Amazon Haul takes on Temu to bring shoppers cheap goods from China

Two weeks before Black Friday, Amazon has quietly added a new section at the top of its mobile app. Called Haul, it’s a mobile-only space for ultra-low-priced items, mostly shipped directly from China.

Haul is Amazon’s answer to the growing popularity of apps like PDD Holdings‘ Temu is the fast fashion retailer Shein. Amazon told CNBC that Haul has had millions of unique customer visits since its launch in November.

As well as To doHaul offers items at bargain prices, such as sneakers for $9.98, cookware for $5.99 and cell phone cases for $2.99. Unlike Temu, Haul limit the price of each offer at $ 20. Offers free shipping on orders over $ 25 and increasingly steep discounts the higher the value of the cart. This encourages shoppers to buy multiple items at a time, hence the name Haul.

“One of the really interesting things that Amazon has done is to make this completely separate from the main Amazon site,” said Neil Saunders, managing director of GlobalData Retail. “Now, there is a rationale for doing this: they don’t want consumers to switch to lower-priced products.”

The trade-off for the lower prices comes in slower shipping speeds. Instead of the one- or two-day shipping typically available to Prime members, items on Haul take one to two weeks to arrive. While Amazon has courted Chinese sellers for years, they usually act as middlemen, stocking items in US warehouses in advance. That increases the speed of delivery, as well as costs for Amazon, which pass on to the consumer in the price of the article.

Haul and Temu keep prices low by relying on their existing network of China-based vendors to import cheap individual items into the United States under the de minimis provisions. Even if this customs exemption is faced renewed federal controlcurrently allows importers to avoid paying duties and taxes on items valued under $800.

This leads to longer shipping times but lower prices. It’s an exchange that many Americans are apparently fine with, given the explosive growth of Temu since its launch in the United States in September 2022. the most downloaded free app in AppleApp Store for two consecutive years.

“It’s not just about fighting Fear,” Saunders said. “It is also to look at the opportunity in that lower price part of the market, which has been a very rapid growth throughout the sales spectrum in the last two years.”

Other low-cost e-commerce sites filled with Chinese goods have seen explosive growth in recent years, including Alibaba and the new TikTok Shop, which sellers are plying their trade despite a potential ban.

All this success happened despite the public announcement against the environmental effects of the business model and work practices by Shein and other companies that violate human rights. Shein did not respond to CNBC’s request for comment.

In 2023, a House of Representatives report found some articles about Temu coming from China’s Xinjiang region, where forced labor has led to accusations of genocide against the Uyghur people. In a statement, Temu told CNBC that it is “committed to ethical, humane and legal business practices” and that its “business partners and third-party merchants must comply with strict standards regarding the work, safety and environmental protection”.

Amazon is too under investigation by the federal government for high injury rates in its stores, although Amazon called the report fundamentally flawed. In addition, a federal rule in July determined Amazon can be held responsible for recalls of defective goods.

None of this stopped the sales numbers to break records.

“Consumers don’t put their money where their mouth is. They say they don’t like the consequences of cheap products, but they’re still going to buy them,” said Saunders.

While Haul is only in beta, demand seems to exceed supply. During a 50% off Black Friday sale, Haul sold some items. Amazon told CNBC that it will expand its selection to hundreds of thousands of items in dozens of categories in the coming weeks.

What does the future hold for Amazon Haul? Could the upcoming political winds blow the growth in the budget e-commerce space? Watch the video above to learn more.