Amazon raises seller fees across several categories; apparel carries highest fee

By

Arati Menon

Published
Jan 25, 2018

Reports are in that Amazon will soon hike its sellers fee bands in two of its high-growth categories — apparel and accessories. Going forward, Amazon will be netting a larger percentage of third-party sales.

Fees for apparel will be increasing from 15 percent to 17 percent whereas accessories will reportedly witness a hike in fees from 15 percent to 18 percent. Interestingly the increases will only apply to items with a purchase price of $75 or more. Items which cost under $75 will see their fees stay put at 15 percent.

Apparel now carries the steepest fees of all categories across Amazon.

The fee changes at this point are limited to the categories of apparel and accessories, but could potentially herald a change in the way that Amazon approaches its businesses. Given that Amazon’s strength comes from being a marketplace for third-party sellers, the seller fee hike is an unorthodox move.
 
In Q3 of 2017, Amazon's apparel business showed 32 percent growth in total sales volume compared to the third quarter of 2016. The retail giant’s growth in apparel has been far outstripping that the of the U.S. apparel market as a whole.
 
In a recent survey of 1500 U.S. shoppers for its forecast report on U.S. Apparel Trends in 2018, CPC Strategy, a retail-focused digital agency, reported that Amazon will sell $28 billion worth of clothing in 2018, almost equal to what countries like Bangladesh and Vietnam export annually. The report stated that apparel sales could reach $85 billion by 2020, according to a survey of 1500 US shoppers by CPC Strategy, a retail-focused digital marketing agency.

Some analysts surmise that the fee hikes are part of a strategy to pivot away from third-party retail brands towards Amazon’s own private labels. Since 2016, the e-commerce giant has launched a series of private label clothing and accessories brands in various sub-categories. Amazon's 2017 private label sales are estimated at nearly $450 million.
 
Amazon has also adjusted its fees in the jewelry category, charging 20 percent on the first $250 in product price — but only 5 percent thereafter.
 
Unlike with apparel, the shift in jewelry seller fees could just mean that Amazon is attempting to attract premium players in the market. Amazon has been struggling to recruit luxury brands to sell on its platform.
 
High-end brands have traditionally stayed away from Amazon's online marketplace, believing it undermines their sense of exclusivity; they also want to be able to maintain control over their high-end pricing. The new seller fee policy might serve as a deterrent to discounting by third-party retailers.
 
Amazon was responsible for 44 percent of e-commerce sales in 2017, or 4 percent of all retail sales, according to a report from One Click Retail. Another bullish calculation by Morgan Stanley estimates that Amazon could be worth $1 trillion by the end of 2018.
 
Meanwhile, the company reports its fourth quarter results on February 1.