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Post FDI-Ecommerce Rule Amazon Dials Down Commissions Charges: Report

Post FDI-Ecommerce Rule Amazon Dials Down Commissions Charges: Report

To cut commission for fashion sellers by 35%

50% cut in commission on select FMCG categories

Company to introduce ratings based commission cuts for vendors

In the aftermath of the FDI ecommerce rule, Amazon India has reportedly reduced its commission charges to attract more independent sellers and establish itself as a friendly marketplace.

The commission has been lowered down by 35% for famous fashion sellers and by over 50% on specific FMCG categories, according to an ET report.

“We introduce limited-period fee promotions regularly for our sellers to motivate them to grow their business on the marketplace,” an Amazon India spokesperson reportedly said in an email.

In a bid to boost sales from independent sellers, Amazon has started a rating-based commission system for fashion vendors. The best performers will pay around 35% less commission as compared to what they were paying before. The vendors will reportedly earn incentives based on their position on the rating scale and will gain the maximum benefit as reduced commission rates, the source added.

With the new ecommerce FDI rules applied from February 1, Amazon and Walmart’s have together lost $50 Bn in market capitalisation.

In December 2018, the government notified changes for large online marketplaces with the new FDI policy for ecommerce. According to these rules,  ecommerce companies can enter into transactions with sellers only on B2B basis. They will not exercise ownership or control over the inventory. Cash back provided by group companies of marketplace entity to buyers shall be fair. Ecommerce marketplace entity will not mandate any seller to sell any product exclusively on its platform only.

Beyond exclusivity, the notification also prohibited marketplaces from making more than 25% of purchases of a vendor.

Amazon India has also removed all the product listings from its preferred sellers such as Cloudtail and Appario Retail in India to comply with the rulings.

The changes in the FDI ecommerce had a negative effect on the company’s private label brands such as Symbol (fashion), Myx (fashion), Solimo (home and kitchen), and its smart speaker range, Echo. The smart speakers which  were earlier unavailable on the website, are now being sold by online sellers such as Hariom Communication LLP and 4 U Marketing. However, the delivery time will get extended to about 15-20 days.

Amazon’s hyperlocal service Prime Now is also reported to stop selling groceries and electronic products on the company-backed NOW store.

This development was first reported by ETtech