Deliver

E-commerce has transformed the way we shop, offering incredible levels of convenience: infinite aisles of products available to us with a single click, without leaving our homes. Online shopping was estimated to account for 19.5% of global retail sales in 2023, is forecast to reach 21.2% this year and US$7t in value the next. 

As one of the pioneers, Amazon ($AMZN) famously started out as a small online bookstore in a garage, and has grown into a global giant. The firm delivered around 5.9 billion parcels in 2023 in the U.S. and earned net logistics revenues of US$117.3b to put it ahead of UPS ($UPS) and FedEx ($FDX). Approximately 60% of their packages arrive on the same or next day in their top 60 urban areas, as they’ve found delivery speed increases the likelihood of purchases. 

Reviews and ratings have also become essential in our decisions before we ‘Add to cart’. But you can even see the products in action with livestreams, as introduced in 2016 on Alibaba’s ($BABA) Taobao app. Originally characterised as China's answer to Amazon, Alibaba leaned into the country’s perception as the ‘world’s factory’ – consumers are familiar with it as the source of many goods. But Alibaba is not alone there, and similar e-commerce platforms are also looking beyond national borders. China is one of the few places not suffering from inflationary woes right now, a reflection of a subdued economy. 

Temu, owned by PDD Holdings ($PDD), entices cash-strapped consumers worldwide to ‘shop like a billionaire’ with very cheap products on offer. Its app was downloaded 314.19 million times in 2023, while fast fashion retailer Shein was second with 251.56 million. Amazon managed 178.25 million. Others have found it hard to compete on price with the top two, which have also been blamed by Etsy’s ($ETSY) CEO for rising digital advertising costs. 

PDD Holdings, also owning Temu’s domestically focused counterpart Pinduoduo, has renewed competition against Alibaba and JD.com ($JD). Temu’s market share among U.S. discount stores increased from 2% in January 2023 to 17% in November 2023, while Dollar General’s ($DG) share fell by 14% to 43%. Amazon has so far reacted by announcing a new innovation centre in Shenzhen and cutting fees for sellers of low-cost items. 

Temu’s tactics appear to be paying off in the short term, but many question whether its levels of spending are financially sustainable and if suppliers can earn profits from selling on the platform. Geopolitical tensions are also challenging global business ambitions. Following Shein’s shift to Singapore ahead of filing for an IPO in the U.S., PDD Holdings has relocated its headquarters to Dublin. 

Meanwhile TikTok Shop has failed to gain traction in the U.S. and UK – a reminder that the popularity of an app doesn’t always translate into successful business spinoffs. All the companies still in the game are closely tracking their market share numbers, as anxiously as we track the deliveries of each new online purchase.