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Amazon's Plan to Tackle Temu, Shein? Sell More Toothpaste

(FILES) This picture taken on July 4, 2022 shows the logo of Amazon, a major online shopping company, displayed at Amazon Amagasaki Fulfillent Center in Amagasaki, Hyogo prefecture. (Photo by Kazuhiro NOGI / AFP)
(FILES) This picture taken on July 4, 2022 shows the logo of Amazon, a major online shopping company, displayed at Amazon Amagasaki Fulfillent Center in Amagasaki, Hyogo prefecture. (Photo by Kazuhiro NOGI / AFP)
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Amazon's Plan to Tackle Temu, Shein? Sell More Toothpaste

(FILES) This picture taken on July 4, 2022 shows the logo of Amazon, a major online shopping company, displayed at Amazon Amagasaki Fulfillent Center in Amagasaki, Hyogo prefecture. (Photo by Kazuhiro NOGI / AFP)
(FILES) This picture taken on July 4, 2022 shows the logo of Amazon, a major online shopping company, displayed at Amazon Amagasaki Fulfillent Center in Amagasaki, Hyogo prefecture. (Photo by Kazuhiro NOGI / AFP)

Amazon's push to offer more everyday essentials like toothpaste is hurting its average selling prices, but it is also a guard against rivals such as Temu and Shein that offer rock bottom prices on goods they ship from China.
People are shopping more frequently at Amazon, adding more low-priced items with each checkout, Amazon said on Thursday, after it reported third-quarter revenue and profit that beat Wall Street expectations.
The company's stock rose about 6% in premarket trading on Friday, Reuters reported.
The e-commerce giant has seen its market share erode in apparel as Shein and Temu quickly expanded in international markets with $12 dresses and $10 gadgets. But offering a variety of everyday products like dish detergent and floss is helping Amazon.
"The strength in everyday essentials revenue is a positive indicator that customers are turning to us for more of their daily needs," said Amazon's Chief Financial Officer Brian Olsavsky. "We see that when customers purchase these types of items from us, they build bigger baskets, shop more frequently and spend more on Amazon."
In August, Amazon CEO Andy Jassy said average selling prices were falling because customers were trading down to cheaper items and buying more essential goods, and that sales of bigger ticket items like computers and electronics were growing "more slowly" than in a robust economy.
John Belton, portfolio manager at Gabelli Funds which owns Amazon shares, said that he is expecting more pressure on Amazon's selling prices in the fourth quarter because of the company's mix of products.
LOCAL WAREHOUSE STRONGHOLD
To offset the impact of lower average selling prices, Amazon is relying on its deep network of local warehouses that allows it to ship quickly.
It's "pretty easy to choose to supply" lower average selling price (ASP) merchandise, but much harder to be able to afford to supply them, Jassy said on Thursday.
"One of the reasons that we have been so maniacal about cost-to-serve over the last few years is that as we're able to take our cost-to-serve down, it just opens up the aperture for more items, particularly lower ASP items that we're able to supply in an economic way," he said.
Shein is trying to ramp up selling everyday products too.
Earlier this year, it began courting skincare and personal care brands such as Colgate-Palmolive to sell more household names on the platform. It launched a third party marketplace in 2023 to expand its product selection to include beauty and personal care products, household items and furniture.
But companies such as Shein would be less successful in expanding to day-to-day products, said Gil Luria, head of technology research at D.A. Davidson.
Shein and Temu have specialized in offering dresses, accessories and gadgets "that the consumer is less time-sensitive about," he said.
"They're not in the US, so they can't get me toothpaste quickly," Luria said, adding that any market for shipping essentials from China is likely to be a small one.
Amazon is also facing competition from rivals at home.
Walmart, the world's biggest supermarket chain, and smaller retailer Target have both slashed prices on essentials in a race to the bottom as they each try to woo inflation-wary shoppers.
Walmart, scheduled to report third-quarter results on Nov. 19, is expected to post a 4% rise in revenue, according to analysts polled by LSEG, a slightly slower pace of growth than in the second quarter.
Amazon on Thursday reported a 7% improvement in retail sales in the third quarter. In the second quarter, its retail sales had risen 5%.
The operating margin for Amazon's international business jumped to 3.6% in the third quarter from 0.9% in the second quarter. Its North America margin ticked up to 5.9% from 5.6% in the previous quarter.

