The fierce competition in the overseas market of Chinese e-commerce platforms has ushered in the latest progress. Recent research shows that the number of users on cross-border e-commerce platforms such as Temu and SHEIN, which are owned by Pinduoduo and originate from China, is rapidly increasing in the United States, and the number of users is gradually approaching the world's largest e-commerce platform, Amazon.
Cross border e-commerce, as a "new business format", is gradually moving towards a "new normal". Multiple e-commerce professionals have told Securities Times reporters that with more sellers flocking and more categories introduced, the current competition of cross-border e-commerce platforms overseas is actually in the competition of industrial supply chain, and supply chain management has become the next direction of cross-border e-commerce.
The number of users in the United States is close to Amazon
According to the joint research report of Nihon Keizai Shimbun and the US survey enterprise data.ai, from the global overall user number in October 2023, Amazon grew by 4% year on year; The total number of users on the two Chinese e-commerce platforms, Temu and SHEIN, has increased to about 110 million, a 2.6 fold increase within a year, approaching 90% of Amazon's users.
From the perspective of the proportion of global users in the United States, Temu accounts for 41% and SHEIN accounts for 18%, both exceeding Amazon's 15%. The new downloads of these two applications in the United States are currently nearly five times that of Amazon. Taking Apple AppStore as an example, currently Temu ranks first in the shopping category of the US region and SHEIN ranks second.
It is understood that Temu is a cross-border e-commerce platform launched overseas by Pinduoduo in September 2022. It was the first to launch in the US market and quickly expanded in the global market. As of now, it has completed more than 40 countries and regions worldwide, with many products priced at $0.9 or less than £ 1, still attracting users at low prices.
SHEIN, founded in 2008, is a Chinese cross-border e-commerce giant located in Guangzhou. It is positioned as an international B2C fast fashion e-commerce company, mainly engaged in women's clothing and also provides fashion products such as men's clothing, children's clothing, accessories, shoes, bags, etc. After 2010, SHEIN entered the US market and has been deeply involved in overseas markets for more than ten years. It has also adopted a low-cost sales strategy for a long time.
It is worth noting that Temu has achieved rapid user growth in just one year since its launch in the United States, which seems to confirm that Pinduoduo's "low price, buy together" model adopted in the Chinese market is also effective in the US market.
Compared to Chinese cross-border e-commerce, Amazon has a unique advantage in the United States and is also a collective "competitor" of Chinese cross-border e-commerce. With the gradual entry of Chinese cross-border e-commerce platforms such as SHEIN and Temu, these platforms have brought some pressure to Amazon in terms of high growth, rich product categories, and fully managed operation models. Since the beginning of this year, Amazon has taken a series of measures to adjust prices and supply chain, which has been interpreted by the industry as a comprehensive response to the upcoming influx of affordable goods from China's cross-border e-commerce.
The low-priced strategy has become popular in the United States
Temu is the first step for Pinduoduo to enter overseas markets. According to Pinduoduo's latest financial report, Temu's sales in the third quarter of this year have exceeded $5 billion, especially in September. On the occasion of its first anniversary of launch, the daily GMV (total transaction volume) even reached $80 million. The United States, as Temu's first and largest overseas market, accounts for 60% of sales.
Why did Temu rise so quickly in just one year? Multiple e-commerce professionals have analyzed that low price strategy is an important factor. Wang Yujian, a special researcher at the Internet Economic and Social E-commerce Research Center, told reporters that Temu sells domestic cost-effective daily necessities and home products to developed countries, and has an advantage in product pricing compared to the target country's prices. The business model with superior prices is easier to replicate in the market expansion of developed countries; At the same time, by replicating Pinduoduo's social fission gameplay that Pinduoduo excels at domestically and expanding its user base through methods such as "cutting a knife", attracting people to help win cash, and group buying, we can offer up to 30% profit to new users based on a cost-effective strategy, thereby quickly accumulating a large number of users.
In addition, precise positioning of users and a good after-sales service experience are also reasons why Temu is popular in the US market. Wang Yujian pointed out that Temu focuses on young and price sensitive groups, focusing on launching cost-effective fashion, home and daily necessities, accurately capturing the consumption level, shopping habits, and fashion trends of American consumers. In terms of after-sales service experience, Temu provides a fast service process, especially in terms of return speed, which greatly enhances the stickiness and loyalty of American users. "said a researcher who has been tracking cross-border e-commerce for a long time.
Low price strategy is also one of SHEIN's "sharp tools" in the US market.
