- Amazon announced it will reduce seller fees on clothing under $20.
- The move comes as Shein gains market share and recently filed to go public.
Amazon may be buckling under the weight of fast-fashion retailer Shein's success.
On Tuesday, Amazon announced it would reduce its seller fees from 17% to 5% for apparel under $15. Clothing priced between $15 to $20 will incur a 10% fee. The new rates will start in January.
The e-commerce giant appears to be courting fast fashion manufacturers. The strategy could help it compete with Shein, where a t-shirt costs about $5, and jeans can sell for around $15. It appears that Shein's low prices and network of roughly 6,000 manufacturers are intimidating even for Amazon.
"We are reducing referral fees for the apparel category in order to help drive and incentivize even greater selection for customers and competitive prices," an Amazon spokesperson told Business Insider. "Our focus is always on how we can best support the growth and success of our selling partners."
Shein is expected to go public next year. In November, the Chinese-owned company confidentially filed for an IPO. Insiders told Bloomberg it is targeting a $80 billion to $90 billion valuation.
Prior to the filing, Shein expanded its product assortment to become more of an everything store, offering a plethora of non-apparel categories from home decor and electronics to outdoor gear. Since its launch in 2008, Shein has relied mostly on sourcing its own products through its on-demand manufacturing model. But to grow its offerings, it opened its marketplace to third-party retailers just as Amazon did years ago.
It's not just Amazon trying to keep up with Shein's meteoric rise. Many other retailers have singled out Shein as one of their top competitors.
Shein has so aggressively recruited suppliers that fast-fashion rival Temu filed a lawsuit claiming Shein forced manufacturers to sign agreements not to work for Temu. In a previous statement to Business Insider, a Shein spokesperson said Temu's lawsuit was "without merit."
Gap's executive vice president Katrina O'Connell called out Shein, Amazon, and TJ Maxx as brands "that are really winning with our consumers," during the company's earnings call in August.
Etsy's CEO Josh Silverman told investors that both Shein and Temu have impacted its marketplace. "You don't get that big that fast without taking share from many people," he said in a November earnings call. "And I think we and most players in e-commerce have had some impact."
But reducing seller rates may not be enough for Amazon to take apparel market share from Shein, wrote Juozas Kaziukėnas, founder of e-commerce intelligence firm Marketplace Pulse.
"Amazon doesn't have the tens of millions of followers Shein has on Instagram nor the billions of views Shein hauls have on TikTok," he wrote in a blog post. "Focusing on fees is missing the forest for the trees."
Update December 7, 2023: This story has been updated with a comment from Amazon.