Faced with the growing interest of Americans in the products of Chinese fast fashion giants, such as Temu and Shein, Amazon is counterattacking. During a conference reserved for Chinese sellers on June 26, the firm with a 2,000 billion stock market capitalization presented a new virtual showcase dedicated to low-cost. This space will include both fashion and home items, as well as small electronics. It will constitute a category in its own right on the Amazon marketplace.
Extended lead times compared to traditional delivery
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According to CNBC And The Information, these low-cost items will be directly sent by Chinese sellers to American customers, with a shipping time of 9-11 days. They will be aimed at customers willing to wait a little longer than usual. Until now, Amazon sellers based in China used the “Fulfillment by Amazon” service, which allowed them to send their products to warehouses in the United States before they were shipped to customers. A method that saves considerable time on delivery, but at a significant cost for sellers.
This new service is therefore presented by Amazon as a way to save money for sellers based in China, who will be able to test new items with small batch production. This production may be increased depending on demand. Temu and Shein's business model is based on Chinese merchants sending products to warehouses in southern China, which are then shipped by cargo plane to foreign countries.
Less than 20 dollars per product
The new space will feature a selection of unbranded items, most of which will cost less than $20. The release date of the section is not yet known, although Amazon indicates in the presentation that it will accept products from the fall.
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To challenge competition from large platforms such as Temu, Shein and AliExpress, Amazon has launched a seduction operation with Chinese sellers. In December, the multinational announced the creation of a “innovation center” in Shenzhen, a city considered the Chinese “tech capital” and home to the headquarters of large companies such as Huawei and Tencent. It also reduced the fees charged to merchants selling clothing priced below $20, going from 17% commissions to 5% for products under $15, and to 10% for those sold between $15 and $20. dollars.
The e-commerce giant said the number of items sold by Chinese merchants on its site increased by more than 20% in 2023 compared to 2022, and that the number of those merchants whose sales exceeded 10 billion dollars had increased by 30%.
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