Amazon still has a big lead in the battle for the hearts and wallets of Gen Z shoppers, despite growing investor concern that competition from Temu and Shein could challenge Amazon stock.
Amazon is the favorite shopping website for 59% of American teens, according to a survey by Piper Sandler. The firm reached out to more than 9,000 teenagers for its semiannual Taking Stock With Teens report released Tuesday. Amazon's score marks an increase from 57% this spring and 52% last fall.
Behind Amazon, privately held retailer Shein was second, as a favorite of 7% of teens. The website for Nike was third, with 6%. Temu, a subsidiary of PDD Holdings , made its first appearance on the survey.
"Only 1% of teens voted Temu as their favorite retailer, suggesting AMZN still has a big lead," the Piper Sandler report said. "We continue to view Prime and Amazon Shopping as a dominant teen franchise."
On the stock market today, Amazon stock closed up 1.8% at 131.83.
Amazon Vs. Temu
Temu and Shein, which offer low-cost apparel from China, are rapidly growing in the U.S. Both companies have spent heavily to market to young customers, and their growth has not gone unnoticed by watchers of Amazon stock.
"Recent discussions with investors have uncovered a heightened perceived risk for Amazon — the sharp rise of Chinese retail/marketplace platforms Shein and Temu," Evercore ISI analyst Mark Mahaney wrote in a Sep. 27 client note.
Temu and Shein are leaders for new U.S. app downloads in the shopping category, as tracked by research firm SensorTower and cited in Evercore's report. Temu, in particular, has amassed more than 100 million downloads since its launch a year ago.
Further, Amazon has been resistant to match the prices of items of Temu, the Wall Street Journal reported. That's a break from the company's usual strategy of utilizing price-matching tools to ensure it is offering the lowest prices.
Amazon Stock: Still 'Early Days' For Temu Competition
Piper Sandler analyst Thomas Champion wrote in a follow-up note to the survey that the results for Temu show it remains "early days on adoption of the site."
Similarly, Mahaney's report for Evercore advised investors to "be aware, but don't be afraid" of Amazon stock risk from Temu and Shein.
"There is certainly a risk that Temu and Shein can start to eat into Amazon's wallet share over time if these platforms sustain their growth momentum and aggressive marketing spend, but we believe the risk for Amazon at the moment is very overstated," Mahaney wrote.
Another challenger to watch: TikTok. The short-video social media app launched its live shopping product to U.S. users last month. TikTok will store and ship items on behalf of manufacturers and merchants in China. Owner ByteDance is hoping to challenge Amazon and quadruple the size of its global e-commerce business to $20 billion in sales, Bloomberg reported.
A separate part of Piper Sandler's poll found that 38% of U.S. teens list TikTok as the favorite social media app. That was easily ahead of the 28% for Snapchat. Further, 23% of teens preferred Meta's Instagram.
Teens Spending Less
Meanwhile, self-reported annual spending by teens was down for the first time since before the onset of the pandemic, according to Piper Sandler's report. Annual teen spending fell 1% compared with a year earlier, to $2,316.
That could point to a broader challenge for Amazon: Inflation and other economic concerns could drag down spending. But Amazon is betting on strong sales to close out the year. Amazon said Sept. 19 that it plans to hire 250,000 full-time, part-time and seasonal fulfillment-center and transportation employees in the U.S. ahead of the holiday season. Analysts took that as a bullish signal.
Amazon's second-quarter earnings topped analyst expectations. That included a 4.2% year-over-year increase in online store sales, following back-to-back quarters with yearly e-commerce sales declines. But the stock still faces several challenges for it e-commerce and cloud-computing businesses.
Separately, Amazon is reportedly hatching a new plan to boost e-commerce sales. The company is testing a "Buy Again" feed for its homepage of its app, the Wall Street Journal reported Wednesday. The hope is to boost repeat purchases.
Amazon stock is up 55% this year. However, it has lost about 10% from a 52-week high reached in mid-September.
