How Shein and Temu, which are spending billions on digital ads and offering steep discounts or free products, have become big threats to Amazon in the US
In the fall of 2020, Amazon looked unstoppable. The pandemic lockdowns had supercharged its e-commerce business … X: @carnage4life , @carnage4life , @joshuaogundu , @lmatsakis , and @kantrowitz X: Dare Obasanjo / @carnage4life : The interesting question is that as geopolitics is now showing up more in tech (Huawei, TikTok and BYD are all facing different obstacles to doing business in the US), will the eye of US protectionism show up here as well? https://www.bigtechnology.com/ ... Dare Obasanjo / @carnage4life : Shein and Temu executed on TikTok's playbook of buying lots of ads to attract US consumers then actually delivering on experience when the users showed up. However their real superpower is that shipping packages from China that cost less than $800 pay no tariffs. [image] Josh / @joshuaogundu : Who said paid ads don't work? I've seen domestic companies and Chinese companies leverage them pretty effectively Louise Matsakis / @lmatsakis : If you want to know more about how Shein and Temu really operate, I wrote about their strategies and tactics for @BigTechnology this week: https://www.bigtechnology.com/ ... Alex Kantrowitz / @kantrowitz : New: @lmatsakis writes the definitive story on how Shein and Temu snuck up on Amazon and now pose the biggest threat to its empire in recent memory. https://www.bigtechnology.com/ ... via @BigTechnology
Context & Ripple Effects
Shein’s earlier growth was tied to a nimble supply chain and social-media-led customer acquisition. Temu and Shein have since become a priority in Amazon’s retail discussions, with their rise displacing Walmart and Target in internal competitive focus.
The current contest is as much about distribution as merchandise: reporting had already documented their unusually large U.S. digital-ad campaigns, while cross-border Chinese retail platforms were expanding their reach to overseas consumers.
First-order effects
- Amazon faces a more immediate challenge for price-sensitive U.S. shoppers as Shein and Temu pair heavy ad buying with steep discounts and free-product offers.
- Shein and Temu gain customer-acquisition scale from digital advertising while the under-$800 package exemption helps support their low-price positioning on qualifying China-origin shipments.
Second-order effects
- Amazon is likely to put greater emphasis on promotions and retail responses as the two platforms compete for the same value-oriented demand and marketing attention.
- Digital ad platforms benefit from two large buyers competing for U.S. consumer reach, while established retailers face pressure to defend perceived value without matching every subsidy.
Third-order effects
- If the model persists, cross-border marketplaces could make paid digital distribution and tariff treatment more central competitive variables than traditional U.S. retail scale alone.
- The platforms’ dependence on a China-to-U.S. shipping advantage makes their expansion increasingly exposed to policy scrutiny, especially as Chinese technology and commerce firms draw broader protectionist attention.
The trend: Chinese consumer platforms are using subsidized pricing and performance marketing to turn cross-border logistics into a direct challenge to incumbent U.S. retail ecosystems.