Amazon's decision to exclude Chinese rival Temu from its price searching algorithm has raised questions about fair competition and pricing policies in the e-commerce industry. Launched in September by PDD Holdings, Temu has quickly gained traction, with its general merchandise value increasing from $193.4 million in January to $634.8 million in April 2023, according to YipitData. The platform primarily offers low-priced home goods, electronics, and apparel shipped from China, aiming to compete with Amazon. However, Amazon claims that Temu does not meet its strict qualification requirements for its fair pricing policy.
@serenafuschi my baby really wanted to be apart of the video. Use code; fav52521 for 30% off #greenscreen #amazonfinds #amazonmusthaves #temu #temuhauls #temuinfluencer ♬ original sound - Serena
This policy is designed to ensure that merchants on Amazon's marketplace do not charge significantly more than their rivals. Amazon's pricing algorithm uses automated and manual tracking methods to check products found both on and off its platform. Merchants who fail to offer competitive prices risk having their Buy Box removed or even being suspended or removed from Amazon's marketplace. The exclusion of Temu from Amazon's price searching algorithm highlights the dilemma the e-commerce giant faces in maintaining competitive prices while ensuring the safety and authenticity of products on its platform.
View this post on Instagram
Amazon has struggled with counterfeit issues in the past and has taken measures to report fakes to law enforcement and implement initiatives to track and combat counterfeits. By ignoring Temu's prices, Amazon avoids engaging in a price war with a competitor it deems questionable, particularly regarding potential counterfeit products. Temu's rapid growth and low prices have already led to legal battles with Amazon sellers. For example, Feixiang Wang, CEO of China-based MaiBo Technology Company, sued Temu in May 2023, alleging copyright infringement and damages to his sales after finding alleged copies of his company's FitBeast-stamped exercise equipment on Temu for less than $5.
View this post on Instagram
Another Amazon seller, Shenzhen Kangmingcheng Technology, accused Temu of infringement in a lawsuit filed in April 2023 over a similar microfiber hair turban sold for $5.88. These legal disputes and Amazon's exclusion of Temu from its price searching algorithm raise concerns about the future of competition in the e-commerce industry.
As Amazon continues to dominate the market, it must strike a balance between maintaining competitive prices and ensuring the safety and authenticity of products on its platform. The ongoing debate around fair competition and pricing policies will likely shape the strategies of both established players like Amazon and emerging competitors like Temu in the years to come.
