Inside Amazon, Temu’s Rise Prompts Soul Searching
The rise of Temu and other retailers who ship dirt cheap goods from China to U.S. shoppers has raised a question at Amazon: Should it be more like them? Its identity could hang in the balance.
Amazon’s executives pride themselves on their obsession with customers rather than competitors. A year ago, though, the head of Amazon’s e-commerce business, Doug Herrington, had one Amazon competitor very much on his mind.
Herrington sent his subordinates a news article about Temu, at the time a little-known subsidiary of Chinese e-commerce powerhouse PDD Holdings that was preparing a splashy statement in the U.S. with its first Super Bowl commercial. Herrington asked what they thought of Temu, according to a person with direct knowledge of his communication.
The consensus among Herrington’s team: PDD’s wholesale relationships with Chinese vendors were making it possible for Temu to offer rock-bottom prices to American shoppers such as $5 dresses and $10 smart watches. That, combined with Temu’s model of shipping directly to American shoppers from China, represented a threat. Amazon needed to do something quickly, they argued, according to the person.