n apparel as Shein and Temu quickly expanded in international markets with US$12 dresses and US$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 specialised 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 per cent 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 per cent improvement in retail sales in the third quarter. In the second quarter, its retail sales had risen 5 per cent. The operating margin for Amazon’s international business jumped to 3.6 per cent in the third quarter from 0.9 per cent in the second quarter. Its North America margin ticked up to 5.9 per cent from 5.6 per cent in the previous quarter. (Reporting by Arriana McLymore in New York City and Ananya Mariam Rajesh in Bangalore; Additional reporting by Juveria Tabbasum in Bangalore; Editing by Sayantani Ghosh and Sonali Paul)