Amazon Attacks Temu and Shein's Turf with New Low-Cost Storefront: Report

Amazon.Com Inc’s AMZN rivalry with discount platforms like PDD Holdings Inc’s PDD Temu and Shein prompted the former to set strict price caps for merchants on its new low-cost storefront.

The Information reports that the price limits, based on messages sent to merchants, include $8 for jewelry, $13 for guitars, and $20 for sofas.

Amazon plans to ship orders from a facility in Guangdong, China, while offering sellers reduced fulfillment fees for items sold through this new platform.

Also Read: Alibaba Rival Temu’s Aggressive Model Shift Sparks Supplier Protests: Report

Amazon’s move coincides with slower retail sales growth, which saw just a 5% rise in the second quarter, down from 7% in the previous quarter.

Prior reports indicated Amazon’s plans to launch a new section on its site offering affordable items to overseas consumers, shipped directly from warehouses in China to compete with the bargain platforms like Temu and Shein, featuring unbranded fashion, home goods, and daily necessities with 9 to 11-day delivery times.

Reportedly, Amazon is ramping up efforts to recruit more Chinese sellers to expand its affordable product offerings in the U.S. and other markets.

In 2024, Amazon opened new offices in Wuhan and Zhengzhou to support its global market strategy.

Temu owner PDD reported fiscal second-quarter 2024 revenue growth of 86% to $13.36 billion, missing the consensus estimate of $14.02 billion.

Goldman Sachs’ Eric Sheridan expects Amazon to show strong revenue growth and improved operating margins in its third-quarter report.

The analyst flagged stable e-commerce demand, with units sold outpacing revenue as consumers shift to lower-priced items, supporting Amazon’s long-term strategy.

Temu Parent PDD’s Stock Prediction For 2024

PDD Holdings’s revenue growth in FY23 was 80.34%, reflecting the influence of various factors including the macroeconomic environment, demand for its products and services, and its position relative to competitors. This growth is a critical indicator for investors assessing the company’s future prospects.

Some macro factors that could impact the company's performance in the next year include higher interest rates, progress on reeling in inflation and labor market strength. The Fed's benchmark rate is currently at 4.83%, while PPI recently came in unchanged, growing 1.8% from last year. The unemployment rate was most recently reported as 4.1%.

An investor should pay attention to economic conditions to decide whether they think the macro environment is positive or negative for PDD Holdings stock. For real time economic data and breaking market updates, check out Benzinga Pro. Try it for free.

How does this stack up against PDD Holdings peers?

Investors may also want to analyze a stock in comparison to companies with similar products or in similar industries. PDD Holdings operates in the Consumer Discretionary sector. The stock has experienced average annual growth of 6.97% compared to the -20.93% average of its peer companies. This is above the broader sector movement of PDD Holdings.

Price Actions: PDD stock is down 4.33% to $122.95 at the last check Wednesday. AMZN stock is down 2.51% at $184.93.

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