American e-commerce giant Amazon is slashing fees for sellers of clothing priced below $20. Although the company has not explained the reasons for this, it is generally believed that this shows that the company is preparing to fight a price war with Chinese cross-border e-commerce Shein and Temu.
On Tuesday local time, Amazon announced that starting in January next year, it will reduce the transaction fee for sellers of clothing products priced under $15 to 5%. Transaction fees will be reduced to 10% for clothing priced between $15 and $20. The fee for both categories was previously 17%.
Amazon rarely lowers the so-called referral fees it charges merchants on its online stores and has not announced other similar changes. That suggests Amazon is particularly interested in attracting merchants who offer low-cost clothing — an area in which Shein is best known for its $9 sweatshirts and other bargains.
"This will make Amazon more competitive in the low-price clothing space because a dollar or two can make a big difference," said Lucas Barnes, a former Amazon executive who founded the consulting firm PNW Web Marketing. "Amazon wants to let Shein spend all its money on offering discounts without losing too many Amazon Prime members over a $9 hoodie," he said.
Amazon still dominates the U.S. e-commerce market, accounting for more than $1 of every $3 of online spending, which is about six times higher than the revenue of its closest online competitor, Walmart. But the company is facing threats from new rivals such as Shein and Temu.