In Amazon’s offices, it is no longer the competition with Walmart, the American distribution leader, that occupies minds. It is now the growing success of Shein and Temu on Western markets, with aggressive promotions and significant marketing spending. Increasingly threatened by the two Chinese platforms, the Seattle group is preparing its response, taking over their cross-border model, says cross border. Last week, during an event bringing together Chinese sellers, it presented a new section of its marketplace, which will offer low-priced items, sold by third-party merchants and shipped directly from China. According to documents consulted by the CNBC channel, the opening of this discount store could take place in the fall.
Logistics costs – While it remains by far the leader in online commerce in many countries, Amazon has nevertheless been overtaken at the lower end of the price scale. First by Shein, a specialist inultra fast fashion. Then by Temu, a subsidiary of Pinduoduo. Instead of entering into head-on competition, the two groups opted for a different approach. Their orders are not sent from American or European warehouses, in a race to deliver them in one or two days. They are delivered from Chinese warehouses, which limits logistics costs. Especially since Shein and Temu benefit from advantageous postal rates as part of an international convention. And that they are falling into a loophole in American import laws, which exempt them from customs duties.
Delivery in ten days – Shein and Temu – and also Aliexpress, the Alibaba subsidiary, in certain countries – only compete in a small part of online commerce, in clothing, jewelry, kitchen utensils and even electronic accessories. But their popularity is significant enough to grab market share from Amazon. To compete, the American giant will offer, first in the United States, a selection of similar items for less than $20, il playing only an intermediary role. Purchases will pass through its warehouses in China, before being sent directly to customers’ homes, without ever going through its American logistics chain. Delivery will take between 9 and 11 days. A delay that consumers are now willing to accept in order to save money.
Heavy losses – In the spring, Amazon had already responded to the success of Chinese platforms by lowering its commissions on clothing sold for less than $20 by third-party merchants. “Half a solution”, estimates Juozas Kaziukenas, director of Marketplace Pulse. Not only did this measure only partially reduce the price gap. But it did not change Shein’s other advantage: its ability to launch countless products, in small quantities, to surf the latest trends almost in real time. Amazon could now be better armed in this area. However, it remains to be seen whether it is ready to follow its Chinese rivals, in particular Temu which is increasing its marketing campaigns and offering numerous promotions. And which therefore suffers heavy losses.
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