Technology
Friday, December 15th, 2023 5:02 pm EDT
Key Points
- Amazon’s Appeal to China-Based Sellers: Amazon is actively reaching out to China-based sellers to counter growing competition from discount online retailers Temu and Shein, both deeply rooted in China. The company announced plans at a conference to open an “innovation center” near Shenzhen, often referred to as China’s Silicon Valley, aiming to support sellers in the Asia-Pacific region in product launch, brand building, and digitization. This move reflects Amazon’s commitment to maintaining a strong presence in the Chinese market, even though it no longer operates directly within the country.
- Enhanced Support and Services for Chinese Sellers: Amazon is providing Chinese sellers with access to its end-to-end supply chain service, which debuted in the U.S. in September. This service enables merchants to efficiently move goods from overseas factories and replenish them on Amazon and other channels “in one stop.” The company is actively promoting these offerings at its annual conference for sellers in China, which attracts thousands of merchants from the region. Amazon reported significant growth in the number of items sold by Chinese sellers on its site in 2023, with a 20% year-over-year increase, and a 30% rise in Chinese sellers with sales over $10 million.
- Rising Competition from Temu and Shein: Amazon faces stiff competition in the region from Temu, owned by Chinese tech giant PDD Holdings, and Shein, a fast-fashion retailer. Shein, which recently filed confidentially for an IPO in the U.S., has faced scrutiny over its environmental impact, ties to China, and allegations of forced labor in its supply chain. Temu, known for its digital bargain basement, has significantly increased its market presence, accounting for 20% to 25% of ad impressions purchased on Google in Q4 2023. Amazon responded to the competitive landscape by updating its seller fees, particularly cutting the commission on clothing priced below $15 to 5% from 17%, a move seen as an appeal to Shein and Temu merchants. Etsy, acknowledging the impact of Shein and Temu, announced layoffs affecting 11% of its workforce, emphasizing its commitment to offering alternatives to the disposable and cheap goods model propagated by competitors.
Amazon is intensifying efforts to attract China-based sellers amid growing competition from discount online retailers Temu and Shein, both rooted in China. At a conference this week, Amazon announced plans to establish an “innovation center” near Shenzhen, often referred to as China’s Silicon Valley, aiming to support sellers in the Asia-Pacific region in product launches, brand building, and digitization. Chinese sellers will also gain access to Amazon’s end-to-end supply chain service, allowing them to move goods from overseas factories to Amazon and other channels seamlessly.
While Amazon no longer operates in China, the country has become a key market for businesses seeking to reach Amazon’s global customer base. The annual conference attracts thousands of merchants from the region, and despite the competition, Amazon reported a significant growth in items sold by Chinese sellers on its site in 2023, with a 20% YoY increase, and a 30% rise in Chinese sellers with sales over $10 million.
In the face of rising competition from Temu and Shein, Amazon is adapting its strategy. Temu, owned by Chinese tech giant PDD Holdings, has gained prominence through a marketing blitz and a Super Bowl ad, accounting for 20% to 25% of ad impressions purchased on Google in Q4 2023, compared to “near zero” at the end of 2022. Temu has seen increased user engagement, with shoppers spending nearly twice as much time in the app as on Amazon and eBay.
Shein, a fast-fashion retailer, has filed confidentially for an IPO in the U.S. Despite potential global popularity, Shein faces scrutiny over its environmental impact, ties to China, and allegations of forced labor in its supply chain. The company, last valued at $66 billion, aims to diversify its offerings through a marketplace launched earlier this year, presenting a wider variety of products.
Amazon’s response to the competition includes a reduction in seller fees, particularly on clothing priced below $15, with the commission dropping from 17% to 5%. This move is seen as an appeal to Shein and Temu merchants. Etsy, another platform known for handmade and artisan goods, acknowledged the competitive landscape, with its CEO noting that Shein and Temu are “taking a little bit of share from everyone.”
In a related development, Etsy has announced layoffs, affecting approximately 11% of its workforce, amid the competitive challenges and changing dynamics in the e-commerce landscape.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/12/14/amazon-courts-sellers-at-china-summit-as-temu-and-shein-gain-momentum.html
