"Thinner Wallets in the US, Flocking to Chinese Shopping Apps... 1 Million Daily Deliveries"

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Consumers in the United States, whose wallets have thinned due to inflation, are flocking to Chinese e-commerce platforms that offer mainly inexpensive products. American e-commerce companies like Amazon, pressured by price competition, are struggling to stay afloat.

On the 26th, China’s Securities Times cited data from logistics analytics firm ShipMatrix, reporting that the daily average delivery volume of Temu (Pinduoduo), a Chinese e-commerce platform, in the U.S. reaches 1 million units. Although this accounts for only 1.2% of the local daily logistics volume, Securities Times evaluated this as a significant advancement considering Temu has been in the market for just over a year.

[Image source=Reuters Yonhap News]

Since entering the U.S. market in September last year, Temu reached the number one spot on the App Store within two months. According to the Bloomberg Second Measure report, Temu’s sales in November this year increased by 29% compared to the previous month. The app industry information platform Business of Apps estimated that Temu’s total monthly transaction volume will reach $1 billion (approximately 1.297 trillion KRW) by the end of this year. The industry also reports that another Chinese e-commerce platform, Shein, has attracted thousands of Amazon sellers and has rapidly grown into the largest fast-fashion sales platform in the U.S.

Meanwhile, American e-commerce companies are struggling. U.S. e-commerce platform Etsy recently announced plans to cut 11% of its workforce. Etsy CEO Josh Silverman stated, “We are losing market share to Temu and Shein.”

Amazon has given up on price competition with Shein and Temu. Securities Times explained, “Amazon conducts market research with the lowest industry prices in mind, but according to sources, it does not perform price comparisons for specific similar products from Temu and Shein,” adding, “They are considering how to respond to these competitors.” Recently, Amazon decided to reduce the fees charged to sellers for clothing items priced under $15 from 17% to 5%.

Securities Times also reported that Americans are going into debt to shop. Marketing data analytics solution Adobe Analytics estimated that on Cyber Monday?the Monday following Thanksgiving (the fourth Thursday of November)?installment loan usage by U.S. consumers surged to $67 billion, a 16% increase from the previous year.

Additionally, citing data from the Federal Reserve Bank of New York, Securities Times emphasized that in the third quarter of this year alone, unpaid credit card balances in the U.S. rose by about 4.7% year-on-year to $48 billion, with the total amount reaching a record high of $1.08 trillion.

Irene Tunkel, chief strategist at BCA Research, said in a recent interview with Securities Times, “During the year-end sales period, the accumulated excess savings have stimulated U.S. consumption, helping to delay a recession,” but added, “However, excess savings are expected to be depleted around next year, which is a negative signal for the economic outlook.”