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November 13, 2024
Will Amazon Haul Steal Market Share From TikTok Shop, SHEIN, and Other Chinese Retailers?
Amazon is making headlines across the globe with the announcement of Amazon Haul, a new shopping service advertising “crazy low prices” beneath the $20 price point.
In a Nov. 13 announcement on its website, Amazon promised that Haul would be “a place to discover even more affordable fashion, home, lifestyle, electronics, and other products with ultra-low prices and typical delivery times of one to two weeks.”
Amazon Is Poised To Take on Temu, SHEIN, and Other Large Chinese Retailers for Market Space
With news of the announcement making major waves, many analysts speculated as to whether this might be a move to capture desired market share in the low-cost online shopping space from established players such as TikTok Shop, Temu, and SHEIN.
“Amazon Haul is a response to both the rise of low-price Chinese marketplaces and the fact that consumers are increasingly seeking value for money as they try to make their budgets stretch further,” said Neil Saunders, RetailWire BrainTrust member and managing director at GlobalData Retail, as reported by CBS News. Saunders went on to suggest that while Amazon had already captured a broad market concerned with value propositions, it had not yet developed a firm reputation as “an everyday low-price destination.”
The launch of Amazon Haul follows earlier reports that the retail titan was engaged in plans to directly compete with Chinese retailers. During an invite-only conference held in China this June, Amazon announced it would be offering a new service that would allow Chinese sellers to ship to U.S. customers directly, with the understanding that the company’s usual timely deliveries might take a bit longer as product was shipped from overseas.
Small-batch production — similar to what SHEIN has termed on-demand manufacturing, per CNBC — was a focal point of Amazon’s presentation centered around its then-upcoming service. Promotion of this cost-cutting measure followed an Amazon announcement that it was curtailing fees for sellers opting to sell articles of apparel under the $20 price point, as well as the reveal of a new “innovation center” in Shenzhen, China, a city known as a tech hub and manufacturing base.
Temu and SHEIN Could Prove Tough To Beat as American Consumers Buy In
Despite Amazon already having a massive footprint in the online retail space as far as U.S. consumers are concerned, Temu and SHEIN could provide stiff competition — particularly during this holiday season.
According to an August Salesforce forecast, one in five (21%) purchases this season are expected to be made on Chinese shopping apps such as SHEIN, Temu, and TikTok Shop. Further, 35% of those polled by Salesforce indicated that they had increased their purchases through these apps over the previous three months compared to the prior year.
This data was seemingly reinforced by Forbes contributor Beth Ann Kaminkow, who detailed her own experiences and positions on these companies.
“Of the top seven marketplaces around the world, six are Chinese, according to a VTex presentation I saw last October,” Kaminkow wrote. “That statistic should get the attention of marketers and retailers everywhere. The competition isn’t hiding, they are in plain sight. And we consumers are voting with our wallets!”
TikTok Shop Could Also Present Challenging Competition
While Kaminkow gestured toward the continued success of more established Chinese retailers such as SHEIN and Temu — the latter recently splashing out $21 million in Super Bowl ads while being the No. 1 downloaded app on the Google Play and iOS App Stores in the first half of 2024 — she also underscored the notion that TikTok Shop could be the one to watch this holiday season.
Citing data from e-commerce marketing company Omnisend, Chain Store Age reported in July that one-third (33%) of Americans had already purchased an item from TikTok Shop, despite the fact that the retailer had just launched in September 2023. This degree of growth may have been driven by younger Americans, particularly members of Gen Z.
“With Gen Z rapidly entering the workforce and emerging as a formidable economic force, their unique preferences and digital fluency are reshaping the online retail landscape,” said Greg Zakowicz, senior e-commerce expert at Omnisend, per Chain Store Age.
“By launching an e-commerce platform and targeting Gen Z consumers, TikTok has entrenched itself deeper into the U.S. economy, strategically arming itself against the threat of a ban,” Zakowicz concluded.
Discussion Questions
Will Amazon Haul be able to capture significant market share away from established players in the low-priced retail goods market?
What concrete steps will Amazon Haul have to take in order to effectively compete against TikTok Shop, SHEIN, Temu, and AliExpress?
Is the market already saturated with low-cost goods shipped to the U.S. from Chinese manufacturers, or is consumer demand set to increase?
