How Amazon Haul Is Taking On Temu With Cheap Goods From China

Summary

Amazon has launched Haul, a new budget e-commerce platform aimed at competing with Temu, Shein, and other low-cost rivals. Haul offers ultra-affordable products under $20, leveraging Amazon's existing Chinese supplier network to keep prices low. Despite its potential, the platform faces challenges from competing platforms that already dominate the market, such as Temu, which has surpassed Amazon in app downloads. The future of Haul and similar platforms could be influenced by shifting trade policies and tariffs, potentially raising costs. The competition in the ultra-budget e-commerce space is fierce, with each player having distinct advantages.

Takeaways

• 😀 Amazon has launched a new budget e-commerce platform called Haul, which offers products priced under $20 to compete with Temu and Shein in the ultra-low-cost market.
• 😀 Haul is a separate, mobile-only section within the Amazon shopping app, focusing on deep discounts and novelty products, but without the Prime logo or fast shipping.
• 😀 Temu, which launched in 2022, has grown rapidly and become the second most visited e-commerce site after Amazon, driving competition in the low-cost space.
• 😀 Amazon Haul targets consumers looking for bargain prices, offering products like jewelry for as low as $2.99 and sneakers for under $10.
• 😀 One major selling point of Haul is that it offers free returns for items over $3, with low shipping costs and promotions to encourage bulk purchases.
• 😀 Haul differs from Temu and Shein in its shopping experience, offering fewer flashy promotions but a more streamlined interface. However, it lacks Temu's gamified, constant-deal shopping environment.
• 😀 Most of the products sold on Haul are made in China, and Amazon leverages its existing inventory of low-priced Chinese goods to keep costs down, bypassing the need for new sellers.
• 😀 A key factor behind the low prices of products from Temu and Shein is the 'de minimis provision,' which allows items under $800 to bypass customs duties, keeping costs lower for consumers.
• 😀 Despite its growth, Temu and Shein face legal and regulatory challenges, including scrutiny over labor practices and the environmental impact of cheap goods.
• 😀 Amazon's cautious approach with Haul suggests they’re testing the waters, with the platform potentially affected by future changes in global trade regulations or the de minimis provision.

Q & A

What is Amazon's Haul, and why did the company launch it?

Amazon Haul is a separate, mobile-only section of Amazon’s shopping app offering ultra-low-priced items, most under $20. It was launched to compete with fast-growing e-commerce platforms like Temu and Shein, which focus on cheap goods often imported from China. Haul targets budget-conscious shoppers seeking extreme deals, especially in the wake of Temu's rapid success in the U.S.

How does Haul differ from Amazon's main marketplace?

Haul is distinct in several ways: it features only low-priced items (under $20), lacks the Prime logo, and offers slower shipping (one to two weeks) compared to Amazon's usual one- or two-day delivery. The Haul section is a separate experience, with unique animations, vibrant promotions, and a focus on affordable products, unlike the traditional Amazon site which offers a broader range of goods.

Why are items on Haul so cheap compared to other Amazon products?

Items on Haul are often inexpensive because they are primarily sourced from China, where manufacturing costs are lower. Additionally, Haul takes advantage of the de minimis provision, which allows imports valued under $800 to bypass customs duties, helping keep prices low. This is a strategy also used by competitors like Temu and Shein.

How does Haul compare to other discount platforms like Temu and Shein?

While Haul offers low prices similar to Temu and Shein, its business model is more integrated into Amazon’s broader platform, offering fewer flashy deals and promotions. Haul also has a more streamlined shopping experience, without the overwhelming offers seen on platforms like Temu. However, its slower shipping times and mobile-only format differentiate it from its competitors.

What role does the de minimis provision play in Amazon's Haul and its competitors?

The de minimis provision allows goods valued under $800 to avoid U.S. customs duties and taxes, which is a major factor in keeping prices low for Haul and its competitors like Temu and Shein. This provision enables these companies to sell items at much cheaper rates than those imported through traditional customs channels.

What is Amazon's strategy with the Haul platform?

Amazon's strategy with Haul is to capture a share of the fast-growing ultra-low-price e-commerce market, currently dominated by platforms like Temu and Shein. By offering low-cost goods in a separate, easy-to-navigate section, Amazon aims to attract budget-conscious consumers while avoiding diluting its primary marketplace, which focuses on higher-value products.

What challenges does Amazon face with Haul?

Amazon faces challenges in competing with established players like Temu and Shein, who have already built strong customer bases. Haul’s slower shipping times, fewer items, and mobile-only format may also limit its appeal. Additionally, potential regulatory changes regarding customs duties and the de minimis provision could raise costs and affect Haul's viability.

Why is Haul's shipping slower than Amazon's main marketplace?

Haul's shipping is slower because the products sold on the platform are mostly sourced directly from China and shipped via air, rather than being stocked in U.S. warehouses. This lowers costs but leads to longer delivery times, typically one to two weeks, compared to the faster shipping Amazon customers are used to.

How does the user experience on Haul differ from platforms like Temu?

On Haul, the user experience is simpler and more straightforward, with fewer promotional distractions and a clearer focus on low-priced items. In contrast, Temu’s interface is more gamified, with numerous deals, pop-up promotions, and a more overwhelming shopping experience. Haul’s mobile app also lacks the extensive filtering options found on platforms like Temu.

What impact could increased tariffs on Chinese goods have on Haul and its competitors?

Increased tariffs on Chinese goods would likely raise the cost of products on Haul and its competitors like Temu and Shein, as a significant portion of their goods are imported from China. This could lead to higher prices for consumers, reducing the appeal of ultra-cheap e-commerce platforms and potentially shifting the competitive landscape.