A New Challenger Emerges in Global Retail
The global retail landscape has undergone a seismic shift with Temu, the budget shopping platform owned by PDD Holdings, catching up to Amazon in cross-border market share worldwide. According to a survey published by the International Post Corporation (IPC), an association representing 26 national postal services across Europe, Asia-Pacific, and North America, Temu’s share of cross-border e-commerce surged from less than 1% at its 2022 launch to 24% last year. This places the Chinese platform on par with American e-commerce giant Amazon, which held 25% of the cross-border market in 2024, down slightly from 26% in the two prior years.
This rapid ascent represents one of the most dramatic competitive challenges Amazon has faced in its decades-long dominance. The survey, conducted with 30,970 participants from 37 countries including the United States, France, and Australia, reveals the profound transformation underway in global online shopping habits. While Amazon has maintained its position through scale, speed, and service, Temu has captured market share through aggressive pricing and a fundamentally different approach to e-commerce.
The implications extend far beyond these two platforms. Traditional retailers like IKEA are feeling the pressure, with the Swedish furniture giant experiencing a 26% drop in profit after cutting prices to stay competitive. Meanwhile, established players like eBay have seen their market share crumble, shedding 68% of their cross-border business between 2018 and 2025, falling to just 5% share last year.
The Temu Phenomenon: Three Years of Explosive Growth
Temu’s trajectory defies typical e-commerce growth patterns. In just three years, the platform has achieved what took other marketplaces decades. The company’s approach centers on sourcing directly from Chinese manufacturers and selling to consumers at ultra-low prices, often 2-3 times cheaper than comparable products on Amazon, with some items costing up to 10 times less.
For example, a charging station for Apple devices that costs between $20 and $50 on Amazon can be found for approximately $10 on Temu. This dramatic price differential has attracted millions of price-conscious shoppers worldwide, particularly in segments of the population that have been underserved by traditional e-commerce platforms targeting urban, affluent consumers.
The company’s marketing strategy has been equally aggressive. Temu has poured billions into digital advertising, spending nearly $2 billion on Instagram and Facebook advertisements alone last year. The platform made headlines with Super Bowl commercials in 2023 and 2024 featuring the slogan “Shop Like a Billionaire,” helping achieve 88% brand awareness among American consumers according to a YouGov survey.
“Chinese e-commerce exports, especially from Temu, have significantly increased in the past three years,” said Holger Winklbauer, chief executive of the International Post Corporation. “The global e-commerce supply chain is evolving due to customs changes in 2025 and into 2026.”
This growth has translated into impressive user numbers. Temu now boasts over 110 million active users globally, compared to Amazon’s 170 million Prime subscribers. While Amazon still leads in scale, Temu’s trajectory suggests a fundamental shift in how consumers approach online shopping, particularly for non-urgent purchases where delivery speed is less critical than price.
The Logistics Model Behind Low Prices
Temu’s ability to offer dramatically lower prices stems from its streamlined logistics model. While Amazon operates on a Supplier to Seller to Amazon Warehouse to Customer framework, Temu connects Chinese manufacturers directly to consumers. This direct shipping approach eliminates warehousing costs in destination countries and reduces intermediaries.
Many Temu suppliers utilize a just-in-time production model, manufacturing goods only after receiving orders. This approach minimizes inventory risk and reduces capital requirements. Combined with bulk shipping advantages and the strategic use of trade exemptions, Temu can maintain razor-thin margins while undercutting competitors significantly.
The platform employs what analysts call a “fully managed” marketplace model. Merchants agree on a sale price and send goods to Temu’s fulfillment centers, from which the company handles all shipments to consumers. This approach has attracted manufacturers by relieving them of warehousing, shipping, and customer service responsibilities, though it has also raised concerns about profit margins for suppliers.
Amazon Counters with Bazaar and Haul
Amazon has not remained passive in the face of this challenge. The e-commerce giant has launched strategic initiatives to compete directly with Temu’s low-cost market segment. In November 2025, Amazon expanded its low-cost e-commerce service, Amazon Bazaar (known as Haul in the United States), to 14 additional markets including Hong Kong, the Philippines, Nigeria, and Taiwan.
