Amazon reportedly preparing to directly compete with Temu & Shein
Amazon is said to have told Chinese brands it will launch a discount storefront featuring their merchandise.
According to CNBC, Amazon held a closed door, invitation-only meeting with select sellers of Chinese products on Wednesday, June 25, where the e-tailer told them it will open a section of its e-commerce site for U.S. consumers to purchase their items at discount prices.
Products will be directly shipped to U.S. consumers from warehouses in China with a target delivery date of nine to 11 days from purchase. The assortment will feature unbranded items across product categories including apparel, consumer electronics and home goods. Many items will feature prices of $20 or lower.
This business model would enable Chinese sellers to avoid using the hosted Fulfillment by Amazon (FBA) fulfillment network to ship products to U.S. consumers. Amazon also reportedly told attendees at the private meeting it would allow them to conduct small-batch tests of certain products to see if U.S. consumers have interest in them.
This China-focused discount store front would presumably be aimed at capturing market share from rapidly growing discount retailers that sell low-priced Chinese merchandise, such as Temu and Shein.
"We are always exploring new ways to work with our selling partners to delight our customers with more selection, lower prices, and greater convenience," an Amazon spokesperson told CNBC. Read more coverage here.
Shein, Temu focus on U.S. market
Singapore-based Shein, which filed for an initial public offering (IPO) in the U.S. stock market with the Securities & Exchange Commission (SEC) in late 2023 and is reportedly seeking NRF membership, reported annual revenue of about $22.7 billion in 2022.
Shein serves customers in more than 150 countries around the world — including the United States, and holds the biggest share (about 40%) of fast-fashion spend in the U.S.
Shein has been expanding its presence in the U.S. via a variety of partnerships, including numerous temporary pop-up shops. The company is also collaborating with Flexport as its preferred logistics provider for the Shein Marketplace U.S. third-party sales platform and plans to open a Seattle-area U.S. supply chain office.
Other recent U.S.-based moves by Shein include a strategic partnership with Sparc Group Holdings" under which the retailer will acquire an approximately one-third interest in Sparc Group, a joint venture that includes Simon Property Group and Authentic Brands Group.
Meanwhile Temu, which is based in Boston but is the U.S. subsidiary of multinational commerce giant PDD Holdings and ships many products direct from Chinese factories, was recently named the fifth-most-popular shopping site among U.S. teens.
According to data from Salesforce, a leading 43% of the two-thirds of the Western consumers who shopped via a shopping app featuring discount Chinese goods in the past six month used Temu. However, Shein is most popular among Western Gen Z consumers, with half of this demographic placing an order recently.
Salesforce predicts apps such as Shein and Temu will take a growing share of the U.S. holiday e-commerce market in 2024.