Photo-illustration: Intelligenmer; Photo: Allen J. Schaben / Los Angeles Times Via Getty Images
By Most Measures, for Mary Years Now, Have Been Going Pretty Well for the Amazon Corporation. ITH’S The Dominant American E-Commerce Firm, IT of A Logistics and Delivery Powerhouse, and it has a Wildly profitable Side Business in Cloud Computing. IT HAS HORDS OF MILLIONS OF CUSTOMERS Buying Stuff from Millions of Sellers. IT HAS A GREATER MARKET SHARE THAN ITS NEXT TEN Competitors Compised.
One of Those Competitors, Howver, Appears to Have Amazon’s Leadership World: Shein, The Ultracheap Fast-Fashion App. In a December mark To Sellers, Amazon Announedd That It Wold Dramatically Decreese the Commissions It Takes on Cheap Clothing. “For Items priced under $ 15, we will decreese reference fees from 17% to 5%,” The Company Said. “For Products PrICED BETWEEN $ 15 and $ 20, we will decreese reference fees from 17% to 10%.”
Fees like this are increasingly core to amazon’s retail Business, which has beCome mess about selling directly than about oversseeing a seller-Buyer Marketplace and taching a cut; These Discounts Will Come at A Real Cost to the Company. Over Time, Seller Fees Have tender to inch up – Indeed, The Company Said It Expects “SELLERS WILL SEE AN AVERAGE INCREASE OF $ 0.15 IN ES FOR UNIT SOLD” NEXT YEAR, TAKING INTO ACCOUNT ALL CATORIGE – WHICH MAKES FOR CLOTING A NOTABLE OUTLIER. Amazon Didn’t Reference Any Competitors in Its Seller Update, But Analysts Are unanimous: Its About Shein.
Juozas Kaziuknas of Pulse Marketplace sketches Amazon’s Basic Prediciament:
Shein is an Order of Magnitude Smaller than Amazon – ITS Gross Merchandise Value This Year, More than $ 40 Billion, Is Less than 10% of Amazon. But Most of that $ 40 Billion is in Clothing, Which Shein is Best Known for and Strongest in. Its suply chain, tuned to introdes of new Designs Dysigns Dynamically Adjusting whic Products Get Manufactured, is uniquely fit for clothing. It is the Biggest Online-Native Clothing Retailler.
Shein, which is headquarted in singapore but was founded in and operats away from china, commands a networking of thusands to churn out on-TRENING at impossibly Low prices. Its Fast Fashion takeen to a new Extreme: Cheaper, Quicker, More Satisfying For Compulsive Shoppersand, accordingly, Ethically and Environmentally Disastrous. Unlike Temu, which sells a range of direct-two-china products at Deep Discounts, Including Clothing, Shein Has Become Just a popular destination but a social-media-Driven brand itself. ALSO Unlike Temu, Which has vaporized billions of dollars trying to break through to American Customers, Shein Is Reportedly profitable and preparing to go public.
Shein’s model is working, and the company’s Big Bets – that, for apparel, pricing and trend sensitivity are more imported than Shipping Times and that MANY SHOPPERS WHO They CARE ABOUT SUSTAINABILITY AND BLUFING OR LYING TO TEMELVES – Have so far paid off. But the rise of shein is just as interesting for the weaknesses it identifies in amazon.
At Bloomberg, Dave Lee entertainment Thats Change Complicates Arguments About Amazon’s Market Dominance and that we are the Company “Faces Real Competition, It Lowers Its Prices. Kaziuioknas disprovers The Idea that Amazon’s Fee Cuts Will Eve Work. “SHIK IF FEES WERE TO GO TO ZERO, AMAZON WAUTED HAVE NO ASSWER FOR SHEIN,” he Writes. “For Instance, Amazon Doesn’t Have the Tens of Millions of Followers Shein Has on Instagram Nor the Billions of Views Shein Hauls on Tiktok.” One plausible consequence of these Fee Changes is that Mercenary, Category-Agnostic Sellers With no participation for development for development or marketing Apparel Accept Amazon’s Invitation to Chase Better Margins, Amazon’s Clothing Verticals in a Way that that is the risk of Making saying less appealing to Image-Conscious Shoppers.
If Shein’s Top-Down, Direct-Supply-Chain Management Is “Uniquely Fit for Clothing,” Amazon’s is spreads Uniquely Unfit, Composed to Sellers Who Amazon Can, Penalie, Nude, and Cajole Into Competing with Shein-But Whom It Iesht Really command — And whose sensitivity to tiktok trends, celebrity fashion, and teenage whims is limited by their arms-wreountness with the Amazon Machine, with Oversseas Manufacturers (Some of the Produce Products for Shein), Products in jumbled searches and ads, not through influencers or friends in social feeds.
Beyond Its Fee Changes, Amazon Has Signaled Nervousness About Changing Shopping Habits and Brand Perception. IT TURNS OUT THAT SOME OF THE THINGS THAT HAVE Long Made premium brands nervous About Working with Amazon – Specific, The profoundly unpleasurable and undifferentiated shopping experience on its apps and sites, which borders on hostile to the Very Concept of a brand – are just as relevant in the degraded but equally aspirational world of fast fashion, meaning that amazon’s enormous apparel business is vulnerable from the top and Bottom of the Market. (In Response to Shein, As Well As the Launch of Tiktok’s Own Shopping Feature, Amazon has Also partner with Meta, Snap, and Pinterest to integrate Amazon Lisings and Checkout Features Directly Into Social-Media Feeds.)
Amazon, in Other Words, is Doing Its best to Replicate Shein’s Success. Meanwhile, Shein is in the process of becoming more like amazon, expanding its product and categories and Recruiting Sellers – Some Poached Directly from Amazon – for a marketplace of its. I was bet on shein as a comprehensive thread to amazon’s business in america. But it has already accompished something that that no other retailer has in quite a few years: it’s put the everything on defensive.
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