These Two Chinese E-Commerce Companies Could 'Steal The Show' In This Black Friday
2min read The Black Friday is approaching, and this year, it seems that two Chinese e-commerce platforms are stealing the spotlight.
According to marketing experts, the subsidiary of Pinduoduo, Temu, and another e-commerce platform Shein, which primarily targets overseas markets, have invested heavily in online marketing to attract more consumers who discover products through search engines to their platforms. This has forced other retailers and brands to increase their marketing spending as well.
Retailers generally bid on keywords to ensure their products rank highly in online searches. The higher the search volume for a keyword, the more the search service providers charge for each click on the ads.
Temu and Shein have intensified this competition. Data shows that Shein has invested heavily in the keyword Walmart clothing, with the cost per click for this term increasing 16-fold from August 2022 to August 2024. Other keywords such as cheap online clothing and Walmart Black Friday sale are also seeing fierce competition.
Erik Lautier, an e-commerce expert at consulting firm AlixPartners, commented that the market environment is extremely brutal, making it very difficult for merchants. Increased costs mean lower returns and even unprofitability, which significantly impacts retailers who rely on paid search advertising.
Compared to the same period last year, consumer spending at major U.S. retailers in the first half of November this year decreased by 1.4%, marking the first decline since 2017. Experts believe that retailers may focus their promotions later in the season, and another possibility is that Amazon's early promotions in October have dispersed purchasing power.
However, the industry points out that the main reason for the current change in consumption patterns is the rise of affordable e-commerce platforms like Shein and Temu. In November, Temu's sales increased by 18%, while Shein's sales grew by 16%, while Amazon's sales remained flat.
The proactive strategy of these two Chinese platforms in search marketing may be a primary reason for their success in attracting consumers. Olga Andrienko, Vice President of Brand Marketing at Semrush, pointed out that Shein and Temu stand out because their investment in competitors' keywords is much higher than the average.
Erin Brookes, Head of Retail and Consumer Business at Alvarez & Marsal, lamented that the surge in costs has led many brands to consider shifting marketing channels. Retailers hope to find more targeted customers rather than just focusing on the swarm of low-price seekers. Some companies are shifting their marketing focus from paid search to other channels like Facebook and TikTok.
Others have noticed a more brutal aspect. The core of Black Friday sales lies in retailers offering significant discounts to attract customers back to their bowl, but when platforms that already win with prices like Temu and Shein join the war, the original competitive logic may have already been shattered.
A survey shows that over a quarter of Gen Z consumers in the U.S. plan to make their Black Friday purchases on Temu, and 24% of consumers hope to buy their Black Friday gifts on Shein. This is enough to alarm Amazon and may also be the deep motivation behind Amazon's launch of the affordable goods platform Amazon Haul.