Temu Hits Roadblock in Efforts to Compete With Amazon

Temu’s attempts to weather U.S. tariffs are reportedly being hindered by Amazon.

The Chinese eCommerce platform — owned by PDD — has been told by American companies that it cannot provide lower prices than Amazon on branded items, the Financial Times (FT) reported Sunday (July 27), citing two sources familiar with recent meetings.

“We’ve told them they can’t undercut Amazon with the same stuff, it’s going to have to be materially different [products],” an executive at a major third-party seller told the FT.

The FT report argued this development hurts Temu as it tries to overhaul its business model in the wake of U.S. tariffs on Chinese goods, as well as the end of the “de minimis exemption,” which had allowed the company to import lower-cost products from China without paying customs duties.

According to figures from market intelligence firm Sensor Tower cited by the FT,  Temu’s business has stalled since then, with monthly active users on its U.S. app plummeting by 54% to 37 million between March and mid-July.

In an emailed statement to PYMNTS, a Temu spokesperson said,  “at Temu, we believe in fair and open competition. It drives innovation, improves quality, and helps keep prices affordable for the benefit of both consumers and sellers. Sellers deserve the freedom to choose where and how they do business—without being boxed in. A more open marketplace gives consumers more choice and gives sellers back the power to grow on their own terms.”

Analysts say this decline is due to Temu’s pause on U.S. ad spending in June before resuming it later in the month. This pause came as the company tried to court third-party sellers with new incentives such as lower fees.

However, one seller told the FT they had warned Temu that Amazon would just match the lower price. The scale of Amazon’s business, the FT noted, means the company can absorb losses much longer than its smaller rivals.

“Unless PDD is willing to lose billions of dollars each year to gain market share over the next five years, it will have to be smarter,” said consultant Martin Heubel, who negotiates deals between Amazon and its vendors.

In other Amazon news, PYMNTS wrote last week about the company’s rivalry with Walmart, with the latter company doing “what once seemed improbable,” outpacing Amazon in the battle for same-day delivery.

New PYMNTS Intelligence research shows the landscape for delivery shifting. While Amazon still excels in traditional fulfillment lanes such as two-day and next-day shipping, Walmart has developed a surprising lead in same-day delivery, a category that matters most in the era of instant gratification.

“And nowhere is this more apparent than in the grocery aisle,” PYMNTS wrote. “After all, grocery is inherently local, and Walmart’s expansive store footprint can help to give it a built-in advantage.”