“Shopping apps and marketplaces that specialize in ultralow-cost goods from China are gaining a foothold among US consumers—with broader implications for the future of ecommerce,” our analyst Sky Canaves wrote in our Chinese Ecommerce in the US' report. Canaves expanded on what’s driving this US retail opportunity for companies like Shein, Temu, and TikTok and how it will impact the greater US market on a recent “Reimagining Retail” podcast episode.
The retail opportunity:
Analyst insight: “I think the appeal of the US market and the fact that ecommerce is continuing to grow here is really the big opportunity [for these companies with ties to China],” Canaves said. “China’s a much more highly competitive market for retail, and there’s also that slowdown in the consumer economy there. So it’s really pushing the companies, the ecommerce players, and the brands and manufacturers to look overseas for their next stages of growth.”
Can these companies with ties to China take share from Amazon’s US dominance?
“It comes down to pricing again,” said Cheung. “They are selling products at a ballpark price of 25% or 20% of what I expected to pay for a similar product that might be sold with a branded retailer.”
“[Marketplace Pulse] reported that Amazon is now taking more than 50% of seller revenues, and that’s a combination of their take rate and fees for fulfillment and advertising, and it’s up from about 40% five years ago,” said Canaves. “That’s really made more sellers feel dissatisfied because they’re not able to even get the money that they’re selling products for, and so maybe look to other channels to sell on.”
Amazon is also looking at delivery speed, particularly with its Prime membership, as a way to stave off competition from the likes of Shein and Temu, Canaves said.
The impact on US retail:
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