SEATTLE – Amazon.com is sharply cutting fees for merchants selling clothing priced below US$20 (S$26.80), a sign it is hunkering down for a price war with Chinese fast-fashion upstart Shein.
On Dec 5, Amazon announced it would reduce seller fees on clothing products priced below US$15 to 5 per cent beginning in January. The rates on clothing priced from US$15 to US$20 will drop to 10 per cent.
The commissions on both categories had previously been 17 per cent.
It is 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 US$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 Mr 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 US$9 hoodie.”
Amazon dominates US e-commerce by capturing more than US$1 of every US$3 spent online, making it about six times bigger than closest online competitor Walmart, 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 United States in 2022 and is offering steep discounts on a broad assortment of products.
Social media app TikTok, owned by Beijing-based ByteDance, also launched a US shop on its app earlier in 2023.
Amazon announced the reduction in seller fees on apparel in a blog post that did not offer any explanation about why it was reducing fees for just lower-priced products in one category.
In a subsequent e-mailed statement, an Amazon spokesperson said: “We are reducing referral fees for the apparel category in order to help drive and incentivise even greater selection for customers and competitive prices. Our focus is always on how we can best support the growth and success of our selling partners.”
Amazon 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. BLOOMBERG