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Amazon prepared to take on Temu and Shein with new discount section
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Amazon is planning to fight off growing competition from rivals Temu and Shein by mirroring their business models with a new discount section direct from China.
In a recent meeting with top Chinese sellers, the American group described the new channel, which aims to ship products by air to American buyers from warehouses in China, according to a presentation seen by the Financial Times.
Amazon plans to include the new section on its app’s homepage and deliver the ultra-low-cost products in nine to 11 days, the presentation said. The offer would be aimed at North American consumers willing to wait longer than Amazon’s typical one- or two-day delivery times to secure a bargain.
The North American group’s rush to offer cheap products directly from China comes as it faces growing competition from Temu and Shein, which have grown rapidly by flooding the Internet with ads for their low-priced toys and dresses.
Temu, owned by PDD Holdings, and Shein, founded in China, have perfected business models that rely on Chinese traders shipping goods to warehouses in southern China, which are then shipped on cargo planes to foreign countries.
Individual packaging intended for consumers benefits from the de minimis rulewhich many countries have in place to allow citizens to receive packages from abroad under a certain value without paying import tariffs. In the US, the limit is set at $800 per package.
Temu and Shein’s use of the loophole allowed a flood of Chinese goods to reach American consumers’ doorsteps, avoiding tariffs on Chinese goods that were increased during the Trump administration.
Both companies have been criticized by U.S. politicians for the practice, and lawmakers in Washington have introduced bills to restrict the use of the de minimis loophole.
Amazon, whose market value on Wednesday surpassed the US$2 trillion mark for the first time, said: “We are always exploring new ways to work with our retail partners to delight our customers with more selection, lower prices and greater convenience.”
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Chinese sellers adopted into the new program would ship their products to an Amazon-run warehouse in China, with the U.S. group shipping them to its U.S. warehouses, according to a person familiar with the matter.
The section directly from China being tested would include products selling for less than $20 per item, weighing less than a pound and not being edible or liquid. Amazon will begin hiring sellers this summer and will launch in the fall, the presentation said.
The move by the North American group would represent a risk to Shein’s prospects, as it intends to launch an initial public offering for investors in London. News of Amazon’s new show was first reported by The Information.
Additional reporting by Wenjie Ding in Beijing and Camilla Hodgson and Eleanor Olcott in San Francisco