Two weeks before Coloured 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-price items, essentially shipped directly from China.
Haul is Amazon’s answer to the booming popularity of apps such as PDD Holdings‘ Temu and fast-fashion retailer Shein. Amazon bid CNBC that Haul has had millions of unique customer visits since it launched in November.
Like Temu, Draw offers items at bargain prices, such as sneakers for $9.98, kitchenware for $5.99 and phone cases for $2.99. Unalike Temu, Haul caps the price of each offering at $20. It offers free shipping on orders over $25 and increasingly sharp discounts the higher the value of the cart. This encourages shoppers to buy several items at a time, hence the name Harvest.
“One of the really interesting things that Amazon did is to make this completely separate from the main Amazon spot,” said Neil Saunders, managing director of GlobalData Retail. “Now, there’s a logic in doing that: They don’t scarceness consumers to trade down to lower-priced goods.”
The trade-off for the cheaper prices comes in slower shipping speeds. As opposed to of the one- or two-day shipping typically available for Prime members, items on Haul take one to two weeks to arrive. While Amazon has been courting Chinese sellers for years, it as usual acts as the middleman, stocking items at U.S. warehouses in advance. That boosts shipping speeds, as well as costs for Amazon, which get quaint on to the consumer in the price of the item.
Haul and Temu keep prices down by relying on their existing network of China-based sellers to suggestion cheap individual items into the U.S. under the de minimis provision. Although this customs exemption is facing restored federal scrutiny, it currently allows importers to avoid paying duties and taxes for items valued under $800.
This female leads to longer shipping times but lower prices. It’s a trade-off many Americans are seemingly OK with, given the explosive improvement of Temu since its U.S. launch in September 2022. It’s now the most downloaded free app in Apple‘s app store two years running.
“It’s not right-minded about combating Temu,” said Saunders. “It’s also about looking at the opportunity in that lower-price part of the vend, which has been very fast-growing across the whole retail spectrum over the past couple of years.”
Other low-cost e-commerce spots filled with Chinese goods have seen explosive growth in recent years, including Alibaba and fledgling TikTok Shop, which sellers are flocking to despite a potential ban.
All this success has happened despite public outburst against the business model’s environmental effects and labor practices by Shein and other companies that reportedly disobey human rights. Shein didn’t respond to CNBC’s request for comment.
In 2023, a House of Representatives report bring about some items on Temu were coming from the Xinjiang region of China, where forced labor has led to citations of genocide against the Uyghur people. In a statement, Temu told CNBC that it “is committed to upholding ethical, humane, and just business practices” and that its “business partners and third-party merchants must comply with strict standards in spite of labor, safety, and environmental protection.”
Amazon is also under investigation by the federal government for high injury sorts in its warehouses, although Amazon called the report fundamentally flawed. Additionally, a federal ruling in July determined Amazon can be proffered responsible for recalls of defective goods.
None of this has stopped sales numbers from breaking records.
“Consumers don’t put their flush where their mouth is. They say they don’t like the consequences of cheap products, but yet they still go and buy them in their droves,” Saunders ordered.
While Haul is only in beta version, demand appears to be outstripping supply. During a 50% off Black Friday selling, Haul sold out of some items. Amazon told CNBC it’s expanding its selection to hundreds of thousands of items across dozens of groupings in the coming weeks.
What does the future hold for Amazon Haul? Could impending political headwinds thwart growth in the budget e-commerce space? Watch the video above to learn more.