Amazon (AMZN) is quickly rising to the competition posed by popular platforms like Temu (PDD) and Shein, when it come to low-cost items imported from China. According to a CNBC report, two weeks before Black Friday, Amazon quietly introduced a new section in its mobile app called "Haul," targeting budget-conscious shoppers with ultra-low-price items shipped directly from China.
The e-commerce giant told CNBC this initiative has already garnered millions of unique visits since its launch in November. Haul offers bargain-priced goods such as sneakers priced at $9.98 and phone cases for $2.99, with all items capped at $20. It also offers free shipping to orders over $25, and larger carts will gain steeper discounts, encouraging bulk purchases.
While consumers might expect speedy delivery thanks to Amazon’s Prime membership program, items from Haul take one to two weeks to arrive. This delay is due to the fact these products are shipped directly from China under the "de minimis" provision, which exempts goods under $800 from duties and taxes. This provision is currently facing increased federal scrutiny.
Neil Saunders, Managing Director of GlobalData Retail, commented on the strategy, stating, "Amazon’s strategic choice to keep Haul separate from its main site was interesting as it prevented customers from 'trading down' to lower-priced goods." This separation could be key to maintaining the perceived value of Amazon’s broader offerings.
Haul and other platforms like Temu achieve their lower prices by tapping extensive seller networks based out of China. Even though delivery times may be longer, many American consumers appear willing to compromise on speed, as evidenced by Temu’s remarkable growth, which has led to its position as Apple’s (AAPL) most downloaded free app for two consecutive years.
Amazon’s strategy with Haul looks promising, with plans to expand the catalog to hundreds of thousands of products across numerous categories. This expansion would not only signal Amazon’s intent to challenge rivals but also indicates it recognizes the demand for low-cost items is booming.
Looking at Amazon from the investment perspective, analysts remain bullish about the stock, rating it as a Strong Buy based on 46 Buys and just one Hold. Over the past year, AMZN has seen growth of more than 40%. The average price target of $248.35 suggests potential upside of about 10.5% from current levels. With Haul set to compete directly with Temu and Shein, many are watching closely to see how this new venture performs throughout the holiday shopping season.
