To counter Temu and Shein, Amazon intends to open a discount store
KEY POINTS –
- Amazon unveiled plans for a new low-cost storefront in China that will sell inexpensive clothing, household goods, and other products at a closed-door event for sellers.
- The storefront would face off against Temu and Shein, two up-and-coming Chinese e-commerce websites that are becoming more and more well-known in the US.
- Although the presentation indicates that it will begin accepting products this autumn, it is unclear when Amazon plans to launch the storefront.
Amazon intends to open a new section of its website devoted to inexpensive fashion and lifestyle products, enabling Chinese sellers to ship straight to customers in the United States.
The amazon discount warehouse would be Amazon’s most significant attempt to date to stave off growing competition from e-commerce upstarts Temu and Shein, both of which have ties to China, the second-largest economy in the world. The announcement was made at an invitation-only conference for Chinese sellers on Wednesday.
In recent years, Temu and Shein have increased their market share in the United States by attracting more American consumers with their unbeatable deals on apparel, electronics, home goods, and other merchandise.
A presentation to Amazon sellers that CNBC saw revealed that a variety of unbranded products, many costing less than $20, will be available in Amazon’s storefront. Among the things for sale in a mock-up of the storefront were phone cases, arm weights, and gua sha facial massaging tools.
According to the presentation, Amazon plans to ship the products straight from China to the United States, hoping to reach customers in nine or eleven days. Before their products are shipped to customers, Chinese Amazon sellers have historically relied on the company’s fulfilment services, known as Fulfilment by Amazon, to send their products to American warehouses.
The company presented the agreement as a way for Chinese Amazon sellers to cut costs while testing new products through small-batch manufacturing. Shein employs a similar strategy known as “on-demand manufacturing,” in which a fixed number of items are produced, with additional goods being produced as demand rises.
“We are always exploring new ways to work with our selling partners to delight our customers with more selection, lower prices, and greater convenience,” Amazon spokesperson Maria Boschetti said in a statement to CNBC.
Boschetti refrained from providing additional commentary on the company’s plans, which The Information initially revealed. Although the presentation indicates that it will begin accepting products this autumn, it is unclear when Amazon plans to launch the amazon discount store storefront.
For a long time, a substantial portion of Amazon’s marketplace was made up of Chinese retailers; however, in light of increasing competition, the company is redoubling its efforts to attract sellers in this market. In addition to cutting the fees it charges retailers who sell clothing for less than $20, Amazon announced in December that it was opening a new “innovation center” in Shenzhen, a well-known centre for manufacturing and technology.
According to Amazon, the number of products sold by Chinese sellers on its platform increased by more than 20% in 2023, and the proportion of Chinese retailers with sales over $10 million increased by 30%.
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