Amazon will reduce the transaction fee for fashion sellers

Amazon has announced it will reduce the transaction fee for fashion sellers from 17% to 5%. The company led by Andy Jassy has announced that, starting next January, it will reduce the transaction fees it charges sellers from 17% to 5% for clothing priced below $15 (13.9 euros). Specifically, prices for clothing between $15 and $20 (€18.5) will drop by 10%, Bloomberg reports.

It is unusual for Amazon to reduce the so-called referral fees it charges sellers in its online store, indicating that the firm is specifically looking to attract sellers offering low-cost clothing, in a clear declaration of war on Shein.

Amazon dominates U.S. e-commerce. On its side, Shein plans its IPO in 2024. To do so, it has hired Goldman Sachs, JPMorgan Chase and Morgan Stanley to list in the United States, with a value that could be around $90 billion (about 82.23 billion euros).

This new move by Amazon also represents an interesting change in the company's strategy. Throughout the year, Amazon has put the focus on profitability, which is why it has made a number of turns on its sellers' fees. 

However, according to Marketplace Pulse, reducing seller fees may not be enough for Amazon to take the apparel market share away from Shein. "Amazon doesn't have the tens of millions of followers Shein has on Instagram or the billions of views Shein has on TikTok, and focusing on fees is losing sight of the forest for the trees," stated Juozas Kaziukènas, founder of Marketplace Pulse.

Amazon wants to rule the fashion market 

According to analysts at Wells Fargo, Amazon's share of US online fashion retail was 34-35% for 2020. That means the gross merchandise volume of apparel and footwear has grown to $41bn—including sales from third-party retailers through the marketplace.

This is the last public data that has been released regarding Amazon’s share of the profitable fashion sector. But, it would be safe to assume that these numbers have remained the same - or even increased slightly - during the last two years. 

All in all, Amazon has had a great year in the USA with its net sales reaching between $121.0 billion and $126.0 billion, showing a growth of close to 8%.