What Happens When Competitors Bust Your Business Model – Amazon is finding out

For the last two-plus years, I have been following a company called Shein, a Chinese eCommerce retailer that is successfully utilizing a unique new business model. Here is how I described one of the secrets to their success in my 2021 article, “Retail Competition, direct to You from the Other Side of the World.

The secret to its success is that it ships its products direct to consumers from its warehouses in China.

Retail Competition, direct to you from the other side of the world,” Richard Gottlieb, Global Toy News, June 17, 2021

It, of course, takes longer to get a product when it is shipping from the other side of the world rather than coming from a warehouse in the U.S. Based upon the popularity of these sites, consumers are willing to wait if the prices are low enough – and they are.

In the two years since I wrote my article, Shein and another Chinese eCommerce site, Temu, have prospered and begun cannibalizing sales from eBay, Walmart, Target, and Amazon.

Shein focuses on women’s fashion. Temu, however, sells, among other things, toys. Both companies benefit from direct-to-consumer from China shipping, and both take advantage of China’s long working hours and inexpensive labor to keep costs low. Put that all together, and you have prices that can be considerably lower than their American retail rivals.

The kicker in all of this is that Temu is headquartered, not in China but in Boston, Massachusettes. However, Shein is owned by PDD Holdings. A Chinese company is registered in the Cayman Islands and trades on Nasdaq—share price as of closing on September 22, 2023, at $95.81 U.S.D.

If you are interested in learning more or becoming a vendor on Temu, I have found a website that will be helpful. It’s called The Ultimate Guide to Selling on Temu.

If you are already a Temu or Shein shopper or vendor, write in and let us know about your experience.

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