Two weeks before Black Friday, Amazon has quietly added a new section at the top of its mobile app. It’s called Haul and it’s a mobile-only space for extremely low-cost items, mostly shipped directly from China.
Haul is Amazon’s answer to the booming popularity of apps like PDD holdings‘ Temu and fast fashion retailer Shein. Amazon told CNBC that Haul has received millions of unique customer visits since its launch in November.
How BeforeHaul offers items at bargain prices, such as sneakers for $9.98, kitchenware for $5.99 and phone cases for $2.99. Unlike Temu, Haul limits the price each offering for $20. It offers free shipping on orders over $25 and increasingly higher discounts the higher the cart value. This encourages shoppers to purchase multiple items at once, hence the name Haul.
“One of the really interesting things Amazon has done is to completely separate this from the main Amazon site,” said Neil Saunders, managing director of GlobalData Retail. “There’s a logic to that: They don’t want consumers to switch to cheaper goods.”
The downside to the cheaper prices is slower shipping speeds. Instead of the one- or two-day delivery typical of Prime members, Haul items take one to two weeks to arrive. While Amazon has been wooing Chinese sellers for years, the company mostly acts as a middleman, storing items in U.S. warehouses in advance. This increases shipping speed and increases costs for Amazon, which are passed on to the consumer through the price of the item.
Haul and Temu keep prices low by relying on their existing network of China-based sellers to import inexpensive individual items into the US De minimis rule. This customs exemption is imminent renewed federal controlCurrently, importers can avoid paying duties and taxes on items valued under $800.
This results in longer delivery times but lower prices. Given Temu’s explosive growth since its U.S. launch in September 2022, this is a compromise that many Americans seem to be okay with The most downloaded free app In Apple‘s App Store two years in a row.
“It’s not just about fighting Temu,” Saunders said. “It’s also about looking at the opportunities in this lower-priced part of the market, which has been growing very quickly across the retail spectrum in recent years.”
Other low-cost e-commerce sites full of Chinese goods have seen explosive growth in recent years, including Alibaba and newcomer TikTok Shop, the Despite a possible ban, sellers are flocking there.
All of this success came despite public protests about the business model’s environmental impact and labor practices by Shein and other companies that reportedly violate human rights. Shein did not respond to CNBC’s request for comment.
In 2023 a House of Representatives report noted that some articles on Temu came from the Xinjiang region of China, where forced labor has led to allegations 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 is being investigated by the federal government for high injury rates in its warehouses, even though Amazon called the report fundamentally flawed. Furthermore a Federal resolution In July, it was determined that Amazon could be held responsible for recalls of defective goods.
None of this stopped sales from breaking records.
“Consumers don’t listen to their word. They say they don’t like the consequences of cheap products, but they still buy them in droves,” Saunders said.
While Haul is only in beta version, Demand seems to exceed supply. During a 50% off Black Friday sale, Haul sold out of some items. Amazon told CNBC it will expand its selection to hundreds of thousands of items across dozens of categories in the coming weeks.
What does the future hold for Amazon Haul? Could looming political headwinds hinder growth in the low-cost e-commerce space? Watch the video above to find out more.
