Amazon vs Temu: Business Model & Logistics

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Could you elaborate on your understanding of the Temu or SHEIN model? They're somewhat different.

Generally speaking, the key difference between Temu and Amazon lies in consumer trust. With Temu, there's uncertainty about the quality of the products. Yes, they have a star system and rating systems, but Amazon's unique selling point is customer trust. This is where Amazon believes it differentiates itself from the Temu business model.

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Please explain it as if you're speaking to a child.

If you have an ocean container of widgets coming into the US, you're going to pay 25% in duties or taxes to the US Government for importing them. However, if you ship one or six widgets, and their total value is less than $800, which is typically the case when you're shipping directly to a consumer, you're not paying that 20% or 25%. So, if you bring it in an ocean container, you pay a 25% tax. If you ship it to a consumer, you pay a 0% tax. This is one structural advantage.

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Let's pause for a moment and consider Amazon's third-party marketplace, where a merchant in China might ship directly to a customer in America. Why doesn't Amazon benefit from the same de minimis exemption, assuming they qualify?

People don't usually go to Amazon to order inexpensive items from China that will take 12 days to arrive. While this option is available on their platform, it doesn't constitute a large portion of their business. Amazon is known for fast, free shipping, particularly for Prime members. If Amazon decided to dedicate a large section of their website to goods fulfilled from China, it could potentially damage their brand in America. If a Prime member were to search for a backpack on Amazon.com and the first page of search results were items fulfilled from China that would take 12 days to arrive, it would be a stark departure from Amazon's core brand.

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