Amazon targets Temu and Shein’s value segment

Amazon, the ever-evolving US retail and computing giant, is looking to take on its competitors at the value end of the market by bringing shoppers goods directly from China through a new channel focused on cheap products.

Why Amazon’s air shipping model matters

Pinduoduo’s Temu and fast-fashion seller Shein are part of a new crop of ultra low-cost online shops with an innovative supply chain – it ships directly from manufacturers or warehouses in China with the help of an import tariff exemption for small packages, to shoppers in the West through the help of vast quantities of online advertising. And it’s enough to put a real mark in the already strong growth of titans like Meta (see the uptick in APAC revenues in the chart above).

Such a move would throw up big questions that range from whether a race to the bottom is wise through to whether in a climate emergency, more sellers of ultra cheap goods are a benefit to the wider planet. More depressingly, it suggests that there is a market need for super cheap goods and that this need is likely to grow.

What’s going on

The Financial Times has the news, based on a presentation initially shared with top Chinese sellers who would provide the goods with a nine to 11-day delivery window to target bargain hunters. Ultra cheap goods will sit on a separate tab on the Amazon homepage dedicated to products directly from China that will initially cost less than $20 per item.

Amazon frames the move in terms of its commitment to customer-centricity, in comments to the FT: “We are always exploring new ways to work with our selling partners to delight our customers with more selection, lower prices and greater convenience.”

While both Temu and Shein have been making waves with Western shoppers, the possibility of the plans comes at a tricky time for the latter as it prepares to list on the stock market where rapid growth is rarely enough and the company will have to show it is able to make money.

Sourced from the FT, WARC