Amazon Launches Direct-from-China Storefront to Rival Temu’s Low-Price Model

An image of an Amazon app on an iPhone.

Amazon has announced plans to introduce a new online store, aiming to compete with retail brand Temu. The new store will offer low-priced items that are shipped directly from sellers in China, a model similar to that of Temu. This marks a significant shift from Amazon’s current model, where items are shipped to U.S. warehouses before being delivered to customers.

Implications for Supply Chain

This new approach could have considerable implications for supply chain operations. Traditionally, Amazon has relied on storing products in U.S. warehouses before delivery. In 2023, the company even enhanced this model by using machine learning to predict customer demand for specific items and storing these products at fulfillment centers in the corresponding areas. The new model, however, will see products shipped straight from China to the U.S., arriving at customers’ doorsteps within nine to 11 days.

Amazon vs. Temu

Amazon has previously criticized Temu for its ultra-low prices. In May 2023, Amazon excluded Temu from its price-searching algorithm, which compares product prices on Amazon’s platform with those on other platforms to ensure competitive rates. Amazon stated that Temu did not meet the requirements for its fair pricing policy. Despite this, Amazon’s new store seems to be adopting a similar low-cost strategy.

Looking Ahead

While Amazon has not provided a specific timeline for the rollout of its new store, indications suggest that the company will start accepting products by fall 2024. This move is expected to stir competition in the digital marketplace and could potentially reshape supply chain strategies in the e-commerce sector.