Amazon is reportedly shifting focus to counter the rapid rise of Chinese online retailers Temu and Shein, according to insights from a recent Wall Street Journal article. These newcomers have significantly disrupted the US market, traditionally dominated by Amazon and its long-standing rivals, Walmart and Target.
Temu, having launched in the US in September 2022, has seen an astonishing growth, reaching 51.4 million users by January, as per data from Sensor Tower. Shein also demonstrated remarkable expansion, increasing its user base from 20.9 million to 26 million over the same timeframe. This surge in popularity for both platforms contrasts starkly with Amazon, which experienced a decline in users from 69.6 million to 67 million.
The essence of Temu and Shein’s appeal lies in their offering of inexpensive products shipped directly from China. However, this advantage also comes with longer delivery times, ranging from six to 20 days. In response, Amazon is reportedly enhancing its promotional efforts to highlight its superior reliability and quicker delivery times. According to an official statement, the company emphasizes its focus on customer obsession, boasting an unparalleled selection and the fastest delivery speeds ever, especially for Prime members in the US, where more than 4 billion items arrived the same or next day in 2023.
However, the rise of Temu and Shein is not without its challenges. Both have faced criticism over customer service issues, with thousands of complaints lodged against them. Temu, in particular, is battling two lawsuits alleging the installation of dangerous malware and spyware through its app and improper collection of personal and biometric data from customers. The company has denied these allegations.
The aggressive marketing strategies of these Chinese e-tailers have also caught the eye, with Temu’s parent company PDD Holdings becoming a top advertiser on platforms like Meta and Google. Their promotional efforts included a significant $21 million expenditure on Super Bowl ads under the “Shop Like a Billionaire” campaign. It is worth noting that Amazon also competes in mostly the same area as Temu and Shein because we know that low priced products are sold well on Amazon as well as these platforms too. This is where Amazon will also have to start advertising aggressively.
