How Shein and Temu Snuck Up on Amazon: The Biggest Threats to Its E-Commerce Empire


In the fall of 2020, Amazon seemed invincible. Pandemic lockdowns had supercharged its e-commerce business, prompting the company to hire thousands of new workers and expand its fulfillment warehouses across the United States. However, Amazon’s online shopping empire soon faced an unexpected challenge from two Chinese-owned e-commerce platforms: Shein and Temu.

Rising Rivals: Shein and Temu’s Unprecedented Growth

Over the past few years, Shein and Temu have quietly emerged as two of the most popular shopping websites in the US. Shein focuses on low-end women’s fashion, while Temu specializes in home decor and household items. Both platforms offer affordable, made-in-China products that many American consumers had previously associated with Amazon.

How Shein and Temu Snuck Up on Amazon
Credits: AI Generated Image Via Canva

According to market intelligence firm Sensor Tower, Temu had 47 million US monthly active users in April, while Shein had 29 million. Although Amazon remained ahead with 66 million monthly users, this figure had decreased from nearly 70 million in September 2022 when Temu launched. Shein and Temu’s rise has not gone unnoticed by Amazon, which has shifted its focus from traditional rivals like Walmart and Target to these emerging competitors.

Impact on Market and Logistics

Shein and Temu’s influence extends beyond user numbers. Shein reportedly earned approximately $45 billion last year and is currently seeking to go public. PDD Holdings, Temu’s parent company, saw its revenue surge over 130% in the first quarter of the year, making it the most valuable e-commerce company in China.

The surge in orders from these platforms has significantly impacted logistics, causing air cargo rates to spike. USPS workers have reported being overwhelmed by the volume of Temu’s distinctive bright orange packages. One mailman’s TikTok video, in which he humorously lamented the constant delivery of Temu packages, garnered over two million likes, highlighting the scale of this logistical challenge.

Targeting Underserved Demographics

While many e-commerce startups targeted upper-middle-class urbanites, Shein and Temu focused on a different demographic. The average American Shein shopper is a woman in her early 30s earning around $65,000 annually, according to UBS Securities. Temu’s fastest-growing user group is consumers aged 55 to 64, and the majority of its customers are women earning less than $50,000 annually.

This strategic focus on underserved demographics mirrors the approach PDD Holdings took with its first shopping app in China, Pinduoduo, which appealed to consumers outside major cities with modest incomes. This strategy has proven highly effective in both China and the US.

Aggressive Marketing and Unique User Experience

Shein and Temu have invested heavily in digital advertising to attract new customers. Temu spent nearly $2 billion on Instagram and Facebook ads last year, according to The Wall Street Journal. The platform also made a splash by running six Super Bowl commercials, significantly increasing its visibility among American consumers. A YouGov survey found that 88% of Americans had heard of Temu, with most discovering the platform through its extensive advertising.

How Shein and Temu Snuck Up on Amazon: The Biggest Threats to Its E-Commerce Empire
Credits: AI Generated Image Via Canva

In addition to aggressive marketing, Shein and Temu engage customers with steep discounts and free products, often in exchange for referrals. These promotions have led some US shoppers to question the legitimacy of the platforms. Both companies also design their apps to maximize user engagement, offering a shopping experience more akin to a digital arcade or casino than a traditional online store.

Innovations in Supply Chain Management

The real innovation behind Shein and Temu lies in their proprietary supply chain management software. This technology allows the companies to quickly adapt to consumer trends and manage inventory efficiently. Unlike Amazon, which emphasizes quick and convenient shopping, Shein and Temu focus on keeping users engaged for longer periods.

When users open the Temu app, they are greeted with interactive features like spinning wheels and games that offer discounts and rebates. Similarly, Shein has an elaborate loyalty rewards program where users earn points for daily check-ins, product reviews, and purchases, which can be redeemed for free clothing.

Amazon’s Strategic Response

Amazon has responded to the competition by reducing fees for sellers of low-cost clothing items and shifting its strategic focus. However, the rapid rise of Shein and Temu poses a significant challenge. While Amazon remains a dominant force in e-commerce, these Chinese platforms have demonstrated the potential to disrupt even the most established players.

Conclusion: A New Era in E-Commerce

The rise of Shein and Temu marks a new era in e-commerce, challenging Amazon’s long-held dominance. Their success highlights the importance of targeting underserved demographics, aggressive marketing, and innovative supply chain management. As Shein and Temu continue to grow, they are poised to reshape the e-commerce landscape, forcing Amazon to adapt and innovate to maintain its leading position.

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