Amazon quietly competes with Temu, Shein


Two weeks before Black Friday, Amazon quietly added super-cheap products to its Haul store app, mostly shipped directly from China.

Haul is Amazon's answer to booming shopping apps like Temu and Shein . The company told CNBC it has had millions of people visit the section since its launch.

Like Temu, Haul offers products at rock-bottom prices, from $9.98 sneakers to $5.99 kitchenware to $2.99 ​​phone cases. The difference is that Haul imposes a $20 price cap on each item. They only offer free shipping on orders over $25, and the larger the order, the bigger the discount. This encourages customers to buy several items at once.

"It's interesting that Amazon separates this section from their main website. Maybe they don't want customers to switch to buying cheaper products," said Neil Saunders, director of retail research firm GlobalData Retail.

Amazon Haul launches in mid-November 2024. Photo: Amazon

In addition, customers will have to make trade-offs when buying cheaper items. Instead of the usual 1-2 days of delivery, goods sold on Haul will take 1-2 weeks to reach customers who purchase Prime packages. Although Amazon has worked with sellers in China for many years, they often act as intermediaries, storing goods in warehouses in the US. This reduces shipping time, but increases costs for Amazon, which will be passed on to consumers.

Haul and Temu keep their prices low by taking advantage of “de minimis” rules when sourcing from existing merchant networks in China. “De minimis” means “too small to be meaningful.” It allows packages under a certain value threshold to be exempt from duties and customs inspections. This threshold is $800 in the US and 150 euros in the European Union. However, this practice has recently come under scrutiny from US authorities.

Importing individual items means longer shipping times but lower prices. Many Americans have embraced this, which has led to Temu exploding after its launch here in September 2022. Temu is owned by Chinese e-commerce giant PDD and is currently the most downloaded free app in Apple's app store.

“It’s not just about competing with Temu. It’s an opportunity for the e-commerce giant to enter the low-cost segment, which is growing very quickly across the retail industry,” Saunders said.

E-commerce sites flooded with Chinese goods are seeing rapid growth, including Alibaba and TikTok Shop. Sellers are flocking to TikTok, despite the risk of the platform being banned in the US.

Temu has also been aggressively expanding its global presence, avoiding dependence on the declining Chinese market. Its GMV has grown exponentially. It was expected to reach $290 million in 2022, but it rose to $14 billion last year, according to data platform ECDB. It is forecast to reach $29.5 billion this year and $41 billion next year.

However, the low-cost e-commerce platform model is controversial around the world, especially its impact on the environment and labor law compliance. Shein, Temu and many other applications have encountered legal trouble over this.

Temu told CNBC that it “remains committed to ethical and business practices.” It also requires “third-party partners and vendors to comply with labor, safety, and environmental regulations.”

Amazon has also been investigated by US authorities for high rates of workplace accidents in its warehouses, a claim the company denies. In July, a US official said Amazon should be held accountable for recalls of defective products.

But that hasn't stopped the brands from setting record sales. "Consumers say they don't like the consequences of cheap products. But they still go out and buy them," Saunders said.

Although Haul is still in beta, demand appears to have outpaced supply. During its 50% off Black Friday sale, the app sold out of many products. Amazon says it’s expanding its list to hundreds of thousands of products across dozens of categories in the coming weeks.





Operate and exploit advertising by SPIO Singapore Media and Technology Joint Stock Company.
Street: 1363 Serangoon Road. City: Singapore. Phone number: 6298 4062. Zip code: 328243. Country calling code: +65.
Email: contact@spioweb.com
Chief Executive: Mrs. Rena Lee