The Unshakeable Dominance of Amazon as the ‘King’ of E-commerce Threatened by the Power Trio: Expanding Territories and Recruiting Former Rivals’ Employees

'They have money. They have experience. They know there is a gap in the international market.'

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Shein and TikTok are seeking to expand their territories, recruiting Amazon employees and even building workspaces in the same tower in Seattle. The decision to move to Amazon’s hometown shows the ambition of these two heavyweight competitors to challenge the American retail giant.

TikTok launched its in-app shopping tool last year, while Shein has gained the position of the fastest-growing fashion brand in the US. Many of the e-commerce products marketed by TikTok are from Shein.

Will Gordon, former CEO of Amazon and co-founder of Latchel, a home maintenance service company, said that Seattle has long been a hub for supply chain operations due to Amazon’s presence. However, over time, this has changed.

“What worked efficiently at Amazon may not necessarily work for other companies. The process-based and data-driven approach needs adjustment,” said Will Gordon.

Shein is taking its first steps into Seattle, so the number of employees is still small. The company’s logistics director, Wei “Andy” Huang, who previously worked at Amazon and Alibaba, aims to build a warehouse in the US despite the fact that the planning is still in its early stages. In a LinkedIn post, Huang wrote that the company is hiring high-level logistics employees in Seattle.

Similarly, the TikTok team is also growing at Key Center, with many of its members being former Amazon employees.

The approach of Shein and TikTok shows their fierce competition with Amazon. TikTok launched the TikTok Shop platform last year, while Shein operates at least one warehouse in Indiana.

The US is Shein’s largest market. The company, which mostly ships its products from China, has made efforts to diversify its supply chain and focus on building warehouses in the US. The construction of a second warehouse in Cherry Valley, California is currently underway.

Building warehouses in the US can bring Shein closer to consumers and attract US sellers and brands to join its platform in a fiercely competitive environment. The success of Amazon lies in its supply chain and logistics, which are considered standards for efficiency and pride, allowing the company to deliver packages in just 2 days or less.

The push from Shein and TikTok towards the Seattle area comes at the right time. Amazon has already reduced positions in healthcare, entertainment, devices, and gaming after laying off about 27,000 employees about a year ago.

Shein, TikTok, and Temu have become urgent issues for Amazon as Chinese shopping platforms begin to expand internationally. According to Yao Kaifei, the founder of BrandAI, an e-commerce startup, the Chinese e-commerce sector is eager to “chuhai,” a term that refers to venturing abroad. “Sellers and platforms want to shed the label of cheap ‘made in China’ and build a new reputation,” Yao Kaifei said.

According to Data.ai, by September 2023, about a year after its launch, Temu had more than 61 million monthly active users in the US and was present in 48 countries. Shein is also considered one of the world’s fastest-growing fast fashion companies, even expanding into selling home goods and electronics. According to Data.ai, it is the top shopping app on the Google Play Store in 115 countries. Meanwhile, TikTok Shop has also seen rapid growth in the Southeast Asian market.

“They have money. They have experience. They know there is a void in the international market. The domestic market is difficult, so why don’t we venture out?” said Lin Zhang, an associate professor at the University of New Hampshire who specializes in e-commerce research.

In this ambition, Shein takes the lead. Established in 2008 in Nanjing, from the start, this platform was dedicated to international customers. Sales volume increased during the 2010s, but it wasn’t until the pandemic hit that Shein truly shined.

Juliana Silva, a hospital psychologist in Brazil, became a loyal customer of Shein after seeing an advertisement on Instagram for plus-size clothing. “I feel really uncomfortable going to stores like Renner or Riachuelo. Here, there are clothes just like on Shein but they are sold at a much higher price,” she said.

In addition to Shein, Temu also gained a lot of affection from users. This platform is famous for its group-buying model, which allows consumers to save costs by pooling orders with friends for large quantities of a product.

However, according to some experts, the participation of newcomers like Temu and Shein, no matter how promising, will only be a drop in the bucket in an Amazon-dominated market. Many customers still complain about Temu’s delayed shipping times and Shein’s environmental standards.

“Temu and Shein offer attractive prices for many types of goods in general, but the customer experience is not yet truly consistent,” an expert said.

Source: WSJ, Rest of World

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