What to expect from Amazon Haul

Similarly to how Steve Jobs used to describe the ethos at Apple, Jeff Bezos said in an interview earlier this year: “We innovate by starting with the customer and working backwards. That becomes the touchstone for how we invent." Once again, Jeff and his minions at Amazon have proven to the world that Amazon’s ability to facilitate a seamless end-to-end direct-to-consumer experience is unmatched.

With tariffs looming and Amazon’s existing e-commerce engine barely profitable, what’s the real incentive for Amazon to invest more time and money in their new venture: Amazon Haul?

‘I love Amazon, but if only they could deliver my products a little more slowly’

Amazon Haul is a new direct competitor to Temu, the rising Chinese powerhouse known for sourcing cheap products directly from Chinese factories. While Amazon Prime boasts next-day delivery and hyper-intelligent warehousing automation, Amazon Haul cuts out the middlemen, shipping products directly from the factory overseas to the customer’s doorstep within 7–10 days.

Juozas Kaziukėnas wrote an interesting piece highlighting the differences between Amazon FBA and the new Amazon Haul (read more). What's interesting is his reference to a quote from Jeff Bezos during a 2013 interview with the Harvard Business Review. When asked about his vision for Amazon in 5–10 years, Bezos delivered a very relevant remark: “I can’t imagine,” he said, “that ten years from now our customers are going to say, ‘I love Amazon, but if only they could deliver my products a little more slowly’.”

According to Amazon, Haul aims to focus primarily on the following categories: fashion, home, lifestyle, electronics, and other product categories while they’re in their Beta launch phase in the U.S (read more). Given how long Amazon kept DSP and Launchpad in beta (officially), we’re not holding our breath for a shake-up anytime soon. Furthermore, Haul is focusing exclusively on “insanely cheap” items with every product on the platform priced at $20 or less - some as low as $1.

Is Amazon’s getting defensive with foreign competitors looming?

Contrary to general assumption, Amazon’s e-commerce engine is merely profitable, and the majority of the operating income Amazon generates is from their software solution: AWS (read more). So why would Amazon go through all that effort of building another e-commerce engine for a minor at best P&L bump? Because, volume, has its benefits: cash flow, market share, and, most importantly - data.

Like Apple with iCloud, Prime is a fierce nicotine - once you’re in its ecosystem it’s incredibly hard to let go. With speed and convenience taking priority over cost and selection (read more), Amazon accounts for nearly 50% of all e-commerce sales in the U.S. By utilizing consumer data and shopping activity in their algorithms, Amazon can lease this information to advertisers, reinforcing the reliability of their advertising engines (Prime Video, Sponsored Products or DSP) and third-party platforms such as Twitch, to consolidate its dominance as an e-commerce monopoly.

The way I see it, Amazon’s e-commerce engine is growing through fear of competition. The profitability of that business division is merely a concern to the board, but more a focus of maintaining market share and pushing their top-line. If Amazon lost even 1% of market share in the U.S. to a foreign competitor (God forbid China!) that would be billions of dollars in sales and consumer spending claimed by competition (also probably China). Amazon Haul, is simply an extension of that overall strategy. By also giving shoppers access to incredibly cheap products online, it’s taking a stand against Temu in an attempt to maintain market share of cheaper consumer goods, and increasing the pool of shoppers in the Prime hamster wheel.

The irony is, there are actually laws and Acts in place preventing monopolies. You name it, there’s an Act for it. The FTC (Federal Trade Commission) Act, 1914. The Hart-Scott-Rodino Antitrust Improvements Act (1976). Even The Sherman Antitrust Act (1890) was used 108 years later in the milestone anti-trust lawsuit against Microsoft in 1998. Yet now, trade tariffs are looming that are about to wreck domestic businesses, and the government’s asking tech companies for advice, not the other way around. Even the FBI (2018) and the CIA (2013) now have AWS as their trusty security provider.

This comparison raises questions about whether antitrust enforcement has kept pace with the changing dynamics of power and influence in modern America. The reality? No one cares. Amazon’s happy to pay their fines, the commissioners get their fees, Amazon maintains dominance and China stays (sort of) at a safe distance.

How will Amazon Haul affect e-commerce brands?

In the e-commerce community, and especially for brands that have yet to expand into Amazon, there’s always an underlying concern: “What if I launch on Amazon and they just build a cheaper version of our product?” In reality, there’s nothing you can do. If your product requires minimal R&D and can be produced en masse, this is a risk you’ll always face - finding an Amazon Basics competitor live sooner or later.

Brand equity and advertising play an important role in maintaining market share on the platform. However, Amazon is your landlord, and by leasing their real estate, part of your contract is that they get access to all of your data (let’s be honest). For businesses with products protected by patents, a higher AOV, unique R&D, or domestic production that’s hard to replicate, you can probably sleep a bit better at night knowing that Amazon Haul is less likely to produce something similar - compared to, say, selling $20 iPhone cases.

Unfortunately, founders need to be pragmatic with their expectations and operate under the assumption that Amazon Haul will affect their business if they’re competing in the same categories. As a result, and from what we’ve seen at Igloo working with our brands, founders are approaching a crucial catalyst point. Just as many did in 2022 when they realized that relying too heavily on ad engines for sales creates severely undiversified risk, now they’re thinking harder than ever: to Amazon or not to Amazon?

The introduction of Shopify’s Buy With Prime application has enabled thousands of e-commerce brands to offer Amazon Prime benefits to their D2C customers, adding an extra layer of consumer trust. Brands that are Amazon-esque should, in my opinion, lean into the platform as much as possible. Amazon’s robust, vertically integrated audience data offers a far more stable ad engine than Meta’s, which is heavily reliant on out-of-platform tracking, a major reason why Meta is doubling down on Facebook Shop.