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Prime News delivers timely, accurate news and insights on global events, politics, business, and technology
Two weeks before Black Friday, Amazon quietly added a new section at the top of their mobile app. Called Haul, it’s a mobile-only area for ultra-low-price items, mostly shipped directly from China.
Haul is Amazon’s response to the growing popularity of apps like PDD Holdings‘Temu and fast fashion retailer Shein. Amazon told CNBC that Haul has had millions of visits from unique customers since its launch in November.
Like Temu, Haul offers bargain-priced items like sneakers for $9.98, kitchenware for $5.99, and phone cases for $2.99. Unlike Temu, Haul limit the price of each offer at $20. It offers free shipping on orders over $25 and increasingly higher discounts the higher the cart value. This encourages shoppers to purchase multiple items at once, hence the name Haul.
“One of the really interesting things Amazon did was completely separate it from the main Amazon site,” said Neil Saunders, CEO of GlobalData Retail. “Now, there’s a logic to doing that: You don’t want consumers to opt for lower-priced products.”
The trade-off for cheaper prices comes in slower shipping speeds. Instead of the one- or two-day shipping typically available to Prime members, Haul items take one to two weeks to arrive. While Amazon has been courting Chinese sellers for years, it typically acts as a middleman and stocks items in U.S. warehouses in advance. That increases shipping speed, as well as costs for Amazon, which are passed on to the consumer in the price of the item.
Haul and Temu keep prices low by relying on their existing network of China-based sellers to import cheap individual items to the US under the de minimis provision. Although this customs exemption faces new federal scrutiny, it currently allows importers to avoid paying duties and taxes on items valued at less than $800.
This leads to longer shipping times but lower prices. It’s a trade-off that many Americans seem to agree with, given Temu’s explosive growth since its US launch in September 2022. It’s now the most downloaded free app on AppleThe app store for two consecutive years.
“It’s not just about fighting Temu,” Saunders said. “It’s also about looking for opportunities in that lower-priced part of the market, which has seen very rapid growth across the retail spectrum over the last few years.”
Other low-cost e-commerce sites packed with Chinese products have seen explosive growth in recent years, including Alibaba and newcomer TikTok Shop, which sellers are flocking to despite a possible ban.
All of this success has come despite public outcry against the environmental effects and labor practices of the business model. by Shein and other companies that allegedly violate human rights. Shein did not respond to CNBC’s request for comment.
In 2023, a House of Representatives report He discovered that some items in Temu came 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 upholding ethical, humane and legal business practices” and that its “business partners and third-party merchants must adhere to strict standards regarding labor, safety and environmental protection.”
Amazon is also under investigation by the federal government for high injury rates in its warehouses, although Amazon called the report fundamentally flawed. Additionally, a federal ruling in July determined that Amazon can be held liable for recalls of defective products.
None of this has slowed down sales figures. 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 still go out and buy them in droves,” Saunders said.
While Haul is only in beta, demand appears to be outpacing supply. During a 50% off Black Friday sale, Haul sold out of some items. Amazon told CNBC that it is expanding 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 looming political headwinds hamper growth in the budget e-commerce space? Watch the video above to learn more.