Amazon’s focus on everyday essentials, from toothpaste to dish detergent, is driving more frequent purchases on its platform but putting downward pressure on average selling prices (ASP). The strategy, aimed at countering competition from budget-friendly e-commerce giants like Shein and Temu, contributed to Amazon’s third-quarter revenue and profit exceeding Wall Street forecasts. The company’s stock surged 7% in early trading Friday and is up nearly 27% this year.
In response to a weaker economy and price-sensitive consumers, Amazon is prioritizing low-cost items, helping it build larger shopping baskets and gain loyalty among users. CFO Brian Olsavsky noted that customers buying essentials shop more often and spend more overall on Amazon, while CEO Andy Jassy highlighted that ASPs are down due to a shift toward essential goods and away from high-ticket items like electronics.
Amazon’s extensive network of local warehouses supports its ability to deliver low-cost items quickly, which Jassy sees as a competitive advantage. “Reducing cost-to-serve has allowed us to economically offer lower-priced items,” he said.
As Amazon bolsters its essentials line, competitors like Walmart and Target are also cutting prices on household basics to attract budget-conscious consumers, intensifying the market competition. Walmart, which reports its quarterly results on Nov. 19, is expected to show revenue growth, albeit at a slightly slower pace than in previous quarters.
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