CNBC Shark and Dallas Maverick’s man Mark Cuban is a believer. He thinks that if American consumers had the option to buy local, they would. He invested in a start-up called Cultivate, in part, because of that belief. The workhorse behind it is Harsh Khurana, an entrepreneur in his early 30s, born in India and now living in New Jersey. He came to the U.S. when he was 9 years old. (Happy Independence Day, Harsh!)
“I go to bed at 1am. Then wake up at 5am. If you want to do this, you have to grind, because the big companies have thousands of people constantly throwing cheap, low-quality products in your face,” he says. He and his two partners have been grinding 16 to 17 hours a day since they launched last June. Cultivate is free for consumers. To list your goods with Cultivate, they’ve built a Shopify app that charges no fixed costs, but gets 5% to 10% of sales on customers they drive to the business.
The extension runs on Google Chrome or Apple’s Safari (sorry, no Explorer or Firefox yet, but they are working on it) and it turns on when you are shopping on Amazon, or some other big retail site like Walmart. It will tell you where the product is made. If it is an import, they will offer American-made alternatives. If there are no American-made alternatives, they offer a donation system. The money goes to local charities. Those charities are helping local communities and economies in various ways, including equipping our labor force with technical skills for future jobs, offsetting carbon emissions from global trade, disaster relief, and infrastructure.
“Cultivate gives you an option to either buy American goods or if not…donate to American charities helping our own,” he says. “At the end of the day, I’m a contemporary patriot, for all that this country gave to me and my family; America is the land of opportunity and, quite honestly, the engine that drives the world forward. So I’m trying to help the local shops nearby who will be wiped out by Amazon and others.”
If not for Harsh, Cuban, and others building out e-commerce platforms selling domestic goods, the e-commerce trend would steamroll American manufacturers of everything from ubiquitous American products like T-shirts and jeans, to barbecue grills and air conditioners bought online.
E-commerce imports rose over 230% in the first quarter of 2021 versus 2020, according to SEKO Logistics. It’s still rising. There are not enough shipping containers to hold all the stuff Americans are buying from online retail; a business that has effectively merged the American economy with China. In the process, we are watching the build-out of a new retail model – the American-consumer-direct-to-China-manufacturer model.
Everyone is in on this, not just Amazon. Over 50% of their goods are coming from China, according to some estimates. Numerous sellers on Amazon are China businesses, though you will have to hunt to discover that as Amazon is not required to list where their products are manufactured.
Moreover, some of the Chinese sellers on Amazon, like mask maker Dr. Moxa, will say they are made in the U.S. when they are actually made and shipped directly from China, as the Cultivate algorithm can prove.
Don Buckner from Florida is also on the front lines.
He bought the MadeinAmerica.com domain way back in 1998, but it didn’t take off as a potential real business until 2018.
“For us, we have MadeinAmerica.org, which is the flagship enterprise. Our mission is to change American minds and behavior to consider origin, not just, price and raise that awareness,” he says. “One of the catchphrases we use is the power of change is in your pocket. Make it your patriotic duty to buy American-made products,” he says.
And if words like “patriotic duty” sound too political, then consider it a contribution to your community, or the people in your home state, or to manufacturing hubs in hard-hit areas of the country that need retail and business demand to remain alive.
“When you’re buying an imported product, you could be contributing to climate change, or human rights abuses,” Buckner reminds us.
Their e-commerce project’s strategic plan is finishing up. They are about to put it in the hands of fundraisers. They’re building their entire platform and cloud service. They won’t be relying on Amazon’s AWS that is for sure.
“Politicians and big business are not the answer to solve this problem,” Buckner says. “The most powerful engine in the world is the U.S. consumer.”
The American consumer is really the driving force, not China. Everyone wants to sell here. Including all of Asia. We keep hearing from Wall Street that Asia is where it’s at, led by China, of course. But China knows where its bread is buttered. It is by the American multinationals outsourcing factory work there, all to sell goods here, not to Thailand. Not to South Korea. Not to ship it by train to Chengdu. It’s all to ship it by boat to the Port of Los Angeles to reach the American consumer, whether an individual or a business.
Buckner’s MadeinUSA.com is finishing up on a prospectus now and will do a Series A funding round for venture capital, hoping to raise around $5 million to launch what he calls “the world’s largest online store of American made products.”
There are several people who have tried this in the past and failed. The “My Pillow guy,” Mike Lindell, has his own made in America store as a tab on his My Pillow website, but the product list is minuscule and some things are actually imports, the Cultivate algorithm can show.
