PYMNTS.comยท2025-07-27 21:59Core Insights - Temu, a Chinese eCommerce platform owned by PDD, is facing challenges in competing with Amazon due to U.S. tariffs and restrictions on pricing for branded items [2][3][4] Group 1: Business Model Challenges - Temu has been informed by American companies that it cannot offer lower prices than Amazon on branded products, requiring them to provide materially different items [2] - The company is struggling to adapt its business model following the end of the "de minimis exemption," which previously allowed it to import lower-cost products from China without customs duties [3] - Monthly active users on Temu's U.S. app have decreased by 54%, dropping to 37 million from March to mid-July [3] Group 2: Advertising and Market Competition - A pause in U.S. advertising spending in June contributed to the decline in user engagement, although Temu resumed advertising later that month [4] - Temu is attempting to attract third-party sellers with new incentives, such as lower fees, but faces the challenge of Amazon matching any lower prices offered [4] - Amazon's scale allows it to absorb losses longer than smaller competitors like Temu, making it difficult for Temu to gain market share without significant financial losses [5] Group 3: Industry Landscape - The competitive landscape is shifting, with Walmart gaining an edge in same-day delivery, a critical area for consumer satisfaction [6] - Amazon continues to excel in traditional fulfillment methods, such as two-day and next-day shipping, but faces increasing competition from Walmart in the grocery sector [6]