Rumor has it that Amazon is working with Chinese sellers to create a new style of discount marketplace, similar to Shein or Temu, to better compete with the fast fashion brands and provide US buyers a safe, secure experience.
Shipping times to the United States would be 9-11 days, much slower than typical Amazon Prime delivery times but much quicker than average China to US delays.
Amazon is always paying attention to pricing and customer satisfaction changes and trends, so it’s no surprise that they would want to respond to the increasing competition from Temu and Shein. Amazon, with their extended reach and strong existing infrastructure, should be able to readily compete if they can offer competitive pricing.
Last year, Amazon decreased fees for certain merchants in the clothing & apparel category in an attempt to retain third-party sellers, with some fees dropping as low as 5% from a previous 17%.
Clearly, Amazon is paying attention. And with many tariff exclusions expiring in June, the market is definitely shifting. US-based businesses are forced to compete with Chinese merchants who have recently been able to avoid duties and tariffs, making the pricing gap even bigger.
What does this mean for Amazon buyers and sellers?
With many small businesses in the US leveraging Amazon to scale their business, will this new discount marketplace make competing successfully impossible?
Here’s an Amazon Seller Central discussion that sums it up pretty well (it’s several years old, but the concerns and the solutions haven’t changed much).
The next question is – does this make sense for Amazon? Will it reflect poorly on their brand reputation? Will it cause Amazon to shift its focus to pricing instead of quality, lowering the bar for products being sold?
There’s already discussion of these types of issues. We shall find out about that sooner rather than later.
What should sellers do now?
What’s most important is for US-based brands to ensure they’re doing everything they can to remain competitive:
- Building your brand, market segment, and audience.
Focus on intangibles, such as brand reputation and customer service to ensure you have a large, loyal customer base. There are many consumers who will choose quality over price; this will help you stand out among Chinese jack-of-all-trades-master-of-none competitors. - Focus on FBA and timely delivery
Delivery times and consistency will be even more important with increased competition; and 9-11 day delivery times are still much slower than consumers have come to expect.
At the end of the day, if Amazon wants to increase their Chinese merchant business in an effort to remain competitive, they’re just doing their best for their shareholders.
But even for small sellers, you can still find ways to stay competitive to ensure your business success.
The increased competition isn’t necessarily fair; and we’ll have to see how it impacts consumer behavior in the long run. But for right now, US-based businesses should remain focused on quality and service to succeed.
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