Amazon slashed the commission it takes from cheap clothing sellers

Amazon has announced that it will slash the commission fees it charges merchants selling clothing on its platform for less than $20. The move has attracted wide attention from industry insiders, who believe it is to cope with the business impact from China’s cross-border e-commerce.

On Tuesday, Amazon announced that starting in January, it will reduce its rebates to 5 percent on clothing items priced under $15 and to 10 percent on clothing items priced between $15 and $20. Previously, the commission rate for both categories was 17 per cent. The change means that clothing sellers selling for less than $20, taking advantage of reduced commission fees and new seller starter packages, will actually pay little commission, and in some cases may not pay any commission at all.

The change in Amazon’s percentage applies only to apparel items, indicating that the e-commerce platform is particularly keen to attract sellers who offer low-priced clothing items. Amazon typically charges merchants higher commission fees, so the cut is undoubtedly a major benefit for low-priced clothing merchants.

Amazon still dominates U.S. e-commerce, capturing more than $1 out of every $3 spent online, according to Insider Intelligence, and is about six times the size of its closest online competitor, Wal-Mart Stores Inc. However, in recent years, Amazon has also faced new threats from cross-border e-commerce in China. Chinese cross-border e-commerce, such as Shein, has become a hot area for American consumers. Temu’s rise has been equally rapid. Temu is now the fourth most visited retail site in the United States, behind Amazon, Walmart, and eBay. Statistics agency GWS research found that from April to July 2023, Amazon’s number of daily active users in the United States decreased by 8 million; By comparison, Temu has added nearly 10 million daily active users in the United States since the beginning of the year. As of October, Temu and Shein had a combined 110 million users, nearly 90 percent of Amazon’s.

Amazon’s move to reduce the percentage of rebates may also be related to the pressure on market share. In the face of competition from Chinese cross-border e-commerce, Amazon needs to take measures to maintain its market position and attract more sellers and consumers. Reducing the commission ratio will help increase the enthusiasm of low-cost clothing merchants on the platform, which will increase the variety and attractiveness of products on the platform. In addition, this initiative will also help reduce the burden on merchants and improve their profit margins, thereby further increasing their activity and loyalty on the platform.

To sum up, Amazon has drastically reduced the commission fee for clothing merchants selling under $20 on its platform, aiming to cope with the impact of business from China’s cross-border e-commerce and maintain its market position. This move is expected to increase the enthusiasm and activity of low-cost clothing merchants on the platform, and enhance the competitiveness and attractiveness of the platform. At the same time, facing the pressure of market competition, Amazon also needs to continue to seek innovation and change in order to maintain its leading position in the field of e-commerce.