(Yicai) June 28 -- Amazon plans to include a low-priced goods and clothing section on its e-commerce website to tackle the growing competition from Temu and Shein, which ship items directly to customers from China.

The new section, which will have a dedicated gateway from Amazon.com, will sell unbranded goods for less than USD20 an item, a merchant from Hangzhou who attended an invite-only meeting for Chinese vendors organized by the US internet giant told Yicai.

Shein and Temu have become increasingly popular in the United States because of their extremely low prices. Figures compiled by Sensor Tower show Temu, which launched in the US in September 2022, had 51.4 million users as of January, while the ranks of Shein’s users had jumped 24 percent to 26 million in the same period, The Wall Street Journal reported in March.

Meanwhile, Amazon’s user numbers fell 4 percent to 67 million. As a result, Amazon has lowered its commission on clothing twice over the past half a year.

Amazon will build transit warehouses in China that will receive products directly from local vendors, according to the source. Merchants will decide the pricing of their goods, and Amazon will take charge of the marketing, the person added.

But Amazon has not yet unveiled any details about the new online storefront, such as commission rates, marketing expenses, and logistic costs, so suppliers are still cautious. Some said they are concerned about whether joining the low-price section will come with more favorable terms.

Amazon’s average transaction value is much higher than those of Shein and Temu, so a discount section would likely attract many low-income users who usually buy through Shein and Temu, said Hu Jianlong, founder of Zhixiang Chuhai, an agency providing services to brands going overseas.

Shares of Amazon [NASDAQ: AMZN] jumped 2.2 percent yesterday to make it only the fifth company to have a market value of USD2 trillion or more, along with Microsoft, Apple, Nvidia, and Alphabet.

Editor: Futura Costaglione