Temu launches "sugar-coated bullets", Amazon sellers take the challenge

Temu launches "sugar-coated bullets", Amazon sellers take the challenge

Since its launch in the United States two years ago, Temu has embarked on a high-profile overseas expansion, opening more than 70 sites in the Americas, Europe, East Asia, South Africa, Southeast Asia and other regions in the past two years.

 

In the US market, where it first entered the market, Temu, as a latecomer that has only been in the market for two years, has not concealed its ambition to compete with Amazon.

 

Data shows that the number of monthly active users of Temu's US app is rapidly approaching Amazon. Although there is still a big gap with the latter, Temu has narrowed the gap by nearly half in the past year.

 

Amazon sellers may embrace Temu amid sugar-coated bullets

 

Temu's growth has slowed in recent months, with a Bank of America report noting that Temu's growth in the United States is slowing.

 

Data showed that Temu's year-on-year sales growth in the United States slowed to 37% in August, down from 45% in July and far below the 99% growth expected in the second quarter of 2023.

 

In addition to the slowdown, Temu is also facing pressure from U.S. regulators. Some time ago, the Biden administration announced that it would introduce administrative measures to crack down on the large number of small packages that enter the United States using the minimum exemption policy.

 

According to industry insiders, the US government's move is mainly aimed at the large number of small packages sent to the United States by platforms such as Temu. If the minimum exemption is cancelled, Temu will face rising product costs, which will require them to balance their revenue by raising product prices, which is likely to greatly reduce their low-price advantage.

 

Obviously, Temu also understood that the spearhead was directed at itself. Under multiple pressures, Temu began to respond and took countermeasures. First, Temu set its sights on sellers with supply chain bases in the United States.

 

According to foreign media The Information, Temu has made considerable concessions to American sellers in terms of platform fees. For sellers who can handle their own shipping, the platform may not even charge advertising and logistics fees. You know, this is not a small amount.

 

After all, for e-commerce platforms, the fees charged to sellers are an important source of their overall revenue.

 

In the first half of this year alone, Amazon has added a number of fees, including warehousing configuration fees, Prime exclusive discount fees, etc. In major seller forums, the voices complaining about the platform's abuse of charging policies are getting louder and louder, and even many senior sellers are considering leaving the market due to rising costs.

 

For Amazon sellers who are suffering from various fees, Temu's "sugar-coated bullet" is undoubtedly attractive.

 

If Temu can attract a large number of US Amazon sellers, it will be able to expand its product inventory in US warehouses and further expand its seller base in the US.

 

At present, many Amazon sellers have already entered Temu in a high-profile manner. According to some data, a number of top sellers, including Anker, have already entered Temu. In addition, traditional giants such as Midea, Xiaomi, Liby, and Vinda have also announced that they have established cooperation with Temu.

 

As more and more sellers go to Temu to test the waters, Amazon has clearly felt the pressure.

 

Amazon takes action in response to Temu shock

 

Recently, Amazon announced that it will launch an end-to-end supply chain service fully managed by Amazon. The service will be available to all US sellers starting at the end of October and will be expanded to the global market by the end of this year.

 

It is reported that this service integrates Amazon's existing AGL (Amazon Global Logistics), AWD (Amazon Warehouse Distribution Network) and PCP (Partner Carrier Program).

 

For sellers, they only need to provide detailed information about the goods and the pick-up location. Other aspects such as product pickup, inventory integration, strategic replenishment and last-mile delivery will be taken over by Amazon.

 

Amazon said that the new supply chain service fundamentally simplifies operations, optimizes inventory layout, and speeds up delivery, increasing sellers' sales by an average of 20%; through this service, sellers can shorten delivery time and save energy and expenses.

 

In addition, Amazon also mentioned in the announcement that sellers using this service will enjoy a 25% discount on AWD storage fees and a 15% discount on AWD shipping and handling costs.

 

In addition to the fully managed option, Amazon's fully managed supply chain service also introduced multi-channel distribution ( MCD), which provides sellers with unified inventory management and enables sellers to flexibly allocate inventory between different sales channels. Amazon predicts that this feature will save sellers 20% of their total inventory requirements and reduce capital occupation.

 

From this series of operations, it can be seen that Amazon is indeed unable to sit still in the face of the impact of Temu.

 

Although there is still a huge gap between Temu and Amazon in terms of overall strength , if we look at some independent data alone, Temu has achieved its "grand goal" of surpassing Amazon.

 

Temu surpasses Amazon in monthly downloads

 

According to foreign media reports, in August this year, Temu's global downloads were close to 55 million times, an increase of 42% over the same period last year, and this figure has surpassed Amazon.

 

Data shows that Temu's app has been downloaded more than 735 million times worldwide to date, with more than 500 million visits per month in the first quarter of 2024.

 

Globally, Temu apps were downloaded over 300 million times last year, 80% more than Amazon apps. Temu has also made a full “invasion” in the United States, Amazon’s main battlefield. According to AppMagic, American consumers have downloaded Temu apps over 200 million times since its launch in 2022, accounting for 27% of Temu’s total downloads.

 

Of course, looking at growth without considering the base doesn’t seem to make much sense. In the field of cross-border e-commerce, Amazon is still the absolute leader, but this does not mean that it can ignore the potential threat of Temu. After all, even Amazon CEO Andy Jassy admitted that Amazon’s online retail business is facing fierce competition from low-price retailers such as Temu.

Amazon

Temu

Seller

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