Amazon’s Entry Into Discount Market Could Mean Strict Price Caps for Sellers

Key Takeaways

• Amazon reportedly plans to launch a low-price storefront that will ship items directly to the U.S. from China. 
• In its pitch to sellers, the firm proposed strict price caps.
• Limits include an $8 for jewelry cap and $13 for guitars.

Amazon has revealed more details of its planned low-price storefront that will ship items directly from China. 

According to the latest report from The Information, the firm has sent slides to Chinese sellers proposing strict price caps on 700 items that could be available on the new platform.

Embracing Budget E-Commerce

Amazon’s potential move into the market for low-priced Chinese consumer goods is a response to the rise of platforms like AliExpress and Temu.

According to the report, the platform will initially ship to the U.S. from a facility in Guangdong and charge lower fulfillment fees than Amazon’s main storefront.

However, to be eligible to list items, sellers must abide by price caps, such as $8 for jewelry, $13 for guitars, and just $20 for sofas.

Introducing a price limit would mark a shift for Amazon, which has historically allowed sellers to set their own prices.

More Options for Chinese Suppliers

Amazon’s proposed storefront will likely attract many of the same suppliers that already sell on similar low-price marketplaces.

The company reportedly held an invite-only conference for Chinese sellers in June, where Amazon pitched the concept as an alternative to local rivals Temu and Shein.

Other discount stores like Ali Express and Wish are also popular with Chinese sellers.

Amazon Sales Stall

The proposed budget department could help reignite sluggish Amazon sales growth. 

While the company’s overall business remains strong, e-commerce has stalled in recent quarters, with some sellers reporting a significant drop in sales in 2024. 

The emphasis on cheaper items reflects broader consumer spending patterns.

During the firm’s second-quarter earnings call in August, CEO Andy Jassy observed that average selling prices had fallen as “customers continue to trade down on price when they can.”

Meanwhile, sales of big-ticket items like electronics were growing “more slowly than we see in a more robust economy,” he added.