Amazon is set to launch a new section on its site dedicated to low-priced fashion and lifestyle items shipped directly from Chinese sellers to U.S. consumers. This development, announced at an invite-only conference for Chinese sellers, underscores Amazon’s most determined effort to date to combat the rising competition from e-commerce giants Temu and Shein, both of which are closely linked to China.
Temu and Shein have significantly expanded their foothold in the U.S. market, drawing in an increasing number of American consumers with their incredibly low prices on a wide array of products, including clothing, electronics, and home goods. In a direct response, Amazon’s forthcoming storefront will feature a variety of unbranded items, many priced under $20. A presentation to Amazon sellers, reviewed by CNBC, revealed that the storefront will include products such as gua sha facial massaging tools, arm weights, and phone cases.
Cost-Efficiency Through Direct Shipping
Amazon plans to ship these products directly from China to the U.S., aiming for delivery within nine to eleven days. Traditionally, Chinese sellers have relied on Amazon’s Fulfillment by Amazon (FBA) service, which involves sending goods to U.S. warehouses before dispatching them to customers. This new direct shipping model is pitched as a cost-saving measure for Chinese sellers, allowing them to test new products through small-batch production, similar to Shein’s on-demand manufacturing strategy.
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Maria Boschetti, an Amazon spokesperson, told CNBC, “We are always exploring new ways to work with our selling partners to delight our customers with more selection, lower prices, and greater convenience.”
Boschetti did not provide further details on the company’s plans, initially reported by The Information. The presentation indicates that Amazon will start accepting products this fall, though the exact launch date of the storefront remains unspecified.
The Growing Influence of Chinese Products
This development highlights the increasing influence of Chinese products in the global market. Despite U.S. restrictions and tariffs on Chinese goods and services, Chinese products have become a top choice for American consumers due to their low cost. This trend underlines the competitive pricing and efficiency of Chinese manufacturing and logistics, which continue to dominate even amidst geopolitical tensions and trade barriers.
Amazon’s new initiative not only showcases the company’s adaptability and strategic planning but also brings to light a significant challenge for the U.S. economy: the high cost of domestic goods and services. The growing preference for affordable Chinese products among American consumers underscores the need for the U.S. to address these cost disparities. Domestic producers are pressured to find ways to reduce production costs and improve efficiency to compete effectively with low-cost imports.
For years, China-based merchants have been a vital part of Amazon’s marketplace. The new storefront represents a renewed effort to attract and support these sellers amidst increasing competition.
In December, Amazon announced the establishment of a new “innovation center” in Shenzhen, a renowned technology and manufacturing hub. Additionally, Amazon has reduced fees for merchants selling clothing priced below $20, further incentivizing Chinese sellers.
In 2023, Amazon reported a more than 20% year-over-year increase in the number of items sold by Chinese sellers on its platform. The number of Chinese merchants with sales exceeding $10 million grew by 30%, highlighting the substantial impact and potential of this seller segment.
The success of Amazon’s new storefront could set a precedent for other global e-commerce platforms seeking to compete in the highly competitive low-priced product market. It also highlights the growing influence of Chinese manufacturing and logistics capabilities in the global retail landscape.
As Amazon prepares to roll out this initiative, the industry will be closely watching how consumers and competitors respond and whether the direct shipping model will deliver on its promises of lower costs and faster delivery times.
The US politicians can continue with their political accusations against China, but the US consumers are only interested in goods that don’t drain their wallets and purses. As long as there are few people with plenty money and larger people with few money, cheap products will continue to win. It’s a settled science.
The challenge is for a place like Nigeria, here, even if you produce items and sell with zero margin, the goods will still be too expensive for average shoppers. So, when you hear misguided people making tangential comparisons, you will appreciate the level of ignorance in the land. Here, even with free energy for production, the Chinese will still outcompete you, because they have pretty much perfected so many things at scale, including logistics.
We must first have to be humble enough to understand how far behind we really are in the grand scheme of things, so that we won’t be delusional enough to believe that fixing electricity will vanquish all the bottlenecks, it’s just the starting point, but much more will be needed in order to compete.
What is the correlation between cheap labour, less regulation and cheap products? You cannot have it both ways, you will have to pretend that you don’t see some things…