Amazon Declares War On Temu And Screws All FBA Sellers
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In this video, I’m going to give my take on exactly what is going on, the implications on the 3rd party Amazon seller community and what you must do right now to prepare yourself as an e-commerce seller.
0:00 Intro 0:38 What Exactly Is Happening And What Are The Details Of What’s Going On? 6:03 How Do You Avoid These Fees? 8:06 How Can You Fight Back? 9:41 Learn How To Build A Brand
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Amazon's new direct-from-China low-cost marketplace will devastate US-based third-party FBA sellers by leveraging price advantages that Chinese sellers cannot match, forcing sellers to pivot toward premium, branded, and personalized products with strong emotional marketing rather than competing on generic goods.
- Chinese sellers avoid import duties, taxes, FBA fees, and logistics costs that US sellers must absorb, creating an insurmountable 2-10x price gap
- Amazon's profit motive means it will prioritize cheap Chinese inventory in search results and recommendations, cannibalizing US seller traffic
- Success requires moving away from Amazon's price-driven model toward brand-building, emotional marketing, and personalization—capabilities that cannot scale from low-cost China suppliers
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Chinese sellers do not have to pay import duties or taxes on products sold through platforms like Teemu because of the de minimis rule, which exempts packages worth less than $800 from tariffs and taxes.
“Chinese sellers do not have to pay import duties or taxes on the products they sell because of the Dom Minimus rule this rule states that products can be imported into the United states without paying taxes or tariffs as long as the package is worth less than $800”
Amazon introduced an inbound placement fee requiring sellers to pay $2.10-$6 per unit for standard and large bulky products to accept inventory into fulfillment centers.
“just this year alone Amazon introduced a SLO new fees and increased the rates of FBA for example Amazon now forces all sellers to pay an inbound placement fee so basically you got to pay a fee of between 21 to $6 per unit for Amazon to accept standard and large bulky products into their warehouse”
Amazon introduced a low inventory fee that penalizes sellers for holding too little inventory in addition to the existing fee for holding too much inventory.
“in addition they announc a low inventory fee in the past you only had to worry about having too much inventory in stock but now you will pay Hefty fines if you have too little inventory as well”
People buy based on feelings and emotions, not logic, and price isn't everything in purchasing decisions—emotional triggers and brand perception are the primary drivers.
“the best way to build a brand is by triggering the emotions of your customers now if there's one thing that I've learned from selling online for the past 18 years is that people buy based on feelings and not logic price isn't everything emotions are everything”
Amazon FBA sellers are going to be 'screwed' because they cannot compete on price with Chinese sellers who have the same products at a fraction of the cost.
“Amazon FBA sellers are going to be screwed basically Amazon's going to offer the exact same service that Teemu does selling cheap generic Chinese products”
Amazon's revenue from apparel is down 30% year-over-year, indicating significant market share loss in this category to competitors like Teemu and Shien.
“I reported that Amazon's revenue from apparel is down 30% year-over-year and T of millions of Americans have started shopping on Shen and timu instead”
Teemu was the most downloaded e-commerce app in 2023, surpassing Amazon with over 120 million downloads, while also having 82.4 million active shoppers in September 2023, up from only 4.6 million the prior year.
“according to Satia timu was the most downloaded e-commerce app in 2023 surpassing Amazon with over 120 million downloads meanwhile according to gws magnify teu had 82.4 million active Shoppers on its app in September of 2023 up from only 4.6 million the prior year”
Teemu had more than half of Amazon's monthly traffic (82.4 million users vs Amazon's 142 million) after just 2 years of operation as of September 2023.
“while Amazon was still number one with with 142 million monthly users in September timu already has more than half of Amazon's traffic after just 2 years”
Amazon just announced a new low-cost marketplace offering unbranded goods shipped directly from China, competing directly with Teemu by targeting items priced under $20 and weighing less than one pound, with 9-11 day delivery timelines.
“Amazon just announced that they are going to compete directly against Teemu with a brand new lowcost Option of unbranded goods shipped direct from China”
Skincare products are an example of goods where Chinese sellers face barriers because consumers are skeptical about buying from unknown Chinese companies due to concerns about chemical composition and safety.
“for example I have a student in my class that sells skincare product would you ever buy a skincare product from a no-name company in China at onet the cost well skincare consumers will be less price conscious because who knows what chemicals are in the Chinese formulation”
A floor mat available on Teemu for $16 is sold for $40 (2.5x the price) on Amazon, but the speaker incorrectly states the markup is 40x rather than 2.5x.
“for example this floor mat here on teu is $16 but in identical florat on Amazon is being sold for 40 bucks now is getting a product in 2 days versus 11 days worth paying 40x for the product”
Products sold on both Amazon and Teemu are often identical, yet Amazon prices are higher because FBA sellers must pay referral fees, import fees, duties, tariffs, and Amazon's FBA logistics fees.