The standalone Amazon Bazaar app offers merchandise similar to Amazon Haul, the budget-friendly shopping section within the main Amazon app launched last year. The platform delivers products priced under $10, with some items costing as little as $2, covering categories ranging from home goods to fashion. Since its initial launch in Mexico, Bazaar has expanded to Saudi Arabia and the United Arab Emirates.
D.A. Davidson & Co analyst Gil Luria noted the strategic importance of this expansion. “Amazon Bazaar’s expansion is an important step in Amazon’s international expansion,” Luria stated. “Amazon has only entered a market when it believed it can scale up to a level where it delights consumers and builds a profitable business.”
The company reported third-quarter international revenue of $40.9 billion, up 10% from the previous year excluding foreign exchange impacts. Amazon’s strategy involves leveraging its existing global fulfillment network to deliver products from its international centers directly to consumers through service partners, attempting to combine Temu-like pricing with Amazon’s operational reliability.
Quality vs. Quantity Trade-offs
Amazon’s Haul service operates as a mobile-only experience with a distinct interface designed for rapid purchasing. Unlike Temu’s “slot machine” approach with spinning wheels and game-like features, Amazon Haul focuses on simplicity. However, this streamlined approach means reduced information for consumers, with no customer reviews and truncated product descriptions in many cases.
Some analysts view Amazon Haul as a strategic way to segregate low-cost, unbranded products from its main platform’s premium experience. By moving items that don’t meet its quality standards to a separate section, Amazon can maintain its reputation for reliability while still competing in the budget segment. Others worry this approach risks creating a “dumping ground” perception that could damage Amazon’s brand equity.
The fundamental difference between the platforms remains Amazon’s focus on speed and convenience versus Temu’s emphasis on price and engagement. While Amazon promises delivery within 1-2 days and sometimes as fast as 8 hours for Prime members, Temu shipments typically take between 4 and 22 days. This trade-off has created distinct consumer segments rather than direct substitution for many shoppers.
The De Minimis Dilemma: Regulatory Challenges Ahead
Both Temu and its smaller competitor Shein face significant regulatory headwinds that threaten their low-cost models. For years, these platforms benefited from the “de minimis” trade loophole, which allowed packages valued under $800 to enter the United States duty-free. This exemption enabled direct shipping from Chinese factories to American consumers without incurring tariffs or extensive customs inspections.
In September 2025, the Biden administration revised these rules, requiring Chinese sellers to pay tariffs and duties on all shipments regardless of value. This change effectively eliminated the pricing advantage that made ultra-cheap products viable. Additionally, new regulations require Chinese sellers to provide detailed tariff classification numbers and consumers to disclose personal identification information for imports.
“Temu and Shein are building empires around the de minimis loophole in our import rules—dodging import taxes and evading scrutiny on the millions of goods they sell to Americans,” said Representative Mike Gallagher, highlighting the political concerns surrounding these platforms.
The European Union has implemented similar measures, introducing a flat fee of 3 euros for each small parcel valued below 150 euros sent from non-EU countries. These regulatory changes have forced Chinese e-commerce platforms to adjust their supply chain strategies, increasing logistics costs and potentially raising prices for consumers.
Analysts suggest that 2026 will be a challenging year for platforms like Temu and Shein. “2026 will be their toughest year yet—not because of competition, but because of tariffs and trade regulations that cut to the heart of their model,” said Friedrich Schwandt, Chief Executive Officer of ECDB, in a news release.
Consumer Behavior and Market Segmentation
The competition between Amazon and Temu reveals distinct consumer segments with different priorities. According to an Omnisend survey, nearly 9 in 10 American consumers trust Amazon, while only 6% express the same level of trust in Temu. Despite this trust gap, 48% of consumers have purchased from Temu in the past year, drawn primarily by prices (53%), ease of use (31%), and product markdowns (29%).
