Is Amazon Paying Sellers to Quit Temu?

Why Amazon Can’t Control Temu Prices

The problem for Amazon starts with its Buy Box system. This feature decides which seller gets the main “Add to Cart” button on product pages. Usually, Amazon penalises sellers who offer cheaper prices elsewhere by removing their Buy Box privileges.

But Temu doesn’t play by these rules. Sellers can slash prices on Temu without losing their Buy Box status on Amazon. This creates a loophole that Amazon’s pricing controls can’t touch.

“Amazon’s Buy Box is central to its pricing strategy, but it cannot enforce this with Temu,” Karstan notes. So instead of technical fixes, Amazon is using financial incentives.

What Sellers Are Choosing

The offers put merchants in a tough spot. Take Amazon’s money and lose access to Temu’s growing customer base, or stay on Temu and miss out on Amazon’s immediate benefits.

Many sellers are finding Temu attractive because they can set their own prices without worrying about Amazon’s restrictions. But Amazon’s free advertising credits and reduced fees provide quick revenue boosts that are hard to ignore.

Regulatory Heat

Amazon’s pricing tactics aren’t flying under the radar. The FTC is investigating how the company punishes sellers for offering lower prices on competing platforms. The ongoing lawsuit examines whether Amazon abuses its market position to stifle competition.

For shoppers, Amazon’s price controls often mean paying more. When sellers can’t offer their lowest prices across all platforms, consumers lose access to better deals.

Industry sources suggest Amazon considered improving its fulfilment rates to compete better, but shelved the plan over concerns it would help Temu gain more ground.