Amazon has finally let go of its arrogance towards Chinese merchants and has begun to take a series of measures to attract them. First, they pay out of their own pocketsLaunched the Amazon version of the "10 billion subsidy", which gives merchants a 20% discount on their product linksto help them get more customers.
Moreover, Amazon also released the Industrial Belt Support Plan, threatening to cultivate merchants in China's 50 industrial belts to deploy cross-border e-commerce and help them get more opportunities in the international market. In the past, Amazon often cooperated with Chinese sellers in a "stick style", but now it has suddenly changed its attitude, which is obviously stimulated by competitors.
After temu was launched in the United States, it quickly achieved great success in Amazon's North American market, and foreign media gave them the evaluation of "sweeping the Internet". even turned out the story of Temu's parent company Pinduoduo surpassing Alibaba, which made Amazon feel pressured.
Amazon is making every effort to woo abandoned Chinese sellersEven e-commerce and retail companies like Shein and Target are becoming wary. However, if we look back at the different retail models such as e-commerce and brick-and-mortar stores in the United States, we will find that Temu may not have had as much impact on Amazon as imagined.
Conversely, dollar stores like Dollar General and Dollar Tree have a high degree of overlap with Temu in terms of target user segmentation. In addition, by taking advantage of China's serious surplus of light industrial products and temporary tariff preferences in the United States, TEMU has continuously lowered the cost of the transaction chain and pushed the goods to a very low level, so it is more attractive to low- and middle-income people in the United States.
Temu's way of leveraging merchants' free competition makes people more inclined to shop on temu instead of choosing Dollar stores. Temu not only has cheaper products and more styles, but also provides free shipping services. Temu has taken advantage of the preferential tariff policy to allow its goods to enter the United States duty-free, which gives it a clear competitive advantage in **. However, if temu is unable to keep prices low and deliver items quickly, consumers may re-opt for Dollar stores.
Temu adopts a fully managed model, which reduces the entry threshold and operational difficulty of merchants, so it has attracted many merchants to join. Temu has also strengthened its support for merchants by recruiting ** merchants and launching a bidding mechanism, further depressing the product **. On the contrary, due to the limitations of the procurement mechanism and pricing model, the Dollar store often has a higher markup rate than Temu, and faces more difficulties.
However, Dollar stores have the advantage of having a deeper understanding of local consumption habits and are able to offer a selection of products that are more suitable for local consumers. At the same time, Dollar stores are also facing a reduction in food welfare subsidies and COVID subsidies, which has further deteriorated their business conditions. However, temu also has to contend with the discerning American consumer, who is more focused on personalized shopping experiences.
Although Temu is now mainly encircled and targeted by dollar stores, this does not mean that large retail companies such as Amazon and Walmart can rest easy. Recalling that Pinduoduo rose from outside the Fifth Ring Road and eventually entered the territory of e-commerce giants such as ** and JD.com, we can see that market competition is changeable and unavoidable.
Temu shares similarities with Pinduoduo in that it is smarter, more flexible, and has a strong posture. Temu's success is due both in terms of intrinsic strength and to the early US market letting its guard down.
Therefore, even though temu is now mainly targeting Dollar stores, large retail companies must not take it lightly, they must remain vigilant and adjust their strategies in time to cope with competitive pressures and changing market conditions.