SUMMARY
The revised fee structure includes changes in various item categories, long-term storage fees, and refund fees
These fee adjustments do not include the 18% Goods and Services Tax (GST) that will be applied to the seller fee
This revision is anticipated to lead to higher prices for numerous items available on the platform
In a major development, Amazon India has informed its sellers that it will change its fee structures from April 7, with a number of categories likely to attract higher fees depending on the product price.
As per Moneycontrol’s report, the company notification mentioned that the revised fee structure includes changes in various item categories, long-term storage fees and refund fees.
It is pertinent to note that these fee adjustments do not include the 18% Goods and Services Tax (GST) that will be applied to the seller fee.
Currently, a seller pays a fee to Amazon, including, charges for inventory storage, technology, shipping, returns, and a seller fee, for each time a product is sold through the portal.
“We recognise seller fees and incentives as strong long-term levers that will help sustain a robust thriving marketplace, focused on digitising small and medium businesses in the country and enabling them to grow into strong national brands. These changes reflect our commitment to make Amazon.in one of the most preferred marketplaces for selling in India and creating right choices for sellers to
grow efficiently,” said an Amazon India spokesperson in a statement.
Home improvement (from 9 %to 13.5%), luxury beauty (from a flat 5% to a tiered system that goes up to 10%), and sleepwear (from 11-15 %to 13.5-19%) were among the categories that saw the steepest increase in seller fee. Musical instruments and flipflops also experienced fee hikes, rising from 7.5% to 10.5% and from 10-12.5% to 13-15%, respectively.
While certain categories saw fee increases, the ecommerce giant also reduced fees for categories such as inverter and batteries (from 5-5.5% to 4.5%), Apparel – Baby (from 11-21% to 11-20%), and a few others.
Amazon’s adjustment in seller fees will affect major companies like Mamaearth and BoAt, which heavily rely on e-commerce platforms for sales. Mamaearth, a prominent player in face washes and skincare, will see a significant increase in seller fees. Previously ranging from 2.5-8%, fees for face washes will now rise to 6-9%.
Similarly, fees for moisturizer cream, including Mamaearth’s products, will increase from 2.5-8% to 6.5-9.5%. Even for popular items like sunscreens, fees will jump from 2.5-8% to 6.5-9.5%. This change will apply to other beauty products as well, with fees increasing from 2.5-8% to 6.5-9%.
It is unlikely that Mamaearth, despite selling in large volumes, is going to be treated differently and will be subject to the seller fee increases.
In February, while announcing the company’s Q3FY24 results, Varun Alagh, co-founder and CEO of Mamaearth said, “In fact, we would be the most commonly treated in terms of players because we operate as sellers on these websites. When you operate as sellers, you are operating with the same framework that Amazon has put out for any seller in the country.”
“But finally, we are going by that same framework that Amazon or Flipkart have created for any seller in the country. Most other companies operate in a B2B model where there is less transparency, but in our model, it is very transparent in terms of the costs that they apply,” he added.
Besides, as part of the latest update, Amazon has eliminated its Zero Fee fulfillment policy. This change implies that a weight handling shipping fee will be applied to standard-sized shipments priced over INR 20,000 starting from April 30, 2024.
Meanwhile, Amazon is reportedly gearing up to launch its new vertical, Bazaar, showcasing budget-friendly, unbranded fashion and lifestyle products.
Reportedly, Amazon Bazaar is currently onboarding sellers and encouraging them to list unbranded products, which include apparel, watches, shoes, jewellery and luggage, all priced below INR 600.
The latest development comes close on the heels of Amazon’s entry into the logistics business in India, introducing a new vertical called Amazon Shipping. The company is set to debut in this space by handling non-Amazon orders. Amazon has initiated collaborations with direct-to-consumer (D2C) brands, logistics aggregators, and other businesses that directly receive orders from consumers to kickstart this new venture.
