Attacking Amazon on the left and Shein on the right, Temu is disrupting North America

Inflation in the United States remains high. According to McKinsey data, actual spending by U.S. consumers has been declining for several consecutive months, and there is a general trend of consumption downgrade. Under this situation, low prices have become an involutionary direction in the U.S. e-commerce market. With the low-price advantage brought by the Chinese supply chain, Temu and Shein both regard North America as their main battlefield.

Temu's first site was launched in the United States in September last year. Relying on extremely low prices and social fission, Temu has rapidly risen in the United States. According to data from the US consulting firm Global Wireless Solutions, in June, Temu's monthly active users in the United States reached 75 million, nearly half of Amazon's. Temu's users spend an average of 19 minutes a day, while Amazon's is 11 minutes and Shein's is 12 minutes.

With the experience of rapid growth in the United States, Temu began to move towards the world. This month, it launched 5 new countries and entered the Asian market for the first time, opening sites in Japan and South Korea. So far, Temu has entered 27 countries around the world.

In the United States, there is Amazon, the leading e-commerce giant, and Shein, which occupies most of the fast fashion market. Temu's original goal was to create another Shein, but after it was finally launched, it was more like a copy of Pinduoduo in China, and its category competition with Amazon was more direct. However, the core of Temu's operation is similar to Shein, that is, strict control of the supply chain.

In order to gain a foothold in the US market, Temu has made efforts in the North American market. First, it used its low price advantage to compete with Amazon in the daily necessities market, and recently it was reported that it would recruit local sellers to poach Amazon. In addition, Temu also recently took Shein to court, accusing it of monopolizing the supply chain.

Left attack on Amazon, involved in local competition

Recently, there is news that Temu will soon open to local sellers. In May this year, Temu announced that it would launch an overseas warehouse plan to build an overseas warehouse in the east and west of the United States. Recruiting local sellers indirectly proves that Temu's overseas warehouse construction has been basically completed. After all, overseas warehouses are a necessary condition for recruiting local sellers.

Although the specific time has not been announced, Temu's actions such as building overseas warehouses and recruiting local sellers have, to a certain extent, demonstrated its determination to compete with local e-commerce companies such as Amazon in the United States. In terms of delivery time, Temu is far behind these local players. In the long run, Temu also faces the problem of how to break through the shackles of the sinking market. Because the ultimate goal of e-commerce platforms is to achieve higher profits.

In particular, in the face of Temu's low-price competition, Amazon recently announced that it would cancel the Small and Light Program and replace it with a plan to reduce delivery costs for products below $10. After the adjustment, small and light products will have the same delivery speed as FBA logistics. In addition, the threshold of the Small and Light Program has been reduced from $12 to $10, which means that Amazon sellers who sell products between $10 and $12 will also take the initiative to reduce prices in order to save delivery costs.

Amazon's small and light commodities and Temu's low-priced categories have a high degree of overlap. Amazon's move not only further reduces the price of small and light commodities, but also significantly improves the delivery time, which is a powerful blow to Temu.

More importantly, Temu hopes to attract more brand merchants to settle in by promoting localization, and finally break through the shackles of the sinking market. Just like the path taken by its parent company Pinduoduo, when it first opened up the market with low prices, it was labeled as low-quality and low-priced. Later, Pinduoduo successfully entered the middle-class consumer group through tens of billions of subsidies and recruiting brand merchants.

In addition, Temu's recruitment of local sellers is also a preparation for its future transition to a third-party platform model. Temu is now an e-commerce platform on the surface, but it mainly adopts a fully managed model, so it is essentially still a super seller without a self-operated factory. No matter how big the seller is, it cannot compete with a third-party platform.

Right hit Shein, the low-price competition war escalates

Since Temu was launched, major e-commerce platforms including AliExpress, Shein, TikTokShop, Shopee, and Lazada have successively opened full hosting models, and full hosting seems to have become the standard for cross-border e-commerce. In this model, merchants become suppliers, so the essence is the competition for supply chains between platforms.

Supply chain determines price advantage to some extent. Shein and Temu not only have similar pricing ranges, but also rely on the Chinese supply chain. Both are expanding into full categories and transforming into true platforms. Their main bases are in North America, and the competition between the two for supply chain is even more intense.

In May 2022, Temu moved its office to Panyu, Guangzhou, the headquarters of Shein's supply chain, inspected all aspects of Shein's supply chain, and poached many local employees. It is reported that Temu is also trying to establish a dedicated team to go deep into the clothing production process and make its own patterns like Shein.

Although Temu gave up its strategy of focusing on clothing, women's clothing is still an important category. Relying on Pinduoduo's accumulated supply chain resources in China, Temu can offer 50%-80% of Shein's prices in some highly overlapping categories.

Now, Shein, which is seeking to be listed on the New York Stock Exchange, announced in May this year that it would officially launch a platform model to expand its revenue sources in order to deliver better results to investors. In addition, Shein has also expanded its product categories beyond clothing to include home furnishings, home appliances, and small furniture.

This means that Shein will have more overlapping categories with Temu, and the competition between the two for suppliers will intensify. Temu's recent lawsuit against Shein for monopolizing supply chain resources is the best example of the intensified competition between the two.

But in general, no matter how fierce the market competition is, the major platforms in the current US e-commerce market are not in a completely zero-sum game state, but each has its own advantages and customer base. Consumers choose platforms according to different needs, allowing e-commerce platforms in the market to flourish. Temu and Shein continue to develop in the competition, exporting more Chinese products and brands overseas, and helping more Chinese companies rise in the global market.

Editor✎ Ashley/

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