However, SHEIN's low price strategy is different from Temu's, which is determined by their different business models. From a positioning perspective, Temu is a store platform that gathers third-party sellers, while SHEIN is a retailer that independently develops products, showing some differentiation between the two sides.
New Pattern of Supply Chain Competition
Multiple e-commerce professionals have stated that Temu and SHEIN's ability to achieve low prices is closely related to their supply chain advantages. "The current competition of cross-border e-commerce platforms overseas is actually a competition in the supply chain
The aforementioned researchers who have been tracking cross-border e-commerce for a long time pointed out that SHEIN's rapid rise in the United States is mainly due to the small batch flexible production capacity of the Guangzhou Clothing Industry Belt in China, also known as the flexible supply chain. This means that its supply chain has sufficient flexibility, and the order volume can be large or small, allowing the platform to seize sales opportunities without causing inventory risks. Therefore, SHEIN can achieve rich products and low unit prices.
The fully managed model launched by Temu has become the current trend indicator for cross-border e-commerce. In the full custody mode, the supplier only needs to provide the goods to the platform, and the subsequent platform will help merchants complete marketing operations, logistics warehousing, after-sales service and other subsequent links. This mode is anchored to factory sellers.
"For China's cross-border e-commerce platforms, the full custody operation model improves the operation efficiency, expands the market share of merchants, and improves customer satisfaction, so all major cross-border e-commerce platforms have followed this model." The above-mentioned researchers who have followed the cross-border e-commerce field for a long time pointed out. It is understood that the full custody model can help more Chinese manufacturing enterprises focus on the production of goods they are good at, achieve "simple sailing", and greatly reduce the operational threshold of cross-border e-commerce.
The full custody operation model has put some pressure on Amazon's supply chain. In recent years, many third-party sellers have shifted from the Amazon platform to Temu to save costs. Amazon has always had a unique advantage in the United States. Wang Yujian told reporters, "The fully managed model actually relies on China's strong supply chain advantages, which is also what Amazon lacks
Faced with the rapid increase in the number of cross-border e-commerce platforms in China, Amazon has taken a series of adjustment measures to respond this year. In terms of supply chain adjustment, on August 8th this year, Amazon globally released the "Ten Initiatives of Industrial Belt" support plan, aiming to cultivate flexible supply chains and help sellers save cross-border logistics costs. In September, Amazon launched an end-to-end supply chain service that allows third parties to use the Amazon warehouse network like Amazon merchants, providing services from factories to Amazon warehouses to consumers. By using AGL services (Amazon Global Logistics) to reach AWD (Amazon Warehouse Distribution Network), logistics costs can be saved by up to a quarter, and warehousing costs can be saved by more than half.
In addition to the supply chain sector, Amazon has also adjusted prices. In June of this year, Amazon removed Temu from its pricing system. As most of Temu's products were priced below $10, Amazon stated that the adjustment was due to "questionable origin and possible counterfeit products" sold by Temu. Industry insiders say that if Amazon directly compares prices with Temu, it will result in businesses being unprofitable.
However, multiple e-commerce researchers have stated that Amazon's series of adjustment measures are not only aimed at Temu or a certain Chinese e-commerce platform, but also adapt to the changing market environment and customer needs, improve its operational efficiency and expand market share. In addition, it is also an overall response to the upcoming influx of affordable goods from Chinese cross-border e-commerce.
On the one hand, Amazon is continuously building its supply chain to improve operational efficiency, optimize inventory management, reduce inventory backlog risks, and improve profitability; on the other hand, Amazon is still persistently expanding its market share, and its way of expanding the market is usually through high-quality services and reasonable prices, rather than deliberately participating in price competition. "The analysis of researchers in the long-term tracking cross-border e-commerce field mentioned above.
Furthermore, it is worth noting that Temu's fully hosted model is not suitable for all overseas merchants. Wang Yujian stated that due to a series of issues such as the lack of pricing power and independent sales by merchants, the full custody model has also been criticized by sellers.
At the end of August, Alibaba's cross-border e-commerce platform AliExpress launched a "semi managed" model, which is less managed than fully managed. This means that merchants set prices and sell independently, and the platform provides operational solutions such as logistics warehousing, exclusive marketing activities, and reverse returns. In the semi custody mode, sellers have independent operational rights, which gives them the opportunity to form a long tail ecosystem. While taking into account the strengths of the long tail ecosystem, it also takes into account the logistics efficiency and flow tilt of full custody. "Wang Yujian said that in recent years, the cross-border e-commerce industry has been rapidly changing and is also breeding new models.