E-commerce Recap 2023: How Amazon is Being Eroded by China's Offshore E-commerce Players

Looking back at 2023, China's overseas e-commerce momentum is quite fierce. According to several practitioners, cross-border e-commerce platforms have experienced the most ferocious year of overseas competition. 

In 2023, under the catfish effect brought by Temu, major cross-border e-commerce platforms accelerated furiously. Shein, Temu, TikTok shop, and AliExpress, the "four giants of China's overseas e-commerce", formed a strong encirclement of the global cross-border e-commerce giant Amazon.

Temu relied on its fully managed model and low-price strategy to stay at the top of the shopping charts throughout the year, and was one of the most downloaded apps in the U.S.  Shein followed in second place for a long time, but was occasionally replaced by Amazon, and AliExpress lagged behind the other three shopping apps, but showed an overall upward trend for most of the year.

Every year on the fourth Friday of November, the day after Thanksgiving, "Black Friday" will come as promised, and last for a month. In Europe and the United States, this is a month-long shopping season for consumers, but also the battlefield for e-commerce platforms and merchants to sprint for the annual KPIs.

In last year's Black Friday promotion battlefield, "China's four giants" has formed a fierce situation with Amazon to fight for the market, users and merchants, which can be said to be the most intense competition.

The U.S. Black Friday activity period is generally "Thanksgiving Day" to "Cyber Monday" a total of five days. Last year, the entry of Chinese e-commerce platforms has pushed the Black Friday discounts to start earlier. They extended the Black Friday cycle to more than 20 days, or even a month and a half. They minimize prices, increase discounts, and raise the "Black Friday" competition to a higher level.

TEMU started previewing as early as October 20th. The promotion accumulated up to 47 days, hit the highest 90% OFF discount, while there is also a $200 coupon gift. 

SHEIN has more than doubled the number of regular promotions and prices are constantly being updated targeting TEMU.TikTok Shop is also discounting up to 50% for this sale. AliExpress's speed seller is also well prepared. Its warehouses are said to be stocking up before Black Friday, up nearly 9 times year-on-year.

Compared with its Chinese rivals, Amazon's promotion came later, starting its preview on Nov. 17, with the total cycle lasting 11 days. Despite being a week later than Chinese players, this is the first time Amazon has lengthened its Black Friday promotion.

Amazon is in a rather tense situation with the Chinese internet giants pushing hard. According to FoxData, during the Black Friday 2023 preview, Shein was the first among several apps in terms of new user acquisition, while Temu and AliExpress were on a par.

Estimated Download of Amazon, SHEIN, Temu, AliExpress in 2023

 

Why China' s Overseas E-commerce Can Make Waves Worldwide?

Twenty years ago, when eBay and Taobao were competing in the Chinese e-commerce market, no one could have imagined that one day Chinese e-commerce companies would be a great hit in the overseas market. 

Low-Price Model

They might have overlooked one point: consumers worldwide are powerless against low prices.

Affected by inflation and economic downturn, North American consumers have also become sensitive to prices. In a survey conducted by McKinsey in August 2023 of 4,000 American consumers, 80% of the respondents indicated they are willing to seek cheaper alternatives for downgrading their consumption.

And low pricing is precisely the magic weapon that Chinese e-commerce uses to win overseas.

Just as Pinduoduo achieved a counterattack in the domestic market with low prices, Temu's strategy overseas is identical to Pinduoduo's, which is to capture consumer attention and market share through extremely low prices.

As for SHEIN, the secret to its rise overseas lies in its cost-effectiveness. With prices more competitive than Amazon's and efficiency higher than Zara's, SHEIN quickly became popular around the world, turning into one of the most favored fashion brands globally.

Operating Strategy

Behind the price advantage of Temu and SHEIN lies different operational strategies.

Temu adopts a full management model, which means the platform is responsible for store operations, sales, warehousing, distribution, returns and exchanges, after-sales service, etc. Merchants only need to provide the goods and stock them in the warehouse. Under Temu's full management model, the entry threshold for sellers is lowered, and sellers only need to produce, while Temu completes almost all subsequent operational work.

SHEIN's supply chain model includes its own brand supply chain and the platform seller supply chain. What the industry pays most attention to is SHEIN's self-branded innovative, flexible, on-demand supply chain. This involves digital transformation of suppliers, full-chain informatization from design to production and logistics, forming a flexible supply chain that can produce on demand based on market feedback, which is also SHEIN's core barrier.

TikTok Shop's full management model also launched in the UK and Saudi Arabia this year. In August, TikTok Shop's full management model began a small-scale pilot in the US market, and by the end of October, it had fully launched.

However, different from Temu, TikTok Shop has the backing of TikTok, which boasts massive traffic. Currently, in the US, which has the largest user base of any global social media platform, TikTok has reached 150 million active users.

With such a large traffic foundation, the appeal of TikTok Shop to merchants and users can be imagined. According to FastMoss data, by early November, TikTok Shop's US site's daily transaction volume had already exceeded 10 million US dollars.

In fact, the full management model is a collective trend for Chinese e-commerce companies going abroad, used to attract more merchants to join. Under the full management model, the platform does not charge merchants for advertising fees, order commissions, logistics fees, or advertising costs. The only revenue comes from the profit generated by the transaction price difference.

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The Biggest Winner in 2023 - Temu

Looking at this year's "Black Friday," with the "90% OFF" ultra-low discounts plus a $200 coupon, Temu quickly became the platform with the most explosive orders during the "Black Friday promotions."

Looking back at Temu's rise, it spent $1 billion on marketing in its first month of launch. Subsequently, Temu also advertised during the American Super Bowl, becoming the youngest brand to appear in a Super Bowl advertisement. Temu, less than a month after its launch in the US, surged to the top of the App Store and Google App Store rankings, thanks to its digital marketing strategies such as ASA, paid search advertising, and paid social advertising. Throughout 2023, Temu maintained its No. 1 ranking in shopping category.

 Ranking History of Temu in 2023

The following blog post will detail how Temu achieved success👉 How to Skyrocket Your App to the Top: Unveiling the Success Secrets of Temu

It is evident that in addition to the full management model and the low-cost model, the fastest way to build a brand is through a combination of ASA (Apple Search Ads), paid search advertising, and paid social advertising. Temu selected the highest traffic platforms across all channels for its advertising campaigns. Since January 2023, Temu has placed approximately 8,900 ads across various Meta platforms. In addition to this online presence, Temu has also advertised on TikTok and YouTube.

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