Temu’s “shop like a billionaire” tagline is catching fire with U.S. consumers. Along with peers Shein and TikTok, the group looks set to challenge Amazon.com's (AMZN.O) huge market share just as trustbusters take aim. That could coincidentally help its defense. The problem is investors seem to prefer a monopoly.
Already, Shein and Temu are taking share of markets that are adjacent to Amazon. Temu accounted for nearly 17% of the discount retailers, not too far from Dollar Tree (DLTR.O), Reuters reported recently, citing figures from Earnest Analytics. Meantime, Shein’s top line has ballooned to $23 billion, according to the Wall Street Journal, surpassing retailer H&M (HMb.ST). Amazon has every reason to fret about their growing dominance. In China, it took just four years for Pinduoduo and ByteDance’s Douyin to nab 25% of the Chinese e-commerce market while Alibaba (9988.HK) dropped to 50% from 80%, Bernstein reckons.
That should, at least in theory, help Amazon in one regard. Amazon boss Andy Jassy is fighting Lina Khan’s Federal Trade Commission, which sued the $1.5 trillion e-commerce titan for monopolistic behavior, including its practice of charging vendors simply to sell wares on the platform. The company rejects the claims, and showing that two new competitors are gaining ground quickly could help the company make its case. Plus recently Amazon made a series of changes to provide more choices to merchants who rely on the company’s delivery and fulfilment services. That’s one of the issues that Khan has latched onto.
For now, Jassy’s company is hanging on to its power. The number of Prime users in the United States last year, an estimated 168 million according to Business of Apps, is about 14% higher than in 2021. So shareholders seem to be unfazed at the immediate risk. Despite Khan’s filing of lawsuits in 2023, Amazon’s market value, up 75%, has added $660 billion over a year. She may be pleased if Temu, Shein and TikTok continue to take a big bite out of Amazon’s market share. Investors, however, will be less so.
Follow @jennifersaba on X
CONTEXT NEWS
Amazon.com on Dec. 5 changed incentives for sellers on its platforms including reducing fees it charged to merchants that sell apparel products for $20 or less. For items priced under $15, Amazon is cutting fees to 5% from 17%. For products priced between $15 and $20, the fee will drop to 10% from 17%.
Fast fashion company Shein, which was founded in China, confidentially filed for an initial public offering in the United States, Reuters reported on Nov. 27 citing sources familiar with the matter.
ByteDance-owned TikTok is aiming to grow the size of its e-commerce business in the United States this year at least 10-fold, according to a report in Bloomberg on Jan. 3, citing sources familiar with the matter.
