Two weeks before Black Friday, Amazon quietly added a new section to the top of its mobile app. Called Haul, it’s a mobile-only area for ultra-low-priced items, primarily shipped directly from China.
Haul is Amazon’s answer to the growing popularity of apps like PDD Holdings‘ Theme and fast fashion retailer Shein. Amazon told CNBC that Haul has had millions of unique customer visits since it launched in November.
As The topicThe Haul offers items at bargain prices, such as sneakers for $9.98, cookware for $5.99 and phone cases for $2.99. Unlike Temu, Haul limits the price each bid at $20. It offers free shipping on orders over $25 and increasing discounts the higher the cart value. This encourages customers to buy several items at once, hence the name Haul.
“One of the really interesting things that Amazon has done is to completely separate this from the main Amazon site,” said Neil Saunders, director of GlobalData Retail. “Now, there’s a logic to that: They don’t want consumers to switch to lower-priced goods.”
The trade-off for lower prices comes in slower shipping speeds. Instead of the one- or two-day shipping typically available to Prime members, items on Haul take one to two weeks to arrive. Although Amazon has been courting Chinese sellers for years, it typically acts as a middleman, placing items in U.S. warehouses in advance. This increases the speed of delivery, 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 China-based dealer network to import low-cost individual items into the US under de minimis provision. Although this customs exemption faces renewed federal oversightcurrently allows importers to avoid paying duties and taxes on items valued under $800.
This leads to longer delivery times, but lower prices. It’s a compromise that many Americans seem to agree with, given Temu’s explosive growth since its US launch in September 2022. Now the most downloaded free app in Appleapp store two years in a row.
“It’s not just about fighting Temu,” Saunders said. “It’s also about looking for an opportunity in that lower price end of the market, which has grown very rapidly across the retail spectrum over the last few years.”
Other cheap e-commerce websites full of Chinese goods have seen explosive growth in recent years, including Alibaba and newcomer TikTok Shop, which sellers are flocking despite the potential ban.
All this success has occurred despite public outcry against the business model’s impact on the environment and work practices by Shein and other companies that allegedly violate human rights. Shein did not respond to CNBC’s request for comment.
2023. House of Representatives report discovered that some of the items on Temu come from the Xinjiang region of China, where forced labor has led to accusations of genocide against the Uyghur people. In a statement, Temu told CNBC that it is “committed to maintaining ethical, humane and lawful business practices” and that its “business partners and third-party vendors must adhere to strict labor, safety and environmental standards.”
Amazon is too under investigation federal government over high rates of warehouse injuries, though Amazon called the report fundamentally flawed. Additionally, a federal judgment ruled in July that Amazon could be held liable for recalls of defective goods.
None of that stopped sales from breaking the record.
“Consumers don’t put their money where their mouth is. They say they don’t like the consequences of cheap products, but they still buy them in droves,” Saunders said.
Although Haul is only in beta, demand seems to outstrip supply. During the 50% off Black Friday sale, Haul sold out some items. Amazon told CNBC that it will expand 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 the coming political headwinds hinder the growth of the e-commerce budget space? Watch the video above to learn more.
