, which will celebrate its 30th anniversary in 2024, is suffering from internal and external problems. While the company’s original e-commerce (EC) business is facing challenges from new forces such as TikTok in its home base of the United States, global expansion is at a standstill. The successful model built by founder Jeff Bezos is beginning to have to be revised.

“We can connect more directly with consumers than Amazon.” Paul Tran, founder of Korean cosmetics brand Love & Pebble, is excited about TikTok’s potential as an e-commerce platform. The skin care product, which cools the face and improves skin quality, became a huge hit in the United States after its introduction video was viewed 4 million times.

In September, TikTok officially launched the “TikTok Shop” service in the United States, which allows users to instantly purchase products that interest them through videos or live streaming within the app. In the run-up to “Black Friday” in late November, when the year-end sales season gets into full swing, there are displays offering 80% off.

TikTok will explain to sellers that TikTok will cover the costs of shipping costs and discounts, encouraging them to switch from competing e-commerce sites such as Amazon. “I don’t know how long it will last, but it’s a big move.” Mr. Tran, who started using the TikTok shop right away, was impressed by the sales aggressiveness, which didn’t care about his pretenses.

“Interest commerce” is a method that recommends products that users may be interested in based on their video viewing history and stimulates consumers’ desire to purchase through live streaming and other means. It’s a method honed in China by companies such as ByteDance, which operates TikTok and its Chinese version Douyin.

U.S. gross merchandise value exceeds Walmart

Amazon, which started as an online bookstore in 1994, has expanded its product lineup to include daily necessities, household appliances, and fresh foods, and has become an overwhelming presence with a 42% share of the U.S. e-commerce market. In 2017, the company acquired Whole Foods Market, an American grocery store, and began operating physical stores in earnest.

J.P. Morgan predicts that Amazon’s total merchandise sales in the U.S. will exceed $500 billion (approximately 75 trillion yen) in 2024, surpassing the largest U.S. retailer, Walmart Its market capitalization has hovered around $1.4 trillion, making it the third largest U.S. company after Apple , Microsoft , and Alphabet. Amazon is now facing the rise of a completely new e-commerce force.

Temu, a cross-border e-commerce service originating from China, is one of them. The company is attracting consumers by spreading discount coupons on its app. Boosted by customs rules that allow low-priced parcels to be imported duty-free, the company gained more than 70 million monthly users within a year of entering the United States.

“Temu users spend an average of 25 minutes a day on the app, compared to Amazon’s 11 minutes,” said Paul Carter, CEO of research firm Global Wireless Solutions. Regarding mechanisms to induce consumers to make impulse purchases, “We have succeeded by bringing the strategies of brick-and-mortar stores, such as window shopping and special sales, into the app.”

Struggling with local conditions in South Korea and Southeast Asia

There is no doubt that Andy Jassy, ​​who became CEO of Amazon in 2021, and others are discussing countermeasures in response to the rise of new companies. In the United States, in 2023, a new feature called “Inspire,” which introduces products in vertical videos of around 1 minute, was quietly added to smartphone e-commerce apps. Influencers can post, and Amazon even pays them for some.

Amazon is honing its own logistics network in order to avoid catching up. “ Although not to the same extent as Toyota Motor Corporation , all facilities are working on “improvement” and are looking for the best solution.” Ryan Doll, who works at a warehouse in Washington state in the western United States, emphasizes the importance of steadily improving operational efficiency.

On a white board called the “Gemba Board,” employees write down their daily achievement rate of work goals and share it with the workplace. Each facility has implemented a series of improvement measures, and in 60 major metropolitan areas in the United States, the percentage of packages delivered within the next day of order has reached 50%.

The company operates over 100 large-scale logistics facilities in the United States, and is actively investing in automated sorting using robots. By selling itself on “speed” such as next-day delivery, it is trying to push ahead of Chinese competitors, which lack a logistics infrastructure in the United States.

However, even with Amazon’s annual capital investment of more than $10 billion for its logistics bases, it is difficult to expand its own logistics network outside the United States. In China, where it expanded into China in 2004, it was rejected by local giants such as Alibaba Group, and withdrew in 2019.

Amazon is still unable to offer Prime membership in South Korea and Thailand, where local e-commerce companies dominate. Due to a backlash from the special demand for online sales amid the coronavirus pandemic, sales in the international business for the full year ending December 2022 shrank for the first time, down 8% from the previous period to $118 billion.

Since the fall of 2022, when the company began large-scale layoffs, its business expansion, once feared by competitors as an “Amazon effect,” has subsided. New technological innovations that completely transform the consumption experience are also essential to defeating the challenges of emerging powers. Now in his third year as CEO, Jassy’s skills are being tested.