Chinese e-commerce platforms are taking away holiday market share from major U.S. retailers
Major U.S. retailers are bracing for another year of humdrum holiday sales. But for Chinese e-commerce marketplaces like Temu, Shein and TikTok Shop, the holiday season is shaping up to be merry and bright.
On Nov. 25, Moody’s Ratings published its holiday sales forecast, with the credit grader anticipating 1% to 3% holiday sales growth in the U.S., relatively flat compared to last year’s 3% growth. Moody’s attributed cautious consumer spending to high costs associated with daily essentials, particularly food, which the credit grader said will likely curtail Americans’ holiday spending habits this year.
At the same time, Chinese e-commerce brands — including Temu, Shein and TikTok Shop — are capturing more holiday spending in the U.S. as shoppers hunt for deals and are turning to ultra-cheap online marketplaces to do it. Chinese e-commerce brands have so far outperformed other retailers this holiday season, according to a recent Earnest Analytics report that analyzed credit card transaction data. TikTok Shop sales in the first two weeks of November more than tripled compared to last year; it debuted in the U.S. a little over a year ago. Meanwhile, Temu, which launched in the U.S. in 2022, saw sales rise 18% and Shein’s sales grew 16%.
By comparison, Amazon has seen relatively flat sales during the first two weeks of November, and Target has seen sales fall by more than 4%, per Earnest. Overall, consumers have spent 1.4% less this season compared to last year.
Put together, the data crystallizes the meteoric rise of Chinese-linked e-commerce platforms, all of which are relative newcomers to the U.S. retail industry. Temu, TikTok Shop and Shein have won the hearts and wallets of U.S. shoppers thanks to their low prices at a time when consumers feel pinched by years of inflation. Such marketplaces have managed to grow despite long delivery times, product quality concerns and, in some cases like TikTok Shop, even regulatory hurdles.
The stakes will be high for traditional retailers to capture their share of holiday sales this year, with Americans expected to spend as much as $989 billion during November and December, according to the National Retail Federation. Chinese e-commerce sites, including Temu, are expected to capture 21% — or $160 billion — of global e-commerce sales outside of China, according to Salesforce.
“People are still spending,” said Michael Maloof, head of marketing at Earnest Analytics. “They’re just going to be looking more conservatively for things that seem to be a good value.”
Price wars
U.S. retailers are scrambling to compete with China-linked upstarts. Amazon, for instance, released its Temu competitor Haul earlier this month. Amazon is also discounting everything sold through its Temu-like discount store by 50% off for the Black Friday shopping holiday. Amazon is taking a page out of Temu’s playbook by subsidizing steep discounts to lure price-conscious shoppers.
Still, it will be tough to beat Temu on price alone, as the Chinese marketplace is marketing Black Friday deals up to 90% off, according to its website.
“Temu, Shein and TikTok Shops have created somewhere between $50 billion and $100 billion worth of consumer demand in the U.S., and they’re fulfilling it,” said Jason Goldberg, chief commerce strategy officer at Publicis Group. “Haul is Amazon’s attempt to try to get some of that demand that it missed out on without eroding their current, much bigger, more important e-commerce business.
For Temu, in particular, it’s in the company’s interest to grow demand in the U.S. outside of its home market of China. Its parent PDD Holdings last week reported that profit growth will slow looking ahead, citing “intensified competition” in China. As such, Temu fully opened up its marketplace to U.S. sellers to drive greater growth in the country, Modern Retail reported.
Beyond Amazon, discounting continues to grow relative to 2023 among U.S. retailers, especially mid-tier apparel outfitters, as they look to appeal to price-sensitive shoppers. For example, Earnest found that Old Navy increased discounting by more than 20% in 2024 compared to last year. Discounting largely increased across major brands since the pre-holiday — the beginning of October — and early holiday shopping season compared to 2023, per Earnest.
To be sure, there are other explanations behind the tepid consumer spending at U.S. retailers. Namely, consumers are increasingly shopping for the holidays earlier than ever as retailers introduce key sales events ahead of Black Friday and Cyber Monday, even as early as October. There are also five fewer days between Thanksgiving and Christmas this year compared to last year, pushing retailers to start their Black Friday sales earlier, too. As a result, that has pulled forward sales from the traditional start to holiday shopping in early November.
As such, Earnest’s Maloof still sees some room to grow for traditional brick-and-mortar retailers looking ahead to the rest of the holiday season.
“You might see some strengthening in some of these brick-and-mortar stores, which tend to get a little bit higher percentage of spending as you get closer to the actual holiday,” Maloof said. “But in terms of just sheer performance we’ve seen, it’s pretty stark, with TikTok, Temu and Shein at the top of the list.”