Customer retention metrics further illustrate the different value propositions. Amazon maintains a 56% repeat purchase rate compared to Temu’s 26%. This gap reflects Prime subscribers’ loyalty, with an impressive 97% annual renewal rate. Amazon’s established brand recognition, customer service infrastructure, and reliable fulfillment continue to drive retention despite Temu’s pricing advantages.
Demographic analysis shows that Temu has successfully reached segments often overlooked by other e-commerce platforms. While Shein’s average shopper is female, in her early 30s, earning approximately $65,000 annually, Temu’s fastest-growing demographic includes consumers between 55 and 64 years old. This broad appeal has allowed Temu to expand beyond the urban, affluent demographic typically targeted by direct-to-consumer brands.
The Gamification Factor
Temu employs an innovative engagement strategy that differentiates it from traditional e-commerce platforms. The app features gamified elements including spinning wheels, mystery envelopes, and multiplier card games that allow users to win coupons and discounts. These features create a sense of entertainment that keeps users engaged with the platform longer.
Shein has implemented similar strategies with an elaborate loyalty rewards program that allows customers to earn points through daily app check-ins, product reviews, and purchases. These points can later be redeemed for free products, creating a cycle of engagement that goes beyond simple transactional shopping.
This approach contrasts sharply with Amazon’s design philosophy, which emphasizes efficiency and speed. Features like the “Buy Again” widget and “Buy Now” one-click checkout are designed to minimize time spent on the platform. While Amazon prioritizes getting shopping done quickly, Temu and Shein view their platforms as entertainment destinations that maximize user engagement time.
Global Implications and Future Outlook
The rivalry between Amazon and Temu has implications beyond the United States. In Australia, analysts project that Amazon, Temu, and Shein will capture more than one-third of the online retail market by 2026, generating over $18 billion in local sales. This dominance puts pressure on local digital marketplaces to either find specialized niches or scale up to survive.
The supply chain impact has been equally significant. The surge in cross-border e-commerce from China has strained global logistics infrastructure. Postal workers in various countries have reported being overwhelmed by the volume of packages from these platforms, and air cargo rates have increased due to heightened demand for shipping capacity.
Looking forward, the competitive landscape will likely evolve as platforms adapt to regulatory changes and consumer preferences. Amazon’s response through Bazaar and Haul demonstrates recognition of the threat posed by low-cost Chinese competitors. Meanwhile, Temu continues expanding globally, now shipping to at least 70 countries, though its growth may slow as regulatory headwinds increase.
The IPC survey also revealed changing consumer expectations around cross-border shopping. Sixty-one percent of consumers consider pre-purchase information about delivery charges essential, while delivery speed has become less critical for international purchases. One-fifth of respondents reported receiving products within 10 to 14 days, with another 19% experiencing 4 to 5 day transit times. This suggests that consumers are adapting to longer delivery times in exchange for lower prices.
The Essentials
- Temu’s cross-border market share surged from less than 1% in 2022 to 24% in 2025, matching Amazon’s 24-25% share according to IPC survey data.
- Amazon responded by expanding its low-cost Amazon Bazaar service to 14 new markets, offering products under $10 to compete directly with Temu’s pricing.
- The elimination of the de minimis trade exemption in the United States and similar regulations in Europe threaten the low-cost model that fueled Temu’s rapid growth.
- Amazon maintains stronger customer loyalty with a 56% repeat purchase rate compared to Temu’s 26%, driven by Prime membership and reliable fulfillment.
- Temu’s logistics model connects Chinese manufacturers directly to consumers, avoiding warehousing costs and enabling prices 2-10 times lower than Amazon.
- The competitive pressure has impacted traditional retailers, with IKEA reporting a 26% profit drop after cutting prices to remain competitive.
- eBay has lost 68% of its cross-border market share since 2018, falling to 5% in 2025, demonstrating broader market disruption.
- Consumer behavior shows price remains the primary driver for Temu shoppers, while Amazon customers value trust, speed, and convenience.
