Amazon Crackdown: Chinese Sellers Banned from Undercutting on Temu

Amazon has instructed some Chinese cross-border merchants to cease offering their products at lower prices on rival platform Temu, according to multiple sellers cited by the South China Morning Post. This move comes amidst escalating competition from Temu, a budget retailer owned by Chinese e-commerce giant PDD Holdings.

Sellers indicate that Amazon's local office recently informed managers of top-selling Chinese brands about the price parity requirement. The US retailer has reportedly been monitoring product pricing on Temu, and sellers found to be more expensive on Amazon have been removed from the Amazon Featured Offer program.

The Featured Offer program, also known as the Buy Box, is prominently displayed at the top of Amazon product pages, making it easier for customers to purchase the featured item. To be eligible, sellers must maintain a "competitive" price, which Amazon defines as being "less than or equal to the lowest price from major retailers outside Amazon."

This action suggests Amazon is taking a proactive stance against Temu's aggressive pricing strategy, which targets budget-conscious consumers with low-priced items shipped directly from China. Sellers who spoke to the South China Morning Post expressed concerns about potential reprisals from Amazon for discussing the price parity requirement.

Amazon's move could have significant implications for Chinese merchants operating on both platforms. Sellers who rely on the Featured Offer program for increased visibility and sales may be forced to adjust their pricing strategies to comply with Amazon's new policy. This could potentially reduce their profit margins and competitiveness on Amazon, while also impacting their overall sales volume.