Amazon India hikes seller commission across categories as etailer cuts costs

This could potentially increase prices for customers, the sellers ET spoke to said.

Seller fee for over-the-counter medicines has been increased from 5.5% to 12% for products priced less than or equal to Rs 500 and 15% for items priced above Rs 500.

Amazon has also reduced seller rates for certain categories like wall paints and tools and inverters and batteries.

It has also reduced tiers, or has allotted a single rate of commission for some categories like the makeup category, which will have a seller commission of 6% for products across all price points. Currently, it has a two-tier commission – 3% for items priced less than or equal to Rs 500, and 6% for products priced above Rs 500.

“Marketplaces know that there will be a straight impact on pricing,” said one of the sellers who spoke on condition of anonymity. “Whatever is the change in commission, it is done more to change the behaviour of the seller. Marketplaces keep changing these rates based on what they want the consumers to see. So, if the commission goes up by 2%, naturally the prices also go up by 2%.”

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Ecommerce companies like Amazon and Flipkart make money by charging commissions and fees from sellers for products sold through the marketplace. The rates keep changing depending on market conditions, Amazon said.Sellers pay fees for inventory storage, shipping, and returns for each product to the marketplace.

Also read | Amazon lays off employees in India across functions

“As part of our annual process, we have recently announced fee revisions that will be effective from May 31, 2023,” Amazon said in an emailed statement to ET. “Seller fee revisions are based on various factors including change in market dynamics and various macroeconomic factors. As a part of our recent fee revision, we have made certain changes to our fee rate card, including introduction of new fee categories and also reduction of fees in certain categories.”

Amazon has made changes to referral fees, long-term storage fees, refunds related to returns, and fulfilled-by-Amazon (FBA) pickup fees for sellers, which are shipping rates.

Amazon has increased shipping rates by about 20-23% for products that needs to be shipped nationally.

The seller fee hike comes as the ecommerce giant is seeing a slowdown in growth across businesses and is undertaking layoffs across the globe as a part of cost-cutting initiatives. ET reported on May 11 that ecommerce shipments across major marketplaces have seen significant slowdown in the first quarter of 2023.

Several sources and brands working with Amazon India said the etailer has seen the highest impact among the leading ecommerce platforms.

Globally, a consumption slowdown has impacted Amazon’s overall growth. The company has cut 27,000 jobs in two phases. For the quarter of 2023, the Seattle-based company posted a loss of $1.24 billion on net sales of $29.1 billion from international operations, as against $1.28 billion and $28.7 billion, respectively, a year earlier.