Amazon Ramps Up Efforts in China to Tackle Rising Competition from Temu and Shein

Amazon.Com Inc AMZN actively engages China-based sellers to counter competition from online discount retailers Temu and Shein, which have strong ties to China. 

During a week-long conference, Amazon announced plans to establish an innovation center near Shenzhen, China's technology and e-commerce hub. 

This center aims to assist Asia-Pacific sellers with product launches, brand building, and digital strategies, CNBC reports.

Moreover, Amazon is extending its comprehensive supply chain service, initially launched in the U.S., to Chinese sellers. 

This service streamlines the movement of goods from factories to various sales channels, including Amazon, in one seamless process.

Also Read: Is Amazon Gearing Up for a Fashion Showdown? Drastic Fee Cuts Signal a New Retail Battlefront

The conference, attracting thousands of merchants, highlights China's importance as a source for sellers on Amazon's platform. 

Despite not operating in China, Amazon relies heavily on Chinese sellers, with nearly half of its top sellers previously based there. 

In 2023, sales from Chinese sellers on Amazon grew by over 20%, with a notable increase in sellers achieving over $10 million in sales.

In November, Temu captured nearly 17% of the U.S. market share in discount stores, trailing Dollar General Corp's DG 43% and Dollar Tree, Inc's DLTR 28%.

In contrast, Amazon faces growing competition in the region. Temu, part of Chinese tech giant PDD Holdings Inc PDD, and Singapore-headquartered Shein are expanding their market presence. 

Shein, primarily a fast fashion retailer, has diversified its product range and has attracted Amazon merchants. The company, recently valued at $66 billion, is also preparing for a U.S. IPO. 

Temu, known for its eclectic and affordable product range, has gained significant visibility, making up a notable portion of Google's ad impressions.

Amazon's response includes adjusting seller fees to remain competitive, particularly in lower-priced categories. 

This strategy is a direct challenge to the rising influence of Shein and Temu, which are capturing market share across various online retail sectors. 

Etsy, Inc ETSY, another online marketplace, acknowledges these companies' competitive pressure and focuses on offering meaningful, non-disposable products as a differentiator. 

Etsy's recent workforce reduction further underscores the changing dynamics in the online retail space.

Also Read: Alibaba Rival Temu Takes Shein To Court: What Does This Mean for US Fashion Retail?

Price Action: AMZN shares are trading higher by 0.49% at $148.14 premarket on the last check Friday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.