Amazon set to create “discount” section with goods shipped direct from China

Amazon is planning to launch a “discount” section in its online store, according to a recent report from the tech news outlet The Information. Goods will be shipped directly from warehouses in China.

Currently, most things Amazon sells to domestic consumers ship from warehouses here in the U.S.

Some analysts view the move as Amazon’s attempt to counter new, ultra-low-cost online retailers based in China, like Temu and Shein.

Recently, Amazon has been focused on fast delivery. Some shoppers, though, have other priorities, per Josh Lowitz, a partner at Consumer Intelligence Research Partners.

When they go to Temu or Shein, “they’re picking price,” he said. “They’re punting service.”

Which, a lot of folks seem fine with. Last year, Temu was the most-downloaded iPhone app in the U.S. But it’s not a huge problem for Amazon, Lowitz noted.

“The competitive threats tend to have more impact on how rapidly Amazon grows rather than ‘Is Amazon going to shrink?” he said.

But there are reasons for Amazon to ship direct from China, according to Kinshuk Jerath, pofessor of business in the Marketing division at Columbia Business Schoo. Axing U.S. warehouses could mean less stuff goes unsold.

“The production could happen after the order is placed, right? So there’s less mismatched inventory,” Jerath said.

Meanwhile, Shein is opening U.S. warehouses, aiming for rapid delivery. Sound familiar?