“now I already showed you the foam floor matat earlier which was 40x cheaper well I just did a search literally right now and this Nick fan here is $23 on Amazon but only $6.95 on teu now if the products being sold on both platforms are the same why are Amazon's prices higher well it's because all FBA sellers on Amazon have to pay referral fees import fees duties tariffs and Amazon's Hefty FBA fees”
A Chinese seller paying a couple of dollars to ship a product directly from China avoids all taxes, fees, and logistics costs, making it impossible for US FBA sellers importing from China to match prices.
“compared to a Chinese seller paying a couple bucks to have a product shipped direct from China with no taxes or fees a third party Amazon Seller importing from China and then selling on Amazon has no chance of matching prices”
A Nick fan is priced at $23 on Amazon but only $6.95 on Teemu (approximately 3.3x price difference), illustrating the magnitude of price disparity for identical products.
“I just did a search literally right now and this Nick fan here is $23 on Amazon but only $6.95 on teu”
Americans currently care more about saving money than the speed of delivery due to recession conditions, which is why sites like Teemu and Shien are destroying Amazon's market share.
“but we're in recession and right now Americans care more about saving money than the speed of delivery and that's where sites like timu and shien have been destroying Amazon's market share”
Amazon will prioritize displaying its new low-cost Chinese products in search results and recommendations to compete with Teemu, cannibalizing traffic from US FBA sellers even if Amazon publicly claims the section will be separate.
“there's the Amazon factor timu and Shen are hurting Amazon right now so Amazon will be incentivized to show off these brand new cheap products to fight back can you imagine paying money to advertise your Amazon listing only for Amazon to display cheap unbranded Chinese products under your own product for onethird the cost well this has already happened in in the past with Amazon's own branded products now the price difference is going to be more dramatic sure Amazon has said that the new El Cheo Mall will appear in its own section of the Amazon website but do you really think that Amazon's going to hide this section from regular Amazon buyer traffic no way remember Amazon makes money no matter what whether the sale is coming from you or a Chinese seller shipping direct from China do you really think that these cheap Chinese products are not going to show up in regular Amazon search not a chance”
A customer searching for a product will find cheap Chinese alternatives displayed next to the higher-priced FBA seller listing, making brand irrelevant for consumers and making it essentially impossible for sellers to build brands on Amazon.
“so here's what's going to happen a customer will do a search for your product and find ridiculously cheap Alternatives right next to your higher price listing it's next to impossible to start a brand on Amazon so your brand will be pretty meaningless in the eyes of the consumer”
Personalization and customization (such as custom embroidery and printing) create a competitive moat because Chinese sellers cannot easily replicate these services in a timely manner, unlike copying and reselling standardized products.
“for my store over at bumblebe lin.com we've doubled down on personalization sure Chinese sellers can copy every single product that I sell but what they can't do easily is personalize a custom product for the consumer in a timely manner we provide custom embroidery custom printing custom pretty much everything and admittedly it is a pain in the butt but what's a pain in the butt for you is a moat for your business”
Dr. Squatch sells men's soap (a commodity product available cheaply on Teemu at $0.79 for 50 bars) for $8 per bar by using emotional marketing that sells 'sexual companionship' rather than soap.
“let's take Dr Squatch this company sells soap for men which is a commodity product hell on Teemu you can buy 50 bars of soap for 79 but Dr Squatch charges eight bucks for a single bar soap and how is this possible possible it's because Dr Squatch has mastered the art of emotional marketing take a look at this short clip of one of their commercials Dr Squatch doesn't sell soap they are really selling sexual companionship”
The real way for Amazon sellers to compete is to rethink their entire product portfolio and move away from selling generic commodity products that can be undercut by Chinese suppliers.
“for many Amazon sellers they're going to have to rethink their entire product portfolio if you're selling generic stuff on Amazon right now you're in trouble someone from China will undercut you in price and you will not be able to compete instead you need to think about products that cannot be easily sold from a seller in China”
Building a brand requires creating content to build an audience around the brand, which cannot be done effectively on Amazon and requires owning your own website.
“finally in order to succeed you're going to have to learn how to build a brand now technically the definition of a brand is just a name that identifies your goods or services but just slapping your brand on a product is meaningless you have to create content to build an audience around your brand and unfortunately that is not something you can really do well on Amazon you need to have your own website”
Chinese sellers already make up over 50% of the top sellers on Amazon, and this percentage could reach 75% or more once all of them start shipping direct from China without paying taxes.
“heck Chinese sellers already make up over 50% of the top sellers on Amazon who knows it could reach 75% or more once all of them start shipping direct from China and not have to pay taxes”
Only 10% of Teemu sellers were also selling on Amazon as of December (prior year), but thanks to Amazon's new program, this overlap is expected to increase to 50% or more as Chinese sellers recognize they can sell directly on Amazon without intermediaries.
“now when timu first launched in 2022 only a handful of the same Chinese suppliers in teu were selling at Amazon however as of this past December there is roughly a 10% overlap between teu Sellers and Amazon sellers but thanks to this new Amazon program it's about to be become 50% or more”
US-based Amazon FBA sellers are in 'big trouble' because Amazon charges them multiple fees (placement, referral, inventory, pick/pack) that Chinese direct sellers on the new marketplace do not pay, creating an unwinnable price competition.
