Amazon.com Inc
Previous reports indicated Shein's shift from selling its branded apparel to becoming a marketplace platform.
Shein launched its marketplace in Mexico, Brazil, and the U.S., with plans to expand into Europe.
Reportedly, Shein has confidentially planned to go public in the U.S. The fashion platform will likely go public at a valuation of up to $90 billion.
Starting in January, Amazon will charge only 5% for clothing under $15 and 10% for items priced between $15 and $20, a steep drop from the previous 17% rate.
This reduction in referral fees, uncommon for Amazon, is targeted at attracting sellers in the budget clothing segment, directly challenging Shein's success with its inexpensive apparel, Bloomberg reports.
Lucas Barnes, a former Amazon executive and founder of PNW Web Marketing, notes that this strategy makes Amazon more competitive in the low-price apparel market, countering Shein's discounts and retaining Amazon Prime customers.
Amazon dominates U.S. e-commerce but faces emerging challenges from companies with Chinese connections, including the rapidly growing Shein, Temu, and TikTok's U.S. shopping platform.
Shein is preparing for a 2024 IPO, and TikTok launched a U.S. shop earlier this year.
Amazon's focus on budget clothing comes amidst its struggles in the apparel sector, highlighted by the recent closure of its Amazon-style clothing stores in California and Ohio, which opened only in 2022.
The company announced its decision to reduce seller fees in a blog post without specific reasons for targeting only lower-priced items in the apparel category.
Recently, e-commerce juggernaut Alibaba Group Holding Limited
Price Action: AMZN shares closed higher by 1.41% at $146.88 on Tuesday.
