Blue Whale News, December 13th - The competition in the low-priced cross-border e-commerce market is becoming increasingly fierce. At the "2024 Amazon Global Store Cross border Summit", Amazon executives publicly introduced for the first time the new low-priced e-commerce platform, Haul Value Buy, which will be launched by Amazon in 2024.
Amazon Haul is an independent section within the Amazon main site, sharing a backend with the main site. The browsing interface is separate from the main site and can be understood as a "store within a store" format.
The core label of Amazon Haul is low price. All products in the Haul store are priced at $20 or below, with most products priced at around $10 or below, and some even as low as $1. Orders over $50 receive an additional 5% discount, and orders over $75 receive an additional 10% discount. In addition, the delivery time for products is slightly longer, ranging from one to two weeks.
Amazon enters the low-priced market, launches Haul, and only opens its US site
From the products currently available on the Amazon Haul platform, it can be seen that the categories mainly cover fashion, home, lifestyle, electronic products, etc. For example, there is a 2.99 yuan shaver set, a 1.79 yuan phone case, and a 3 yuan winter glove. Users who purchase goods worth more than $3 can enjoy a free return service within 15 days of arrival, and can choose to return them at Amazon's over 8000 delivery points in the United States.
At present, Amazon Haul is only available on the US site and is only open to sellers who receive targeted invitations. According to Blue Whale News, Haul currently has a fulfillment center in Dongguan. Orders purchased on the Haul platform for $25 or more can be delivered for free within one to two weeks, while orders below $25 will incur a fee of $3.99.
Cindy Tai, Vice President of Amazon Global and Executive President of Amazon Global Store Asia Pacific, mentioned that the first batch of invited sellers need strong supply chain and price advantages, as well as emphasis on customer experience and product quality. "The first batch of invited objects need to be existing Amazon sellers; have cost and price advantages, and operate products in our target category; can transport goods to the Dongguan operation center, and are willing to cooperate with continuous improvement and optimization in the initial testing stage
At present, Amazon Haul is just starting out, and many details of the information have not yet been made public. According to information seen by Blue Whale News from a seller, the sellers who have joined are selected by Amazon's investment managers through targeted invitations. Sellers need to have certain Amazon operation experience, a high number of ASINs (unique codes assigned by Amazon to each product) and sales revenue, and product specifications, prices, and categories need to meet the requirements. For example, categories such as children, pets, and food are currently not within the scope of what can be done, as customs clearance requires additional documentation.
In addition, Blue Whale News learned that the products launched by sellers on Haul must be "new products", and the same ASIN and SKU cannot have quotes on both the Amazon main site and the low-priced store at the same time.
In terms of mode, the Amazon Haul platform is responsible for logistics, traffic and other operational processes, while sellers are responsible for product selection. This is similar to Temu, but the difference is that sellers under Amazon's low price policy have the autonomy to set prices and manage inventory. Amazon charges sellers the same commission as the main site.
According to data shared by a seller on social media, the gross profit margin of their products in the Amazon Haul store exceeds 40%, significantly higher than the products launched on the main site.
In an interview with Blue Whale News and other media outlets, Dai Hongfei, Vice President of Amazon Global and Executive President of Amazon Global Store Asia Pacific, mentioned that the original intention of launching Amazon Haul was to expand the platform's service categories and customer base. Under the influence of the global economy, customers from all channels hope to get better prices, so Amazon has also taken many low price measures, including reducing commissions in the clothing category
Compared to Amazon Prime members who have higher requirements for delivery timeliness, the Amazon Haul platform is aimed at another wave of users who are less sensitive to delivery timeliness but pay more attention to product cost-effectiveness.
Dai Hongfei mentioned, "Although Amazon FBA has always been committed to making the delivery of daily necessities faster to meet customer needs, there are also some customers who tell us that they may not necessarily need to receive certain products so quickly, but are willing to wait longer to get a lower price." It can be understood that consumers on the Haul platform are more inclined to choose price economy rather than delivery speed.
FBA (Fulfillment by Amazon) refers to a logistics service provided by Amazon, through which sellers can directly store their inventory in Amazon's fulfillment centers. When customers purchase these products, Amazon is responsible for processing the order, packaging the goods, shipping them to customers, and providing customer service and managing returns.
Positive cooperation with Temu and Shein in the low price market
In Amazon's view, user needs are diverse in different consumption scenarios. Dai Hongfei told Blue Whale News, "What we see is not only the classification of prices, but also the classification of timeliness and different user scenarios. Many customers are not very concerned about brands and delivery speeds, but rather focus more on cheap prices
Dai Hongfei gave a specific example to illustrate the different needs of consumers on the Amazon Haul platform. Some products, such as shampoo, they want to get them on the same day, not only at a low unit price, but also with fast delivery. But some products, such as the second utensil in the kitchen, can wait longer, so they would rather have a cheaper price. Then they can come to Haul to buy them
The launch of Amazon Haul is not only to meet the diverse needs of users, but also a new strategic attempt by the company in the face of the rapid development of Temu and Shein.
Currently, Temu is developing rapidly in the US market. According to a survey by Wired magazine, Temu's global GMV in 2023 is $14 billion, of which 43.3% comes from the US, equivalent to approximately $6 billion. According to AOV (Average Order Value) ranging from $25 to $40, Temu's order volume in the United States in 2023 is estimated to be between 150 million and 240 million units.
Temu and Shein are making a strong push. According to research by Appfigures, Temu is the most popular app among American users aged 18 to 24 in the first 10 months of 2024 on iOS and Android platforms, with nearly 42 million downloads, while Shein has approximately 14.7 million downloads.
Temu and Shein are widely favored among young users in the United States, which will pose challenges for Amazon to acquire incremental users. Amazon needs to respond to the increasingly fierce market competition through Haul.
According to the latest data released by Amazon, the number of Chinese sellers with sales exceeding $1 million on Amazon's global sites has increased by nearly 55% in the past two years, and the number of Chinese sellers with sales exceeding $10 million has increased by nearly 60%. In the past year, the number of goods sold by Chinese sellers to consumers, as well as corporate and institutional customers through Amazon's global site, has increased by over 20% year-on-year.
Amazon has abundant resources in the Chinese seller market and a mature supply chain and logistics system, which may become their advantage in competing with Temu and Shein in the low-priced market. Dai Hongfei said, "Amazon has been cultivating in China for ten years and has accumulated a large number of excellent sellers. We hope to use 'Amazon Haul' to help sellers gradually develop differentiated products in the cross-border e-commerce field, and ultimately move towards the long-term goal of establishing a global brand
In addition to its advantages, Amazon Haul also faces significant challenges in the future. Nowadays, with changes in the macro environment and market competition, both leading and latecomer cross-border e-commerce platforms are facing more complex situations. It is still unknown who can penetrate the fog and gain new growth. Currently, Amazon is catching up.