With rising inflation, American consumers are increasingly turning to the Chinese e-commerce platform Temu for their shopping needs. With its enticing tagline “Shop like a billionaire,” Temu has captured 17% of the U.S. market share, posing a challenge to traditional American retailers such as Amazon.com Inc., Dollar Tree Inc. and Five Below Inc. The rise highlights the lucrative and disruptive nature of startups.  

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Temu has even become the No. 1 Shopping App on Apple’s App Store, surpassing Amazon, Target Corp. and Walmart Inc., which currently hold the third, fourth and eighth spots, respectively. The No. 2 shopping app is Shein, another Chinese retailer.

Orders purchased on Temu are shipped from China and are estimated to be delivered within 10 days. However, in a bid to compete with Amazon’s fast delivery, Temu opened its marketplace to U.S. warehouses last month. Shopping from these sellers can significantly reduce shipping time, giving U.S. retailers the ability to handle fulfillment and shipping directly.

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In December, Reuters reported that Temu was successfully challenging U.S. dollar stores like Dollar Tree and Dollar General Corp., accounting for nearly 17% of the market share in the United States. According to data analytics firm Earnest Analytics, this compares to 8% for Five Below, 43% for Dollar General and 28% for Dollar Tree.

In January, Amazon announced it would lay off 5% of its Buy with Prime workforce, which equips retailers with fulfillment and delivery services. 

"Following a recent review, we’ve made the difficult decision to eliminate a small number of roles on our Buy with Prime team. Buy with Prime is a top priority for Amazon, with strong adoption from merchants and positive feedback from customers, and we will continue investing significant resources in Buy with Prime to build on that momentum,” an Amazon statement said.

The ripple effects extend to discount stores like Dollar Tree and 99 Cents Only Stores, both of which have announced significant closures and employee layoffs. 

Citing changing consumer demand and economic challenges, 99 Cents Only Stores is shutting all 371 locations in Arizona, California, Nevada and Texas. Dollar Tree plans to close 1,000 locations across its Dollar Tree and Family Dollar stores.

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