Amazon has decided to exclude its new competitor, Temu, from its price searching algorithm, which checks the competitiveness of products listed on its platform. The company claims that Temu, an e-commerce marketplace launched in September, fails to meet Amazon’s stringent qualification requirements for fair pricing. Consequently, certain low-priced general merchandise available on Temu, owned by PDD Holdings, may offer prices lower than those provided by sellers on Amazon’s marketplace.
The pricing algorithm, which utilizes both automated and manual tracking methods, examines products available on and off Amazon to ensure that merchants on its marketplace are not charging significantly higher prices than their rivals on Amazon. Amazon is cautious about engaging in a price war with competitors it deems untrustworthy. The company’s qualification standards aim to prevent the comparison or matching of prices against merchandise from questionable marketplaces, including potentially counterfeit products.
A substantial portion of the merchandise sold on Temu originates from vendors and suppliers based in China. Through advertisements and social media platforms, Temu has promoted affordable prices for home goods, electronics, and apparel shipped from China, such as $5 dresses and $2 makeup brush sets, with the aim of competing with Amazon.
Temu and its U.S.-based lawyer at Mandell Menkes did not respond to multiple requests for comment. However, on its website, Temu declares a strict policy against listing or selling products that infringe on third-party trademark, copyright, or patent rights. The company states that it is not actively involved in the listing and sale of items by sellers, and vendors are responsible for obtaining the necessary licenses for their stores.
Amazon’s decision to disregard Temu’s prices, rather than competing with them, highlights the challenge the company faces in maintaining price competitiveness while ensuring the safety and authenticity of products on its platform. It is worth noting that Amazon has previously grappled with its own counterfeit issues and has taken steps to combat such problems, including increasing reporting of counterfeit goods to law enforcement agencies.
According to YipitData, Temu’s general merchandise value, or the total value of goods sold, has risen from $193.4 million in January to $634.8 million in April. Amazon merchants who do not offer competitively priced merchandise risk having their Buy Box, a button that facilitates easy product purchases, removed by Amazon until their prices match those of their competitors. Repeat offenders perceived to overprice their products may face suspension or removal from Amazon’s marketplace.
Amazon’s Marketplace Fair Pricing Policy section on its website states that if pricing practices on a store offer undermine customer trust, Amazon reserves the right to remove the Featured Offer, eliminate the offer itself, suspend shipping options, or, in severe or repeated cases, suspend or terminate selling privileges. The company emphasizes its commitment to providing customers with low prices on a daily basis.
According to Amazon, there are currently no Temu sellers offering products that meet its qualification standards for price comparison or matching.
Feixiang Wang, CEO of China-based MaiBo Technology Company, revealed in an interview with Reuters that he discovered alleged copies of his company’s $25.99 FitBeast-branded exercise equipment on Temu priced below $5. Concerned about potential penalties under Amazon’s fair pricing policy, Wang filed a lawsuit against Temu in May, alleging copyright infringement and damages to his sales. The complaint contends that Temu and its vendors replicated and sold the products to capitalize on FitBeast’s success.
In a separate lawsuit filed in April, Shenzhen Kangmingcheng Technology, a seller of $29.99 Hicober-branded microfiber hair turbans on Amazon, accuses Temu of infringement. Temu offers a similar turban priced at $5.88, according to the lawsuit.
These ongoing lawsuits in the United States represent some of the initial legal battles between Amazon sellers and Temu, as documented in court filings.