The surging popularity of shopping platforms Temu and Shein among U.S. consumers has touched a nerve at Amazon.com (AMZN), and the e-commerce giant is trying to figure it out.

While Amazon has been fending off challenges from rivals like Walmart (WMT) and Target (TGT) for years, Temu and Xiyan, two companies with roots in China, are tapping into consumer demand for low-priced goods that don't require quick delivery.

Amazon hasn't taken any steps to match the prices of items on Temu, the people said. That's a rarity for a company that typically scour the Internet using a variety of price-matching tools to make sure its site offers some of the lowest prices online.

Inside the tech giant, executives have been weighing how to deal with the two rivals, these people said. Executives have found a market for deals that take longer to deliver and are trying to figure out whether they should make them easier to spot on their websites and offer more of them.

Shiyan and Temu "are not looking for two-day delivery or better customer service," said Steve Tadelis, a former Amazon executive who is now an economics professor at the University of California, Berkeley. "They seem to focus on the lower end of the market -- cheap goods that people are willing to wait for."

American consumers worried about inflation are increasingly willing to try Temu and Xiyin. Since its U.S. launch in September 2022, the number of monthly U.S. unique visitors to Temu's website and app - a measure of how often shoppers visit the service - has grown more than ninefold to about 70.5 million in March, according to estimates by analytics firm Comscore.

Since August 2021, the number of monthly unique visitors in the United States has nearly doubled, reaching approximately 41 million in March.

Comscore estimates that Amazon's monthly unique visitors dropped to about 211 million in March from about 217.5 million in September 2022. Data firms Similarweb and Sensor Tower have tracked Temu, Amazon and Amazon in recent months and found similar trends in website and app traffic.

An Amazon spokesperson said that the number of customers on Amazon's website and apps has grown year over year. Independent studies have found that Amazon's online prices are often the lowest among major U.S. retailers, and the company has always sought to ensure that prices in its online store are comparable to or better than those of competing retailers, the company said.

Reuters previously reported that Amazon did not include certain items on Temu in the price comparison.

The popularity of Temu and Xiyin comes after Amazon's e-commerce market share in the United States took a hit. According to research firm Insider Intelligence, Amazon's U.S. e-commerce market share has remained around 38% since 2021, after rising for years in a row, and is expected to hover around that level for at least the next year. As others like Amazon, Target, eBay and furniture seller Wayfair have stagnated or shrunk in market share, up-and-comers like Temu and Siyin have gained customers in the United States.



The company recently opened a marketplace for U.S. consumers, creating a way for independent merchants to sell their goods through the company's website. According to research firm Marketplace Pulse, thousands of sellers on Amazon have joined the new platform, including dozens based in the United States. Last month, the Singapore-based online fashion retailer struck a deal with US fast fashion company Forever 21, under which it will be able to sell Forever 21 products on its website and app.

Temu and Xiyin attract consumers with low prices. While the goods may take a week or more to arrive, the two companies are able to sell them cheaply, largely because they save money over Amazon and American sellers by not having to store large amounts of inventory in U.S. warehouses. They ship directly from China based on consumer demand, rather than stocking up in bulk in warehouses ahead of time.

According to Earnest Analytics, Xiyin has grown into the largest seller of fast fashion in the United States. The company is fast moving and is known for staying on top of fashion trends, but it has recently sought to expand its offerings beyond fashion. Temu sells a wide variety of goods.

Unlike Amazon, Xiyan and Temu can't deliver household necessities like toilet paper quickly enough to replace grocery shopping. Some Amazon users, however, said the two companies offered items similar to those on Amazon, but at lower prices.

Lynn Hatch, an Amazon shopper who lives in North Texas, first heard about Temu from a friend late last year. After browsing the site, she found a painting similar to one sold on Amazon, but for about half the price.


Xiyin has grown to become the largest seller of fast fashion in the United States, and in August it formed a partnership with Forever 21.


Hatch has tried to buy clothes from Temu, but she's not a big fan, and she's also shopped for kitchenware, art and crafts on the site.

"I now find myself looking at Temu to see if there's a good option before I go to Amazon," says Hatch, 42. "Temu has taken a little longer to arrive, but so far the quality of the goods is actually similar. Most products are made in China now anyway."

Given that Amazon has spent years building a vast logistics network, Xiyan and Temu can barely compete with the delivery advantages of Amazon's Prime subscription service.

"It's going to be very difficult to beat Amazon," said Neil Saunders, retail analyst at GlobalData. "If Xiyin said, 'Yes, we want to offer the same delivery service as Amazon.' 'Then all I can say is good luck."

Tadelis, the former Amazon executive, said Amazon had to balance its goals of maintaining its brand as a reliable retailer with the need to emulate Temu and Amazon's model of offering lower-priced goods, which could weaken its brand image. He said customers may not be able to find quality products on Temu and Xiyin's platforms because the prices are too low.

Online reviews and forum discussions show that some customers who shopped on Xiyin and Temu's platforms expressed concern after not receiving high-quality products and said they only bought items such as hair clips or laundry bags that were not easily damaged during shipping.