Walmart suffering collateral damage from Amazon's battle with Temu

From smartphones, to apparels and F&B , China has been well known by the world for "copying" other countries' work and products and calling them their own. But now, the tables have turned. Amazon, the American mascot of the E-commerce world, has openly admitted that they will outright copy the chinese business model and do what the chinese retailer companies have been excelling at so far: selling cheap goods from China at an unreasonable low price to their customers. Essentially, Amazon has waged war with its Chinese competitors and saying," bring it on, and may the best man win!" But what if the biggest loser from this battle isn't Amazon,Temu or Shein but another party instead?

Amazon diverting attention away from Walmart to focus on Chinese retailers

Amazon and Walmart have been synonymous with online retailers among American household names, as they have been bitter rivals for many many years. From the lowering of prices, to the race to reach the doorsteps of their customers quicker, these two rivals have done it all in an effort to come out on top of the other. But it seems like the rivalry between the two giants is about to come to an end with the entry of two new competitors: Shein and Temu.

Now, Amazon channelled all its efforts to curb the budding growth of the two Chinese retailers.

What is Amazon's original business model

In the primitive age of online retailing, Amazon made a name for itself because of how the company has changed the way people shop. In order to get to their customers quicker, Amazon has cleverly built a vast network of warehouses around the country to stockpile products which could be swiftly delivered to the doorsteps of their customers within days of making the purchase. Of course, this business model has allowed Amazon to hold the crown of being the fastest deliverer for such a long time.

The new Chinese business model

But this is obviously not the model that Amazon's rival, like Temu, has been doing, partly because they cannot compete with Amazon using such a cost-intensive strategy. Instead, they adopt what is commonly called the factory-to-consumer model. In contrast to Amazon's model, products are shipped in smaller batches from Chinese factories to warehouses close to Chinese airports. And when an order is placed from the U.S, the product is put on a U.S bound cargo plane and shipped directly to the customers. This model would mean that products would take a much longer time to get to their buyers, but the lower delivery cost would allow Temu and Shein to offer prices that Amazon has been unable to match with its costly logistical operations.

A misopportunity for many years?

Now that you know the difference between the chinese and American business models, what do you think would have happened to Amazon if they adopted the Chinese model earlier? Would they have been richer than where they are right now? Has this been a misopportunity that has blindsighted Amazon for so many years? And why did Amazon hold on till now before they finally adopted the Chinese model?

Here is my speculation:

Brand positioning and strategy: Amazon has traditionally positioned itself as a marketplace that offers a wide range of products, from low-cost items to premium goods. This focus on catering to the needs of the diverse customer segments means that it was impossible to adopt the Chinese business model which focuses on lower end goods as they would lose out on a whole big chunk of their customer base.

Focus on Prime and value-added Services: Amazon prides itself on providing "Prime membership", emphasizing fast delivery, streaming services and other perks. This shows that Amazon has always put a very strong emphasis on the overall value of their products rather than just competing solely on the price.

Who might be the biggest loser from the Amazon-Temu showoff?

With Amazon joining Temu and Shein on adopting a similar business model, the fight to become the retailer of budget goods has never been tighter. With Amazon, Temu and Shein fighting for the top spot of the retail king of budget goods, where does that put Walmart?

While all three companies offer their own unique selling points to the online retail world, all three companies are still vying for the same slice of the pie. Thus, I think that by waging a war with Temu and Shein, Amazon essentially snatching the piece of the pie from the hands of Walmart and squeezing Walmart out of this competitive space. Furthermore, Amazon's wide variety of goods and speedy delivery speed might put even greater pressure on Walmart, making it even harder for them to survive in this ever competitive landscape.