Ecommerce Behemoth Amazon India Modifies Seller Fees To Engage More Sellers

In an attempt to encourage sellers to engage more with its marketplace, Amazon India has reportedly altered its seller fees in various segments. The changes will be applicable from April 19.

The change has made it cheaper for sellers to ship locally in their city. However, the cost of shipping regionally and nationally has increased. The reduction in fees is nearly 70%  in categories like daily needs and apparel, while it has increased by up to 50% for items like power banks, chargers, shoes etc.

On the change in fees structure, an Amazon India spokesperson said, “Many of our new sellers now come from smaller towns and semi –urban and rural areas and they are catering to nationwide customer base. Our Prime offering too is expanding significantly helping our sellers access this loyal customer base and frequent purchasers. We feel it is now more important than ever to empower sellers more and provide them more choice, agility and flexibility to serve this growing demand from all segments of customers across the country.”

Amazon India offers three shipping modules on its platform for sellers. In the local option, a vendor can sell the products only in his/her city. Under the regional category, the company offers sales in a predefined set of cities or states in four modules. With national shipping, on the other hand, a seller can sell across regions.

At present, Amazon India has over 300K vendors who sell more than 160 Mn products across 104 categories. The fees for sellers in 24 categories will increase by upto 50%, while that across 32 other categories will decrease by upto 75%. For another 48 categories like mobiles, laptops, books etc, it will remain the same.

The spokesperson added, “We want to offer more choice to our sellers so that they are able to choose the best channel based on their selection keeping in view their operational capabilities and individual item level costs and sales turns. We also want to encourage sellers to continue to offer their products locally so that customers are able to get more selection locally with faster deliveries”

The company has targeted mostly groceries and apparel sector. As per sources, the ecommerce giant has reduced seller fees for the grocery segment from 7% to 3%, while the apparel section has seen a reduction in seller fees from 19.5% to 17%.

To go more green-conscious, the referral fees for garden solar devices have reduced to 5% from 12%. Similarly, for LED bulbs and batteries, the seller charges have reduced to 3% from 11%.

One of the other major changes instituted by Amazon pertains to the shipping fee within city limits under its Fulfilled by Amazon programme, where the fees have been changed to $0.37 (INR 24) for the first 500 gms from $0.43 (INR 28). The shipping for the next 500 gms has also been cut.

However, this has been reversed for shipping within the region and nationally, with the fees increasing to $0.49 (INR 32) from $0.43 (INR 28) for regional shipping and to $0.85 (INR 55) from $0.77 (INR 50) for national shipping.

Amazon has also altered the fixed closing fees levied on sellers for payment processing, hardware and other costs.

Earlier, it was Flipkart that altered its selling rates in November 2017. The company lowered commission by 5% on items priced below $4.61 (INR 300) for many categories including mobile accessories. Also, the payment settlement time frame was reduced by two days for sellers in the silver category.

As the Indian ecommerce market reached $33 Bn registering a 19.1% growth in 2016-2017, according to the Indian government’s Economic Survey 2018, major players like Flipkart and Amazon have been expanding and exploring avenues to gain a stronger foothold in the burgeoning market.

However, with the changes in seller fees, it remains to be seen if Amazon India will continue to see an influx of new sellers. If it goes sideways, however, existing sellers might give up on the booming ecommerce market of Amazon India.

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