SUMMARY
Amazon India's move to cut seller fee will encourage its vendors to stock more products
The company has reduced its sellers’ commission by 2% in the apparel, home, and electronic accessories categories
The rates for the 'Go Local' programme have been reduced by 20%
Online ecommerce giant Amazon India has reportedly reduced both its storage charges as well as seller fee in five categories in order to encourage vendors to stock more products ahead of its festive season sale in October this year.
The company has also reduced the rates of its Go Local programme by at least 20%, which will enable sellers to bring their inventories closer to their customers by improving their delivery speed. The Go Local programme introduced by Amazon is a distance-based shipment fee for third-party sellers. However, vendors have expressed concerns that the proposed rule can lead to a 15% additional cost of doing business for them.
Further, Amazon has slashed the commission it charges sellers by 2% in popular categories such as apparel, home, and electronic accessories. The company has also cut the closing fee for sellers who use its fulfilment centres to store products.
With this revised seller fee, Amazon India aims to give its sellers an added benefit so they participate enthusiastically in the upcoming festive sale. This will further help the company in avoiding last-minute “out of stock” situations and deliver its products faster.
Also, the cut in seller fees in categories such as apparel and home will further help Amazon India tackle issues arising due to heavy discounting during the festive sale.
According to reports, the Amazon India has been witnessing an addition of 3,000 sellers every week.
Even though the company is taking steps to support the merchants on its platform, a group of sellers is reportedly in the process of filing a case against the company alleging that it gives “ preferential treatment” to larger sellers such as Cloudtail and Appario.
This is not the first time Amazon has revised its seller fee structure. It has done it before as well on the following occasions:
- In June 2018, it reduced its seller fees in categories such as furniture and luggage
- In April 2018, the company reduced the seller fees by 70% in categories such as daily needs and apparel, while it was increased by up to 50% for items like power banks, chargers, shoes etc.
It must also be noted that after the completion of the Walmart-Flipkart deal, Flipkart reduced its commission in low-priced categories in August 2018.
Meanwhile, ecommerce companies are looking to sparkle in their upcoming festive sales.
The month of October usually marks the beginning of the festive season in India. Not only Amazon India, but it’s arch-rival Flipkart is also gearing up for its annual festive sale — Big Billion Days — which is scheduled to begin on October 10. This time, it plans to increase the total headcount of its delivery and warehousing executives to 100K.
Recently, a group of online sellers affiliated to Flipkart requested the country’s fair trade watchdog — the Competition Commission of India (CCI) — to restrict large sellers from participating in the five-day Big Billion Days sale.
According to the Economic Survey 2018, India’s ecommerce market reached $33 Bn and registered a 19.1% growth in 2016-2017. Last year, Flipkart claimed the top spot in the festive season sale as managed to sell around 1.3 Mn smartphones within the first 20 hours of the category opening for sale.
With the festive season sales playing a major role in hiking up the overall gross merchandise value (GMV) of ecommerce companies, Amazon India’s latest move of slashing seller fee is sure to encourage vendors to stock up on more products in view of the upcoming sale.
[The development was reported by ET]
