Amazon has traditionally been “the e-commerce giant”, but that position has been increasingly challenged in recent years by upstarts, mainly Shein and Temu. Those two Chinese companies have experienced massive growth by adopting a strategy of selling cheap products created in China and shipped directly to global consumers, particularly Americans. Their products are generally cheaper than Amazon’s because they don’t focus on delivering products quickly, saving money on fulfillment infrastructure. Additionally, they utilize a US statute that allows shipments of $800 or less to not face certain tariffs by shipping small orders to customers, avoiding the tariff and lowering costs.
Amazon has seemingly had little to no response for the last 2 years, but it has now announced a plan to compete with Shein and Temu. Amazon plans to launch a service for low priced unbranded goods, many under $20, that will allow Chinese sellers to ship directly to US consumers. Also like Shein and Temu, Amazon will take longer, 9-11 days, to ship products, saving money related to fulfillment centers.
Although no date was given for this new service, it's clear that this service is intended to compete with Shein and Temu and provide another source of growth for Amazon. With Amazon’s advantage in scale and brand awareness, Amazon’s new service could displace Shein or Temu.