Amazon slashes sellers’ fee across categories, lays emphasis on local merchants

Amazon India has once again intensified its ‘Go Local’ programme, encouraging sellers to concentrate on their local markets. The e-commerce giant has introduced several changes in its seller fee structure.

The Amazon India’s sellers will be charged lesser fees to ship products locally, however, they will have to pay higher fees for regional and national shipping.

This is the second time in a year’s time when Amazon India is making such changes in fee structure. In August last year, it introduced the reform under the branding of ‘Go Local’ and applied logistics costs on sellers based on distance and logistics.

It had then divided the country into four regions, making it cheaper for sellers to ship to customers falling under the same region. However, shipments from one region to another saw an increase of 15-16 per cent in the weight handling fees charged by Amazon.

In the latest changes, it has slashed 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 move seems to be its effort to gain an upper hand in the long term by having a strong presence in particular local and hyperlocal pockets over rival Flipkart.

Meanwhile, it hiked the rate for shipping within the region to Rs 32 from Rs 28 and beyond that to Rs 55 from Rs 50. The fee has also been cut for the next 500 grams for local shipping under FBA.

Besides, it has also re-structured sellers’ fees based on product categories.

This time, with the changes sellers’ fees structures, the e-commerce major aims to increase delivery speed and bring more customers to the platform.

In categories such as daily essentials and apparel, sellers’ fees have been slashed by up to 70 per cent. Simultaneously, it increased the fee by up to 50 per cent for items such as shoes, home improvement accessories, and power banks, among others.

Overall, it has increased the fees for 24 categories and reduced for 32 categories. However, in 48 categories, including mobiles, laptops, books and small appliances, among others, no changes in the fees have been made.

The platform has also reduced the fees in groceries’ category from 7 per cent to 3 per cent. The e-commerce platform is competing with Alibaba-backed BigBasket and SoftBank-backed Grofers in this segment.

Importantly, in November last year, Amazon Seller Services, which earns through commissions, advertisements and shipping fees, registered a growth of 41 per cent in FY17 with a revenue of Rs 3,128 crore.

Over the years, Flipkart and Amazon have been at price-war in India. Besides fighting for more marketshare in consumer space, they also engaged in incentive war to attract more sellers.

Flipkart has also made several such changes in the past. Last November, it cut commissions by 5 per cent for items priced below Rs 300 in many categories. It was an attempt to encourage sellers to offer their products at lower prices.

However, sellers think otherwise. Amazon has 3 lakh sellers selling 160 million products across 104 categories on its Indian platform. Earlier, the All India Online Vendors Association (AIOVA) has opposed the Go Local policy and termed it as an unethical move by the e-commerce major.

The development was first reported by ET.