Amazon’s New Discount Store: What It Means for Brands Competing with Temu & Shein

Amazon’s upcoming discount store is a bargain hunter’s dream and a bold play to reclaim the ultra-cheap market from Temu and Shein, one $8 necklace and $9 bedding set at a time. But are these rock-bottom prices a race to the bottom for brands? This strategy is bold but brings its own challenges. Liran Hirschkorn recently shared a take that sums up the mixed reaction well. Sure, the ultra-low price tags could grab attention, but there’s a question of quality and whether this model dilutes Amazon’s image.

By directly competing with Temu and Shein, Amazon is leveraging its logistics power to dominate the ultra-budget sector. However, for brands selling on Amazon, this shift means the landscape is becoming more competitive and saturated with low-cost options. Brands will now need to emphasize unique value and invest in brand-building to differentiate themselves amid Amazon’s push to make budget shopping a core part of its offering.

So, what does Amazon’s bold new direction mean for brands? Let’s dive into the potential impacts, strategies, and the moves brands need to make to thrive in Amazon’s new, price-slashed universe.

What is Amazon’s Discount Store?

Here’s the setup: all products are stocked in Guangdong, China and ship directly to U.S. customers. It’s like a digital dollar store—only here, you can buy sofas for $20. Yes, you read that right. Amazon is going full throttle on low, low prices to compete with ultra-cheap shopping sites like Temu and Shein.

It’s simple: extreme price caps and zero-name brands. Forget “designer”—here, everything’s “Generic.” Jewelry? $8 max. Guitars? $13. Bedding? A grand total of $9. This store isn’t aiming for glamour; it’s all about cheap thrills.

How does Amazon’s Discount Store Work?
According to Marketplace Pulse, these are the distinct requirements and restrictions:

1. Seller Eligibility

Invite-Only Model: Amazon selectively invites sellers based on specific criteria and the store’s capacity. Only invited sellers can join, and it’s unclear if only Chinese-based sellers are eligible or if U.S. sellers manufacturing in China may also participate.

2. Amazon-Fulfilled Only

• Centralized Fulfillment: All orders are fulfilled through Amazon’s warehouse in Dongguan, Guangdong, China. Sellers can’t use their own fulfillment methods, giving Amazon control over logistics and shipping speeds for this program.

3. Product Listing Requirements

• Generic Branding: All items must be listed as “Generic,” regardless of actual brand, emphasizing a no-name, value-first product lineup.
• Weight and Size Limits: Each product must weigh under 1 lb and fit within dimensions of 14 x 8 x 5 inches. Products that exceed these limits aren’t allowed, reducing shipping costs and optimizing space.

4. Prohibited Product Types

• No Restricted Items: The store disallows items with additional regulatory needs, such as ingestibles, topical products, or goods requiring extensive cross-border compliance, like baby or pet products.

5. Separate Storefront

• Not in Regular Search: Items from this store don’t show up in standard Amazon searches. Customers must access the storefront through a separate section in the Amazon app.

6. Price Caps

• Maximum Price Points: Each category has strict price caps. For instance, items like shorts are capped at $14, while smaller items like calculators are capped at $8. Listings priced above the set caps will be deactivated.

7. Listing Tools and Management

• Limited Listing Tools: Sellers can only create listings via a spreadsheet upload. Standard tools like the “List Your Products” tool and APIs aren’t available, streamlining product uploads but reducing customization.

8. Fulfillment and Storage Fees

• Low Fulfillment Fees: Fulfillment fees start as low as $0.50 for lightweight, low-cost items (4 oz or less, under $3). The fee scales with weight, with apparel items starting at $0.99. A monthly storage fee of $0.40 per cubic foot applies.

9. Return Policy

• Limited Returns: Buyers have 15 days from delivery to initiate returns, but items priced under $3 are non-returnable. Any returns will be liquidated rather than returned to sellers, potentially disposed of or donated if liquidation isn’t possible.

The launch of this discount section was announced at an invite-only conference for Chinese sellers, and the initial feedback has been largely positive. Amazon has pitched this new arrangement as a cost-effective solution for Chinese sellers, allowing them to reduce overheads associated with U.S. warehousing.

Sellers can also test new products through small-batch production, a model inspired by Shein’s on-demand manufacturing. This approach minimizes the risk of unsold inventory and aligns production closely with consumer demand.

How This New Strategy Affects E-commerce Brands

Amazon’s new low-cost store introduces challenges for brands operating in Amazon’s regular marketplace, pushing them to rethink pricing, brand perception, and long-term strategy.

Price Pressure

With Amazon offering rock-bottom prices on essentials, shoppers may begin to expect similar deals everywhere. The ultra-low price caps on items—from $7 toothbrush holders to $14 shorts—could make budget-conscious buyers hesitant to pay typical retail prices, even outside Amazon. This pressure means brands either need to compete on price, which might be unsustainable, or get creative in showcasing their added value. In short, if it’s not affordable, it better be unforgettable.

