he can siphon off some of those dollars. All he’d need to do was do reverse image searches to find the listings in Aliexpress, suck those products in with Oberlo, and he could effectively clone the store in a few minutes.

But for the video series, he was focused on just the lion stuff. With his shop loaded with a handful of products, his next step is to get people to see the merchandise. First, he creates a Lions Jewel Instagram account, posting a smattering of pictures with a link to his store. Then, he taps an Instagram account that posts pictures of nature, and brokers a sub-$20 deal that pushes some hundreds of people to his site through Lions Jewel’s Instagram account.
When they hit the site, there is a countdown clock telling them they are running out of time to grab the free bracelet deal. This is, of course not true. But it creates that “sense of scarcity,” as Ganon says, that leads to purchases. That clock is just another app for Shopify, Hurrify. It is supposed to increase conversions 2 to 3 percent, Ganon claims.
As one is shopping this kind of site, occasionally a screen will pop up saying, “Alexis in Oakland just purchased the West Louis (TM) Business-Man Windproof Long Coat.” This effect comes courtesy of yet another app, Sales Pop. Ganon and the appmakers say these pop-ups provide “social proof,” which is, again, designed to increase conversions. One would expect that such an app would show actual purchases, and it can do that. But it can also show “custom notifications” so that you can create fake customers who are supposedly buying things. Pick some cool-sounding names, pick some cool locations (“London,” “Paris,” “Mexico City,” “Oakland”) and it does the work of combining them into robo-social proof.

Given the array of behavioral tricks arrayed against your average Internet user, some of them take the free lion bracelet deal. But for those that don’t, merely by visiting his site, they’ve been tagged in Facebook’s system because Ganon has installed a standard Facebook tracking pixel. That means Ganon can now re-target those people who visited but left without purchasing anything through Facebook. And he spends a lot of time designing and testing ads that will bring

them back for the purchase.
There’s nothing unusual about this in digital marketing. In fact, it’s a completely common practice. But employed so baldly, it shows the strangeness of our current commerce model. I like lions, so I follow an Instagram account that posts pictures of them, they post an ad, so I go to a webpage, and now I get ads chasing me all over the Internet advertising a lion bracelet. It’s enough to make you long for the days of going to the mall or buying stuff out of a catalog.
Ganon says he creates blogs for his sites, too. So maybe for his lion store, he’d cobble together “fun facts about lions” by looking up the most popular lion content on the site, Buzzsumo. Once you hit that page, he could retarget you.
This is one major purpose of “content marketing.” For example, a company could have someone ghostwrite its CTO some blog posts about cloud storage topics that only people deep in the industry could be interested in. Because of that hyperspecificity, anyone who lands on those pages is likely to be a prospective customer. So, even if the prose is unreadable, it doesn’t really matter beause by the time you’re staring at the words, the content has served its purpose already. Just by arriving on the page while logged into Facebook, you’ve placed yourself in a custom audience that can be targeted on the Facebook back end. This is a basic capability of the system: it works for any demographic, from Chief Executive Officers to white supremacists to lion lovers.

The last step in a Ganonite store process, then, is to do the actual fulfillment of the orders. This means entering names and addresses into AliExpress, so the Chinese companies can send out the stuff. But Ganon doesn’t like to waste time on things that don’t generate revenue for his stores. “There’s only 24 hours in a day,” he writes in a slide, underlining this text, “Why waste money on things that don’t make you money?”
So Ganon “automates” the order fulfillment by hiring digital workers on the platform, UpWork, for 3, 4, 5 dollars per hour. When I searched through the platform last week, there were 275 open jobs listed for dropshipping, 200 for AliExpress specifically, and 132 for Oberlo—though there was considerable overlap among all those ads.
Ganon’s video series opens by promising that he’ll get his store’s revenue to $1,000 in the first week. Spoiler alert: that does not happen. That’s probably because it’s harder than he made it sound. But there was something else going on, too. Ganon posted the videos in real time. So, as the first video began to circulate, other people—following his instructions exactly—began to create shops also selling lion bracelets. Oops!
In general, it’s hard to know how much actual profit anyone could make from a store that does even substantial transactions. AliExpress products are cheap, but not free. Facebook and Instagram ads are effective, but cost money. That “Make a thousand dollars in a week!” promise is very easy to whittle down.
But as hypermodern economic entities, they are fascinating. Even the idea of a “supply chain”—the system for using cheaper labor and global logistics networks to increase profit margins for companies with the wherewithal to do global business—breaks down. There are just suppliers and retail-front ends connected loosely by e-commerce sites and apps.
“Amidst the shifting winds of Alibaba sites, dropshipping networks, Shopify templates, Instagram accounts and someone somewhere concocting the details of ‘Our Story,’ a watch was formed, like a sudden precipitate in an unstable cloud,” the artist Odell writes.
Which suggests a name for this phenomenon of jumbled up global capitalism that uses Silicon Valley ad tools to arbitrage cheap goods from Asia: the Supply Cloud.
As for my coat, in the end, there was no real mystery to it. It was too cheap to be true, and no matter how much technology changes, you get what you pay for.