“The reason people have failed is that they started out with 1,000 items or maybe 10,000 items and then people don’t find what they are looking for, they never come back,” Buckner says. “Our objective is to have between 300,000 to 500,000 products listed so when people do come, they can find, identify, and purchase an American-made product,” he says.
Consumer Reports says 80% would prefer to buy an American product but they don’t because of convenience.
“Over the last years, we have seen a rise in interest in local economics,” says Jim Palmer, the marketing director for BuyDirectUSA.com based in the Ozarks of Missouri. They’ve been at this for nearly a quarter of a century. They were online back in the dial-up internet days, when Netscape was a thing. They coded everything by hand, all to help the small manufacturers of everything from tools to soaps. They wanted to be found. Those who got over the hurdle and accepted into a big box store would just end up competing with a China-made product. They’d get squashed on price.
“Compared to five years, we have gone from about 25,000 visitors a month to our site to about 100,000 now,” Palmer says.
Jeff Bezos would laugh. But it’s better than zero, and it is growing in the right direction. What it needs is “influencer awareness,” perhaps more than Mark Cuban himself. Think Katy Perry selling Shein, the direct American consumer to China clothing retailer loved by teens.
Companies have to pay a small rate to be on BuyDirectUSA.com. Companies can choose to have a basic listing to being promoted through their networks. The page then puts up a company bio and directs people to the company’s own site and links directly to the manufacturers’ website where purchases can be made.
When they first started the business, Chinese companies were trying to advertise.
“A Chinese company tried to buy us out,” Palmer recalls. “It was a lot of money.”
Of course it was. Money has been the lure to China for decades. It works, almost every time. Palmer and the founders of BuyDirect stood their ground, knowing the entire entity would have just become a hub for direct-to-China e-commerce.
As revenge for turning down their Chinese suitors, Palmer says they have faced cyber-attacks “for the past 10 to 15 years during Christmas holidays to knock us offline. We’d get so many DDoS attacks that put so many hits on our website that it can’t function.” They got that rectified now, with a new network. No more devastating attacks.
Palmer said the idea to start the site occurred around the mid-1990s, in the Bill Clinton years. Back then, NAFTA was just taking off.
“I remember when news broke about factories closing in North Carolina. People were in food lines. We thought Americans deserved better than that,” he said.
In October, Buckner is holding a Made in America event in Louisville, Kentucky for companies to showcase their wares. The MadeInAmerica.com event hosts around 400-plus domestic manufacturers for corporate buyers and public procurement officers to come to see what products they can add to further domesticate their supply chain, keeping dollars and jobs in America. He says the U.S. economy post-pandemic can “boom” if we ensure local buyers and local manufacturers “have ample opportunities to connect.”
It’s a movement. It really is. Why the Commerce Department of Gina Raimondo is not backing this somehow is unknown. Her father was a watchmaker at Bulova in Providence, RI until the factory shut down. She knows the importance of manufacturing to build a middle-class life.
Secretary Raimondo, here are some sites to check out this Fourth of July weekend in case you need suntan lotion or beach chairs that won’t break by Labor Day…
Khurana, Buckner, and Palmer are like the rebels in Star Wars going up against a vastly superior machine. They’re not all buddies. But they’re in the same uphill battle.
In fictional tales, we know how this story ends. In reality, the odds are that they remain a small niche. In the best-case scenario, it becomes a growing niche of consumers, the same who are interested in buying craft beer and food from the local farm, using those exact same values to buy local. If that proves to be the outcome, then instead of having a domestic sales force and a website (with IT probably outsourced to Bangalore), you would also have a local factory floor making things, too.
As it is now, U.S. economic growth, and U.S. e-commerce, is a China jobs program.
Consumers buying domestically is the only way to stem the tide of Asian goods flooding the country. A trillion-dollar trade deficit is now a sure thing.
“Show me a label online and I will show you where it is coming from,” says Khurana. “Cultivate exists to send traffic to small businesses across the country and pays it forward to charities. You wouldn’t know it, maybe, but we have companies that make everything from jeans, beachwear, outdoor games, luxury goods, furniture, etc. You name it, they’re here. They’re not just in Asia, I promise.”
"If US national security was left up to corporate America, we'll all be speaking Chinese very quickly," says @Jkylebass on American corporations doing business in China. "They are social justice warriors where they see fit until it affects their wallet." pic.twitter.com/tM8pH1uDRb
— Squawk Box (@SquawkCNBC) July 1, 2021