Amazon muscles in on Temu’s and Shein’s turf

The news: Amazon will soon feature cheap items from Chinese sellers on a dedicated section of its homepage, The Information reported—its most direct effort to date at curbing the growing influence of Temu and Shein.

How it works: Much like the offerings from Chinese ecommerce companies, the products on Amazon’s new marketplace will be shipped to consumers directly from warehouses in China, resulting in lower prices but also slower deliveries of between nine and 11 days.

• The bargain section will feature fashion, home goods, and everyday necessities; merchants have the freedom to determine product selection and set pricing.
• Amazon is taking an additional page from Shein by allowing sellers to manufacture items in small batches to gauge demand, enabling them to minimize waste and maximize efficiency.
• The retailer will begin onboarding merchants this summer, with plans to accept inventory starting in the fall.

The path forward: Amazon has struggled to determine the best way to head off competition from Shein and Temu, whose low prices and vast array of trendy products are resonating strongly with value-conscious shoppers.

• While the retailer previously made some efforts to compete on price—including lowering seller fees on cheap apparel—it mostly chose to emphasize its delivery speeds and reliability as a counterpoint to the lengthy shipping times and hit-or-miss experiences that its competitors offer.
• Its aggressive about-face shows that it’s worried by the inroads those companies are making with consumers, especially as platforms like Shein and Temu win more repeat shoppers.
• While Amazon still ranks well ahead in terms of shopper retention and its share of the ecommerce market, the retailer is clearly feeling the heat—and is prepared to fight hard to protect its advantage.

Go further: Read our US Amazon Ecommerce Forecast 2024 for more on how the retailer is combating threats to its ecommerce dominance.