Amazon has been the biggest online marketplace for a long time. But time goes on, and various competitors also appear in online marketplaces. In this article, we will look at the competition between Temu vs Amazon. Is Temu better than Amazon? What are the differences between these online marketplaces?
What is the online marketplace in Temu?
Chinese marketplace Temu has taken European e-commerce by storm. Having invested heavily in advertising in recent months, it has gained prominence on social networks and search engines, sidelining many smaller online stores. But how does it work, who is behind it, what is the market reaction, and what controversies are associated with it? We will answer ten key questions.
Temu is a marketplace, i.e. an online marketplace that works similar to Amazon or Allegro. It provides a connection between buyers on one side and sellers on the other. The vast majority of them are Chinese manufacturers who, bypassing intermediaries and distributors, can supply goods to their customers directly. This makes it possible to reduce the final price of the products. There is, figuratively speaking, everything imaginable here.
How it works
Wikipedia indicates that Temu directly requires sellers to sell their goods at a lower price than, for example, competing with other online retailers like AliExpress. If multiple sellers sell the same item, Temu only allows the one with the lowest price to sell. The platform then removes items from listings that don’t meet the sales requirements, which are to sell at least 30 items for at least $90 within two weeks.
The app has been compared to Chinese ultra-fast fashion giant Shein due to its factory-to-consumer business model, but analyst Bruce Winder notes that the breadth of products offered on the marketplace goes beyond apparel, giving it more similarities to Amazon.
However, as with Shein, Temu’s real advantage is its lower prices. For example, a mid-August sale had sunglasses for under $4, shaving blades for under $5, and smartwatches for $28.
Why is Temu popular?
Its popularity is mainly due to its extremely low prices, which are often reflected in the quality of the items, as well as its offer of free shipping. This is evidenced by the massive investment in marketing on social media, especially Instagram, as well as search engines such as Google.
The theme has many chinese suppliers because of which competitive prices are set.
Temu has built its business by prioritizing ease of use, transparency, and a commitment to customer service. The website and mobile app are designed with simplicity in mind; users can search for products from thousands of suppliers with just a few taps.
Other benefits include Temu’s incentive model, where Temu offers discounts to customers who encourage others to download the app, creating a “user pyramid.”
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Who is behind it?
The Temu platform was founded by PDD Holdings, the company behind another e-commerce platform, Pinduoduo, which operates in China. The company is officially headquartered in Dublin, Ireland, but its shares are also traded on New York’s Nasdaq exchange, where it is currently valued at $175 billion. The company’s founder, Colin Huang, is, according to US Forbes, the third richest Chinese and the 45th richest person in the world, with a fortune of more than $46 billion.
Why is Temu being talked about now?
It is because of the massive investment in social media advertising that Temu spread quickly among customers and became very visible. Founded only in 2022, the company started in the United States early last year and gradually added Australia and New Zealand, as well as Western European countries. Since the summer, the company has been active in the Czech Republic, and in total, it is present in about 50 markets worldwide.
What has Marketplace done for European e-commerce?
Last year, online retailers were expecting the arrival of foreign marketplaces Allegro and Kaufland Marketplace, which were also widely publicized and started operating in the country in the first half of the year. Unlike them, Temu did not invest much in PR and entered the market only thanks to large investments in social media and search advertising.
How big? He bought up the entire space. Temu’s spending has boosted Google’s ad prices (it works on an auction basis: the bid of the company that paid the most is displayed) by tens of percent year-on-year. The smaller players can’t keep up and are losing customers who used to come to them from here.
How are the manufacturers reacting?
Even the manufacturers themselves have to react to the appearance of Temu. The American magazine Time reported on the appearance on the market of fakes or copies of products with unique designs. Temu’s media representative told them that if copies of products were found, measures would be taken, including sanctions and canceling the accounts of specific sellers.
What is the potential risk?
The Lupa portal cites an analysis by Grizzly Research, which identified Temu as cleverly hidden spyware that poses a security risk and stated that it is the most dangerous malware/spyware currently in widespread distribution. Analysis of the source code revealed that the hidden features of the app allow it to collect information about users who are unaware of it, gaining potential full access to all data on customers’ cell phones. This is being investigated by the National Cyber and Information Security Agency. Temu itself has responded to the Lupa article, saying the allegations have no basis.
