Dec 6, 2023
On Tuesday, Amazon announced it would reduce seller fees on clothing products priced below $15 to 5% beginning in January. The rates on clothing priced from $15 to $20 will drop to 10%. The commissions on both categories had previously been 17%.
It’s rare for Amazon to reduce the so-called referral fees it charges merchants on its online store, and no other changes of that nature were announced. That signals Amazon is specifically looking to entice merchants offering low-cost clothes — an area where Shein has excelled with its $9 hoodies and other bargain-basement apparel.
“This will make Amazon way more competitive in the low-price apparel category because a dollar or two can make a big difference,” said Lucas Barnes, a former Amazon executive who founded PNW Web Marketing, a consulting firm. “Amazon wants to let Shein spend all of its money offering discounts without losing too many Amazon Prime shoppers to the $9 hoodie.”
Amazon dominates US e-commerce by capturing more than $1 of every $3 spent online, making it about six times bigger than closest online competitor Walmart Inc., according to Insider Intelligence. But it faces new threats from companies with ties to China.
That includes Shein, which plans to hold an initial public offering in 2024, and Temu, a shopping app that launched in the US last year and is offering steep discounts on a broad assortment of products. Social media app TikTok, owned by Beijing-based ByteDance Ltd., also launched a US shop on its app earlier this year.
Amazon announced the reduction in seller fees on apparel in a blog post that didn’t offer any explanation about why it was reducing fees for just lower-priced products in one category.
The Seattle-based company has had some missteps in apparel. In November, it announced the closure of its Amazon Style clothing stores in California and Ohio — outlets that had just opened in 2022.