Amazon’s recent focus on selling more everyday essentials, such as toothpaste, has impacted its average selling prices. However, this shift serves as a competitive defense against companies like Temu and Shein, which offer extremely low prices on items shipped from China.
On Thursday, Amazon reported that customers are shopping more frequently and adding lower-cost items to their carts, leading to third-quarter revenue and profit results that exceeded Wall Street’s expectations. In early Friday trading, Amazon’s stock, which has risen nearly 27% this year, saw an additional 7% boost.
Although Amazon’s market share in apparel has been challenged by Shein and Temu with their budget-friendly clothing and gadget offerings, the e-commerce giant’s strategy of providing everyday products like dish detergent with swift delivery is driving customer loyalty. Chief Financial Officer Brian Olsavsky noted that Amazon’s strong performance in everyday essentials suggests customers are increasingly turning to the platform for routine shopping.
Amazon CEO Andy Jassy recently mentioned that average selling prices have declined as customers shift to essential goods over high-priced items, such as electronics. This trend reflects slower growth in big-ticket purchases amid economic uncertainty.
Amazon’s robust network of local warehouses also supports this shift, allowing for quick and efficient delivery of lower-cost goods. Jassy emphasized that Amazon’s ongoing efforts to reduce service costs enable the company to economically offer a broader range of lower-priced items.
While Shein has been expanding its product range to include household goods, industry experts like Gil Luria, head of technology research at D.A. Davidson, believe the company may struggle in the time-sensitive market for daily essentials. Domestically, Amazon faces pressure from Walmart and Target, both of which have slashed prices on essentials to attract budget-conscious shoppers. Walmart, set to report its own third-quarter earnings on November 19, is expected to post a 4% revenue growth, marking a slight slowdown from the previous quarter.
