This copy is for your personal, non-commercial use only.

Distribution and use of this material are governed by our Subscriber Agreement and by copyright law.
For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.

https://www.wsj.com/business/retail/amazon-shein-temu-online-shopping-727570ea

BUSINESS RETAIL

Amazon’s New Challenge: Bargain Retailers

That Are Playing a Different Game
E-commerce giant weighs how to respond as online shopping sites Shein and
Temu notch rapid growth by stressing low prices, not fast shipping
Discussion questions:
By Sebastian Herrera and Shen Lu 1. What are some main takeaways from the article? What did you learn
from the article?
Updated Sept. 22, 2023 at 12:20 am ET 2. What does this word mean “juggernaut”? Give me another example that
uses this word in the same/ similar context. Does it have any other
meaning?
3. Pick at least 2 sentences that described the changes/ trend and
statistics in this article and try to analyze the use of language in those
sentences. Did you see any familiar structures with what you have learned
in this course so far?

R
OCKDOO
162

Amazon hasn’t moved to match prices on Temu despite the shopping platform’s growing popularity. PHOTO:
STEPHANIE KEITH/BLOOMBERG NEWS

The soaring popularity of shopping platforms Temu and Shein among U.S. consumers
startled Amazon AMZN -0.16% .com. The e-commerce juggernaut is figuring out how to
respond.

While Amazon has for years contended with challenges from rivals such as Walmart and
Target, Temu and Shein, both of which have Chinese roots, are tapping into demand for
low-price items that aren’t delivered quickly.

Amazon hasn’t taken steps to match the prices of items on Temu, people familiar with the
matter said, a rare strategy for a company that typically scours the internet with a variety
of price-matching tools to ensure its site has some of the lowest prices online.

Inside the tech giant, executives have been weighing how to respond to the two
competitors, the people said. Executives have seen there is a market for bargain items that
take longer to arrive and have tried to figure out if they should make such offerings on their
own site more discoverable and available.

Shein and Temu “aren’t going after two-day delivery or better customer service,” said
Steve Tadelis, a former Amazon executive and economics professor at the University of
California, Berkeley. “They seem to be hitting the lower end—cheap stuff that people are
willing to wait for.”

Inflation-wary American customers have increasingly been willing to try out Temu and
Shein. Since launching its U.S. services in September 2022, monthly unique visits from U.S.
customers on Temu’s website and app, a measure for how often shoppers are visiting the
service, grew by more than 10 times to about 70.5 million by March, according to estimates
from analytics firm Comscore.

Since August 2021, Shein’s U.S. monthly unique visitors nearly doubled to roughly 41
million in March.

Amazon’s monthly unique visitors decreased to about 211 million in March from about 217.5
million in September 2022, Comscore estimated. Data firms Similarweb and Sensor Tower
measured similar web and app traffic trends during recent months to Temu, Shein and
Amazon.

An Amazon spokeswoman said the number of customers across its website and apps has
grown year-over-year. The company said independent studies have found its prices are
frequently the lowest online among major U.S. retailers, and that it works to ensure the
prices in its online store are as good or better than at competing retailers.

Reuters previously reported that Amazon hasn’t matched prices for certain items on Temu.

Temu and Shein’s popularity comes after earlier jolts to Amazon’s e-commerce market
share in the U.S. After rising for years, the company’s share of U.S. online shopping has
stayed around 38% since 2021 and is projected to hover at that level through at least the
next year, according to research firm Insider Intelligence. Newer entrants such as Temu
and Shein have gained customers in the U.S. as other players such as Amazon, Target, eBay
and furniture seller Wayfair are seeing their market share stagnate or decrease.

Customers have been attracted to Temu for its bargains. PHOTO: LAM YIK/BLOOMBERG NEWS

Shein recently opened a marketplace for U.S. customers, creating a channel for
independent merchants to sell products through its site. Thousands of Amazon sellers have
joined the new platform, including dozens that are based in the U.S., according to research
firm Marketplace Pulse. Last month, Shein struck a deal with Forever 21 that will allow the
Singapore-based online fashion retailer to sell the American fast-fashion company’s
products on its site and app.

Customers have been attracted to Temu and Shein for bargains. While items may take a
week or longer to arrive, the companies can sell items cheaply primarily because they don’t
have large inventory stored in U.S. warehouses, eliminating costs that Amazon and U.S.
sellers have. They ship many products directly from China based on consumer demand
instead of having large inventory sitting in warehouses in advance.

Shein has grown into America’s largest fast-fashion seller, according to Earnest Analytics.
The company regularly updates its inventory and is known to consistently be on top of
fashion trends, though it has lately looked to expand its product offerings beyond fashion.
Temu, meanwhile, sells a diverse assortment of products.

Unlike Amazon, Shein and Temu can’t replace a grocery store run with fast deliveries of
household essentials such as toilet paper. But some Amazon customers say the firms are
offering similar goods to those found on Amazon but for lower prices.

Lynn Hatch, an Amazon shopper who lives in North Texas, first heard about Temu late last
year from a friend. After browsing the website, she found a painting similar to one on
Amazon, but for roughly half the price.

Shein has grown into America’s largest fast-fashion seller and entered a partnership with Forever 21 in August.
PHOTO: GILLES SABRIE FOR THE WALL STREET JOURNAL
Aside from Temu’s clothing, which Hatch has tried but hasn’t liked, she has shopped on the
site for kitchenware and arts and crafts.

“I find myself now looking at Temu first to see if there is a suitable option before going to
Amazon,” said Hatch, 42. “Temu takes a little bit longer to arrive, but the quality so far has
been about the same. Most products these days are produced in China anyway.”

Shein and Temu also can’t typically compete with Amazon for the delivery advantages built
around its Prime subscription service, thanks to a vast logistics network Amazon spent
years building.

“It is very difficult to crack Amazon,” said Neil Saunders, a retail analyst at GlobalData. “If
Shein says, ‘Well, we want to offer the same delivery services as Amazon.’ I mean, good luck
with that.”

Amazon must balance its brand as a reliable retailer versus potentially cheapening its
image by mirroring Temu and Shein with lower-priced products, said Tadelis, the former
Amazon executive. Customers may be sacrificing quality of products by shopping on Temu
and Shein because products are priced so low, he said.

In online reviews and forums, some Shein and Temu customers have expressed concerns
after not receiving quality products and said they restrict their purchases to items that are
less likely to break in shipping, such as hair clips or laundry bags.

Shein and Temu face regulatory scrutiny in the U.S. Lawmakers and Republican attorneys
general from over a dozen states have pressed the companies to address whether they
source cotton from China’s Xinjiang region, where the U.S. has accused Chinese authorities
of committing genocide and of using forced labor in its repression of mostly Muslim
Uyghurs.

Beijing has denied the allegations. Shein has said the company doesn’t source cotton from
China and doesn’t work with suppliers in Xinjiang. Temu hasn’t responded to requests for
comment.

Write to Sebastian Herrera at sebastian.herrera@wsj.com and Shen Lu at

shen.lu@wsj.com