Temu, Shein and the Price FloorNarrow moat

The threat to Amazon's marketplace does not come from a better marketplace. Temu and Shein ship directly from Chinese manufacturers to Western consumers, compressing out the importer, the wholesaler and — critically — Amazon's own roughly 50% take rate. A seller listing on Amazon pays referral fees, fulfilment fees and increasingly advertising fees before earning anything; the same factory selling through Temu pays none of them¹.

What makes this more than a discount-tier problem is that it resets what shoppers believe things should cost. Amazon's defence has been speed — nobody matches next-day delivery from a domestic warehouse — plus a low-price storefront of its own and pressure on sellers to price competitively. The vulnerability is that Amazon's fee structure is the reason its marketplace is profitable, so matching factory-direct prices means giving up the economics that make the business work.

Trade policy has been the wild card in both directions — changes to low-value import exemptions and tariffs can raise or lower the entire Chinese direct-to-consumer cost base overnight, independent of anything either company does. Watch Amazon's paid-unit growth against its revenue growth: units growing faster than dollars means average selling prices are falling, which is what a price war looks like before anyone calls it one.