As the Temu plan of Pinduoduo, a Chinese e-commerce company, sweeps across overseas markets, Amazon, one of the world’s largest e-commerce platforms, faces unprecedented challenges. Temu quickly attracted the attention of overseas consumers with its ultra-low prices, while Amazon has worked hard on shipping speed in the hope of resisting the competitive pressure from Temu.
Temu’s low price advantage comes from two aspects: one is relying on China’s strong domestic supply chain, and the other is direct cooperation with factories to avoid the price difference of middlemen. In contrast, it is difficult for Amazon to gain an advantage in price, so it chose to start with shipping speed and take advantage of its many logistics and warehousing centers in the United States.
Fast shipping can greatly enhance consumers’ shopping experience and thus attract more market share. However, Amazon is not only competing on speed, but also on the Small and Light Commodity Plan, which is a completely different development direction. The plan allows sellers to offer smaller, lighter, and cheaper products, but the delivery speed will be slower. Canceling this part of the plan means that all products will be delivered faster.
This has a significant impact on sellers. Although Amazon has introduced new logistics fee standards for goods under $10, making delivery costs lower, the fees are still higher than the previous Small and Light Commodity Program. Since the vast majority of sellers are participating in the Small and Light Commodity Program, most sellers will face the problem of rising shipping costs.
In addition, the new logistics fee standards only apply to goods under $10, which means that goods between $10 and $12 must lower their prices in order to enjoy low-cost logistics. However, goods in this price range already face fierce competition and meager profits, and as competitors increase, competition will only become more intense.
Meager profits mean that sellers have low risk tolerance, so some sellers are considering changing their product lines and choosing some products with high customer unit prices. However, products with high customer unit prices are more suitable for sale on independent sites.
Independent sites are freer than platforms and are not directly affected by price comparisons, so pricing is more flexible. In addition, independent sites are also more conducive to brand building and long-term development, so for cross-border sellers, independent sites may be a better choice.
Faced with the challenges from the Temu plan, Amazon and sellers must actively respond and find development strategies that suit them. Whether it is providing faster logistics services or switching to independent station sales, these are important measures to cope with the new situation. Only by constantly adjusting strategies can we remain invincible in the fierce competition.