Customer Loyalty Challenges

Amazon’s Low-Cost Store operates under a “Generic” brand label with stripped-down branding, aiming to attract customers who prioritize price over brand loyalty. This approach could gradually shift consumer expectations towards unbranded, cost-efficient products, impacting how customers view traditional brands. Brands aiming to retain customer loyalty will need to double down on unique selling points like quality, durability, or ethical sourcing to appeal to shoppers who seek more than just low prices.

Impact on Visibility and Marketing Costs

The ultra-competitive pricing of Amazon’s Low-Cost Store may create additional challenges in securing visibility. Brands will likely need to allocate more resources to Amazon DSP and sponsored ads to stand out in a landscape where lower-priced alternatives dominate the scene. This need for targeted ad investment will particularly impact brands looking to maintain a premium image and reach customers who value quality over price alone.

Tracking your success on Amazon requires understanding the right metrics. Learn how to measure campaign effectiveness and fine-tune your strategies with our guide on Amazon Advertising KPIs. You can also explore our DSP services here.

Risks to Brand Perception of the Amazon Platform

The Low-Cost Store reinforces Amazon’s presence as a budget shopping destination, which may alter its perception among consumers as a platform that traditionally offers both high and low-priced options. This shift might affect how premium brands fit into Amazon’s ecosystem, as consumers could begin associating the marketplace more with discounted, unbranded goods.

For brands, staying competitive means emphasizing unique value, harnessing targeted advertising, and reinforcing brand identity across multiple channels to maintain customer loyalty and distinct positioning within Amazon’s diverse marketplace.

Future Outlook for Amazon and Ultra-Budget E-commerce

All things considered, here’s where we’re headed with Amazon in ultra-budget territory—and what it means for brands:

Expect New Price Benchmarks
Amazon’s budget store has redefined what “cheap” really means, setting the bar at rock-bottom prices for basics. Jewelry at $8? Sofas at $20? This isn’t just a novelty—it’s an expectation shift. As more shoppers discover they can get essentials for less, brands across the board may feel the pressure to justify their pricing. The message here? If your brand isn’t about low prices, you’d better deliver something more memorable.

A Potential Boost for Slow-Shipping Norms
Amazon is known for fast, reliable shipping, but this store moves at a different speed, with delivery taking 9–11 days. This could help “slow shipping” become more acceptable when it comes with ultra-low prices. Other retailers might jump on this train, offering slower delivery on budget items to cut costs. Amazon’s move could normalize slower shipping for those who don’t mind waiting if it means saving big bucks.

A Golden Opportunity for Brand Storytelling
With a flood of unbranded, generic items taking over Amazon’s budget store, there’s a ripe opportunity for brands to stand out by telling their story. Now more than ever, brands that can create a unique identity—whether it’s through quality, eco-friendly practices, or customer-centric design—will stand apart in a sea of low-cost products. Think of this as a chance to show shoppers why your brand is worth more than a bargain-bin find.

New Customers, Bigger Reach
This budget move could attract shoppers who might not have considered Amazon before, especially younger, cost-conscious buyers. If Amazon becomes the top budget destination, we could see a wave of new e-commerce customers. Brands willing to experiment with entry-level products might gain exposure to this market without losing their premium edge elsewhere.

In short, Amazon’s new store may push the e-commerce market to evolve with more price-focused, value-driven, and story-rich strategies. Brands that stay flexible, offer real value, and stand out with unique experiences will thrive—even in a low-cost world.

Strategies for Brands to Compete on Amazon’s Low-Cost Playground

Amazon’s low-cost model is a new frontier in e-commerce, and while the competition is fierce, brands can still thrive with strategies that showcase their strengths and differentiate them from the bargain-basement crowd.

Here’s how to stay competitive while maintaining premium value:

Earn Trust Through Certifications

Certifications are like instant trust badges—they set your products apart from cheaper competitors and make shoppers feel good about their choice. For customers who care about health, safety, or eco-friendly options, these certifications are proof that your brand goes the extra mile.

Types of Certifications:

• Health Certifications: For food and beverage brands, stamps like USDA Organic, Non-GMO Project Verified, or gluten-free show shoppers that your product is safe and health-conscious.
• Safety Certifications: Selling baby gear or household items? Highlighting safety standards like BPA-free materials or FDA compliance can give customers peace of mind about product safety.
• Eco-Friendly Certifications: For the eco-conscious crowd, certifications like Fair Trade, FSC (for sustainably sourced wood), or other environmental endorsements help show your brand’s commitment to the planet.

Real-World Example:

Imagine a baby product company showcasing its BPA-free materials and U.S. safety certifications. This instantly sets it apart from uncertified, low-cost competitors, giving parents the confidence to invest in a brand that prioritizes their child’s safety.

If you want to learn how to avoid low-quality products through high-quality inspections—a key consideration when differentiating your brand from budget options—listen to this podcast episode.

Promote Unique Value Propositions

When competing with budget brands, it’s all about showing what makes your products worth it. Emphasize the qualities that set your brand apart—whether it’s quality, unique design, stellar customer service, or eco-friendly practices.

