It’s a race to the bottom in the battle for marketplace sellers’ loyalty.
Starting Dec. 15, Amazon will slash seller fees for vendors on its platform by an average of 0.15 Great British Pounds (GBP) or 0.17 Euros per unit in a bid to keep up with the low prices of Asia-based competitors like Shein and Temu.
Stacking upon the fee reductions, the company will also reduce Fulfilled By Amazon (FBA) fees for parcels by an average of 0.26 GBP or 0.32 Euros across stores based in the United Kingdom, Germany, France, Spain and Italy.
Related Stories
In Europe alone last year, small and medium-sized enterprises selling on Amazon moved a total of 1.3 billion products. “These entrepreneurs are creating an estimated 350,000 jobs across the EU, many in rural areas. We are committed to ensuring that selling in Amazon’s store remains the best way for these businesses to thrive,” the company wrote in a memo to sellers.
There are also some category-specific changes going into effect. Amazon said it will cut referral fees for clothing and accessories from 8 percent to 5 percent for items worth up to 15 GBP or 15 Euros, while reducing them from 15 percent to 10 percent for items up to 20 GBP or 20 Euros.
Meanwhile, referral fees for home products will also be reduced on Feb. 1 from 15 percent to 8 percent for items up to 20 GBP or 20 Euros, while pet clothes and food will see referral fees fall from 15 percent to 5 percent for items up to 10 GBP or 10 Euros.
Amazon said on the same date, it will offer lower-priced FBA rates on the majority of categories and products selling for 20 GBP or 20 Euros (or less), with these products eligible for fees of 0.40 GBP or 0.45 Euros per unit. There will also be lower caps on the fluctuating fees for Best Deals and Lightning Deals.
“This update reflects the work we have done for years to optimize our operations and fulfilment network. As we continue to lower our cost to serve through operational improvements and innovation, we are passing on greater savings to our selling partners, providing them with an even greater value by selling in Amazon’s store,” the company wrote. “These reductions also align European fees with changes we have made in other countries, including in the U.S., as we continue to drive our costs to serve lower around the world.”
In recent years, Amazon has seen some attrition from its third-party sellers as competitors offer more favorable terms and continue to grow their global logistics infrastructure.
Burgeoning marketplace competitor Shein—known chiefly for its impossibly cheap branded wares—charges 10 percent referral fees for EU sites and 12.24 percent for stores based in the UK, though the platform is reeling in new users with a 0 percent referral fee period of 30 days upon sign-up.
Perhaps in a move to evolve beyond its reputation for hawking disposable fast-fashion, the China-founded, Singapore-based e-commerce phenom has been courting legitimate fashion players and trend-forward upstarts to join its platform. In September, the company debuted its Xcelerator program in France, the U.K. and China with French brand Pimkie as one of its first partners. Shein said the program will allow both established labels and emerging talents to develop scalable digital businesses with international potential.
Temu’s seller fee model, by contrast, is more variable. While sellers can list items for free, the platform charges a service or commission fee of between 5 percent and 20 percent per unit depending on the product being sold.
Last month, for example, Temu signed a memorandum of understanding with BPostGroup, an expert in parcel logistics, to support its sellers in Europe. The companies plan to strengthen their existing partnership in Belgium and Canada by diversifying delivery models (including services for heftier packages) and create greater access with pick-up and drop-off networks. They also plan to develop new integrated logistics solutions to support localized and pan-European delivery.
The company, which launched its marketplace to sellers in Europe just last year, said it anticipates that local sellers and local fulfillment will eventually account for a whopping 80 percent of its European sales.
