
The eCommerce landscape is set for potential disruptions as Amazon prepares to enter the cheap-product territory against Temu and Shei
A week ago, Amazon announced record-breaking sales for its Prime Day – an indication of the company’s unhindered growth. But behind the scenes, the company is working on something much bigger: Taking on Temu and Shein.
In late June, news about Amazon’s plan to launch a discount store started circulating the internet. This has generated mixed feelings in the market. For eCommerce businesses, Amazon’s venture into offering cheaper products by utilizing direct China fulfillment presents both opportunities and challenges. Here’s what you need to know.
From China to customer’s doorstep: What is Amazon’s upcoming discount store?
In an invite-only meeting with Chinese merchants, Amazon unveiled a plan to launch a new channel on its platform to sell cheap products similar to Temu and Shein. The products are said to include categories such as unbranded fashion and household items, many of which will be priced under $20.
The logistics behind this new store will be based on direct-to-consumer (direct from China) fulfillment. This means the inventory will stay in China and products will be shipped directly to customers upon placing orders. The delivery time is expected to be 9-11 days, far slower than what Amazon traditionally offers but much similar to rivals like Temu and Shein.
Amazon is planning to move fast with its Temu-like store. The reports said that Amazon plans to start accepting inventory this fall.
A Temu and Shein competitor backed by Amazon: Any benefits?
Consumers will definitely be happy. The increased competition means lower prices. Amazon will be the main beneficiary of this new store (of course). The reason is that only 7% of Americans said they ‘trust’ Temu and Shein. If the ‘trusted’ Amazon starts offering wallet-friendly products, more consumers will flock to buy more even if it means longer delivery times.
It’s unclear if Amazon will allow independent sellers to list on that new store and keep inventory in China. If it does so, these sellers will have a better chance to compete directly with Shein and Temu and potentially beat them in their own game.
Another potential benefit is making it harder to pass laws restricting Chinese goods coming to the US under Section 321 (a topic being discussed by policymakers). This is because Amazon, an American company, would become a major beneficiary of Section 321.
Amazon vs Temu and Shein: Should eCommerce sellers be worried?
Not everyone is enthusiastic about Amazon’s upcoming store. According to the US publication Modern Retail, some local sellers, who rely on Amazon FBA and don’t source directly from China, have expressed concerns. They said it would be harder for them to compete on price if Amazon starts offering cheaper products.
Given Amazon’s history of disrupting markets, independent eCommerce sellers might also find it difficult to compete. Amazon is also known for its outstanding supply chain and logistics network, which means it could create a direct China fulfillment network much more efficiently.
What should online businesses do?
It’s still too early to tell what the new store will look like. It might succeed or face challenges along the way. But if this move from Amazon tells us anything, it’s the increasing demand from customers for low-priced products, even if it means longer delivery times. Does your eComm business offer the same?
At Lansil Global, we leverage our Shenzhen fulfillment center to ship your product directly to customers in 6-10 days. We’ve already shipped to over 171 countries and your product can be next to reach new markets. Contact us today for a free quote.