Americans like two-day delivery. But they like cheap stuff even more.
Amazon has spent the past two decades putting one thing above all else: speed. How did the e-commerce giant steal business away from bookstores, hardware stores, clothing boutiques, and so many other kinds of retailers? By selling cheap stuff, but more specifically, by selling cheap stuff that arrived quickly. It built the most expansive and brutally optimized logistics empire the United States has ever seen, capable of delivering almost any product imaginable to consumers within two days. As of March, roughly 180 million Americans were Amazon Prime subscribers, an all-time high. Even at a moment when many people report feeling squeezed financially, most of them still think it’s worth spending $139 a year to ensure that stuff arrives at their doorstep swiftly, sometimes in as little as a few hours.
But recently, Amazon has faced a new threat to that model. Tens of millions of Americans have started shopping on Shein and Temu, two Chinese-owned e-commerce platforms that send products directly from China with no middleman. The shipping takes longer, but the prices are lower. Shein specializes in women’s clothing and accessories, such as $6 crop tops and $12 sundresses. Temu’s core strengths are household items, decorations, and electronics; you can buy a $52 Android tablet and a $3 box of latex-free gloves.
Now Amazon, for once, is slowing down. Earlier this week, The Information first reported that Amazon plans to follow the Shein and Temu playbook and open a new online store for low-cost products shipped directly from China. It will focus on unbranded clothing and household items priced under $20 and weighing less than a pound; orders will arrive in nine to 11 days—a relative eternity compared with how long most of its customers are used to waiting. A spokesperson for Amazon didn’t refute any of these details, saying only that the company is “always exploring new ways to work with our selling partners.” When given the choice, Amazon seems to have realized, lots of people will choose stuff that is really cheap over stuff that arrives really quickly.
In certain ways, Amazon is already a lot like Shein and Temu. All three platforms rely on some of the same factories and merchants in China to manufacture products. When Temu launched, in the fall of 2022, I reported that it was selling electronics from at least a handful of the same Chinese suppliers that Amazon used. As of this past December, there was a roughly 10 percent overlap between Temu sellers and Amazon sellers, according to the technology-investment consulting firm Tech Buzz China. When I did quick searches on Shein and Amazon earlier this week, I found that the same Chinese merchants were offering a number of identical products on both sites, including dog toys shaped like Stanley cups and pink memory-foam slippers. But on Shein, they were a few bucks cheaper. If the products are the same, why are Amazon’s prices higher?
The most fundamental explanation is that when customers buy things on Amazon, part of what they are paying for is the quick delivery. That speed is possible because Amazon has poured billions into building warehouses and other logistics infrastructure in the United States. Fast shipping is a convenience that comes at a cost. In other contexts, consumers understand and accept the trade-off they’re making for convenience, however begrudgingly. Most of us get that part of why buying a sandwich at the airport is expensive is because it's faster and easier than packing one at home before a flight.
On Amazon, the trade-offs are less clear: The items tend to be cheaper than at your local store, after all. But what Amazon didn’t anticipate is that consumers would eventually be given appealing options that come directly from the source.
Earlier this month, Jason Wong, the CEO of a packaging company, caused a minor stir on social media when he claimed that he’d bought a couch for $700 that a luxury-furniture retailer was selling for $4,000. He said he did it by finding the company’s supplier in China and placing an order with them directly. In March, two tech entrepreneurs launched a service called Dupe.com, which is ostensibly dedicated to helping people buy furniture knockoffs in a similar fashion. Temu and Shein do much the same thing, giving customers direct access to warehouses in China where they can get similar or identical items as those offered on Amazon, without the convenience markup.
But as this kind of ultracheap shopping takes over, there are downsides beyond just slower shipping times. Retail markups are what allow brands to pay for expenses such as advertising and marketing, which may sound unnecessary but play a big role in helping consumers identify the things to buy in the first place. (Wong said that he originally saw the couch in an ad.) Then there’s the cost of managing inventory, operating physical stores, handling customer-service issues, and designing new products to sell. Although corporations moved manufacturing to China decades ago, millions of workers in the United States are still employed to provide these services, including at Amazon.
In the logic of this new economy, store clerks, marketing executives, furniture designers, importers, even Amazon-warehouse employees—everyone but factory and logistics workers in China—are seen as gatekeepers and middlemen standing in the way of people’s ability to keep buying more, cheaper stuff. The fact that it arrives a little slower is only a minor annoyance, one last thing for Shein and Temu to take over and optimize.
