Former President Donald Trump's tariff policy has narrowed the position of the Chinese e-commerce platform Temu, which is struggling to secure sellers in the U.S. This is because Amazon, which dominates the U.S. online shopping market, is blocking Temu's market expansion.
On the 27th (local time), the Financial Times (FT) of the U.K. reported, citing sources familiar with the matter, that "Temu cannot offer brand-name products at prices lower than those provided to U.S. corporations and sellers by Amazon."
Temu has been seriously affected by the Trump administration's tariff policy. In May, the Trump administration abolished the "de minimis exemption" that exempted tariffs on imports valued at less than $800. For Temu, which imports low-priced products from China to distribute in the U.S., securing products to sell on the platform has become problematic.
According to the market research firm Sensor Tower, due to the impact of the tariff policy change, Temu's monthly active user count in the U.S. as of mid-July was reported to be 37 million, a 54% decrease compared to March. It appears that the user count plummeted as Temu ceased its advertising in the U.S., and the company has resumed advertising since last month.
With the difficulty of importing cheap products from China, Temu has begun to secure new supply chains within the U.S. Reports indicate that it is actively explaining the reasons for registering products on its platform by offering incentives such as reduced commissions to distributors.
However, this situation is not easy due to competition with Amazon. Amazon applies a low-price policy to most items, tolerating losses for certain periods based on its overwhelming economies of scale. If distributors sell the same products at lower prices on Temu than on Amazon, it becomes difficult to continue transactions with Amazon, the largest online trading platform in the U.S.
Moreover, Temu sets the selling prices of products on its platform autonomously. From the distributor's perspective, once they start supplying products to Temu, there is no way to prevent those prices from being set lower than on Amazon. Therefore, distributors inevitably hesitate to engage in transactions with Temu.
An executive at a large supplier said, "Because we cannot lower the prices of the same products as Amazon, we must provide entirely different products to Temu." Consultant Martin Hubel, who mediates transactions between Amazon and distributors, noted, "If Temu is not willing to endure billions of dollars in losses annually to expand market share over the next five years, it needs to move more wisely."
The industry believes that Temu needs to find a different strategy from Amazon. It suggests maintaining a low-price sales policy by utilizing return products, similar to discount chains in the U.S. like Nordstrom Rack and TJ Maxx. Consultant Martin Hubel stated, "To be competitive, Temu should sell private-label products or employ a discount strategy through bulk purchases."
Temu stated to FT, "We believe in fair and open competition," adding that "sellers have the right to freely decide where and how to conduct their business."