A better deal |
Molson Hart spent the past decade building an online business selling stuffed animals and other toys, mostly on Amazon.com. This year, he told me, has been the toughest he’s experienced. Sales haven’t rebounded from a steep industrywide drop last year, costs have risen and profit has dwindled.
Hart’s company, Austin, Texas-based Viahart, is betting on a revival with the help of what US officials have warned is a threat to American businesses: Chinese-owned Temu. The discount shopping app controlled by PDD Holdings Inc. has come in for criticism for undermining domestic merchants by using a trade loophole to elude tariffs.
But Hart, who sold his first toy on Temu in August, sees things differently. He’s just happy to have somewhere other than Amazon to reach US shoppers. Amazon.com Inc., which captures about 40 cents of every dollar spent online in the US, is the target of an antitrust lawsuit filed last year by the Federal Trade Commission that accuses the company of illegally maintaining monopoly power to the detriment of US shoppers and online merchants like Hart.
“I understand where the government is coming from, but we really need alternatives,” said Hart, who testified five years ago before the House Small Business Committee about his unhealthy reliance on Amazon for revenue. At the time, about 98% of his sales were on the e-commerce platform.
Temu is giving him a sense of hope as he heads into the holiday shopping season. Take his October sales of a plush black cat toy that is one of his top sellers around Halloween. Amazon shoppers on average paid $18 for the cat, with about $7 going to Hart’s business. Temu shoppers paid $14 for the same item, with more than $8 going to Hart. It's cheaper for sellers like Hart to shift inventory on Temu. The trade-off for shoppers is they need to wait as many as five business days for delivery, compared with getting their Amazon order in a day or two.
“We’re making more money on Temu even though the price is higher on Amazon,” the seller said.
In just three months, Hart’s sales on Temu have grown to surpass those on the websites of Walmart, eBay and Target, as well as via his own website. Hart began selling on Temu when the app was recruiting US businesses on an invite-only basis. Earlier this month, Temu opened its marketplace to any US sellers who fill out an application online and clear its vetting process. Temu didn’t disclose the number of US sellers on the platform, but a spokesperson said the company has been “inundated” with applications.
“Independent sellers set their own prices on Amazon – and Amazon offers optional tools to support them in offering competitive, low prices,” Amazon spokeswoman Maria Boschetti said. Amazon fees are 15% or less in most product categories, which helps pay for a variety of tools that help sellers remain competitive, she added.
Hart realizes it might seem bizarre for a US business to defend Temu, which uses a 90-year-old trade loophole to let Chinese factories sell direct to US shoppers at steep discounts while dodging tariffs. Regulators are increasingly calling out the business model, which ships small parcels from China direct to US shoppers, as a threat to US interests.
Hart imports his products in cargo containers from China, Indonesia and Vietnam and pays tariffs when they reach the US en route to his warehouse, so he doesn’t benefit from the loophole. He says his experience as a US business on Temu shows it can help level the playing field in the US — not tip it — by providing an Amazon competitor.
“Temu is a very serious contender to Amazon,” he said.—Spencer Soper
No comments:
Post a Comment