Temu and Shein "touch the soul", Amazon "has to change"

Chinese cross-border e-commerce is rising strongly in the United States, using social media and low-cost product strategies to accumulate a large number of American users, eroding Amazon's market share in the online shopping market in the United States.

The rise of emerging Chinese e-commerce platforms Temu and Shein has caught the attention of Amazon's top management. Amazon has begun to "fight back": the company is trying to benefit consumers and merchants by significantly reducing the commission for clothing sales, creating a second purchase box for consumers, and lowering the commission for the MFN program.

Amazon's Counterattack

According to media reports, in January of this year, Amazon significantly reduced its commission on clothing sales, with commissions for items under $15 reduced to 5% and commissions for items between $15 and $20 reduced to 10%. Previously, this ratio was 17% of total sales. Amazon spokesperson Boschetti stated that the purpose of this commission adjustment is to "increase the diversity and quantity of products and offer more competitive prices."

Amazon is also considering taking other measures, including creating a second purchase box for American consumers. The purchase box is an area in the upper right corner of the Amazon product listing page that contains buttons for "Buy Now" and "Add to Cart".

Under the current purchase box mechanism, Amazon uses an algorithm to determine which seller's products will be displayed in the purchase box. This algorithm mainly considers factors such as delivery speed, price, and cancellation rate, and tends to reward sellers who use FBA services because this usually means faster delivery and higher customer satisfaction.

The proposal for a second purchase box is to add another purchasing option on the product detail page that places more emphasis on the price of the product rather than the delivery speed. This means that even if the delivery time of certain products may be longer than those using FBA services, as long as the price is lower, these products can still gain more exposure and sales opportunities.

This practice has already been implemented in the European Union as part of Amazon's commitment to antitrust regulators. It has been reported that Amazon executives have been discussing the possibility of adding this feature to all websites, including the US site, since 2019.

It has been reported that Amazon is also discussing reducing the commission for sellers who fulfill their own orders in the MFN (Merchant Fulfilled Network) program so that these sellers can more easily compete with Temu and Shein on price.

In the MFN model, sellers retain full control over the logistics process but still need to pay Amazon's standard commission, which typically varies depending on the product category and is approximately 15% of the selling price. By reducing the commission required to sell products on Amazon, sellers who fulfill their own orders can operate at lower costs, potentially offering more competitive prices.