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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 The giant told Chinese retailers at an invite-only event on Wednesday that the new budget online marketplace will offer unbranded fashion, household and everyday items that will be shipped directly to consumers from warehouses on the mainland within nine to 11 days.
The plan, first reported in online technology publication The Information, has already received wide attention 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 is similar to 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.

According to Wang, sellers under Amazon’s new program can set their own product prices, which differs from Temu’s model. She said this would likely appeal to mainland cross-border sellers and exporters – especially those who have worked with Temu, Shein and TikTok Store – with manufacturing capabilities, cash flow, talent and supply chain that can make a difference for 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’re always looking for new ways to work with our retail partners to delight our customers with more choice, lower prices, and greater convenience,” Amazon said in a statement in response to a query about the new initiative.

It was at the top of my shopping list ago app Download charts for 125 markets in 2023, including the United States, where Shein ranked second, according to Data.ai.
CantonClothing supplier Kenny Li, who works with Shein and Temu, said he has been closely following news of Amazon’s plan and is keen to join in when he gets the chance.
The new budget online marketplace planned by Amazon.com will feature unbranded fashion, household goods and everyday essentials 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 he was restricting deliveries to Temu after being fined for goods returned by consumers. “It hurts our profits, so I’d rather produce less than bear the cost of profits,” he said.

Although Chinese sellers are eager to take advantage of Amazon’s new trend, it will not be easy for the U.S. company to win over Temu and Shein customers in the discount shopping segment, said Zhang Yi, founder and chief analyst at market consulting firm iiMedia.

“Amazon has set its sights on China as a huge and highly efficient manufacturing hub offering a variety of low-cost goods, but it remains to be seen whether the company can smoothly transition from its existing model to a lower-cost one,” Zhang said.