“here's what's going to happen a customer will do a search for your product and find ridiculously cheap Alternatives right next to your higher price listing now I hate to say it but us-based Amazon FBA sellers are in big trouble on one hand Amazon is charging three-piece sellers placement fees referral fees inventory fees Pick and Pack fees and here comes a Chinese seller who doesn't have to pay for any of that stuff and they have the pricing Advantage I really don't see how this can possibly end well”
True Classic T-Shirts sells plain colored t-shirts for $30 each, while Teemu sells 8 shirts for $13.49 (approximately $1.69 each, or 18x cheaper), yet True Classic is a nine-figure company because they sell the emotional benefit of looking buff and hiding body insecurity.
“another one of my favorite Brands is true classic teas this company literally sells plain colored t-shirts for $30 a piece and on Teemu you can literally buy eight shirts for $13.49 but watch this true classic te's commercial and you'll understand why they are a nine figureure company today as a guy I want to look buff and hide my Buddha belly so I'll happily shout out 30 bucks for what I perceive is a higher-end t-shirt”
The key to succeeding in e-commerce is marketing and branding, which are the worst attributes of selling on Amazon, meaning the only viable path to success is to own your own web presence and diversify across multiple marketplaces.
“the key to succeeding in e-commerce is marketing and branding and guess what these are by far the worst attributes of selling on Amazon you can't build a brand on Amazon you can't really Market effectively on Amazon so your options on Amazon are limited on Amazon it's all about price and with these new Chinese sellers selling Direct on Amazon you're just not going to be competitive the only real way to succeed in e-commerce today is to own your own web presence and create content to build a brand your goal should also to be to sell in as many different marketplaces as possible to diversify your sales”
On Amazon, competitive success is based primarily on price, and with the new Chinese sellers selling direct from China without taxes or fees, US sellers cannot win on price and are not competitive.
“on Amazon it's all about price and with these new Chinese sellers selling Direct on Amazon you're just not going to be competitive”
To avoid inbound placement fees, sellers can use Amazon's Logistics service (third-party warehouse) which holds products in Amazon's warehouse and drop-ships them to fulfillment centers on demand.
“well you have to pay for Amazon warehousing and Logistics this service allows you to wave your placement fees by holding your products in Amazon's thirdparty Warehouse where they are drop shipped on demand directly to a fulfillment center so basically Amazon is forcing everyone to use their end to- end Logistics Services now”
Amazon is only targeting low-end products with the new marketplace, so sellers can survive by focusing on high-end premium products where customers are less price-sensitive and margins are higher.
“another thing to consider is that Amazon is only doing this for low-end products for now I said this time and time again on many of my videos if you sell online you want to Target the high-end customer you want your products to be premium so you can make more money per sale which makes everything else easier you make more money customer servic is easier and advertising is more profitable”
Selling direct from China allows Chinese factories to bypass the middleman entirely and ship directly to US consumers, eliminating distributor markups and logistics costs.
“second selling direct allows Chinese factories to bypass the mlan altogether and ship directly to consumers in the United States”
The speaker purchased handkerchiefs from competing sellers on Teemu and found the quality to be atrocious, with no monogramming service, making them unsuitable for high-value use cases like weddings.
“I purchased handkerchiefs for many competing sellers on teu and their quality is atrocious am I worried that someone will buy these cheap hings for a wedding highly unlikely and they don't provide monogramming either”
For the past two decades, Amazon has focused on speed of delivery as its primary competitive advantage, building the most optimized fulfillment network in the United States capable of 2-day delivery to nearly any American consumer.
“for the past two decades Amazon has focused on the speed of delivery by selling cheap stuff that arrives quickly Amazon has built the most expansive and optimized fulfillment Network in the United States capable of delivering almost any product imaginable to Consumers within 2 days”
Teemu and Shien are Chinese-owned e-commerce platforms that ship products directly from China with no middleman, delivering in longer timeframes (typically 7-11 days) but at significantly lower prices than US retailers.
“if you aren't familiar with these two PL platforms timu and Shen are chinese-owned e-commerce platforms that ship products directly from China with no middleman now the shipping takes longer but the prices are lower”
Teemu's core strength is household items and electronics, while Shien specializes in women's clothing and accessories, and together these two platforms are decimating Amazon's sales.
“U's core strengths are household items and electronics whereas shien specializes in women's clothing and accessories and together these two Chinese companies are decimating Amazon sales”
There are roughly 180 million Amazon Prime subscribers as of the current year, which is at an all-time high despite being in a recession.
“there are roughly 180 million Americans who are Amazon Prime subscribers which is at an all-time high as of this year”
eBay drew only 40 million online shoppers in the relevant month, demonstrating its smaller market presence compared to Teemu (82.4 million) and Walmart (85.5 million).
“by comparison eBay only Drew 40 million online Shoppers that month while Teemu ran neck and neck with Walmart which had 85.5 million online users”