Amazon faces uphill battle against Temu and Shein as it woos Chinese merchants, analysts say

Merchants under Amazon’s plan can set product prices by themselves, which deviates from the business model of discount-shopping platforms like Temu

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Amazon.com’s foray into the discount-shopping market segment shows a renewed effort to broaden its “Made in China, sold on Amazon” community. Photo: Shutterstock

Published: 7:00am, 30 Jun 2024

Amazon.com’s plan to launch a discount shopping section would appeal to mainland Chinese suppliers with pricing flexibility, but competing with Temu and Shein in selling low-priced merchandise will not be easy, according to analysts.

The US e-commerce giant told Chinese merchants in an invite-only meeting on Wednesday that this new online budget marketplace will feature non-branded fashion items, household goods and daily necessities, which will ship directly to consumers from warehouses on the mainland in nine to 11 days.

That plan, first reported by online tech publication The Information, has already made a splash within China’s cross-border e-commerce community, where heated discussions centred around joining this marketplace and related Amazon policies. This programme, however, is only open to select sellers.

“The initial feedback from Chinese merchants has been quite positive even though Amazon has yet to officially launch the new programme,” said Wang Xin, executive chairwoman of the Shenzhen Cross-Border E-Commerce Association.

Select mainland Chinese merchants have been invited by Amazon.com to joint its new discount-shopping marketplace. Photo: Reuters

Amazon’s new discount marketplace resembles the budget e-commerce model of platforms like Temu, which work closely with Chinese suppliers in marketing and shipping dirt-cheap goods directly to global consumers.

Merchants under Amazon’s new programme can set product prices by themselves, which deviates from the Temu model, according to Wang. She said this is likely to appeal to mainland cross-border merchants and exporters – especially those who have worked with Temu, Shein and TikTok Shop – with the manufacturing capabilities, cash flow, talent and supply chain to make a difference for Amazon.