Supplier Localization! Temu starts to encroach on Amazon's turf

Due to changes in the regulatory environment and other factors, Temu, a cross-border e-commerce platform under Pinduoduo, is undergoing a significant strategic shift in the U.S. market, gradually moving closer to Amazon's localization operating model.

According to reports, Temu is currently vigorously developing sellers with local warehousing in the United States, contributing about 20% of the platform's GMV.

Firstly, this will effectively avoid potential policy risks. Previously, the media reported that platforms like Temu and Shein extensively utilized the "de minimis" rule, shipping goods valued below $800 directly from China to U.S. consumers without paying tariffs.

However, this practice has attracted the attention of the U.S. Congress and may even face the risk of being banned. By developing local warehousing, Temu can maintain business stability in the event of policy tightening.

Secondly, localized operations can alleviate logistics pressure. With the vigorous development of China's cross-border e-commerce, shipping costs have significantly increased, weakening the cost advantage of direct mail mode. Local warehousing can provide faster and more stable delivery services, while expanding product categories, such as large furniture.

Furthermore, this strategic transformation enables Temu to attract more high-quality sellers. It is reported that many Chinese sellers who have performed well on the Amazon platform have joined Temu's local warehousing project. For example, well-known electronic brand Anker and furniture retailer Costway offer more competitive prices on the Temu platform compared to Amazon.

However, this shift by Temu also faces challenges. Firstly, balancing the interests of new and old sellers is a key issue, with some Chinese suppliers reporting a negative impact on sales. Secondly, localized operations require higher logistics and management costs, posing a major test on how to maintain price advantages.

At the same time, Amazon is also testing a low-priced product section similar to Temu, planning to use the same "de minimis" rule to ship directly from Chinese warehouses. This back-and-forth competitive situation highlights the intensity of the competition in the China-U.S. cross-border e-commerce market.

Juozas Kaziukėnas, founder of Marketplace Pulse, told the media:

Temu wants to be more like Amazon to reduce supply chain risks and provide faster delivery; while Amazon is imitating Temu because it cannot ignore the fact that some consumers value low prices over convenience.

Overall, Temu's strategic adjustment reflects the flexibility and adaptability of Chinese cross-border e-commerce platforms in the process of globalization. Faced with multiple pressures such as policy risks, rising logistics costs, and intensified market competition, how to maintain price advantages while improving service quality will be a key factor in determining Temu's future development