Amazon is launching a new discount marketplace to compete with Temu; direct shipping from China

Amazon is gearing up to launch a new shopping section designed to directly compete with emerging e-commerce giants Temu and Shein, according to a report from The Information. This new section, or possibly an app, will offer a range of low-cost items shipped directly to consumers from warehouses in China.

The move comes as Amazon faces increasing competition from budget shopping apps like Temu, which topped the US download charts in 2023. Recognizing the success of these low-cost e-commerce platforms, Amazon seems ready to enter the fray.

This marks a significant shift for Amazon, which has traditionally focused on quick delivery times through its network of US-based warehouses. By incorporating direct shipping from China, Amazon aims to compete more effectively with discount retailers like Temu and Shein, known for their ultra-low prices on fashion and household items.

Amazon Gets into Discounts With Direct Shipping From China

The Information revealed that Amazon introduced this new initiative during a private meeting with Chinese sellers. The presentation highlighted plans to stock inexpensive items such as phone cases, massage tools, and clothing, all shipped from China. The new section is expected to go live in the fall, with estimated delivery times of 9 to 11 days, longer than Amazon’s typical delivery windows.

“The new marketplace will offer unbranded fashion, home goods, and daily necessities, according to the slides, and orders will take 9 to 11 days to get to customers. Amazon told Chinese sellers in a recent closed-door meeting that it would start signing up merchants this summer and begin accepting inventory in the fall,” The Information reported.

The store will offer unbranded fashion, home goods, and daily necessities. Amazon plans to start signing up merchants this summer and begin accepting inventory in the fall, according to the report.

CNBC also confirmed that Chinese suppliers will connect directly with US shoppers, eliminating next-day delivery options. Instead, shipping times will range from nine to eleven days.

“Amazon plans to launch a new section on its site dedicated to low-priced fashion and lifestyle items that will allow Chinese sellers to ship directly to U.S. consumers, CNBC has learned. The storefront, announced at an invite-only conference for Chinese sellers on Wednesday, would mark Amazon’s most aggressive attempt yet to fend off growing competition from e-commerce upstarts Temu and Shein, which both have ties to China, the world’s second-largest economy,” CNBC reported.

An Amazon spokesperson stated, “We are always exploring new ways to work with our selling partners to delight our customers with more selection, lower prices, and greater convenience.”

Temu’s Meteoric Rise

Temu, which launched in the US in September 2022, has quickly gained traction. In 2023, it was the most downloaded app in the US with 103 million downloads, nearly double that of TikTok, its closest competitor.

Based in Boston, Temu has expanded its reach to 22 additional countries, including major European markets like France, Germany, Italy, The Netherlands, Spain, and the UK. The app has achieved top rankings in download charts across these regions, reflecting its growing popularity.

Temu is owned by Pinduoduo, a Chinese e-commerce company founded in 2015 by former Google employee Colin Huang. Dubbed “China’s Groupon” and a mix of “Costco and Disneyland,” Pinduoduo raised around $24 billion in valuation during its 2018 IPO, backed by Tencent and Sequoia Capital.

With Amazon’s new section set to launch soon, the e-commerce landscape is poised for a shakeup as the retail giant takes on the low-cost leaders head-on.