Amazon has announced the criteria for its new Low-Cost Store, a marketplace dedicated to shipping & selling unbranded, low-priced products directly to U.S. consumers from warehouses in China.
News of this initiative first surfaced in June when Amazon hosted an invite-only event for select sellers in Shenzhen. Shortly after, presentation materials were leaked, revealing that some sellers had already begun shipping inventory to Amazon’s Chinese warehouses. While still in the testing phase, Amazon is expected to launch the Low-Cost Store later this year.
Details of the Amazon Low-Cost Store
According to the latest seller documentation, here’s how the Low-Cost Store will operate:
- Participation is by invitation only, based on specific eligibility and capacity criteria.
- Amazon will fulfill all orders from a dedicated fulfillment center in Dongguan, Guangdong, China, without the option for seller-based fulfillment.
- While it is unclear if the program is exclusive to Chinese sellers, U.S. sellers with manufacturing in China may also be eligible.
- Sellers must list all items under the brand name “Generic.”
- Products will not appear in Amazon’s regular search results; instead, shoppers will access them through a separate storefront in the Amazon app.
- Only products under 1 lb and measuring less than 14 x 8 x 5 inches are eligible.
- Restricted items include those with batteries, ingestible goods, items intended for skin use, and those requiring cross-border documentation, such as baby or pet products.
- Products are subject to category-specific price caps, ranging up to a maximum of $20. Listings priced above these limits will remain deactivated.
- Listings must be created using the spreadsheet upload tool, as API and in-app listing options are not supported.
- Fulfillment fees start at $0.50 for items under 4 oz and priced below $3. The fees varies based on product weight and category.
- The return window remains limited to 15 days from the delivery date, with products priced at $3 or below being non-returnable. Returned items will be liquidated if they cannot be donated.
Amazon’s Evolving Fulfillment Strategy
Amazon’s Low-Cost Store represents a shift in strategy by integrating the supply chain at the source in China rather than at the destination. The program starts in Guangdong, a hub for nearly half of Amazon’s Chinese sellers. Sellers ship products directly to Amazon’s Chinese warehouses, where U.S. consumers receive shipped products in 9-11 days without incurring tariffs due to the de minimis threshold.
Low-Cost Store vs. Traditional FBA Model
Unlike Amazon’s FBA program, which focuses on fast domestic delivery, the Low-Cost Store emphasizes affordability. It does so by streamlining fees and removing the need for brand differentiation. The Low-Cost Store aims to attract price-conscious shoppers who prioritize savings over immediate delivery. It remains Amazon’s answer to competing with other low-cost platforms like Temu and Shein. The marketplace now offers U.S. consumers a digital dollar store experience with Amazon’s reach.
Source: Marketplace Pulse