Amazon plans to launch discount store in bid to fend off Temu and Shein

🌈 Abstract

Amazon is planning to launch a new budget storefront on its platform that will feature low-cost apparel, home goods, and other items. This storefront will directly compete with e-commerce sites like Temu and Shein, which have gained popularity in the U.S. due to their rock-bottom prices on a range of products. The new storefront will allow Chinese sellers to ship directly to U.S. consumers, marking Amazon's most aggressive attempt yet to fend off the growing competition from these upstart e-commerce platforms.

🙋 Q&A

[01] Amazon's New Budget Storefront

1. What are the key details about Amazon's new budget storefront?

• Amazon is planning to launch a new section on its site dedicated to low-priced fashion and lifestyle items
• The storefront will feature a range of unbranded items, many priced under $20
• It will allow Chinese sellers to ship products directly to U.S. consumers, with the goal of delivering them within 9-11 days
• This represents Amazon's most aggressive attempt yet to compete with e-commerce upstarts like Temu and Shein, which have gained popularity in the U.S. due to their low prices

2. How does this new storefront differ from Amazon's existing model for Chinese sellers?

• In the past, Amazon sellers in China have relied on the company's Fulfillment by Amazon service to send goods to warehouses in the U.S. before dispatching to customers
• With the new storefront, products will be shipped directly from China to the U.S., which Amazon says will provide cost savings for Chinese sellers

3. What is the timeline for the launch of this new storefront?

• It's unclear when Amazon intends to debut the storefront, but the presentation notes it will start accepting products this fall

[02] Competition with Temu and Shein

1. How do Temu and Shein compare to Amazon's new budget storefront?

• Temu and Shein are two emerging e-commerce sites with ties to China that have grown in popularity in the U.S. in recent years
• Like Amazon's new storefront, they offer low-cost apparel, home goods, and other products
• They have been luring an increasing share of American shoppers with their rock-bottom prices

2. How is Amazon's approach similar to Temu and Shein's business model?

• The new Amazon storefront will use a model similar to Shein's "on-demand manufacturing", producing a limited quantity of goods and manufacturing more as demand increases
• This allows for cost savings and the ability to test new items through small-batch production

3. What is the significance of Amazon's move to compete more directly with Temu and Shein?

• Amazon's new storefront represents its most aggressive attempt yet to fend off the growing competition from these upstart e-commerce platforms
• As Temu and Shein have expanded their presence in the U.S., they have been capturing an increasing share of American shoppers, posing a threat to Amazon's dominance