Amazon has instructed some Chinese cross-border merchants selling goods on its site to stop listing lower-priced products on rival platform Temu, according to a report in the South China Morning Post today. The apparent move comes amid the US site’s growing competition with the budget retailer owned by Chinese e-commerce giant PDD Holdings.
Why it matters: Temu has been attracting US consumers with its aggressive pricing strategies. The pressure on merchants to keep prices competitive on Amazon underscores the challenges the American e-commerce giant faces in protecting its market share against emerging competitors in the global retail landscape.
Details: Temu has seen rapid growth in its market share in the US in recent years, and it was once again the most downloaded free app in the country in 2024, having first taken that title last year in place of TikTok, according to a list of top apps and games across the App Store released by Apple. This surge in user numbers is largely driven by its aggressive pricing strategy, which has in turn forced Amazon to take action. Last week, after Anker, a power bank and charging brand, removed its listings on Temu, rumors emerged about Amazon pressuring Chinese sellers to list exclusively on its platform.
- The two official Anker stores on Temu’s US site, “ANKER Certified Refurbished Official Shop” and “ANKER Official Shop,” are currently listed as temporarily on hold, with all products removed. According to the stores’ homepage, the two hubs have sold a total of 19,105 items and accumulated 3,708 followers.
- Amazon’s local office recently informed the managers of top-selling Chinese brands that they should not list identical items at lower prices on Temu. The policy followed Amazon’s increased monitoring of pricing on Temu, with penalties for sellers found to offer more expensive products on Amazon compared to Temu, including being removed from Amazon’s “Featured Offer” program.
- The “Featured Offer” program prominently displays products at the top of product pages, making them more visible and accessible to customers.
- Amazon responded to enquiries from a reporter from Chinese media outlet The Paper, stating, “The claim that Amazon requires sellers to exclusively sell on our platform is inaccurate. Sellers have the freedom to determine their own sales strategies and can set prices for their products on Amazon and other sales channels. In fact, regardless of where sellers choose to sell, Amazon supports their success through our multi-channel strategy, including solutions like Multi-Channel Fulfillment (MCF). Sellers set their own prices on Amazon and use the optional tools provided by us to offer competitive prices to consumers.”
Context: For Temu, the strategy of offering extremely low prices has proven to be a double-edged sword. On the one hand, it draws in consumers, as the platform markets itself with slogans such as “Shop Like a Billionaire.” On the other hand, such pricing practices raise questions about the platform’s legitimacy and ethical standards.
- While Temu’s parent company, PDD Holdings, has not faced significant moral scrutiny in China, it’s a different story in the US. In China, consumers and businesses are more closely aligned in terms of values and local economic realities, with fewer political considerations, making ideological resistance less pronounced. However, the very same approach might not resonate as well with global consumers, especially in markets like the US, where concerns over pricing and sourcing are more amplified. This ongoing tension between affordability and ethical concerns is now becoming a key point of contention in Temu’s growth strategy.
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