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IMF Forecasts 4% Rebound for MENA Region Next Year

Jihad Azour, the Fund’s director for the Middle East and Central Asia department, at the launch of an IMF Regional Economic Outlook (IMF/File)
Jihad Azour, the Fund’s director for the Middle East and Central Asia department, at the launch of an IMF Regional Economic Outlook (IMF/File)
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IMF Forecasts 4% Rebound for MENA Region Next Year

Jihad Azour, the Fund’s director for the Middle East and Central Asia department, at the launch of an IMF Regional Economic Outlook (IMF/File)
Jihad Azour, the Fund’s director for the Middle East and Central Asia department, at the launch of an IMF Regional Economic Outlook (IMF/File)

The International Monetary Fund (IMF) forecasted on Thursday that growth in the Middle East and North Africa region is expected to rebound to 4% next year, but will hinge on a phase out of oil production cuts and headwinds subsiding, including from conflicts.
The IMF also stated that any discussions to further increase the overall program size in Egypt are premature.
At the launch of the IMF’s latest Regional Economic Outlook, Jihad Azour, the Fund’s director for the Middle East and Central Asia department, told reporters in Dubai that “the economic outlook is fraught with risks.
“Hence, our 2025 forecasts come with important caveats,” he said.
Growth in the region will remain “sluggish” at 2.1% in 2024, lower than earlier projections as geopolitical and macroeconomic factors weigh.
For 2024, growth is projected at 2.1%, a downgrade revision of 0.6% from the April WEO forecast, and this is largely due to the impact of the conflict and the prolonged OPEC+ production cuts.
To the extent that these gradually abate, the IMF anticipates stronger growth of 4% in 2025. However, uncertainty about when these factors will ease is still very high, Azour said.
Meanwhile, the economic growth of MENA oil-exporting countries is expected to increase from 2.3% in 2024 to 4% in 2025, if the voluntary oil output cuts end.
The IMF has estimated that growth among GCC members will reach 8.1% this year, accelerating to 2.4% next year compared to 4.2% and 9.4% in its previous forecast in April. Inflation rates are projected to average 8.1% this year and 9.1% next year.
In MENA emerging markets, growth is also expected to accelerate from 2.4% this year to 3.8% in 2025, assuming a decline in the intensity of conflicts.
Similarly, improved growth in low-income countries (LICs) depends, to a large extent, on the easing of conflict in Sudan, according to Azour.
He explained that the Fund’s forecasts were prepared in mid-September and therefore do not reflect the impact of recent developments in the region.
“We are closely monitoring the situation and assessing the potential economic impacts. Overall, the impact will depend on the severity of any potential escalation,” Azour said.
He noted that the conflict could impact the region through multiple channels.
“Beyond the impact on output, other key channels of transmissions could include tourism, trade, potential refugee and migration flows, oil and gas market volatility, financial markets and social unrest,” Azour added.
He also warned that concern is also high about the possibility of prolonged conflict in Sudan, increased geoeconomic fragmentation, volatility in commodity prices, especially for the oil exporting countries, high debt and financing needs for emerging markets and recurrent climate shocks.
Egypt
Azour said the IMF’s $8 billion program for Egypt is making progress, stating that any discussions to further increase the overall program size are premature.
Asked whether he was confident Egypt would meet its program targets, Azour said that economic conditions in Egypt were expected to improve and that it was too early to discuss any changes to its size.
“The program is moving in the right direction and is gradually achieving its targets, both in terms of growth recovery and gradual decline in inflation, and a normal functioning of the foreign exchange market,” Azour said.
“Building buffers or strengthening the buffers of Egypt is the first line of defense that could help the Egyptian economy withstand any additional external shock,” he said.
Azour also said that Egypt was expected to save almost $800 million over the next six years on the back of recent reforms of the IMF's charges and surcharges policy, which would provide additional support.
The IMF's Egypt team is scheduled to travel to Cairo in November to prepare for the third review of the program. Managing Director Kristalina Georgieva also plans to visit to reaffirm the fund's support for Egypt.