Coffee & Commerce #42: Baby Gear Tariffs, Potential Chrome Breakup & Big Lots Reinvented

Good afternoon,

Here’s the headlines for this week: 2 May 2025

ECOMMERCE

Tariffs are already hitting baby products hard

U.S. tariffs on Chinese imports are significantly impacting baby products, with prices for essentials like strollers and car seats rising sharply; for instance, the UppaBaby Aria infant car seat is increasing from $349.99 to $499.99 effective May 5.
Industry leaders, including Babylist and the Juvenile Products Manufacturers Association, are lobbying for exemptions, labeling the tariffs a "baby tax" that burdens families.
Small retailers, such as Three Littles in Washington, D.C., report severe inventory shortages and reduced sales, threatening their survival.

President Trump has eased certain tariffs, such as those on the auto industry, in response to economic concerns, including a 0.3% GDP contraction in Q1 2025 and warnings of potential empty shelves during the holiday season.
Despite these adjustments, Trump maintains that tariffs are a strategy to penalize China and encourage domestic manufacturing, even as critics warn of increased consumer costs and potential harm to U.S. exporters.
The administration plans to impose additional tariffs on pharmaceutical imports to bolster domestic production, signaling continued trade tensions.

Chinese authorities have mandated that e-commerce platforms like PDD Holdings and JD.com end the practice of refunding customers without requiring product returns by July, aiming to alleviate financial pressure on merchants during economic slowdown.
The policy change follows merchant complaints about losses from the practice and government criticism of "involution-style" competition in the eCommerce sector.
The refund-without-returns policy, initially designed to benefit both buyers and sellers, has been deemed detrimental to merchants' bottom lines.

The U.S. is pressing India to grant full e-commerce access to American giants like Amazon and Walmart as part of ongoing trade negotiations.
Current Indian regulations restrict foreign e-commerce firms to operating as marketplaces for third-party sellers, preventing them from owning inventory, which the U.S. views as a non-tariff barrier.
The U.S. is leveraging potential tariff increases on Indian exports to push for these changes, aiming to level the playing field for American companies in India's $125 billion e-commerce market.

TECH

Legal challenges are emerging over the use of copyrighted material to train AI models, with courts beginning to address whether such practices fall under fair use.
A notable case involved Thomson Reuters successfully suing Ross Intelligence for using its legal content to train an AI, setting a precedent that could influence future rulings on AI and copyright.
The outcome of these cases could significantly impact how AI companies source and utilize data for training purposes.

OpenAI has enhanced ChatGPT's search capabilities to include shopping features, allowing users to receive product recommendations, images, reviews, and direct purchase links within the chat interface.
The feature, initially covering categories like fashion and electronics, aims to provide a personalized shopping experience without incorporating ads, distinguishing it from traditional search engines.
OpenAI plans to integrate memory features to offer highly personalized product recommendations based on users' previous interactions.

OpenAI is preparing to integrate Shopify's checkout system into ChatGPT, enabling users to complete purchases directly within the chat, streamlining the shopping process.
This partnership would allow Shopify merchants to reach ChatGPT users seamlessly, reflecting a broader trend of integrating AI into e-commerce platforms.
The integration suggests a move towards a full-funnel shopping experience within ChatGPT, enhancing user convenience.

The European Union has fined Apple and Meta a combined $798 million for violations related to the Digital Markets Act, signaling increased regulatory scrutiny of major tech firms.
Apple was fined for restricting app developers from directing users to more affordable alternatives outside its App Store, while Meta was penalized for requiring users to accept ads or pay to avoid them.
These fines come amid broader tensions, including U.S. political pressures and debates over the dominance of American tech companies in global markets.

Google faces a potential antitrust ruling that could compel the company to divest its Chrome browser, stemming from concerns over monopolistic practices.
The U.S. Justice Department, alongside several states, is seeking significant remedies, including requiring Google to share data with competitors and notify the government of AI investments.
The outcome of this case could set a precedent for future tech industry regulation and significantly alter Google’s role as the internet’s primary gateway.

RETAILERS

Big Lots' new ownership plans to shift the retailer's focus from furniture to apparel, aiming to attract a broader customer base and revitalize sales.
The strategy includes reducing furniture inventory and expanding clothing offerings, reflecting changing consumer preferences and market dynamics.
The company plans to reopen 132 stores in May 2025, joining nine already reopened locations across the southern U.S., with a focus on offering "brands for less."

Albertsons has introduced shoppable video advertisements on its e-commerce platform, allowing customers to purchase products directly from video content.
The initiative seeks to enhance customer engagement and streamline the online shopping experience through interactive media.
This move reflects a broader trend of integrating multimedia content into ecommerce to drive sales and improve user experience.

ADVERTISING

Perplexity's CEO announced plans for the company's browser to monitor all user activity to deliver highly personalized advertisements, raising privacy concerns.
The approach aims to create a more tailored advertising experience but has sparked debates over data collection and user consent.
Perplexity is also exploring partnerships to expand its reach, including pre-installing its app on certain devices, further integrating its services into users' digital lives.