Faced with fierce competition from some recent Chinese platforms such as Temu or Shein, Amazon has decided to act. The American manufacturer has announced the creation of a new section on its website dedicated to low-cost products.

AliExpress, Shein or Temu, you are probably familiar with these Chinese platforms known for their low-cost products. In just a few years, these e-commerce sites have nibbled away at market share everywhere.

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To give you an idea of the extent of the phenomenon and according to the figures of a study Les Echos, Temu reached 11% market share in France between May and October 2023! Since the end of last year, Temu has even become the most downloaded free application of the App Store in France.

Inevitably, the insolent success of Shein, Temu and others is beginning to worry the world's number 1 e-commerce company, namely Amazon. As revealed by our colleagues at CNBC, the web giant has decided to take action against these new competitors. In a conference reserved exclusively for Chinese manufacturers and sellers, the Seattle-based firm announced its intention to create a new section on its website dedicated to the sale of low-cost products.

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Like what Temu, Shein and others are offering, you'll find a bit of everything, from clothing to cosmetics, consumer electronics, weight training equipment and phone shells. According to Amazon, the goods will be shipped directly from China, all within an estimated period of between 9 and 11 days. On the price side, the average would be around 20 dollars.

As a reminder, Chinese manufacturers had to go through the "Shipped by Amazon" service to sell their goods on the US or European market. In exchange for a commission paid to the American giant, retailers can send their products to Amazon distribution centers. The company then takes over for delivery.

AMAZONIZES DROPSHIPPING
With this new low-cost section, the idea is to short-circuit this intermediate step. As you can see, Amazon is generalizing what is called dropshipping. For beginners, this method can be reduced to a complicated system, where a seller will take orders without having any stock of his own. In truth, the merchant transfers the order directly (with the delivery address) to the manufacturer of the product, to a wholesaler or a company specialized in the processing of orders. They then take care of the shipment of the package.

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This practice presents risks, first of all for the seller who has no control over the quality of the product, the management of stocks or even on the smooth running of the delivery. On the customer side, this is no better: after-sales service fails to say absent, no guarantee of having the right product, misleading advertising, overprices, etc. According to statements from several sources, Amazon plans to launch the first products of this low-cost range by fall 2024.

Amazon declares low-cost war on Shein and Temu