Where do the controversies lie?
Last summer, according to the BBC, the U.S. Congress warned of an extremely high risk that some goods sold on Temu were produced using forced labor, particularly of the Uighur minority, which is subject to repression in China. According to reports at the time, the investigation itself had not yet been completed, but authorities wanted to inform the public of its findings as soon as possible.
While other sellers of products from China, such as Shein, regularly report on whether their platform has sold products made in this manner, Temu has yet to take a similar step, CNBC reported. In an inquiry on the matter, a Temu spokesperson said that each of the sellers on the platform must sign a statement in advance stating that they do not use child or slave labor and that such forms of employment are prohibited by their regulations.
Product range
The shipping process is quite fast. Due to the fact that in Temu chinese suppliers in this marketplace lower prices. On the official website of Temu, you can find out what the product range is.
What’s next
Matej Kapošvari, head of custom online store builder Shopsys, told e15 that some Czech online retailers are nervously waiting to see what Temu’s actions will be in the coming weeks and whether the site will be able to attract many more customers through its mobile app. “If Temu succeeds, in the future, thanks to direct access to the app, the site will have much lower marketing costs and its business model will become more sustainable,” he said, referring to AliExpress, which also broke into the Czech market with absurdly low prices a few years ago, but now its market share is smaller than expected.
Amazon’s online shopping site
Amazon is the largest online retailer in the United States, operating both as a standalone company and as a marketplace. Below in the article, we will take a closer look at the differences between these two categories. The popularity of the site among Americans is due to its favorable and easy shopping experience. The company provides fast free shipping, offers all the necessary things for the home at a minimum price, and during periods of big sales sells top gadgets at a 20%–50% discount.
Size and Reach
Amazon is one of the largest online marketplaces globally, offering a vast range of products, including electronics, books, clothing, and groceries. It has a massive customer base and is known for its global reach, serving millions of customers worldwide.
Product Variety
Amazon offers an extensive range of products from various categories, including both third-party sellers and its own products. It provides customers with a one-stop destination for almost everything they may need, from everyday essentials to luxury items.
Fulfillment Options
Amazon offers various fulfillment options, including Fulfillment by Amazon (FBA), where sellers can store their products in Amazon’s fulfillment centers, allowing for faster shipping and Prime eligibility.
Customer Experience
Amazon prioritizes customer experience and provides features such as fast shipping (especially for Prime members), easy returns, and a user-friendly website and app interface. Customer reviews and ratings also play a significant role in helping customers make informed purchasing decisions.
Digital Services
Amazon has expanded beyond e-commerce into digital services such as Amazon Prime Video, Amazon Music, Kindle e-readers, and Amazon Web Services (AWS), making it a multifaceted platform.
Product range
Amazon offers a vast array of product categories for sellers to list and sell their items. These categories include, but are not limited to:
- Electronics: This category includes items such as smartphones, laptops, tablets, cameras, and accessories like chargers and cables.
- Clothing, Shoes, and Jewelry: An eCommerce seller can list clothing items, shoes, jewelry, watches, and other fashion accessories.
- Home and Kitchen: Products for the home and kitchen category range from furniture and decor to kitchen appliances, utensils, and gadgets.
- Books: Amazon began as a bookstore and continues to be a significant platform for selling both physical books and e-books.
- Health and Household: This category encompasses health and personal care products, as well as household supplies like cleaning agents, kitchen essentials, and more.
- Toys and Games: Sellers can list toys, games, puzzles, and other entertainment products for children and adults.
- Sports and Outdoors: This category includes sporting goods, outdoor equipment, fitness accessories, and related products.
- Beauty and Personal Care: Sellers can offer a wide range of beauty and personal care products, including skincare, haircare, makeup, and grooming items.
- Tools and Home Improvement: Items in this category include power tools, hand tools, hardware, and products for home improvement and maintenance.
- Automotive: Sellers can list automotive parts, accessories, tools, and equipment.
- Grocery and Gourmet Food: This category includes a variety of food and beverage products, including pantry staples, snacks, beverages, and gourmet items.
