This week, Amazon held a summit for the substantial portion of it's third-party market which is made of China-based merchants. In addition, they revealed their new 'innovation center' in Shenzhen, known as a technology and cross-border e-commerce hub. In this competitive environment, they are facing increasing pressure from newcomers Shein and Temu, who have Chinese origins.
Amazon is trying to attract sellers from China as it faces a growing challenge from cut-price online retailers Temu and Shein, both of which trace their origins to the world's second-largest economy. To this end, Amazon disclosed plans to open an "innovation center" near Shenzhen, an area known as China's Silicon Valley, at a conference kicking off Tuesday. The company said it will assist merchants from the Asia-Pacific region with product launch, brand building, and digitizing on their platform. Additionally, Amazon is giving Chinese vendors access to its end-to-end supply chain service, which debuted in America in September last year and allows traders to purchase goods from factories abroad and restock them on Amazon and other sites in a single step.
The conference, mostly attended by Chinese merchants, is also graced by senior personnel from Amazon. Whilst they have no presence in China, the country has become a hotspot for businesses aiming to capitalise on Amazon's global clientele. Data from Marketplace Pulse states that, at one stage, almost half of the top Amazon vendors had roots in China.
In 2023, the number of items sold by Chinese traders on Amazon's platform rose by over 20 percent year-on-year, while the number of Chinese sellers with revenues of over $10 million increased by 30 percent. Temu, an online store featuring items from unique trinkets to cheaper versions of popular brands, is owned by Chinese technology giant PDD Holdings. Shein, which generally sells fashion items and accessories, established a marketplace earlier this year selling electronics, homewares, and other items. Certain Amazon sellers have started selling on Shein over the past few months.
Shein submitted a confidential application for a public offering in the U.S. in late November. Although the listing could bring greater attention to Shein in the U.S. and globally, the firm has drawn criticism over its impact on the environment, links to China, and accusations of forced labor in its supply chain. It is currently valued at $66 billion, as reported by CNBC.
Temu, which has been carrying out a marketing campaign since it ran an advertisement for the Super Bowl in the beginning of the year, accounted for 20-25 percent of ad impressions purchased on Google in the fourth quarter, in contrast to nearly nothing at the end of 2022. Customers of Temu spend almost twice as much time in the app as they do on Amazon and eBay.
Last week, Amazon tweaked its fees for vendors, reducing the commission charged on clothing items priced below $15 to 5 percent from 17 percent, likely in a move to entice Shein and Temu sellers. When speaking at an investor event earlier this month, Etsy CEO Josh Silverman commented that Temu and Shein are taking away market share from everyone, adding: "There's a lot of people focused on selling you cheap goods cheaper, that end up in a landfill five minutes later. We think there's a big alternative to do something different that's truly meaningful, and in doing so, earn a spot in your mind."
On Wednesday, Etsy announced layoffs of 11 percent of its personnel, which amounts to about 225 workers.
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