Up to 90% off the price of goods, Chinese shopping apps challenge Amazon right at home

Attract with “deal” good deal

US consumers are swimming in thousands of hot deals this year, believed to be the result of increasing competition between Chinese tech companies like ByteDance, Pinduoduo and Shein for the top market share in the world’s largest economy.

Shanghai-based Pinduoduo, known in China for its promotional events, launched its low-cost global shopping platform Temu in September.

In the face of Shein’s massive popularity in the US, Temu felt part of the appeal in early November when it quickly became the most downloaded shopping app.

Meanwhile, Chinese social networking giant ByteDance is continuing to leverage the influence of the TikTok platform and adding a shopping function from November, allowing users to customize to create virtual shelves for sale. goods.

Temu’s launch and growing influence in the US coincided with the holiday shopping season, which tends to follow the Thanksgiving holiday on Black Friday and Cyber ​​Monday. large in the US), on November 25 and 28 this year.

Temu and Shein have up to 90% off some promotional items, including accessories like earrings for under $1 and headphones for just a few dollars.

Deals are combined with perks like free shipping and additional discounts for specific categories or orders that exceed certain amounts. Shein offers 10% off orders of $39 or more.

According to DataReportal, TikTok had more than 136 million users in the US as of April. Inflation also forced consumers to tighten their wallets and look for bigger deals, and this is to Pinduoduo’s advantage.

Win Amazon right on “home field”

The United States, already a fiercely competitive retail environment, is now a major battleground for Chinese technology companies, which see links with manufacturing plants in China as giving they have the advantage in the battle for the American wallet.

“As Shein has demonstrated, Chinese companies are shaking up American shopping habits and challenging Americans,” said Mark Tanner, chief executive officer of Shanghai-based market research firm China Skinny. Amazon food right on their home turf. The main advantage of these companies is the lower cost structure.

Amazon, which said it had its “biggest-ever” weekend shopping this year, is under increasing scrutiny by regulators in the US and is bracing for a recession. potential, with plans to lay off thousands of workers. But that doesn’t stop there, Amazon may have to factor in the new competition from Chinese apps into the challenges it faces.

Meanwhile, the saturated domestic market is prompting Chinese e-commerce companies to seek growth opportunities outside the domestic market. According to the Ministry of Commerce, China’s import and export value will reach 39.1 trillion yuan ($5.5 trillion) in 2021.

However, cross-border e-commerce accounts for only 3.1% of imports and 6.6% of exports, suggesting a greater opportunity for Chinese companies to grow in this sector.

In underdeveloped markets lacking a dominant e-commerce platform, Pinduoduo could find larger untapped opportunities for Temu, according to analysts at Chinese market research firm EqualOcean.

According to Chinese media, Temu is said to be attracting talent and suppliers from Shein. To make it easier for Shein employees to switch jobs, Pinduoduo has set up Temu’s office in Guangzhou, just two subway stations from Shein’s headquarters.

A Shein employee told Southern Weekly that Pinduoduo is offering twice as much salary as its rival. In response, Shein hid her company structure on internal messaging platforms and replaced all Chinese names with English names, making it less convenient to communicate at the company. this member told Southern Weekly.

As for vendors, Temu has promised to offer free listings and no commission to entice them to join its platform.

Conquering the US market is not easy

But the road towards its goal of gaining market share in the US market will be an uphill battle, analysts and industry insiders say.

Tanner from China Skinny said China’s e-commerce platforms will be challenged by “differences between the Chinese and US markets – including consumer familiarity and habits, issues logistics and infrastructure issues, or personal data security concerns for Chinese companies.”

George Gu, founder of cross-border e-commerce company Newme, said that logistics costs threaten the profitability of Chinese e-commerce companies, because it is very expensive to “ship orders”. small goods by air”.

He warns that Temu is “doing this with very high logistics and advertising costs… [Những chi phí hậu cần này] won’t change much no matter how big or small your business is.”

“For now, we’ll stick with TikTok,” said Gu, who founded his company in November 2020 to ride the new wave of e-commerce on the platform. “But as time goes on, we will bring our branded products to all channels.”