If you can’t beat them, join them.
Facing surging competition from Chinese cheap-stuff marketplaces Temu and Shein, Amazon is preparing to launch a new section of its site for Chinese sellers that want to ship their fast-fashion and lifestyle wares directly to U.S. customers. It could go live later this year.
According to multiple reports—The Information got there first—Amazon held a meeting yesterday with the biggest Chinese sellers, detailing the plan. The presentation described a section that’s accessible from the Amazon homepage and targeted at people who will put up with a nine- to 10-day delivery time if it means paying bottom dollar. (We’re talking lightweight items that retail for under $20.)
Amazon’s new tactic would closely follow the Temu and Shein playbook by having sellers send their products to a warehouse in China, from which they would be sent directly to U.S. buyers. Currently, Chinese sellers send their products to Amazon warehouses in the U.S.
The distinction is important because the U.S. has a relatively high “de minimis” threshold of $800 on the value of imported goods: If the value is below the threshold, the item is not subject to import duties. Temu and Shein have both denied that this provision is central to their ability to sell things at ultralow cost in the U.S., but U.S. lawmakers disagree. A House select committee found that Temu’s and Shein’s shipments alone from their Chinese warehouses accounted for almost a third of the billion packages that entered the U.S. in 2023 using the de minimis loophole.
In April, the Biden administration ordered closer scrutiny of de minimis shipments from China, partly to check whether they’re violating the U.S.’s ban on goods produced with forced labor (a common accusation against Shein and Temu, and one that they have strenuously denied). There are also two bills lingering in Congress that would exclude China from the de minimis channel.
This may be one reason why Beijing just issued draft rules to make it easier for Shein, Temu, and AliExpress—at this point the shining beacons of Chinese e-commerce prowess—to finance the construction of new warehouses outside the country. But if America’s Amazon is also about to get into the game of helping Chinese sellers access U.S. buyers through the de minimis channel, those legislative efforts in Congress could find it a little harder to drum up the support they need. (It’s currently unclear whether Amazon’s shipments will use the de minimis channel; I did ask, but an Amazon spokesperson did not answer my question.)
On the other hand, the competition presented by Amazon’s move could further tarnish Shein’s planned IPO, which CNBC said on Monday was set to take place in London, owing to lawmakers’ opposition in the U.S. The date for the flotation is not yet clear, but British human rights group Stop Uyghur Genocide yesterday launched a legal campaign to stop it going ahead at all, owing to those aforementioned concerns about forced labor.
More news below.
David Meyer
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NEWSWORTHY
SpaceX tender offer. Elon Musk’s SpaceX will reportedly sell insider shares at a valuation of around $210 billion, Bloomberg reports. Its last valuation in December was $180 billion, and the new valuation would be a record for a U.S. private company. Meanwhile, SpaceX has won an $843 million NASA contract to build the space agency a vehicle that can bring down the International Space Station by the end of the decade, when it’s due to go out of service. Both the ISS and this U.S. Deorbit Vehicle (which NASA would own and operate) would break upon reentry.
YouTube AI music talks. YouTube is reportedly talking to major record labels about paying them so their artists have an incentive to allow their music to be training fodder for YouTube’s AI models. According to the Financial Times, this would help Google’s video site release its own AI song generators, which it plans to do this year. The big labels just sued AI song generators Udio and Suno for allegedly using copyrighted music to train their models without permission.
SoftBank Perplexity investment. Speaking of AI companies allegedly taking data without permission, it seems Perplexity—an AI search outfit that online news outlets have accused of pilfering their journalism—is set to get a cash infusion from SoftBank’s Vision Fund 2. Bloomberg reports that SoftBank will put in $10 million to $20 million as part of a $250 million round valuing Perplexity at $3 billion, or triple its last valuation.
SIGNIFICANT FIGURES
13,000
—The less-than-impressive number of iOS downloads of TikTok’s Whee, a new Instagram-like social network, in the first week after it was quietly launched on June 18.
IN CASE YOU MISSED IT
Slack CEO welcomes EU’s Microsoft Teams probe that could see the tech giant slapped with a $21 billion fine, by Ryan Hogg
The Supreme Court rules in Biden’s favor, tossing out GOP claims that Democrats coerced social media companies to stamp out conservative points of view, by the Associated Press
Amazon joins Google parent Alphabet in the $2 trillion market cap club, by Justin Doom
Why Land O’Lakes now has a CTO after 97 years without one, by John Kell
Ask Andy: How much should startup founders pay themselves?, by Andy Dunn
BEFORE YOU GO
Telco malware. KT Corp., the South Korean communications giant formerly known as Korea Telecom, has been caught infecting the computers of over 600,000 users with malware. As Tom’s Hardware reports, this was part of an effort to combat illicit peer-to-peer file sharing.
KT and the Korean cloud storage firm Webhard—whose systems use the BitTorrent P2P protocol to store data on users’ computers rather than Webhard’s servers—had previously gone to court over the strain Webhard’s traffic was putting on KT’s network, and the court had ruled that KT could block Webhard’s traffic. But instead, KT installed malware on the users’ PCs, disabling not only Webhard’s program but also in some cases the PCs themselves. Korean police have now charged 13 KT employees and contractors over the attack, which likely violated multiple laws.
