Amazon.com is slashing its merchant fees for clothing vendors in an attempt to compete with Chinese fast-fashion retail site Shein, which may be on the docket to IPO in 2024. The online retail giant announced Tuesday that referral fees for items priced under $15 will drop from 17 percent to 5 percent. The fees for items between $15 and $20 will drop from 17 percent to 10 percent. Referral fees for other items won’t change, according to an Amazon blog post. The new fee structure begins Jan. 15. Amazon also said that existing returns processing fees for apparel and footwear will remain unchanged on average. Otherwise, the returns processing fee will expand next year, effective June 1, for products that have the highest return rates relative to other products in their category.
Total Retail’s Take: In an attempt to better compete with emerging players in the fast-fashion category, including Shein, Amazon is trying to make its marketplace a more attractive distribution channel for apparel sellers. Reduced seller fees is certainly one way to accomplish that. Amazon is seeking to grow market share in apparel, which traditionally has not been one of its core categories. In fact, last month Amazon shuttered its two Amazon Style brick-and-mortar stores, making its penetration in the online space for the category that much more important. Apparel sellers, like brands in other categories, will have to determine if the positives of selling on Amazon’s platform (e.g., audience reach, revenue gains) outweigh its negatives (e.g., lack of brand control, loss of first-party data). Paying less fees is a step in the right direction for sellers.
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