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Author | Huang Yu
Editor | Zhou Zhiyu
More than a decade ago, international e-commerce giant Amazon faced fierce competition from local Chinese e-commerce platforms like Taobao and JD.com, ultimately retreating and shutting down its domestic e-commerce operations in China in 2019.
However, Amazon did not enjoy a long period of peace in the international e-commerce market either. After nearly two years of rapid growth, TEMU, a subsidiary of PDD, has become the second-largest e-commerce platform in the world by traffic, and its user base is expected to surpass Amazon's within the year.
TEMU is making aggressive moves and is now targeting Amazon's core market. Wall Street Insights has learned that TEMU is expanding its local supplier strategy in the United States and Europe, while also considering adopting a third-party platform model to attract more merchants, relying on its fully managed services.
Amazon's global e-commerce dominance is under threat. Since the second half of this year, Amazon has officially sounded the horn for a counterattack, with its low-price store Amazon Haul recently launched on mobile platforms.
The trends over the past year show that TEMU and Amazon are mimicking each other and penetrating each other's territories, indicating that this &#34;battle&#34; has entered a close-quarters phase.
The new round of offensive and defensive battles in the global e-commerce industry is intensifying, with both pioneers and disruptors fully engaged, and the competitive landscape of the global e-commerce market will be completely rewritten. There is no turning back in this fight; everyone must go all out, or they risk becoming the losers in the cycle of rise and fall.
The countdown has begun for the battle for the title of overseas e-commerce king.
Intense Competition
The competition between TEMU and Amazon has become increasingly intense over the past six months. Both sides are trying to attract more merchants from each other.
In June of this year, Amazon held a closed-door seller recruitment meeting in Shenzhen, revealing news about its upcoming project &#34;low-price store.&#34; This move has been interpreted by the outside world as Amazon's forced counterattack in response to the strong impact from TEMU and others, and it is currently seen as the most significant measure taken.
Cross-border e-commerce expert Lin Zhiyong pointed out to Wall Street Insights that previously, Amazon attempted to distance itself from TEMU and Shein by promising fast shipping to hold its ground and encouraging Chinese merchants to use U.S. warehousing and distribution services more. As part of its emergency response strategy, Amazon also significantly reduced fees charged to merchants selling clothing priced below $20.
The newly launched low-price store Amazon Haul began opening to select customers in the U.S. on November 13, with all products priced at $20 or below, focusing on low-priced fashion, furniture, and daily necessities, with prices generally under $10 and offering free return services.
It is reported that the products sold on Amazon Haul are mostly small household items produced in Yiwu priced under $7, fashion accessories under $5, and many 3C products similar to those found in Huaqiangbei, which are also important categories for TEMU and Shein
This also means that compared to the past, Amazon now needs the support of Chinese white-label merchants more than ever, which is a key factor in the rise of PDD and TEMU.
Against this backdrop, Amazon has significantly increased its recruitment efforts in China since last year. For example, after a gap of three years and nine months, Amazon restarted its seller recruitment conference in Shenzhen at the end of last year—the 2023 Amazon Global Store Cross-Border Summit—and opened Amazon's overall supply chain solution to Chinese sellers.
In addition, Amazon has established new locations in cities like Wuhan this year and has held more seminars targeting sellers. Meanwhile, on November 8, Amazon's first innovation center in the Asia-Pacific region for global sellers officially opened in Qianhai International Talent Port, Shenzhen, aiming to attract more Chinese e-commerce sellers to join its platform.
On the same day as the opening of Amazon's innovation center, TEMU employees set up a recruitment sign downstairs, and the large sellers invited to the Amazon opening ceremony were asked if they wanted to join TEMU. Interestingly, TEMU's multiple business departments also relocated from Guangzhou to Qianhai International Talent Port in Shenzhen this year.
In addition to &#34;recruiting&#34; domestically, TEMU has also pushed into Amazon's territory and is continuously increasing its operational intensity.
For about the past six months, TEMU has been recruiting American merchants, but merchants could only join with a special invitation code; starting in November, TEMU lowered the entry threshold for merchants, allowing any American brand or individual seller to register and sell on TEMU.
A TEMU spokesperson stated in an email that TEMU is opening its doors to local American sellers. Sellers can now ship directly from U.S. warehouses and deliver products to customers in as little as one business day.
Beyond the U.S. market, TEMU's localization strategy continues to advance. On December 3, news emerged that TEMU is also actively recruiting new sellers in the UK, aiming to accelerate its expansion in the UK market.
