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Amazon Raises Fashion Seller Fees

Perry Preston Feb 24, 2018 8:19:44 AM
Perry Preston
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Amazon’s latest seller fee increases hit fashion sellers square in the wallet.

The company upped its take of sales from third parties by raising seller fees across the Clothing & Accessories and Handbags & Sunglasses categories in varying ways, while it reduced jewelry seller fees.

According to an equity research report from Instinet, apparel and accessories sellers must give the company 17 percent, up from 15 percent. Merchants offering bags and sunglasses face step increases for higher-ticket products, i.e., items priced in excess of $75. Fees under that threshold will stick at 15 percent, while items above it go up to 18 percent. Jewelry purveyors contend with a much broader step structure, paying out 20 percent on the first $250 of the retail price, but just 5 percent afterward.

The move arrives on the heels of rising subscription prices for monthly Amazon Prime memberships for consumers, from $10.99 to $12.99 per month.

However, the higher fees for sellers — and the precision with which they were constructed — suggest they’re not just a play for more revenue.

Indeed, the company is not hurting for money. In the third quarter of 2017, Amazon sales soared 34 percent, and the vast coffers of its cloud business grew further still, with Amazon Web Services driving a 42 percent jump in revenue, breaking $4 billion dollars. Fourth-quarter results will be released on Feb. 1.

The new seller fees appear to be a surgical strike. After adjusting for the step structures, the apparel category emerges with the highest fees across all of the marketplace categories.

“Raising rates in the higher-margin, third-party apparel business is an interesting move, perhaps signaling the fact that we’ve reached the point where there is no denying that Amazon, as the online mall, has become more attractive real estate for brands than what the physical malls have to offer,” said Instinet analyst Simeon Siegel.

On the other hand, it could be an equalizer for fashion apparel’s higher return rates, he said.

Amazon did not immediately respond to a WWD request for comment, but the company made its priority on fashion rather evident through a multitude of related efforts — including its private labelclothing lines, styling and try-on services, devices like the Echo Look camera, and an array of design and fashion-related patents covering virtual fitting mirrors to morphing mannequins — that would place apparel squarely in its crosshairs now.

So far, Amazon’s strength in fashion has skewed toward basics, though the company has been trying to lure premium goods. In that vein, slashing fees for more expensive jewelry items gives luxury purveyors a direct benefit.

Jimmy Duvall, chief product officer at BigCommerce, believes the company’s goal is to bring more high-end shoppers to the platform. “We expect that Amazon will put more of that money towards advertising targeted at luxury shoppers, which will only serve to further increase the marketplace’s value to third-party sellers,” he said.

Duvall also points out that, with 55 percent of all initial product searches starting on Amazon, many retailers consider it a key aspect of their overall channel sales strategy. “That won’t change,” he added. “For Amazon-only apparel merchants, this move may be a wake-up call that they need to increase their investment in other channels that drive a better return on investment — their own web site, other marketplaces and social media channels.”

Source: https://wwd.com/business-news/retail/amazon-raises-fashion-stakes-with-seller-fee-changes-increase-11124081/

 

Topics: fashion, amazon, marketplaces