Amazon's daily active users dropped by 2.6 million, and sellers suffered

Amazon loses 2.6 million daily active users

With the rise of emerging platforms such as Temu, they have snatched away a lot of traffic and users from traditional e-commerce platforms such as Amazon.

According to data provided by The Wall Street Journal, since Temu was launched in September 2022, the platform's daily active users have increased by more than 51 million (data as of January 2024).

On the other hand, Amazon is not so optimistic. During the same period of time, the number of Amazon's daily active users decreased by nearly 2.6 million. It can be seen that the current situation faced by the industry big brother is not optimistic.

In response, an Amazon spokesperson said: "We have not noticed a decline in daily active users."

Logically speaking, there is not much overlap between the customer groups targeted by Amazon and Temu: Amazon mainly targets high-end customers who are willing to pay for Prime service fees and hope to enjoy faster delivery and better quality products.

In contrast, a post by foreign media some time ago showed that many lower-income groups are turning from physical stores to the Temu platform, giving up delivery time and quality assurance in exchange for cheaper prices.

Originally, the two platforms were to develop on their own tracks without interfering with each other. However, due to the impact of inflation in the United States and a wave of layoffs in Silicon Valley, many middle-class people were forced to downgrade their consumption, which caused those who were originally loyal users of Amazon to eventually move to other platforms.

Data shows that Amazon 's revenue grew 14% in the fourth quarter of 2023, but studies have shown that it can do better in meeting customer needs.

According to Amazon's customer survey, consumers' satisfaction with the quality of the platform's products has declined, but consumers are very satisfied with the company's refund service for damaged or defective products.

On the other hand, Temu's parent company's revenue doubled in the fourth quarter of 2023, precisely because the company met the specific needs and vital interests of overseas consumers.

“Consumers are most concerned about the balance between quality and price. Recognizing this trend, we are more confident in our value proposition,” Temu CEO Chen Lei said recently.

Industry insiders pointed out that if Amazon can make changes and try its best to meet the needs of existing customers, it may be possible to slow down the rate of customer loss. However, if Temu tries to enter the mid- to high-end market in the United States in the future, Amazon may face a more difficult dilemma.

Temu may enter the high-end market in the future

Amazon must figure out whether Temu is going after its core customers or whether the two companies are competing for different target customers.

This raises the question: If Temu wins Amazon’s premium customers, will those customers continue to buy from Temu and leave Amazon, or will they simply try it and then return to Amazon?

Amazon is characterized by customer trust, reliable delivery services, and easy returns. It is understood that in 2023, Amazon delivered more than 4 billion items in the United States on the same day or the next day.

Temu, on the other hand , has carved out a new niche in the U.S. with its low prices, and it is likely to use this to move into the high-end market and snatch customers from Amazon.

After all, engaging in price wars is not a long-term solution. Similar to Pinduoduo's strategy in China, Temu will definitely launch more high-priced products in the US market in the future.

The Wall Street Journal noted that Temu's plan to move into the high-end market by reducing shipping costs and launching higher-priced products is likely to steal customers from Chinese Amazon sellers who have inventory in the United States.

Industry insiders believe that Amazon's advantage lies in its excellent logistics and services, which have attracted a large number of high-end consumers. On the other hand, Temu has captured consumers who are highly sensitive to prices.

But Temu’s recent success has proven that there are indeed a considerable number of consumers who are willing to wait longer for delivery in exchange for lower prices, which directly hits Amazon’s soft spot.

In the view of some industry insiders, Amazon's huge investment in logistics construction seems to have become a "sunk cost" that constrains the e-commerce giant. Although Amazon has invested too much money in the logistics system, it may have overlooked the importance of this service in the eyes of consumers, and even if it has realized this problem now, it cannot easily make changes.

However, Amazon has not yet considered giving up its advantages in logistics and convenient return services. After all, this is its basic strength in the industry.

On overseas social platforms, foreign netizens often complain about Temu’s slow logistics and inconvenient returns, which has now become Amazon’s biggest advantage in retaining its consumers.

Of course, Amazon is clearly not satisfied with the status quo. In order to further enhance its competitiveness and compete with these emerging platforms, it has even begun to prepare to move towards low prices.

Amazon introduces new coupon rules

Some time ago, Amazon introduced new regulations and put forward new requirements for sellers in terms of coupons.

Specifically, the coupon needs to meet two conditions. If the price or discount of the product does not meet the requirements, then the product will not be eligible for the coupon.

The first point is to provide a discount percentage between the minimum discount (5%) and the maximum discount (50%);

The second point is that the product also needs to have a sales history to be eligible for a coupon, and the promotional price should be lower than its "historical selling price" or recent lowest price.

This new policy of the platform will undoubtedly affect the sellers' operating methods and will indirectly push down product prices. Regarding this new rule, some sellers bluntly said that this is another way Amazon has come up with - forcing every seller to sell at a price lower than the actual cost of the goods.

Some sellers also believe that the new coupon rules are the same as the Prime promotion. The combination of the two discounts is basically equivalent to giving it away for free. If the pricing is not raised, coupons will no longer be fun in the future.

Since Amazon’s new coupon policy came into effect on the US site on March 12, many sellers have been affected and order volumes have plummeted. The most exaggerated example is that one seller’s order volume has dropped by nearly 50%.

Industry insiders pointed out that Amazon undoubtedly wants to compete with Temu in terms of price by this method. After all, it is facing such great competitive pressure now. If no measures are taken, it may lose more users in the future.

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