Feels like Temu and Shein are playing tri dimensional chess, reshaping the US e-commerce market,
Their aggressive advertising strategies have notably influenced Meta and Google’s ad revenues, with Meta recently reporting impressive quarterly results partly due to the substantial ad spend by the China based businesses on Facebook and Instagram (~10% of 2023 sales, with 5PPT growth). Both Temu and Shein also rank among the top advertisers on Google, showcasing their marketing prowess to lure more and more US consumers every day.
While they have become a boon for the US digital ad market, this dynamic duo is seemingly challenging growth among established giants like Amazon and Walmart and posing an existential threat to countless retailers and brands.
Eyeing to grab Amazon’s Chinese sellers that hold inventory in the US, Temu is raising the war by opening its marketplace to sellers.
Of course, Amazon’s main defense lies in its extensive warehouse network, supporting free (unless you count the $139 fee) and rapid delivery services for millions of Prime members—a tough nut for the Chinese e-commerce powerhouses to crack despite their significant investments in global logistics. Walmart is actively protecting its turf with similar tactics.
However, the real challenge looms for independent brands, retailers, and merchants who face the most significant risks. The low-price based land grab strategies by Temu and Shein demand a surgical response from independent retailers.
Traditional business models no longer suffice. To reenergize brand value in this new competitive landscape, the mid-market players must dare to rethink and redesign their underlying operating principles – from inventory sourcing to order fulfillment to delivery.
In this multifaceted game, US businesses need to strategize several moves ahead while considering multiple dimensions to maintain a competitive edge.
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