Amazon, the American e-commerce giant, is reshaping its strategy in China, focusing on helping local merchants sell globally. This move comes at a critical time when Chinese-founded competitors like Shein and Temu are making significant strides in the market.

Amazon seems to be directly challenging companies like Temu and Shein

At the heart of Amazon’s strategy is the opening of an innovation center in Shenzhen, its first in the Asia-Pacific. This center aims to assist merchants in brand building, product promotion, and digitalizing operations. Amazon’s commitment is evident in its recent four-day event in the city, showcasing its dedication to integrating industrial, expert, and supplier resources for Chinese merchants.

Amazon Q

In a bold step, Amazon has expanded its reach to Brazil, directly challenging Shein and Temu, who have also established strong presences in Latin America. Amazon’s strategy includes leveraging its extensive supply chain network, providing Chinese merchants with warehousing, distribution, and courier services. Additionally, the company plans to enhance its selling platform and explore artificial intelligence applications to streamline and legitimize business operations.

This strategic pivot is driven by the growing success of Chinese products on Amazon. The platform has seen a more than 20% increase in items sold from China, with a significant rise in merchants reaching revenue milestones.

Despite this renewed focus, Amazon has scaled back other operations in China, including its third-party merchandise marketplace, Kindle e-book service, and a local app store. This refocusing indicates Amazon’s commitment to the “Made in China, sold on Amazon” initiative, recognizing the potential of cross-border e-commerce as a key driver in China’s foreign trade.

The shift in strategy is not just about business expansion but also regaining trust. In 2021, Amazon faced challenges with fake reviews, leading to the closure of numerous Chinese merchant accounts. This crackdown impacted Chinese sellers’ presence on Amazon, highlighting the need for renewed and trustworthy partnerships.

Meanwhile, rivals like Shein and Temu are escalating the competitive landscape. Shein, now based in Singapore, has seen remarkable growth, while Temu, a newcomer in the US market, has already doubled Shein’s sales. ByteDance‘s TikTok, with its innovative live commerce model, is expanding globally, further intensifying the e-commerce competition.

Amazon’s strategic realignment in China represents a significant shift in the e-commerce landscape, marking a new chapter in the battle for global market dominance.

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