Amazon Battles Temu and SHEIN: Can Increased Essentials Sales Revitalize the Giant?

Tech 2024-11-01 10:04:45 Source: Network

Amazon Battles Temu and SHEIN: Can Increased Essentials Sales Revitalize the Giant?Amazon is facing intense competition from rising platforms like Temu and SHEIN. To combat this challenge, Amazon is planning to increase sales of essential items like toothpaste, aiming to counter its rivals' low-price advantage strategy

Amazon Battles Temu and SHEIN: Can Increased Essentials Sales Revitalize the Giant?

Amazon is facing intense competition from rising platforms like Temu and SHEIN. To combat this challenge, Amazon is planning to increase sales of essential items like toothpaste, aiming to counter its rivals' low-price advantage strategy. This move could potentially lower the average selling price of Amazon goods but also attract more consumers and enhance its market competitiveness.

Amazon's recently announced third-quarter earnings report revealed that while revenue and profits exceeded market expectations, the average selling price of goods declined. This was attributed to consumers shifting towards cheaper products and the growth of essential items sales. Amazon CFO Brian Olsavsky stated that the strong revenue from essential items indicates that consumers are increasingly buying daily necessities from Amazon. When consumers purchase these products from Amazon, they tend to buy more items, shop more frequently, and spend more on the platform.

Amazon Battles Temu and SHEIN: Can Increased Essentials Sales Revitalize the Giant?

Amazon CEO Andy Jassy also acknowledged the trend of declining average selling price, attributing it to increased consumer demand for cheaper goods and the slowing pace of sales in large items like electronics. To offset the impact of lower average selling prices, Amazon is relying on its extensive network of local warehouses to enable fast delivery. Jassy emphasized that sourcing low-priced goods is relatively easy, but supplying them effectively is much more challenging. Amazon has focused on reducing service costs in recent years, allowing them to open markets for a broader range of products, particularly low-priced ones.

It's important to note that Amazon faces competition not only from cross-border e-commerce players like Temu and SHEIN but also from local competitors. Retailers like Walmart and Target are actively lowering prices on essential items to attract consumers. Analysts predict a 4% increase in Walmart's third-quarter revenue, slightly lower than the growth rate in the second quarter.

Amazon's retail sales grew by 7% in the third quarter, surpassing the 5% growth in the second quarter, suggesting that their strategy is bearing fruit. However, whether Amazon can successfully counter the challenge posed by Temu and SHEIN by increasing essential item sales and revitalize its position remains to be seen.

Amazon needs to continue exploring new strategies to adapt to the evolving market landscape. Beyond increasing essential items sales, Amazon could consider the following measures:

Enhance user experience: Optimize website design and mobile apps to provide a more convenient and user-friendly shopping experience.

Strengthen brand promotion: Invest more resources in brand marketing to increase brand awareness and customer loyalty.

Prioritize personalized services: Leverage big data and artificial intelligence to provide personalized product recommendations and services.

As competition in the e-commerce industry intensifies, Amazon needs to constantly innovate to maintain its leading position.

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