On the relatively low-key Double 12 shopping day, Amazon announced a series of new initiatives for 2024 aimed at Chinese sellers, including establishing a new regional center in China, offering more comprehensive supply chain storage and logistics solutions, and opening its Brazilian site to Chinese sellers.
In the past year, Pinduoduo's overseas version, Temu, has aggressively entered Amazon's stronghold, the U.S. market, achieving over 200 million downloads within a year and expanding to 48 country sites.
Not just Temu, but other Chinese cross-border platforms like Shein, TikTok, Alibaba's AliExpress, and others are continuously updating their policies, indirectly or directly competing with Amazon for sellers and user resources.
Facing a particularly competitive 2023, Dai Jingfei, Amazon's Vice President and Executive Director for Amazon Global Store Asia-Pacific, responded calmly: "The cross-border e-commerce track is becoming more spacious, and we see more and more companies joining, which is good for the healthy development of the industry. It also shows that there is still a lot of room for growth in export cross-border e-commerce."
Temu has popularized a new model called "full management," treating merchants as suppliers responsible only for providing high-value products. Once the platform warehouse receives the goods, Temu takes over the remaining aspects like pricing, sales, marketing, logistics, and after-sales. With its early no-commission and subsidy strategy, Temu has taken its "slash prices" approach overseas, making American users fall in love with products under $10.
To counter the competition, Amazon has had to make changes.
On December 6, Amazon U.S. announced a commission reduction for lower-priced products in the relatively weak clothing category, including reducing the commission for clothing under $15 from 17% to 5% and for clothing between $15 and $25 from 17% to 10%. Additionally, Amazon reduced fees for its FBA (Fulfillment by Amazon) service, offering an extra $0.77 per item shipping discount for products priced under $10.
"This is a significant reduction," emphasized Peng Jiaqiu, Amazon Global Store Asia-Pacific's Head of Product and Seller Education.
Guosen Retail Trade Team stated in a research report that Amazon's strategy adjustment aims to increase discounts on low-priced goods to boost platform traffic and sales, countering potential competition from low-priced online platforms like Temu and Shein.
Chinese sellers are indeed better at "rolling" value for money, but Liu Jingkang, founder of Insta 360, advised against a price war, describing it as a "nuclear button" with devastating consequences.
Amazon's stance is to help sellers build global brands and adopt long-term, sustainable development methods. Therefore, although Amazon has launched a "full management" service similar to other platforms-Supply Chain by Amazon-it does not directly participate in seller operations. This program includes Amazon Global Logistics (AGL), Amazon Warehouse Distribution Network (AWD), Fulfillment by Amazon (FBA), and Amazon Multi-Channel Fulfillment (MCF), supporting sellers in delivering their products directly from manufacturers to customers worldwide.
Additionally, for Chinese sellers, Amazon has consolidated offices in different cities into four major regional centers in East, South, West, North, and Central China, adding Wuhan and Zhengzhou as new centers in Central China to enhance localized services and cooperate with local governments and industrial belts. Also, its first "Amazon Global Store Asia-Pacific Innovation Center" was announced to be set up in Shenzhen Qianhai.
In seller operations, platforms like Alibaba focus on developing AI+ e-commerce, such as AI customer service, AI product selection, one-click product listing, AI digital human live streaming, etc. Amazon Web Services also offers similar services, like listing management, consumer review keyword analysis, business insights, growth opportunity recommendations, etc. Moreover, Amazon emphasizes aspects like intellectual property protection and product compliance for overseas operations, typically pain points in foreign business.
These signs indicate that Amazon has adopted a relatively conservative stance in responding to competition. However, in the midst of the fray, cross-border platforms now face not only the challenge of expanding their market but also defending their territory and capturing more market share.
