Amazon and Temu's battlefield expands again

Author: Ju Zuo

Image source | pexels

1. Amazon's Secret Layout: Low-Priced Mall "Haul" Aiming for Global Reach

At the beginning of 2024, Amazon quietly released two key recruitment announcements: one was to recruit software development engineers to join the "Haul team" to assist in launching global operations; the other was to hire a senior product manager responsible for the rollout of the low-priced mall in the Mexican market. Although the first recruitment was quickly withdrawn, this move has revealed its strategic intent to push the low-priced mall business from the United States to the global market, with Europe as the first target.

According to CNBC, Amazon plans to launch "Haul" in Europe later in 2024, competing with emerging platforms like Temu and SHEIN with their ultra-low-price model. Although the official response was vague ("no specific plans to share"), insiders revealed that Amazon has been internally testing a "fully managed" supply chain model: sellers only need to stock goods in designated warehouses, while pricing, logistics, and after-sales are fully managed by the platform, which is similar to Temu's approach.

2. The Price War: Why Amazon Has to "Compete"?

1. The Crushing Growth of Emerging Platforms

Temu: As of December 2024, global downloads are close to 900 million (SensorTower data), sweeping the European and American markets with "viral growth" and "$1 free shipping."

TikTok Shop: Social e-commerce GMV has surpassed $32.6 billion (Tabcut.com data), reshaping user shopping habits through live-streaming sales.

2. The Irreversible "Downgrade" of Consumers

Europe: Under inflationary pressure, 67% of consumers stated they are "more inclined to purchase low-priced goods" (Euromonitor International data), with search volume for low-priced products on Amazon's European site surging 140% year-on-year.

Latin America and Southeast Asia: With lower per capita disposable income, Temu's Mexican site saw over a million downloads in its first month, proving the explosive potential of the low-price model in developing markets.

"Low prices have shifted from being an 'option' to a 'necessity,'" noted retail analyst Laura Gurski, "if Amazon does not take proactive measures, the moat of Prime membership may also be breached."

3. Amazon's Cards and Challenges

1. Advantage: Supply Chain and Logistics "Dimensional Strike"

Logistics Network: The European FBA warehouses cover countries like the UK, Germany, and France, enabling "next-day delivery," far exceeding Temu's 7-15 day delivery cycle.

Supplier Resources: Leveraging a 20-year accumulation of over a million third-party sellers, Amazon can quickly integrate low-priced private label products without relying on China's cross-border supply chain.

2. Risk: Balancing the Ecosystem While Competing Against It? Conflict with third-party sellers: If Amazon has too many self-operated low-priced products, it may squeeze the survival space of small and medium-sized sellers, leading to the controversy of "the platform being both the referee and the player."

Dilution of brand image: Amazon, known for its quality and service, may harm the loyalty of high-net-worth users if it excessively leans towards low prices.

3. Localization challenges

European compliance costs: Regulations such as the German Packaging Act and French EPR will increase operational costs and weaken price advantages.

Cultural differences: Temu has risen through "cutting a knife" social fragmentation, but European users are sensitive to privacy, and similar tactics may not be well-received.

4. Restructuring the global e-commerce landscape: Who will win?

1. Battle of models: Full management vs. platform ecosystem

Temu: Extreme low prices + social fragmentation, but relies on the Chinese supply chain and subsidies, raising doubts about long-term profitability.

Amazon: Reducing costs based on existing infrastructure, but needs to solve the balance between "low price and quality."

2. Key battlegrounds: Europe and Latin America

Europe: Temu has established a presence in the UK, Germany, France, and other countries, and Amazon needs to counterattack with a "Haul + Prime" combination.

Latin America: Amazon's market share in Mexico is less than 10%, while Temu has rapidly penetrated the market with low prices; this battle will test localization capabilities.

3. Long-term variables: AI and supply chain revolution

AI product selection: Amazon is testing AI tools to predict hot-selling products based on real-time data, shortening the new product launch cycle to 3 days.

Flexible supply chain: The "small orders and quick response" model plans to set up quick response factories in Poland and Turkey, specifically for low-priced products.

5. Conclusion: A war with no retreat

The launch of "Haul" by Amazon is not only a defensive move against Temu but also a reshaping of global e-commerce rules, shifting from "fast, good, and cheap" to "extreme cost performance." If successful, Amazon will solidify its position as the "everything store"; if it fails, it may hand over a trillion-dollar market.

As Bezos said, "Your profit is my opportunity." This time, Amazon chooses to use the enemy's weapon to fight a war of its own.