Key Ways to Stand Out:

• Quality and Craftsmanship: Highlight your products’ durability and premium materials. Explain why they’re made to last or perform better than cheaper alternatives—customers are willing to pay more if they know it’s worth it.
• Sustainability Practices: If your brand uses recyclable packaging, ethical labor, or eco-friendly materials, make that known. Shoppers are drawn to brands that take the environment seriously.
• Exceptional Customer Service: Standout service can build lasting loyalty. Offer responsive support, satisfaction guarantees, or other customer-focused policies that show you’re committed to a great experience.

Real-World Example:

Take a skincare brand that emphasizes organic, cruelty-free ingredients with certifications like Leaping Bunny or USDA Organic. This communicates high standards and appeals to shoppers who prioritize ethical and eco-conscious products—something they won’t get from low-cost alternatives.

Engage Customers Through Authentic Storytelling

Storytelling isn’t just about selling products—it’s about creating a connection. In a marketplace crowded with generic options, sharing your brand’s story, values, and commitment to quality gives customers something to relate to and remember.

Key Storytelling Strategies:

• Brand Origin and Mission: Share why your brand came to be—whether you’re solving a problem, filling a unique niche, or making a social impact. People are drawn to brands with a purpose they can connect to.
• Sustainable Sourcing and Production: Let customers know about your responsible sourcing, fair labor practices, or efforts to minimize environmental impact. For eco-conscious consumers, these details can be the deciding factor.
• Product Demonstrations and Testimonials: Use video demos or customer testimonials to bring your products to life. Real people sharing real experiences with your products make them more relatable and memorable.

Real-World Example:

Imagine a clothing brand showcasing its commitment to sustainability by highlighting its use of fair-trade, eco-friendly materials, backed by certifications. This narrative resonates with shoppers who care about ethics as much as aesthetics, offering a compelling reason to choose your brand over others.

Leverage Advanced Pricing Strategies

Staying agile with pricing is key to competing in today’s dynamic market. Offering both budget-friendly and premium options allows you to cater to a broad range of customers while keeping your brand identity strong.

Strategies:

• Balanced Product Lines: Develop a range of products, from affordable essentials to premium options with higher quality or unique features. This lets you reach both budget-conscious buyers and those willing to pay more for quality, without sacrificing brand integrity.
• Subscription Models and Bundles: For consumables, subscriptions can lock in loyal customers with perks like discounts or exclusive access to new products. Bundling complementary items creates added value, encouraging higher order sizes and repeat purchases.
• Dynamic Pricing Tools: AI-driven tools adjust prices based on factors like demand, competitor pricing, and inventory, keeping you competitive without manual intervention. Dynamic pricing helps you respond instantly to market changes while maximizing profits.

Real-World Example:

A personal care brand could offer subscriptions for products like shampoo or lotion, rewarding loyalty with perks like exclusive discounts and early access to new releases. This approach builds recurring revenue and fosters brand loyalty, especially when paired with AI tools that keep prices competitive in real-time.

Additional Strategies to Protect Your Brand

With Amazon’s low-cost store and competition from Temu and Shein, brands are facing more pressure than ever. But these challenges can also drive innovation and brand loyalty. Here’s how to strengthen your brand in this ultra-competitive landscape:

Key Strategies:

• Brand Differentiation: Stand out by prioritizing quality and sustainability. Rigorously test materials and adopt eco-friendly practices that appeal to consumers who value durability and environmental responsibility. A focus on quality attracts buyers and positions your brand above lower-cost competitors.
• Exceptional Customer Service: Offering 24/7 support options—like live chat, email, and phone—shows your commitment to customer satisfaction. Promptly addressing issues builds loyalty, helping customers feel valued and more likely to return.
• Exclusive Products and Limited Editions: Create unique or limited-edition products to generate excitement and a sense of exclusivity. Special releases appeal to customers’ desire for something unique and encourage faster buying decisions.
• Influencer Collaborations: Partner with influencers who resonate with your target audience to drive authentic endorsements. Influencers help build trust and reach new customer segments through their networks, extending your brand’s appeal.

Together, these strategies help brands stand out, foster loyalty, and compete effectively in an increasingly price-driven marketplace.

Conclusion

With ultra-cheap prices on everyday essentials, Amazon’s turned up the heat, pushing brands to decide: fight on price or stand apart with value. Competing with Amazon’s “Generic” goods is no small feat, but it’s not impossible either.

This new model might seem like a challenge, but it’s also a chance for brands to play to their strengths. Instead of slashing prices, think of it as the perfect moment to show what makes your brand worth it. Lean into quality, tell your story, and give customers the “why” behind your products. And if you want to keep visibility high, don’t ignore Amazon’s own tools like DSP to target the shoppers who care about more than just the lowest price tag.

The takeaway? Amazon’s budget shift is changing the game, but brands that stay true to their identity can not only survive—they can stand out. So, what’s your move? Take stock of how Amazon’s discount store might impact your strategy, and gear up to protect what makes your brand unique in this crowded, cost-cutting arena.