Recently, Amazon is reportedly preparing to launch a new low-cost storefront with strict price caps to compete with discount retailers like Temu and Shein, according to The Information. This new pricing strategy significantly limits the prices that merchants can charge, with jewellery items capped at $8, guitars at $13, and sofas at $20. These price limits cover around 700 different items. The move is part of Amazon’s effort to compete in the increasingly popular discount shopping market.
To further attract merchants, Amazon is offering lower fulfilment fees for products sold through the new storefront, with orders shipped directly from Guangdong, China. This aggressive pricing strategy marks a shift for Amazon, which has traditionally given sellers more freedom in setting prices on its platform.
Amazon plans to ship orders to U.S. customers directly from a facility in Guangdong, China, the report said, adding that it was charging sellers lower fulfillment fees for items sold through the new storefront.
This comes as Amazon faces a slowdown in retail sales growth, with a 5% increase in the second quarter of this year, down from a 7% rise in the previous quarter. With this new low-price strategy, Amazon hopes to reclaim market share lost to rivals with more affordable offerings.