In addition to increasing recruitment efforts, TEMU has also begun to diversify its business model. Unlike last year when it only had a fully managed model, TEMU launched a semi-managed model at the beginning of this year, and recent reports indicate that it is considering introducing a third-party platform model, allowing merchants to select products, set prices, open stores, and ship overseas, with the platform charging transaction commissions.
The third-party platform model has been a focus for Amazon over the past five years, helping its GMV grow from $335 billion in 2019 to over $700 billion by the end of 2023. Now, third-party sellers contribute more than 60% of Amazon's platform GMV.
Amazon is focusing on low prices, while TEMU is pushing the third-party platform. Clearly, as competition intensifies, both TEMU and Amazon are starting to unreservedly adopt each other's &#34;killer moves,&#34; becoming increasingly similar to one another.
Sprint
In the past two years, the strong rise of Chinese cross-border e-commerce platforms like TEMU has made Amazon realize that its global e-commerce dominance is not unshakeable.
According to data released by SimilarWeb in October, TEMU successfully surpassed eBay to become the second most visited e-commerce website in the world just two years after its launch, second only to Amazon
In addition, according to Sensor Tower data, in August, the number of users of the TEMU app ranked third among major e-commerce platforms, reaching 91% of Amazon's user count. At this rate, TEMU's user count is expected to surpass Amazon, which has been established for 30 years, within this year.
Relying on a low-price strategy and the innovative &#34;full custody model,&#34; TEMU surged into the blue ocean of cross-border e-commerce in 2022 like a catfish. According to statistics from Wall Street News, as of now, TEMU has expanded its business to 89 countries and regions worldwide, doubling the number from last year.
In the face of TEMU's aggressive approach, a spokesperson for Amazon once stated, &#34;The company has been exploring new ways to collaborate with sales partners.&#34;
The launch of Amazon Haul is a direct response from Amazon, which may help the company maintain its position to some extent. Lin Zhiyong told Wall Street News that Amazon's recent move to launch a low-price store will undoubtedly weaken the low-price advantages of TEMU, Shein, and others, thereby strengthening its own position.
Moreover, TEMU itself is facing increasing challenges.
From a revenue perspective, the growth rate of revenue contributed by TEMU to PDD has clearly slowed down. According to PDD's financial report, in the third quarter of this year, transaction service revenue driven mainly by TEMU grew by 72% year-on-year to 50 billion yuan, compared to growth rates of 327% and 234% in the previous two quarters.
During the third-quarter earnings call, PDD's executive director and co-CEO Zhao Jiazhen reiterated the warning about TEMU's growth: &#34;The competition faced by PDD's global business is becoming increasingly fierce. This competition, combined with the complex external environment, will inevitably cause some fluctuations and impacts on our business.&#34;
As TEMU's scale rapidly expands, it has drawn the attention of regulators in various countries. Entering new markets not only means overcoming localization challenges but also dealing with external pressures such as investigations, tariffs, and bans influenced by geopolitical factors in different regions.
Against this backdrop, if TEMU wants to break the &#34;shackles&#34; of overseas development, it must strengthen its localization strategy. The semi-custody model launched earlier this year is an attempt by TEMU to provide more diverse operating models to meet the needs of more merchants.
Sources close to TEMU revealed to Wall Street News that the semi-custody model allows TEMU to achieve faster speeds while maintaining quality-price ratios. In the future, if merchants' capabilities become stronger, TEMU may grant them greater space and freedom.
This means that as TEMU introduces a third-party platform model, it will simultaneously have three models: full custody, semi-custody, and third-party platform, similar to those adopted by Amazon, Shein, and AliExpress.
&#34;Following&#34; is a path many companies choose when they encounter growth bottlenecks, but it often does not yield effective results. For example, domestic platforms like Taobao and JD.com have learned from PDD's strategies of &#34;refund only&#34; and &#34;low prices,&#34; ultimately choosing to focus on their areas of expertise.
The same story is now being replayed in the global e-commerce market, with the difference being that everyone is actively stepping out of their comfort zones to seek new breakthroughs. The rough phase of expansion for cross-border e-commerce platforms has ended, but who will become the final biggest winner remains uncertain

AMZN

- Amazon faced significant competition from local Chinese e-commerce platforms, leading to its exit from the Chinese market in 2019.  
- TEMU, a platform under Pinduoduo, has rapidly gained traction, becoming the second-largest global e-commerce site by traffic and is expected to surpass Amazon's user base soon.  
- In response, Amazon has launched a low-price store, Amazon Haul, and is intensifying efforts to attract Chinese sellers, indicating a fierce ongoing battle for dominance in the global e-commerce landscape.

TEMU aims to dethrone Amazon