Poll
Loading …BrainTrust
Mark Ryski
Founder, CEO & Author, HeadCount Corporation
Lisa Taylor
Retail Consultant, JL Buchanan
Lisa Goller
B2B Content Strategist
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Amazon Haul is a response to both the rise of low-price Chinese marketplaces and the fact that consumers are increasingly seeking value for money as they try to make their budgets stretch further. This will not kill Temu and other Chinese sites dead. They still have advantages, especially in terms of their breadth of assortment and the constantly changing mix of products. However, Amazon has an advantage on the grounds of familiarity and trust which it will look to exploit. So yes, Amazon will take a little share; it may also cannibalize some of its own mainstream sales.
Amazon Haul will steal share from value players due to its combination of affordability, brand trust and consumer loyalty. Product quality, easy returns and friendly service further strengthen Amazon’s offering, especially among the coveted Gen Z cohort.
China is the biggest e-commerce market in the world. To stay competitive, Amazon Haul needs to closely monitor Chinese rivals’ business models and moves. Ultra-lean supply chains, bold marketing, social media integration, private traffic that reduces acquisition costs, group buying incentives and online-to-offline campaigns are shrewd, addictive qualities that make Chinese giants worth examining.
I see this being quite successful since consumers are already going to Amazon first for so many of their shopping journeys. Temu, SHEIN and TikTok shop each have their own unique places, but this will definitely make some waves.
Amazon Haul will take share from the China low-cost players simply because of its dominate brand position with US consumers. Items with price points at $20 or less are a compelling proposition, especially, as US shoppers continue to see and feel high prices for groceries and energy. To drive further growth for Haul, Amazon will have to find a new creative gear that energizes its base of core shoppers.
It’s clear that SHEIN, Temu and TikTok have had a significant impact especially with younger consumers, and the launch of Amazon Haul is Amazon’s declaration that it’s prepared to fight for some of that market. While Amazon Haul appears to be not much more than a ‘me too’ strategy, because it is Amazon, it will have an impact. I doubt that Amazon will capture significant market share, but it will capture some, and Amazon’s gain will be SHEIN and Temu’s loss.
Shein has a hold over consumers who want to save money, and I have heard many, many comments about not trusting Temu from people of all ages. Younger generations who claim to be all about sustainability should do some serious research on both of these retailers.
Do I think Amazon will take market share from Shein and Temu? Yes, but probably not enough to significantly hurt either one of them. Still, Amazon has become the go-to place for everything. When I see something interesting online I find myself going to Amazon first to see if the item is available there. Amazon Haul will be successful just because it bears the Amazon name. It’s an issue of trust.
Will it have an impact? Most definitely. While legions of consumers have flocked to these sites, many others have not because of potential data risks associated with them. Shopping on Amazon is familiar, trusted and is almost second nature to some, making it highly convenient. How much share they are able to steal is dependent upon their selection and quality, which is a fine line in that ultra low price range.
Amazon Haul has a strong chance to capture market share by leveraging its brand trust, vast reach, and established customer base among U.S. shoppers. However, to compete with popular low-cost platforms like Temu, SHEIN, and TikTok Shop, Amazon must focus on ultra-low pricing, a wide selection of trend-driven products, and faster delivery.
A 35% increase in app-based purchases highlights demand from budget-conscious consumers yet converting customers poses challenges; these shoppers get competitive prices and engaging experiences on competition platforms. Success will depend on Amazon’s ability to balance cost, speed, and engaging shopping experiences to match and surpass competitor appeal.
Yes, Amazon Haul is the online solution to an expensive Dollar store with greater product choices at a $1-$20 price point that is below discount store pricing for the same pricing. Shoppers love this value proposition, but Amazon still needs to get the beta version ready for “prime time”. The current version is mobile only, will not let you search by price, or search for daily deals, etc. This needs to be fixed before truly determining how successful Haul can be.
This will happen. Amazon is too good in the “beyond just price category” and they will definitely steal share. An outlier to this outcome would be an enhanced “appreciation” for not doing business with China. But that is a maybe. Amazon will be successful here.
I am not as enthusiastic about the prospects for Amazon Haul. Little margin left in these lower cost items and likely a higher service level for these lower quality products. Amazon pushes a lot of that risk on their suppliers but then there’s the Amazon reputation. Amazon has been known for service and quality. Quality has slipped a bit as has adherence to delivery timing with the expansion of products from Amazon Marketplace sellers. Going down market could be a risk for the Amazon brand. Perhaps they should have done Haul under a new brand to protect the core Amazon brand reputation. Risky in my view.