- Pet Supplies: Sellers can offer pet food, supplies, toys, grooming products, and other pet-related items.
These are just some of the main categories, and within each category, there are numerous subcategories and product types. Amazon provides guidelines and requirements for each category to ensure that sellers comply with its policies and standards.
Is Temu better than Amazon?
Comparing the pros and cons of the Temu trading platform and Amazon’s online marketplace involves considering various aspects such as pricing, product variety, fulfillment options, customer experience, digital services, and potential risks. Let’s break down the comparison:
Temu
Pros
1. Extremely Low Prices: Temu offers products at highly competitive prices, often undercutting other online retailers.
2. Direct Connection with Manufacturers: By connecting buyers directly with Chinese manufacturers, Temu eliminates intermediaries, potentially reducing prices further.
3. Free Shipping: Temu’s offer of free shipping contributes to its appeal among customers.
4. User Incentives: The platform offers discounts to customers who encourage others to download the app, fostering a user pyramid and potentially driving growth.
5. Simplicity and Transparency: Temu’s website and mobile app are designed for simplicity and ease of use, allowing users to browse products from thousands of suppliers effortlessly.
Cons
1. Quality Concerns: While prices are low, there may be concerns about the quality of products, as reflected in their prices.
2. Spyware Allegations: There are allegations that Temu may contain hidden spyware, posing a potential security risk to users.
3. Controversies Regarding Labor Practices: Temu has faced scrutiny over the sourcing of its products, with concerns raised about the use of forced labor in manufacturing.
Amazon
Pros
1. Vast Product Variety: Amazon offers an extensive range of products across multiple categories, providing customers with a one-stop destination for their shopping needs.
2. Global Reach: With a massive customer base and global reach, Amazon serves millions of customers worldwide.
3. Fulfillment Options: Amazon provides various fulfillment options, including Fulfillment by Amazon (FBA), enabling faster shipping and Prime eligibility for sellers.
4. Customer Experience: Amazon prioritizes customer experience, offering fast shipping, easy returns, and a user-friendly interface and provides excellent customer service.
5. Digital Services: Beyond e-commerce, Amazon offers a range of digital services such as Prime Video, Amazon Music, Kindle e-readers, and AWS, enhancing its value proposition.
Cons
1. Competitive Pricing: While Amazon offers competitive pricing, it may not always match the extremely lower prices found on platforms like Temu.
2. Third-Party Seller Quality: Quality control can vary among third-party sellers on Amazon, potentially leading to inconsistent experiences for customers.
3. Environmental Concerns: Amazon’s large-scale operations raise environmental concerns regarding packaging waste and carbon emissions from logistics.
4. Marketplace Fees: Sellers on Amazon may incur fees and commissions, impacting their overall profitability.
Is TEMU cheaper than Amazon?
The price comparison between Temu and Amazon can vary depending on the specific product you’re interested in, as well as factors like shipping costs, taxes, and any ongoing promotions or discounts. Temu, as a hypothetical entity, may or may not exist in reality, but if it’s imagined as a platform or retailer, its pricing would depend on its business model, suppliers, and operational costs.
In real-life scenarios, Amazon often offers competitive pricing due to its vast scale and ability to negotiate with suppliers. However, there are instances where other platforms or retailers might have lower prices for certain products, particularly if they specialize in specific categories or operate on different pricing strategies.
To determine which platform offers the better deal, it’s wise to compare prices on both Temu (if it exists) and Amazon for the specific item you’re interested in purchasing. Additionally, consider factors like shipping times, return policies, and overall customer service when making your decision.
Conclusion. Temu vs Amazon
Is Temu better than Amazon?In summary, while Temu may excel in offering extremely low prices and a direct connection with manufacturers, it faces challenges related to product quality, security concerns, and controversies over labor practices. On the other hand, Amazon’s marketplace provides a vast product variety, global reach, and robust customer experience but may not always match the pricing competitiveness of platforms like Temu.
Additionally, Amazon faces criticisms regarding third-party eCommerce seller quality and environmental impact. Ultimately, the choice between the two platforms depends on individual preferences and priorities, such as pricing, product selection, and trustworthiness. You can also learn about the capabilities of Shopify.
