Amazon, Temu and Shein are expected to capture more than one third of Australia’s online retail market by next year. An analyst report warns that this shift will increase pressure on local digital marketplaces to either specialise or scale up to survive.

According to Jarden, the three international retailers are forecast to generate more than $18 billion in local sales in 2026. This represents a 36 per cent share of the market and is being fuelled by a price war between the global giants that is attracting cost-conscious shoppers.

“Retailers need scale or niche differentiation to survive. The market is splitting into two, with those caught in the middle such as Kogan, Big W, Myer and the accessories range at JB Hi-Fi facing the greatest risk as competition tightens from both directions,” analyst Ben Gilbert wrote.

Ruslan Kogan, chief executive and founder of ASX-listed marketplace Kogan, said his company has developed a niche because it lacks the resources to match Amazon in the race for fastest delivery and does not have the manufacturing capabilities to compete with Temu on items priced below $50.

Kogan has put its efforts into expanding its private-label business, which focuses on brown goods such as televisions and air conditioners. This strategy gives the company greater control over the supply chain and allows it to offer products at lower prices. These categories were chosen because they have limited overlap with Temu and Shein.

Kogan’s gross merchandise value, which measures the total amount spent by customers before fees, discounts and returns are deducted, peaked at about $1.2 billion in 2022 but now sits below $1 billion.

In comparison, Jarden expects Amazon’s gross merchandise value to grow to $8.5 billion by 2026.

Amazon has invested more than $25 billion in its Australian operations since 2011, including over $5 billion in 2024. That investment has resulted in 20 fulfilment centres and delivery stations, same-day delivery in some regions and a catalogue of more than 200 million items, along with 14,000 Australian businesses selling on its marketplace.

“Amazon has invested billions of dollars in fulfilment. You are not going to deliver faster than them. When that became clear, we had to choose our direction as a retailer,” Kogan said.

“A lot of other online retailers are simply selling products made by others, and that creates a race to the bottom because it becomes extremely difficult to compete on price once middlemen take their margins.”

Jarden’s analysis found that Temu typically prices comparable products between 30 per cent and 40 per cent lower than Amazon. Amazon responded with steep discounts during its Prime Day event in July, when average prices in its home category fell to 42 per cent below the recommended retail price.

Temu vs Shein

Temu’s price gap is even wider compared with other platforms, with many of its items coming in 30 per cent to 70 per cent cheaper than similar products elsewhere.

This trend has resulted in companies such as eBay and Kogan losing market share, while platforms including MyDeal and Wesfarmers-owned Catch have closed.

eBay’s gross merchandise value has nearly halved since 2020, falling from $6.5 billion to about $3.5 billion in 2025. The decline follows five consecutive years of contraction caused by the rise of Amazon, Temu and Shein.

Jarden noted, however, that eBay’s sales decline is expected to slow because the US-listed company has strengthened its position as a reseller and specialty marketplace with a focus on niche categories such as collectibles, including Labubu and Pokémon cards.