Money

What Will It Look Like if Amazon Tries To Take on Shein and PDD’s Temu?


Key Takeaways

  • Amazon is set to start working with Chinese sellers, shipping products directly from China to customers in the U.S., according to multiple reports.
  • The move is a step up in Amazon’s defense against Chinese competitors like Shein and Temu, which have grown rapidly in the U.S.
  • Shein’s attempts to become a publicly traded company have hit roadblocks in the U.S., leading the Chinese retailer to potentially turn to London’s stock exchange first.

Amazon (AMZN) appears set to take aim at Chinese e-commerce giants like Shein and PDD Holdings’ (PDD) Temu, with reports this week indicating that the dominant force in U.S. online retail has begun pitching Chinese suppliers on a new section of its website that would sell low-cost clothes and home goods to U.S. consumers directly from China.

Amazon reportedly held a meeting with Chinese sellers this week, showing a presentation that included images of what the platform would look like and highlighting clothing and everyday items like phone cases and coffee mugs. The meeting and concept of the service was first reported by The Information, with later reports from Bloomberg and The Wall Street Journal.

An Amazon spokesperson told Investopedia the company is “always exploring new ways to work with our selling partners” to offer customers “more selection, lower prices, and greater convenience.”

Amazon Reportedly Considering Dedicated Section of Its Site

The discount service would have a dedicated section on Amazon’s website, and orders would ship directly from Chinese suppliers to customers in the U.S., with orders projected to take nine to 11 days to arrive, according to the reports. Part of why Temu and Shein can offer such low prices is the length of their delivery times.

Currently, products that come from China and are sold on Amazon will typically spend time in Amazon’s vast warehouse network before being delivered. The Journal has reported previously that Amazon has had internal debates over whether to organize search results by prioritizing items that are less expensive, or by those that have the fastest delivery times.

CEO Andy Jassy said during Amazon’s April earnings call and in his annual shareholder letter that the strategy to regionalize its warehouse network to make deliveries faster has worked, with some 4 billion packages arriving the same day or one day after the order was placed in the U.S. in 2023.

Shein and Temu have grown substantially in the U.S., with Temu parent PDD routinely doubling or nearly doubling its revenue and profits year-over-year in recent quarters.

Amazon Effort Could Face Scrutiny

Considering the criticism Shein and Temu have faced from U.S. regulators and politicians, including allegations of forced labor likely being used by some of the platforms’ suppliers, it’s unclear how the U.S. government would react to one of the country’s largest companies shipping China-made products straight to U.S. consumers. Temu and Shein have denied that any of their products are made using forced labor.

Shein’s attempts to receive a public listing on American stock exchanges have hit several roadblocks since the company confidentially applied in November 2023, ranging from political criticism to rejections of its attempts to join the National Retail Federation, according to CNBC.

The fast-fashion retailer is reported to have filed for a listing on the London Stock Exchange earlier this month, according to Reuters, highlighting Shein’s belief that it may not receive a U.S. listing.


Source link

Related Articles

Back to top button