With Amazon's uber-popular sales event Prime Day just around the corner, a surprising report just released pointing to a new direction for the company.
In meetings with Chinese sellers, Amazon informed them that the company is working on building a new discount product section that ships directly to consumers from warehouses in China, according to The Information.
This would be different from the currently offered Amazon Basics line of products. Instead, these budget items would be unbranded fashion, home goods and daily necessities.
The move appears to respond to bargain seller websites and apps like Temu and Shein. Those companies offer direct shipping from China to US customers at deeply discounted prices.
Even if you haven't used Temu or Shein, both companies have seen massive growth in the United States in the last few years. Temu ads are almost everywhere, from YouTube and daytime TV to phone games and websites.
Shein only offers clothing and clothing accessories, while Temu is more of a direct competitor, with Amazon offering just about anything you can imagine. And some things you never would have imagined.
Unlike products offered via Prime, the new discount products would have a longer shipping time, between 9 and 11 days, since they're coming from overseas.
An Amazon spokesperson told The Information, "We are always exploring new ways to work with our selling partners to delight our customers with more selection, lower prices, and greater convenience.”
Based on the report, the Amazon.com homepage will get a new section that features bargain items. Chinese sellers could determine pricing and products that go into this new section.
It appears like it's one way for sellers to test out small batches of products before launching a larger wave based on interest. Shein uses a similar model to minimize unsold inventory. Temu is stricter, as the company dictates pricing and operates marketing and storefronts for sellers.
There is concern that Amazon might get caught up using a U.S. trade provision that exempts packages worth less than $800 from customs duties. Temu and Shein use that provision for their goods.
With anti-China sentiments rising in the U.S. government, there has been talk of closing that tariff loophole. If that comes to pass, it might halt Temu and Shein in their tracks in the United States and forgo the need for Amazon to create this new discount section.
In the meantime, Chinese sellers are being asked to sign up this summer, and Amazon will start accepting products in the fall. Perhaps US customers will see this new section or, more likely, as a launch in time for the holiday buying season.
