How Chinese shopping sites ‘Shein’ and ‘Temu’ came closer to competing with Amazon

May 28, 2024 16:00:00

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Amazon is the largest retailer in the United States and one of the most influential economic and cultural forces in the world. It has been reported that Chinese e-commerce companies Shein and Temu are growing in popularity and Silicon Valley is unaware of it.

How Shein and Temu Sneaked into Amazon by Louise Matsakis
https://www.bigtechnology.com/p/how-shein-and-temu-snuck-up-on-amazon

Shein is a Chinese e-commerce site specializing in cheap women’s fashion, while Temu is an e-commerce site offering affordable Chinese home furnishings and household items.

According to Louise Matusakis, a freelance journalist specializing in e-commerce and China, as of April 2024, Ago had 47 million monthly active users in the United States and Shein had 29 million, a total that exceeds Amazon’s 66 million. Amazon says access to its platform is growing, but that number is down from 70 million in September 2022 when Temu launched, according to market research firms.

Dick Thomas Johnson

Not only the number of accesses, but also revenues continue to grow – Shein claims that its revenues in 2023 exceeded approximately $45 billion (approximately 7 trillion yen), and Temu’s parent company, PDD Holdings, announced that its revenues in first quarter of 2024 increased by 140%.

However, large Silicon Valley companies were unaware of Shein and Temu’s rise in popularity, and once they landed in the United States, both companies remained largely under the radar.

The U.S. mail-order industry was wary of Chinese companies because Shein and Temu didn’t publish much information and because they “appealed to a constituency overlooked by the male-dominated venture capital and technology industries,” Matsusakis said.

According to one report, the average Shein user is a woman in her 30s, and most Temu users are also women.

Author: Paul Chin

Additionally, Colin Huang, founder of PDD Holdings, said in a 2018 interview that he wanted to appeal not only to wealthy city dwellers, but also to people living abroad Beijing’s 5th Ring Road that is, middle- and low-income people living in the suburbs.

To attract target audiences to their sites, Shein and Temu invested huge budgets in digital advertising. Temu spent nearly $2 billion (about 310 billion yen) on Instagram and Facebook ads alone in 2023, according to a study by The Wall Street Journal.

Perhaps reflecting these numbers, Meta reported in its 2023 earnings report that its total revenue from China almost doubled from a year earlier, while revenue from the United States increased by just under 6%.

In addition to aggressive marketing, Shein and Temu also attract new customers through promotions that offer deep discounts or free products for referring friends and family. These promotions are flashy, for better or worse, and Matsusakis, who is familiar with Chinese e-commerce sites, says the most common question his friends ask him is, “Is this site really legit?”

Commenting on the experience of using Chinese e-commerce sites, which are showing incredible growth, Matsusakis said: “Browsing through Shein or Temu’s sites is more like an arcade or casino than a shopping mall, and both companies have designed their platforms to maximize metrics such as time spent on the page. In other words, they see it as a form of entertainment rather than a tool to avoid the hassle of visiting a brick-and-mortar store.