Amazon.com (AMZN.O) is imposing severe price caps on what merchants can charge for their products on a new low-cost storefront that the e-commerce giant is preparing to launch, the Information reported this week.
The company’s price limits include $8 for jewelry, $13 for guitars and $20 for sofas, according to the report, which cited messages from Amazon to merchants. The messages included a list of 700 items, it said.
Amazon plans to ship orders to US customers directly from a facility in Guangdong, China, the report said, adding that it was charging sellers lower fulfilment fees for items sold through the new storefront.
“We are always exploring new ways to work with our selling partners to delight our customers with more selection, lower prices and greater convenience,” an Amazon spokesperson told Reuters when contacted for a comment on the report.
The company has been working to roll out a low-price storefront site, according to media reports earlier this year, as it rushes to tackle competition from discount sites such as Temu and Shein, which have exploded in popularity due to their rock-bottom prices.
The price caps, if put in place, would represent a shift in strategy for Amazon, which has historically not set strict limits for sellers on its platform.
This comes at a time when the company is seeing signs of weakness in retail sales. Its online stores sales rose just 5 per cent in the second quarter, slowing from a 7 per cent increase in the first quarter.
