In the fall of 2020, Amazon seemed invincible. The pandemic had supercharged its e-commerce business, and the tech giant was expanding its workforce and fulfillment warehouses across the U.S. However, the biggest threat to its online shopping empire was brewing in an unlikely place: China.
Two Chinese-owned e-commerce platforms, Shein and Temu, have quietly become some of the most popular shopping websites in the U.S. Shein specializes in low-end women’s fashion, while Temu focuses on home decor and household items. These are the same type of affordable, made-in-China products that many American consumers associate with Amazon.
In April 2024, Temu had 47 million U.S. monthly active users, while Shein had 29 million. In contrast, Amazon’s user base had shrunk to 66 million, down from almost 70 million in September 2022 when Temu launched.
Shein and Temu’s users aren’t just browsing. Shein reportedly earned roughly $45 billion last year and is currently trying to go public. PDD Holdings, Temu’s Chinese parent company, reported a surge of more than 130% in its first-quarter revenue. PDD is now the most valuable e-commerce company in China.
The two startups are sending so many orders from China to the U.S. that it’s causing air cargo rates to spike. USPS workers have publicly stated that they are overwhelmed by the sheer volume of Temu’s signature bright orange packages they have to deliver.
Amazon has taken notice of its competitors’ swift rise. In meetings related to its retail business, the company has shifted focus away from traditional rivals like Walmart and Target and toward Shein and Temu. In December, Amazon announced it was sharply reducing the fees it charges sellers for clothing items under $20, a move that appeared designed to ensure its prices were competitive with Shein.
While countless e-commerce and direct-to-consumer startups have targeted upper-middle-class urbanites in recent years, Shein and Temu have deliberately tried to court people outside places like San Francisco and New York, especially women. This strategy has paid off, with both platforms exploding in popularity.
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