Amazon appears to be going aggressively after Shein and Temu on price.

According to Reuters, by way of the information, Amazon is imposing severe price caps on what merchants can charge for their products on a new low cost storefront that the E commerce giant is preparing to launch.

The company's price limits include $8 for jewelry, $13 for guitars, and this one blows my mind, $20 for sofas.

Not sure what that sofa is made out of.

That's a great point.

The croissant lamp sofa that we were talking about a few weeks ago on the lightning round.

Okay, but anyway, according to the information's report, which cited messages from Amazon to merchants and included a list of 700 items, Amazon plans to ship orders to US customers directly from a facility in Guangdong, China.

Did I say that right?

Guangdong?

Yeah, you did.

You nailed it.

Okay, all right.

Good enough is what I'd say.

All right.

Adding that it was also planning to charge sellers lower fulfillment fees for items sold through the new storefront.

Chris, why do you think Amazon is getting so aggressive on price against Temu and Shein?

Ooh, starting off hot and all right.

I am, I think, yeah, I think.

Because they're eating, I think they're eating into Amazon's business.

They, I mean, they have to be.

You've seen the, all the recent numbers bear that out.

You see the number of app downloads in the US like, the number of them is insane.

Amazon's online store sales rose just 5% in the last quarter, which slowed down from a 7% increase in the previous quarter.

So in the first quarter of this year.

So.

But you know, more importantly, I think the other piece of this is it's actually a strategic assault on Amazon's E commerce turf.

Like Amazon has been, has been known as the low price leader.

And like we've talked about on the show, consumers gravitate to the, to the offering that gives them the lowest price, which Temu and Sheen are now effectively doing.

So then I have to ask the question for me is are the implications of this.

The question I have to ask then, Anne, is can they actually win this pricing war in this way?

I don't know that they can at this point because she and Timu are pretty entrenched with consumers.

Amazon's just trying to start up this new, you know, kind of format in this vein or this storefront in this vein.

So I don't know that they're going to make, make a lot of inroads here.

I think, I think that this part of the business might be lost forever, especially until we know how regulation is going to continue to impact this, this direct to factory way of doing E commerce as well.

But what do you think?

Well Chris, but I guess my question too is like I assume we're talking the same manufacturers.

I mean from my experience ordering, I would assume she and like yeah, are that are, is Amazon asking these manufacturers to make further concessions for Amazon than they are for Temu and Shein or is this like this is just standard across the board?

Like they're already doing this so it's going to be fine.

Like that, that to me doesn't make sense.

Like they've already, these factories already have these longstanding relationships with Sheen and Temu and who, you know, just because Amazon comes in, do they have the same clout that they might have in the US Market when we're talking about, you know, what their relationships are over in China.

But I disagree with you a little bit and I'm curious what you think about this.

Let's get it going.

So I think this could be a massive opportunity for Amazon.

Like he huge because I think if you look at the brands, I was even shocked by this.

But if you look at the brands that are most beloved by Gen Z again the generation that's holding the most buying power that any of any generation at this con existing age, Amazon is consistently ranked among their favorites and in some cases even in the top 10 of their favorite brands.

So I have to ask you Chris.

If you're ordering another question, I do.

I have to ask you this question.

So if you're going to order, let's talk, let's say like shoe organizers for your closet or something, something like that.

Are you more comfortable ordering that from Amazon as a US consumer?

Are you more comfortable ordering that from Amazon or from Temu?

It's a good question.

Yeah, it's a, it's a really good question.

So I, that's what's tough for me on this.

It's, it depends on the user experience.

Cause I talked to the folks at temu for like 30, 45 minutes one day.

Yeah.

And they say while the direct to factory model is part of it, it's also the gamification and the user interface is also part of this.

True.

So the Amazon experience as you're des describing it, operates and behaves differently.

But with that said, like could I as a young consumer be browsing Amazon and looking for storage organization solutions that are cheap?

Yes, I could.

So maybe they get some of this business, you know, that they've been losing to Temu and shein but, but I don't know that they can ever get the total amount.

I don't know that they can ever just like shut them out of the market at this point.

I think that that's the point I'm trying to make here is like, yeah, true.

They, they.

It just seems like this is a hard game for Amazon to stand up and play entirely new because it, it's a different way of doing E commerce.

I don't know.

It totally is.

But, but I, but answer the question.

Who would you rather order from, Amazon or team?

As a US consumer, probably Amazon.

Yeah, I think, I think that I would concede to you, I would agree.

If, if all things are equal, like price is comparable.

You, I mean everything else, the quality of the product, it looks the same, the images are the same.

I would also go with Amazon and my hunch is there's a lot of people in the US that would also go to Amazon before ordering something from Temu or from Shein if it's the same thing.

So you make a great point.

I think about making sure that the gamification and the shopping experience is there, but I think if they can do it, there's a huge opportunity in the US for them.

Yeah.

The other part about this though you got me think about is seller ratings are also really important on Amazon and so Amazon's always very transparent of that.

So like, if customers start to get dissatisfied with that, Amazon's going to probably showcase that a little bit more too.

So, so yeah, this is a really great conversation.

I have no idea which way it's going to play, but you can tell that Amazon is definitely, definitely focused on trying to figure this out.