Amazon is trying to defend its kingdom against cheap Chinese rivals, and it thinks it has a plan

Amazon's market capitalization passed $2 trillion for the first time on Wednesday, joining the ranks of other tech colossuses like Microsoft and Apple. Nathan Stirk via Getty Images

• Temu and Shein have been giving Amazon a run for their money with their ultra-low prices.
• But Amazon might just have a plan to fend them off — starting its own discount section.
• The Seattle-based giant is looking to ship a range of unbranded items directly from China to the US.

You know what they say, "If you can't beat them, you join them."

That appears to be the gist of Amazon's new plan to fend off its Chinese rivals, Temu and Shein.

The Seattle-based e-commerce giant plans to start a new discount section on its website, The Information reported on Wednesday, citing slides the company had shown to Chinese sellers.

According to the outlet, Amazon wants to ship a range of unbranded items directly from China to the US. Customers can expect to receive their orders within nine to 11 days.

Chinese sellers were told in a recent closed-door meeting with Amazon that the new marketplace will start accepting products this fall, per The Information.

The move is widely seen as a response to the increased competition it's facing from Temu and Shein, which have lured customers with their ultra-low prices and aggressive marketing campaigns.

"We are always exploring new ways to work with our selling partners to delight our customers with more selection, lower prices, and greater convenience," a spokesperson for Amazon told The Information.

Temu and Shein did not immediately respond to requests for comment from BI sent outside regular business hours.

To be sure, winning customers through competitive pricing has long been a part of Amazon's playbook.

In 2009, Amazon launched its own private-label business, AmazonBasics. The company started by selling electronics like batteries and power cords at a lower price point before expanding its efforts into other product segments like pet food and clothing.

The strategy might be even more relevant today, given how American consumers may be becoming more prudent with their spending.

In April, Amazon CFO Brian Olsavsky told journalists that the company noticed that its customers were "buying a lot more consumables and everyday essentials," which tend to be cheaper.

"Customers in the US are being very thoughtful about their spend," Olsavsky said. "They look for deals, they trade down and look for lower ASP (average sale price) products."

And unlike most companies, which could find themselves bleeding cash when they try to wage a price war, Amazon might just have the heft to survive the bloodbath.

On Wednesday, the company's market capitalization surpassed $2 trillion for the first time, joining the ranks of other tech colossuses like Microsoft and Apple.

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