Amazon.Com Inc AMZN is focusing its strategic efforts on countering the rise of emerging e-commerce platforms PDD Holdings Inc PDD Temu and Shein, recognizing them as significant competitors in the online retail sector.
These platforms, originating from China, have swiftly gained traction in the U.S. market, directly targeting Amazon’s customer base.
Temu, in particular, has launched a massive advertising campaign, securing its position as the leading advertiser on Meta Platforms Inc META in 2023.
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To maintain its competitive edge, Amazon is leveraging its strengths in customer trust and speedy delivery, the Wall Street Journal reports.
The company is expanding its same-day delivery offerings, especially electronics, and developing marketing campaigns highlighting its reliability and quick delivery capabilities.
Despite Amazon’s efforts to innovate and adapt, challenges from Temu and Shein persist.
These competitors have rapidly grown in the U.S., with Temu’s monthly active users rising in a short span. Their strategy includes offering bargain prices and shipping directly from China, albeit at slower delivery speeds than Amazon.
Previously, Amazon intended to set up an innovation hub near Shenzhen, the center of technology and e-commerce in China.
In 2023, Amazon witnessed a more than 20% rise in sales from Chinese vendors, with an increasing number of sellers reaching sales figures above $10 million.
Temu is drawing in manufacturers who previously worked with its fast-fashion competitor, Shein, per prior reports. By offering these manufacturers a new platform to sell their inexpensive products, Temu is capitalizing on Shein’s efforts to streamline its supply chain for a significant U.S. stock market debut.
Furthermore, Temu is intensifying its competition with retail giants like Amazon and Walmart Inc WMT by encouraging suppliers to take charge of logistics and delivery, aiming to lower market prices through substantial subsidies and faster delivery times to customers.
Amazon’s stock has gained over 77% in the last 12 months. Investors can gain exposure to the stock via IShares U.S. Consumer Discretionary ETF IYC and VanEck Retail ETF RTH.
Price Action: AMZN shares closed higher by 1.28% at $178.15 on Wednesday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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