Amazon sets ultra-low pricing plans for Temu rival store, The Information reports

(Reuters) – Amazon.com (NASDAQ:) 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 on Tuesday.

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 U.S. customers directly from a facility in Guangdong, China, the report said, adding that it was charging sellers lower fulfillment fees for items sold through the new storefront.

Amazon did not immediately respond to a Reuters request for comment.

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% in the second quarter, slowing from a 7% increase in the first quarter.