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Amazon is planning to fight back against rising competition from rivals Temu and Shein, mirroring their business models with a new direct-from-China discount section.
In a recent meeting with top Chinese sellers, the US group outlined the new channel, which aims to airship goods to American shoppers from warehouses in China, according to a presentation seen by the Financial Times.
Amazon plans to include the new section on the homepage of its app and deliver the ultra-low-cost goods in nine to 11 days, the presentation said. The offering would be aimed at US consumers willing to wait longer than Amazon’s typical one- or two-day delivery schedules in order to secure a bargain.
The US group’s rush into offering cheap goods directly from China comes as it faces mounting competition from Temu and Shein, which have grown rapidly by blanketing the internet with adverts for their low-priced toys and dresses.
Temu, owned by PDD Holdings, and China-founded Shein have perfected business models that rely on Chinese merchants shipping goods to warehouses in southern China which are then shipped via cargo planes to foreign countries.
The individual packages bound for consumers benefit from the de minimis rule, which many countries have in place to allow citizens to receive parcels from abroad under a certain value without paying import tariffs. In the US, the threshold is set at $800 per parcel.
Temu and Shein’s use of the loophole has allowed a flood of Chinese goods to make it to American shoppers’ doorsteps while skipping tariffs on Chinese that were increased during the Trump administration.
Both companies have come under criticism from US politicians for the practice, and legislators in Washington have introduced bills to restrict use of the de minimis loophole.
Amazon, whose market value on Wednesday crossed the $2tn mark for the first time, said: “We are always exploring new ways to work with our selling partners to delight our customers with more selection, lower prices and greater convenience.”
Chinese sellers adopted into the new programme would ship their goods to an Amazon-run warehouse in China, with the US group shipping them onwards to its warehouses in the US, according to a person familiar with the matter.
The direct-from-China section being trialled would include goods that sell for less than $20 an item, weigh less than a pound and are not edible or liquids. Amazon will start signing up sellers this summer and roll out the offering in the autumn, the presentation said.
The US group’s move would represent a risk to Shein’s prospects as it plans to pitch an initial public offering to investors in London. News of Amazon’s new programme was first reported by The Information.
Additional reporting by Wenjie Ding in Beijing and Camilla Hodgson and Eleanor Olcott in San Francisco
