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Analysts say Amazon faces tough battle with Temu and Shein as it seeks favor with Chinese merchants

Posted on by darion

United States e-commerce During an invited meeting on Wednesday, the giant told Chinese sellers that the new low-cost online marketplace will feature unbranded fashion, household and daily essentials items that will be shipped directly to consumers from mainland warehouses within 9 to 11 days.
The plan, first reported by online technology publication The Information, has already made waves in China cross-border e-commerce communities, where there have been heated discussions about joining this marketplace and related Amazon policies. However, this program is only available to select sellers.
“The initial feedback from Chinese sellers has been very positive, even though Amazon has not yet officially launched the new program,” said Wang Xin, executive director Shenzhen Cross Border Trade Association.
Selected sellers from mainland China have been invited by Amazon.com to join its new discount shopping marketplace. Photo: Reuters

Amazon’s new discount marketplace resembles the budget e-commerce model of platforms like Temu, which work closely with Chinese suppliers to market and ship cheap goods directly to consumers around the world.

Sellers under Amazon’s new program can set their own prices for products, a departure from Temu’s model, Wang said. She said it would likely appeal to cross-border merchants and mainland exporters, especially those who have worked with Temu, Shein and TikTok Store – with the manufacturing capabilities, cash flow, talent and supply chain that could be important to Amazon.
The planned entry of the American company into the discount shopping market is evidence of renewed efforts to expand its offer “Made in China, sold on Amazon” communities as many mainland suppliers struggle to increase their profits in the face of fierce competition among discount shopping platforms.

“By leaving pricing in the hands of sellers, Amazon has offered them a key way to stay profitable,” Wang said.

Amazon.com’s discount shopping initiative is expected to attract suppliers who have partnered with rival platforms Temu, Shein and TikTok Shop. Photo: Shutterstock

“We are always looking for new ways to work with our retail partners to delight our customers with more selection, lower prices and greater convenience,” Amazon said in a statement in response to inquiries about the new initiative.

This was the top shopping app download charts from 125 markets in 2023, including the United States, where Shein ranked second, as reported by Data.ai.
CantonKenny Li, a clothing supplier based at Shein and Temu, said he had been closely following news of Amazon’s plan and would be happy to join in if the opportunity arose.
The new budget online marketplace planned by Amazon.com will feature unbranded fashion, home goods and daily necessities shipped directly to consumers overseas from supplier warehouses in mainland China. Photo: Shutterstock

“It would be a good opportunity for us to expand our sales channel and reduce risk,” said Li, whose factory produces T-shirts and jeans that sell for just a few dollars.

Li revealed that he had restricted deliveries to Temu after being fined for goods returned by consumers. “It hurts our profits, so I’d rather produce less than incur the cost of returns,” he said.

Chinese retailers are eager to join the new Amazon trend, but it won’t be easy for the American company to win over Temu and Shein’s discount-shopping customers, according to Zhang Yi, founder and chief analyst at consulting firm iiMedia.

“Amazon has set its sights on China as a huge and highly efficient manufacturing center to supply a wide range of low-cost goods. However, the question remains whether the company will be able to smoothly transition from the current model to the low-cost model, Zhang said.