Amazon is imposing price caps on what merchants can charge for their products on its upcoming Temu-rival low-cost storefront. Price limits include $8 for jewelry, $13 for guitars, and $20 for sofas, according to Amazon's messages to merchants, which included a list of 700 items and price caps.
Did I read that correctly — a $20 sofa?!?!
The price caps would represent a shift in strategy for Amazon, which historically has not set strict pricing limits for sellers on its platform — other than of course to demand that they sell their items at the lowest price on Amazon (compared to other marketplaces they might sell on).
Amazon plans to ship orders to U.S. customers directly from its facility in Guangdong, China, while offering reduced seller fees on these direct-from-China orders. Shipping will take approximately 9 to 11 days, and sellers will be charged between $1.77 and $2.05 for shipping a four to eight ounce item. In comparison, domestic sellers pay between $2.67 and $4.16 to ship items of the same weight from local warehouses using FBA.
“Thanks for nothing” — says all 3rd party Amazon sellers in the U.S.
Lori Barzvi, whose brand Pupiboo sells washable pee pads for dogs, told Modern Retail, “This new storefront could significantly impact U.S. sellers’ ability to compete. Amazon customers are already price-sensitive, and a dedicated discount section could further erode our market share.”
She noted about the slew of new fees that Amazon introduced earlier this year, “The combination of these fee increases and the pressure to lower prices to compete with the new discount platform could make it unsustainable for many small businesses to continue operating on Amazon.”