Amazon has launched its first smart warehouse in Shenzhen, China. The warehouse is designed to reduce storage costs for sellers by up to 45%.

With its smart warehouse model in China, Amazon aims to retain sellers amidst the increasing competition from Chinese rivals such as Shein and PDD Holdings’ Temu. According to the company’s statement, the smart warehouse will be Amazon’s first Global Warehousing and Distribution (GWD) center. The warehouse will serve as an all-in-one logistics hub for Chinese sellers targeting US customers, located at the heart of Shenzhen’s manufacturing base. The next-generation warehouse is designed to reduce storage costs for Chinese sellers by up to 45%.

Smart Warehouse Focuses on Sellers’ Entire Needs

Amazon’s GWD center in Shenzhen is designed to handle logistics management from the moment products leave factories in China until they reach Amazon’s warehouses in the US. This will allow Chinese sellers to automatically manage local storage, customs clearance, cross-border shipping, and inventory transfers—steps that sellers previously had to organize themselves.

Chinese Competitors Continue Their Investments to Compete with Amazon

With this move, Amazon aims to retain Chinese sellers. Competing with global e-commerce giants like Temu, Shein, and TikTok Shop in the region, Amazon is also responding to the rising competition among sellers, suppliers, and customers. Temu’s market share surged from under 1% to 24% last year, bringing it on par with Amazon. Additionally, Shein holds a market share of approximately 10%.

Chinese platforms are deepening their investments in supply chains. Shein’s founder Xu Yangtian committed to investing $1.4 billion in February to build a “smart supply chain system” in Guangdong Province.

Expanding the Smart Warehouse Model to Europe and Japan

Amazon announced plans to expand the smart warehouse model to the Yangtze River Delta, another major manufacturing hub, and extend its distribution to Europe and Japan. Shenzhen continues to remain at the center of this ecosystem. The city hosts more than half of China’s cross-border e-commerce sellers and has ranked first nationwide in cross-border trade for four consecutive years. Amazon’s expansion is placing pressure on Chinese platforms as regulations on low-value imports tighten in the US and Europe.