Amazon to reduce seller fee by 10 percent on June 5 to celebrate 10 years in India

Manish Tiwary, country manager, India Consumer Business for Amazon, is upbeat about the future of the e-commerce giant in India.

As Amazon, the e-commerce giant, celebrates a decade-long presence in India, the company said that it will waive off 10 percent from the seller fee for all transactions on June 5, 2023. The Seattle-based company has over 1.2 million sellers on its platform, largely in line with its closest competitor, Walmart-owned Flipkart, that has over 1.1 million sellers in the country.

Since June 5, 2013, when its India operations first started, Amazon has invested over $6.5 billion to grow categories like e-commerce and video streaming through Prime. It even launched vernacular languages on its platform, introduced two-hour deliveries, and announced Amazon Smbhav, a $250-million capital pool through which it invests in Indian direct-to-consumer (D2C) companies.

'Future is exciting'

But, at the same time, it has rolled back several initiatives like Amazon Food and Amazon Academy, which would be shuttered in a phased manner starting August 2023.

“It’s been an incredible journey of making an Amazon in India, for India. We are truly just getting started. With a young and vibrant population, rising income levels, and increasing penetration of (the) internet and social media, the future is exciting,” Manish Tiwary, country manager, India Consumer Business, Amazon said in a blog post published on June 4.

After having digitised over 4 million small businesses, enabled over $5 billion in cumulative exports, and created more than 1.1 million direct and indirect jobs, Amazon pledged to deliver more. By 2025, Amazon plans to digitise 10 million small businesses, enable $20 billion in exports, and create 2 million jobs.

The goals are set despite talks of Amazon downsizing its operations in India. In fact, the company skipped any mention of its performance in India during its latest quarterly update.

Even analysts at Bernstein had earlier highlighted how profit remains elusive for Amazon India even after investing over $6.5 billion as competitors, like the Flipkart group, are gaining ground in categories like smartphones and apparel. While newer companies like SoftBank-funded Meesho continue to increase their market share in Tier 2 and Tier 3 cities.

Amazon’s Tiwary however continued to sound upbeat. “We remain committed to innovating for customers, and enabling small businesses and startups to contribute to India’s vision of becoming a $1 trillion digital economy,” he added.

Difficult road ahead?

The growth path however seems like a difficult one for e-commerce players in general. Last month, the analysts at Redseer, a consultancy firm, highlighted that the growth in e-commerce gross merchandise value (GMV) was slowing after years of steep growth. E-tailing GMV grew by about 44 percent from $25 billion in FY20 to $36 billion in FY21. And then the GMV further increased by around 36 percent year-on-year (YoY) to $49 billion in FY22.

However, the pace of YoY growth slowed to 22 percent in FY23 when the GMV increased to $60 billion.

The slowdown was largely due to price pressures, fewer online shoppers, and stagnating average dollar spend per shopper, as per Redseer's report.