Guitars for $13, sofas for $20: Amazon plans to establish a competitor to Temu with even lower prices

Temu and Shein have been the big stars in the online shop scene for several years now, with Shein expected to generate sales of over $50 billion and well over 200 million app downloads in 2024, while Temu generated sales of $15.33 billion in 2023 and had more than 500 million active users in individual months alone. According to a report by The Information, Amazon plans to claim a slice of this lucrative business pie with cheap goods from China, which is why the company is said to be developing a new online store that will operate in parallel to Amazon.com.

In order to keep prices low, Amazon will set maximum prices in each category, even undercutting Temu in some cases. For example, a sofa is not allowed to cost more than $20, a guitar can be offered for up to $13, jewelry will be limited to a maximum of $8 and bed linen sold for $9 at most. Instead of Amazon Prime shipping within one day, delivery from this new online store is expected to take 9 to 11 days, similar to Temu, as shipping will begin directly at a logistics center in Guangdong, China.

While Amazon takes care of the shipping, the company primarily earns from the fees that the manufacturers of the products pay for distribution and delivery. Nevertheless, costs will also be reduced in these areas, as Amazon will only charge $1.77 to $2.05 for shipping a product that weighs between 1.8 and 3.6 kilograms, far less than shipping via Amazon in a local logistics center. When exactly Amazon's new China store will be launched is not yet known.