Amazon is readying for a pricing tussle in the apparel market by reducing fees for merchants selling clothes priced under US $ 20. The move seems to position Amazon for a competitive clash against the Chinese fast-fashion giant SHEIN, amid SHEIN’s reports on filing for an IPO in the United States.
Amazon disclosed plans to slash merchant fees on apparel-related products under US $ 15 to 5 per cent starting January 2024. Items priced between US $ 15 and US $ 20 will see reduced fees of 10 per cent, a significant drop from the previous 17 per cent commission on both categories.
This bold step by Amazon, an unusual fee reduction, suggests a strategic shift, likely aimed at enticing more sellers within the budget-value apparel market. The move comes on the heels of news about SHEIN’s IPO plans, indicating Amazon’s proactive measures to fortify its position.
Amazon has been a dominant force in the US e-commerce sphere, holding a 37.6 per cent market share, well ahead of rivals like Walmart Inc., at 6.4 per cent, as reported by Insider Intelligence. However, the emergence of challenges from competitors like SHEIN and Temu poses new tests for Amazon.
SHEIN, since its establishment in 2012, has disrupted fast fashion, offering thousands of new products daily at remarkably low prices. Garnering 50 per cent of the segment sales, surpassing brands like H&M and Zara combined, SHEIN stands at a valuation of US $ 66 billion. With SHEIN’s IPO plans and Temu’s growing market share in the US post-launch last year, Amazon appears to be bracing for intensified competition by adjusting its approach in the apparel sector.
