Amazon Challenges Shein’s Digital Dominance

Jennifer Bringle
·2 min read

With fast-fashion giant Shein continuing to gobble up marketshare, Amazon is making moves to compete on apparel with a new reduced fee structure for sellers of products priced below $20.

The company announced that it would reduce seller fees on clothing and accessories beginning in January. Fees for items priced $15 to $20 will drop by 10 percent while fees on products $15 or cheaper will drop 5 percent.

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The fee reductions signal that Amazon is looking to court sellers offering inexpensive clothing, which Shein has built its business on. The company has adjusted its model to one more similar to Amazon’s, allowing third-party retailers to sell via its marketplace. Those third-parties include Forever 21, which partnered with Shein to sell their clothing on the online retailer’s site as well as hosting Shein popups in its brick-and-mortar stores.

Late last month, Shein reportedly made moves to go public, filing confidentially, according to The Wall Street Journal. The company, which was valued at $66 billion earlier this year, is eyeing a $90 billion valuation for the offering. The potential IPO announcement drew the ire of some, including Rep. Jennifer Wexton, who called on Homeland Security Secretary Alejandro Mayorkas to verify testing of Shein products that contained cotton from Xinjiang, the region in China notorious for labor abuses against Uyghurs and other Turkic minorities.

The Chinese retailer has been a hit with Gen Z shoppers in particular, with its budget-friendly products playing a big role in “haul” culture—sharing purchases of multiple low-priced items on social media. Journey advertising platform Illumin reported that Shein was the top brand that people show off in TikTok haul videos, accounting for 42 percent of total products featured.

While Shein is on the rise, Amazon still dominates e-commerce retail in the United States, accounting for $1 of every $3 spent online, according to Insider Intelligence. But Chinese discount competitors such as Shein and Temu have begun to eat into Amazon’s formidable marketshare.

In addition to reducing fees for apparel sellers, Amazon also is excluding apparel and shoe purchases from an increase in returns processing fees. Amazon reported its best Black Friday ever last month, despite a labor strike that affected operations in 30 countries.

Yet the company has seen some struggles recently with apparel, announcing last month that it will close its two brick-and-mortar Amazon Style stores—located in Los Angeles and Columbus, Ohio—to refocus on its online fashion operation.

In a statement to Bloomberg, Amazon said the fee reductions will be implemented to help sellers compete.

“We are reducing referral fees for the apparel category in order to help drive and incentivize even greater selection for customers and competitive prices. Our focus is always on how we can best support the growth and success of our selling partners.”