• Amazon is working on a budget version of its online store that will have many unbranded products for under R360.
• The company is looking to woo Chinese sellers and compete against the likes of Shein and Temu with the new storefront.
• If the budget Amazon would launch in South Africa, it may still feel the sting of the new SARS import tax increase.

In efforts to better compete with cheap everyday items and fast fashion brands like China’s Shein and Temu, the world’s ecommerce leader Amazon told sellers in China that it is working on a cheaper “budget” version of its storefront.

With Shein and Temu’s enormous popularity not only in South Africa, but also worldwide, and Amazon launching locally this year, this cheaper version of Amazon may eventually make its way here to local browsers and deliver to local shoppers.

But there would be some difficulties in this endeavour thanks to newly minted import taxes that the South African Revenue Services (SARS) is looking to place on foreign firms like Shein and Temu from next month onwards.

According to a report from The Information, the new budget storefront from Amazon would feature a wide range of unbranded items with many priced under R360. Amazon says that it will also ship products directly from Chinese manufacturers to the US within nine to 11 days.

Previously Chinese manufacturers would use Amazon fulfilment services to ship first to warehouses in the US and then to customers, increasing delivery time but also shipping expenses. Amazon told Chinese sellers, in a closed-door, invite-only meeting, that it would allow them to test new items through small-batch production.

This is a method that Shein uses, what it calls “on-demand manufacturing.” This means that the company produces a small amount of goods and only ramps up production if demand increases, lowering production costs and cutting inventory.

“We are always exploring new ways to work with our selling partners to delight our customers with more selection, lower prices, and greater convenience,” Amazon spokesperson Maria Boschetti told CNBC.

Amazon has not indicated when it will launch this cheaper storefront, but it will primarily be geared towards US customers buying goods from Chinese sellers. With international mega-sellers like Shein, Temu, Alibaba, soon Amazon, and likely others, enormous amounts of money will be flowing freely into the Chinese manufacturing industry.

[Image – Photo by Christian Wiediger on Unsplash]