If you've been tracking the shifting tides of e-commerce, Temu's recent performance has undoubtedly sparked widespread discussion. In this current wave of market realignment, the budget-focused platform finds itself facing significant challenges following the Trump administration's elimination of tax exemptions for small parcels.

Recent data reveals a staggering 54% drop in Temu's monthly active US users since March, plummeting to just 37 million. This dramatic decline not only reflects weakening market competitiveness but also correlates directly with the platform's decision to pause advertising campaigns during a critical period. In response to plunging user engagement, Temu resumed advertising in late June in an attempt to reawaken dormant consumers.

A Strategic Pivot Meets Market Realities

Facing these headwinds, Temu has begun forging connections with local suppliers as part of a broader restructuring of its US market strategy. However, these efforts appear painfully inadequate against Amazon's overwhelming market dominance.

"We've made it clear that Temu must offer substantively differentiated products to meet market demand," stated a senior executive from a major third-party sales company during negotiations.

Discussions with numerous American brands and sellers have delivered a sobering message: the low-price strategy alone no longer guarantees success. Multiple sellers emphasized that for Temu to carve out its own space under Amazon's shadow, it would need to price products above Amazon's levels while avoiding homogeneous competition.

The Amazon Advantage and Temu's Uphill Battle

Market intelligence from Sensor Tower shows that despite Temu's massive $1.4 billion advertising spend on platforms like Facebook and Instagram, strategic adjustments have failed to yield expected results. Meanwhile, Amazon continues leveraging its market scale and resources to maintain aggressive pricing while restricting brands and third-party sellers from offering lower prices elsewhere—a dual advantage that further solidifies its position.

Temu's transformation plans have grown increasingly difficult following US tariff policy adjustments. The platform now faces the imperative to redirect focus toward product quality and innovative differentiation —the only viable path to regaining market traction.

As the e-commerce landscape continues evolving, all eyes remain on whether Temu can adapt its competitive strategy, overcome current obstacles, and ultimately regain its growth trajectory. The challenge is formidable, but in the relentless churn of market forces, only those who evolve with the times avoid obsolescence.