Comparison of Amazon and TEMU Business Models Analysis of Two Operation Modes of Amazon

Which is better between Amazon and TEMU models? The two models of Amazon

As one of the largest e-commerce platforms in the world, Amazon has been famous for its powerful logistics system, rich variety of products, and user-friendly shopping experience since its establishment. However, with the increasing competition, especially from emerging platforms like TEMU under Pinduoduo, Amazon has to re-examine its business model. This article will start from Amazon's traditional self-operated model and third-party seller model, combining the current market environment and news reports, discuss the advantages and disadvantages of the two models respectively, and analyze which model is more suitable for future development.

Firstly, let's take a look at Amazon's traditional self-operated model. In this model, Amazon directly purchases inventory from manufacturers or wholesalers, then sells it through its own website. The advantage of this approach lies in the ability to strictly control product quality and service standards, ensuring consumers get the best experience. For example, during the pandemic, when many countries faced supply chain disruptions, Amazon quickly adjusted its strategy thanks to its vast warehousing network, ensuring stable supplies in core markets. Since it directly controls the source of goods, Amazon can better manage pricing power, thus gaining an advantageous position in price competition. According to a report by the Wall Street Journal, at the beginning of 2025, Amazon announced a new service called BuywithPrime, allowing non-Amazon platform merchants to use Prime membership qualifications for checkout, further strengthening its dominant position in the retail sector.

However, the self-operated model also has obvious drawbacks. The most significant one is the high cost input including procurement costs, storage fees, and logistics expenses. These factors make it difficult for Amazon to maintain long-term price competitiveness, especially when facing new opponents like TEMU that focus on ultra-low prices. According to a report by CNBC, in order to cope with the pressure from TEMU, Amazon is considering cutting some high-cost projects, such as reducing the variety of goods in certain categories to optimize inventory structure. Despite this, how to balance cost control and user experience remains a major challenge for management.

Next, we turn to Amazon's third-party seller model. In this model, Amazon acts more like a bridge connecting buyers and sellers, providing sellers with opportunities to showcase their products and earning commissions or other related service fees. Compared with the self-operated model, the third-party model has lower capital thresholds and higher flexibility, attracting a large number of small and medium-sized enterprises and individual entrepreneurs. Data shows that currently over 60% of sales on Amazon's platform come from third-party sellers. This phenomenon indicates that an increasing number of brands are choosing to leverage Amazon's massive traffic pool to expand their market share.

The advantage of the third-party model also lies in its ability to quickly respond to changes in market demand. For instance, when a specific product suddenly becomes popular, third-party sellers can quickly launch corresponding products without going through complex internal approval processes. This is crucial for capturing trends. Additionally, by introducing a wider range of products, Amazon not only enriches its product catalog but also reduces risks associated with single-channel dependence. However, this brings new problems how to ensure the quality of products provided by third-party sellers? Frequent fake product incidents in recent years have raised widespread doubts among consumers. To address this, Amazon has taken a series of measures to strengthen regulatory efforts, including introducing artificial intelligence technology to screen suspicious accounts and increasing manual review processes.

So, which model is better? Actually, the two are not absolutely opposed but complementary. Ideally, Amazon should fully leverage the advantages of both models while avoiding their respective defects. For example, continue to adopt the self-operated model for high-profit but stable-demand categories, and prioritize the third-party model for niche products that change rapidly. At the same time, innovation and exploration of more efficient operational methods are needed. For instance, Forbes magazine mentioned that Amazon is trying to apply AR/VR technology to the development of virtual fitting room functions, aiming to enhance users' immersive shopping experience.

In conclusion, both Amazon's traditional self-operated model and third-party seller model have their unique values. In the future, to maintain its leading position in the global e-commerce field, Amazon needs to continuously optimize its existing business mix and actively embrace technological innovations, in order to stand firm in fierce market competition.