Competition heats up as Amazon and Temu race to explore diversified supply chains

According to the latest foreign media reports, two people familiar with Temu’s relationship revealed that 20% of Temu’s US sales now come from US warehouses, not China, a proportion that was zero at the beginning of the year. For a platform that only started recruiting local sellers in March this year, this change is both significant and rapid.

Marketplace Pulse’s research further pointed out that most of the new sellers are local sellers, which indicates that Temu is shifting from a supply chain model that relies entirely on direct shipments from China to diversification to reduce its reliance on small-volume duty-free shipments.

Although these new local sellers are still Chinese companies in essence, they now adopt the strategy of importing goods in bulk to US warehouses for storage, so that they can sell a wider variety of products including large items such as furniture, electric bicycles, etc. Temu also recently recruited the first 1,000 US sellers, who appear to be registered in the United States, but are still closely related to Chinese companies.

This shift is reflected directly on Temu's homepage: 103 of the 120 recommended products are clearly marked as shipped from US warehouses and promised to be delivered in less than five days. The same is true for most of the products on the discount and best-selling product pages. They are no longer shipped directly from Chinese factories to consumers, but are first imported to the United States. According to domestic media reports, Temu expects sales from local warehouses to be on par with sales directly shipped from China in the next six months.

At the same time, Amazon is working hard to establish a Chinese supply chain similar to Temu's in order to gain stronger price competitiveness. Faced with the dual pressures of tariffs and domestic warehousing costs, Amazon has realized that simply copying Temu's supply chain model is no longer enough to cope with competition, while Temu seems to be gradually breaking free from the constraints of this model.

Amazon plans to launch a dedicated area for low-priced, slow-shipping goods on its app and website, which will be shipped directly from Chinese warehouses to U.S. consumers, sacrificing fast delivery in exchange for lower prices, the report said.

For many years, Amazon has been an important bridge for Chinese sellers to reach the Western market. Data shows that Chinese sellers account for half of the top third of Amazon sellers. However, the launch of the new market provides these sellers with another option besides FBA warehouses.

The advantage of the supply chain model that ships directly from China is that it enables on-demand production and a consumer-to-manufacturer (C2M) retail model, which is unmatched by traditional wholesale imports. It allows for faster and iterative innovation at a slower delivery speed. Shein's ultra-fast fashion model is based on this concept, launching thousands of new designs every day, but only producing a small amount. If all of them need to be imported to domestic warehouses before being sold, this model will be unsustainable.

Amazon is also actively exploring this model because it recognizes that not all goods need to be circulated through FBA, especially when the goods do not need to be produced in large quantities, this supply chain model can create more possibilities.

However, it is worth noting that Temu has not completely abandoned the model of direct shipment from China, but is actively responding to regulatory challenges that may remove the minimum tax-free threshold, while enhancing market competitiveness by expanding price ranges and product categories. Temu attracted the first batch of users by offering ultra-low-priced goods, but it is clear that it has a more ambitious goal and is willing to give up some price advantages in exchange for more convenience and market share.

As for Amazon, although Prime membership service is still one of its core advantages, it also realizes that the supply chain model represented by Temu and Shein is an indispensable part of modern retail. However, Amazon also understands that this is not all, because Temu itself is constantly surpassing this model.

Therefore, while maintaining its FBA advantage, Amazon is also exploring more possibilities. It stated that it will not place the results of goods shipped directly from China in the main search, but this does not mean that this area will be ignored.

Amazon has also shown a forward-looking layout in the field of social commerce. It hopes to master the essence of social commerce before social media such as TikTok can completely change the shopping experience. Similarly, Amazon also hopes to consolidate its retail business position of shipping directly from China before Chinese e-commerce platforms such as Temu and Shein may transform into fast delivery competitors.

Author ✎ Ten Degrees/

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