Manish and Maneesh break down Amazon Hall, a new program shipping products directly from China at rock-bottom prices. It undercuts domestic brands and arrives before Trump's tariffs hit, raising questions about the timing and who actually wins.
Hello and welcome to Hot Takes with Manish and Jer, bringing you the latest buzzworthy e commerce news and insights today. Hot off the press, we're talking about Amazon hall, the new low cost, direct from China program set to compete with Sheen and Temu. So first of all, Manish, I just want to start by saying the name hall is actually brilliant because my daughter and all of her friends, these high school girls, they are so excited that they go online and they buy all this cheap stuff from China and then when it arrives, they do what's called a hall, which is young people slang for showing off everything that they just bought. So I actually think the naming is brilliant. But in any case, what is Amazon Hall?
Yes, I agree Amazon hall is a really clever name. But what Amazon hall is essentially, it's a unbranded low priced store where Amazon will ship the items directly from China to the shoppers. So essentially, rather than the middleman, you know, marketing executives, Amazon fulfillment centers, the ocean freight and then getting the items to the shoppers in one and two days using prime delivery. These items will originate straight from China and will be shipped via air freight. And all these items are going to be priced below $20. So there cannot be a single item a listing above $20. And it would take about nine to 11 days on average up to two weeks for these items to be delivered directly to the shoppers. And it is intended to compete directly with the Shein and Temu's of the world.
I just don't get it. It's the exact opposite of what Amazon has been pushing for so long. So my follow up question is why? Why now? What's the advantage?
You're 100% right. Amazon has spent the larger part of the last two decades building out its amazing supply chain and fulfillment network comprised of hundreds of warehouses, flotation facilities, distribution centers, the delivery vans and all of that. But the reality is for many shoppers, cheap trumps fast. And there is a growing group of consumers in the United States that would much rather wait longer to have products delivered for cheap, really low, low prices.
Tell me what your thoughts on timing are because, you know, with the Trump administration taking over the White House come January, you know, all over the news every day there are reports about the tariffs that are going to be imposed on Chinese imports and its imminent advantages going away. So isn't this perhaps the worst timing for having launched this?
Well, this program has been in the works for months, if not years. And to go back, how are these low, low prices possible? Is the sellers first of all, on the Amazon hall, there is no brand. Everything is listed as generic brand. And number two, these items originates and they're shipped directly from China using air freight and delivered directly to the shoppers with very limited storage. There is no storage in the United States. And how is it possible to sell these items so inexpensively? Because they're bypassing the tariffs which if you bring the goods into the US store it in fba, you would be paying significant import duties, taxes. Whereas this is the loophole under the de minimis program where Amazon of course helps these sellers and bypass all those taxes and duties. So yes, I 100% believe that there will be a big change in the de minimis program and that is going to shake up the industry. And so timing, timing wise, you know, they are just going to see how this performs, you know, so. But I do expect some big changes come January.
My last question is most importantly, how do you see the new Amazon hall program impacting, you know, the domestic brands and retailers?
That's a great question. You know, for decades, you know, goods are manufactured overseas and then the US companies have built a brand and they've acted as the sellers and distributors and retailers and they have made significant amount of money. Chinese have provided the goods. With the advent of the Internet, distribution is no longer an issue. So these overseas manufacturers are thinking, hey, why if I can sell the goods directly to the US consumer without going through US based companies, why not? And capture 3, 4, 5 times the share of the wallet. So overall we will continue to see disintermediation, which is essentially getting rid of the middleman and it is just product design and innovation. That remains to be seen. Whether the Chinese manufacturers or the overseas manufacturers are truly capable of building and bringing new innovation to market and also to marketing to the US Consumer. Customer service, support, safety, product safety. So there's a lot of considerations, but overall you will continue to see the middleman shrinking, if not disappearing.
All right, thanks Maneesh, everyone. If you enjoyed today's episode, please subscribe and leave a comment. We'd love to hear your thoughts, particularly how this will impact you and your business. Reach out to us on LinkedIn. Contact info is in the show notes. And until next time, keep learning and stay curious.
