Explain: Temu's aggressive pricing has forced competitors into a defensive stance. Amazon, for example, launched Amazon Haul—a dedicated platform for ultra-low-cost items—to counter Temu's dominance in the $20-and-under segment. Similarly, Walmart and Shein have intensified discount campaigns and localized delivery networks to retain price-sensitive shoppers. Yet, Temu's market share in the U.S. discount retail sector remains robust at 17%, outpacing Etsy's 2.1% sales decline in Q2 2024 and Shein's 12% user drop in 2025. The platform's global expansion has also outpaced rivals. In Europe, Temu's GMV is projected to surpass $15 billion in 2025, with a 40% surge in advertising spend in France and the U.K. This geographic diversification mitigates U.S.-specific risks and taps into markets where regulatory scrutiny is less restrictive. Meanwhile, in China, Temu holds a 37.3% online retail market share, leveraging PDD PDD -2.62% Holdings' supply chain expertise to maintain low costs.

**Temu's Aggressive Pricing Strategy and Its Impact on Competitors** 1. **Amazon's Response**: Amazon has launched Amazon Haul, a platform focused on ultra-low-cost items, to counter Temu's strong presence in the $20-and-under segment. This move is aimed at attracting price-sensitive shoppers and competing with Temu's aggressive pricing strategy. 2. **Walmart and Shein's Strategies**: Walmart and Shein have intensified their discount campaigns and have enhanced their localized delivery networks to retain customers and compete with Temu's pricing model. However, this has not significantly impacted Temu's market share, which remains robust at 17% in the U.S. discount retail sector. 3. **Etsy's Challenges**: Etsy has faced a 2.1% sales decline in Q2 2024, and Shein has experienced a 12% user drop in 2025 due to competition from Temu. Despite these challenges, Temu's market share continues to grow, outpacing Etsy's decline and Shein's user drop. 4. **Global Expansion**: Temu's global expansion has been more successful than its competitors. In Europe, Temu's GMV is projected to reach $15 billion in 2025, with a significant increase in advertising spend in France and the U.K. This expansion has allowed Temu to diversify its market and mitigate risks associated with the U.S. market. 5. **Market Share in China**: In China, Temu holds a 37.3% online retail market share, leveraging its parent company PDD Holdings' supply chain expertise to maintain low costs and compete effectively. **Conclusion**: Temu's aggressive pricing strategy has forced competitors like Amazon, Walmart, and Shein to take defensive stances, such as launching new platforms, intensifying discount campaigns, and enhancing localized delivery networks. Despite these responses, Temu's market share in the U.S. and its global expansion continue to grow, outpacing competitors like Etsy and Shein. This success is attributed to Temu's effective use of data to refine pricing and forecast inventory needs, combined with its direct-to-consumer approach and lean business model.