Amazon announces launch of discount store

 

Amazon has announced plans to open a discount store on its platform. The store will reportedly sell low-priced fashion and lifestyle products, allowing Chinese sellers to send their goods directly to customers in the US.

 

If this modus operandi reminds you of other e-Commerce players, you’re not wrong.

 

 

Why does Amazon need a discount store

With around $575 billion of annual net sales revenue and 30 years in business, Amazon is one of the oldest and largest online marketplaces worldwide. However, age and past success doesn’t fully protect against emerging competitors. And Amazon is not without its challengers, especially rising e-Commerce stars like China-based Temu and SHEIN.

 

Although neither of these marketplaces have managed to get even close to Amazon’s revenue figures so far (Temu’s annual revenue is estimated to be around $6 billion, while SHEIN reports $24 billion), their business model of flooding the market with cheap goods in all categories does seem to become increasingly popular with shoppers all over the world. No wonder that Amazon tries to get in on the action.

 

Related topics

Temu and SHEIN battle for the US market

 

Temu invites US and European sellers to its platform

 

SHEIN accused of violating copyright via AI

 

 

How will Amazon’s discount store work

Presented at an invitation-only meeting for Chinese sellers, Amazon’s new plans revolve around a storefront accessible from Amazon’s main site. The store will sell all kinds of unbranded products ranging from fashion and beauty to lifestyle and sports, mostly priced under $20 per item.

 

 

Illustration of discount sales signs and shopping carts

 

 

While Chinese sellers already have access to Amazon’s US platform, historically they had to use Fulfilment by Amazon (FBA) services and store their items in the country.

 

Learn more about fulfilment!

 

Vendors of the discount store will be able to ship directly from China, working with a 9 -11 days delivery window (For context, Temu items generally ship between 6-20 days while products bought on SHEIN arrive within 6-9 days). This feature can help them cut costs, along with the proposed small-batch production that allows manufacturers to test the success of a product with a smaller customer base before mass production. Interestingly, SHEIN operates with a similar model called on-demand manufacturing.

 

Amazon has yet to announce an official launch date for the discount store, but reporters believe that vendors will be able to submit products for the store from late 2024 onwards.

 

Related topics

Amazon launches live-shopping channel in the US

 

Pre-owned luxury products arrive on Amazon

 

Direct to consumer (D2C) sales on Amazon

 

 

Strict limits for sellers

In a letter sent to prospective sellers, Amazon announced strict limits for products appearing on its discount store. No product can cost more than $20, otherwise the listing gets automatically deleted. Moreover, sellers can only offer no-name products: goods that don’t sport a brand name. 

Analysts believe that these restrictions will act as an active deterrent against most US-based sellers, further opening the door to Chinese merchants. In addition, products will arrive via Amazon’s logistics centre in China and customers have a 15-day window to return them, should they be unhappy with their purchase. 

Another limit, albeit for customers, is on returns: only products above the value of $3 are eligible for a return. Customers can send their products back to Amazon, where returns get donated or disposed of - in other words, sellers won’t get them back.

 

---

+++ Update Winter 2024 +++

Amazon has beta launched its discount store to US-based customers in November 2024. The platform, christened Haul, is currently available as a mobile-only experience and advertises itself with “crazy low prices.” Haul offers further reductions on orders over $50 and free shipping to customers who order over the value of $25.

 

 

Screenshot of https://www.aboutamazon.com/news/retail/affordable-products-amazon-20-dollars-and-under displaying the homepage of Amazon Haul

 

---

 

 

Reactions to Amazon’s discount store

Not everyone is enthusiastic about Amazon’s bid to attract more Chinese sellers to its platform. Indeed, several US vendors active on the marketplace have voiced their concerns about the issue.

 

US-based sellers on Amazon, especially those operating small businesses, may find it difficult to compete with even more cheap Chinese products flooding the market. And with Amazon raising some of its fees for sellers, this new challenge may prove to be too much for some US vendors.

 

“The combination of these fee increases and the pressure to lower prices to compete with the new discount platform could make it unsustainable for many small businesses to continue operating on Amazon,” said Lori Barzvi, a US-based entrepreneur selling pet products on the platform.

 

Find out the pros and cons for EU and US sellers to join Temu!

 

Another issue concerns the nature of the new products arriving from China. Since the country is one of the major sources of counterfeit goods flooding the global market, it’s not unlikely that at least a part of the cheap products appearing in Amazon’s discount store will be fake.

 

As Judah Bergman, an Amazon vendor of baby products puts it, “I’m concerned that making it really cheap and easy for Chinese sellers to sell from overseas is going to incentivize a lot of bad apples.”

 

 

Illustration of stacked boxes waiting to be shipped

 

And thanks to Amazon’s relatively good reputation, customers may feel they’re safe from the dangers of counterfeits when ordering products from the marketplace. Since Temu and SHEIN are less trusted by customers, people shopping on the Chinese platforms may be more alert to the risks they face.

 

Discover the dangers of counterfeits!

 

As online brand protection experts, we certainly share these concerns. Indeed, as customer trust is one of the most important features of a brand’s reputation, fake sellers may try to bank on Amazon’s good standing to spread their low quality and possibly even toxic wares.

 

Luckily, honest brands and sellers don’t have to face this threat alone.

 

 

Online brand protection on Amazon’s discount store

Despite its good reputation, Amazon is no stranger to fake sellers and counterfeit products on the platform: over 7 million fake goods are detected on Amazon annually.

 

We at globaleyez regularly monitor the e-Commerce giant’s many marketplaces (and over 150 others) and have developed excellent professional cooperation over the years. Wherever a dubious product listing appears, should it be on the regular marketplace or the discount Amazon store, we can take care of it.

 

Thanks to keyword based searches via our in-house software tool traxster, our marketplace monitoring service detects potentially fake listings on Amazon’s discount store and over 150 other marketplaces worldwide. Handy filter options allow us to quickly discard authorised listings and zero in on fraudsters.

 

In case we need more information about a seller or the origins of a product, we suggest our test purchase service. With operatives in over 50 countries across the globe, we can quickly attain the product and learn as much about it and its seller as possible.

 

Size does matter, at least when it comes to the size of a counterfeit operation. It’s easy to see that a fraudulent vendor selling 10 products a month does less harm than another with 100 monthly sales under their belt. This is why we offer our marketplace sales tracking service. By closely following the stats of the chosen product listings and sellers, we can prioritise which ones to eliminate from the market first for maximum efficiency.

 

And finally, no brand protection is complete without taking down the fraudulent listings we uncover. Our enforcement service ensures the timely removal of IP infringing product listings from Amazon’s discount store, and any other marketplace.

 

 

Conclusion

Although it’s not even launched yet, Amazon’s proposed discount store is already making waves in e-Commerce, especially amongst US-based vendors.

 

Don’t let the increased influx from cheap and potentially IP infringing goods from China ruin your brand! Contact us and let’s create an effective online brand protection strategy together.