Amazon India restructures its fees to encourage local markets

19 March 2018 (Last Updated March 19th, 2018 16:29)

Amazon India wants to encourage sellers on its platform to focus more on their local markets to deliver products cheaper and faster to customers especially in categories such as apparel and groceries.

Amazon India restructures its fees to encourage local markets
Amazon India increases seller’s prices for regional and national shipping. Credit: Amazon

Amazon India wants to encourage sellers on its platform to focus more on their local markets to deliver products cheaper and faster to customers especially in categories such as apparel and groceries.

The e-commerce retailer brought in several changes to its seller fee structure, making it cheaper for sellers to ship locally to increase delivery speed and encourage more customer sales, while increasing costs of regional and national shipping.

Amazon has reduced the fees for selling on the platform by up to 70% in categories such as daily essentials and apparel, but increased fees by up to 50% for items like shoes, home improvement accessories, power banks and chargers.

At present, Amazon India has over 300,000 vendors which sell more than 160 million products across 104 categories.

Overall, the fees will increase for 24 categories and fall for 32. There will be no change in 48 categories, including mobiles, laptops, books and small appliances.

In a bid to push groceries, seller fees in the category have been reduced to 3% from 7%, as the company takes on Alibaba-backed Big-Basket and Flipkart which are entering the space.

The company is also giving a push to its fashion category, where Amazon lags behind India’s online store, Flipkart, by reducing seller fees in apparel to 17% from 19.5%.

A spokesperson said: “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”

Amazon said the new rates would apply to all sellers on the marketplace but did not comment on Cloudtail and Appario, two sellers in which Amazon has a stake.

Sellers said both Flipkart and Amazon had been changing fee structures over the past few years to keep their rates on par so as to not lose merchants to the other company.

In November Flipkart lowered commissions by 5% for items priced below Rs 300 in many categories, in a bid to encourage sellers to offer their products at lower prices.

The company cut the shipping fee within city limits under its Fulfilled by Amazon (FBA) category to Rs 24 per item (first 500 grams) from Rs 28.

The shipping rate within the region increased to Rs 32 from Rs28 and national shipping was increased to Rs 55 from Rs 50.

The fee was cut for the next 500 grams for local shipping under FBA.

For EasyShip –where Amazon picks up the product directly from the seller–the closing fee has been cut to Rs 2 from Rs 10 for products priced below Rs 250, and to Rs 5 from Rs 10 for those priced Rs 251-500.