Amazon scraps referral fee on products below Rs 300, cuts shipping costs by 16%

Amazon scraps referral fee on products below Rs 300, cuts shipping charges by 16% to boost seller-base

Amazon India has scrapped its referral fee for sellers on its platform on products listed at less than Rs 300, in a bid to increase its seller base in India. This will apply to more than 1.2 crore products across 135 categories, said a senior executive at the company.

The e-commerce major previously charged a 2-14 percent referral fee on each product sold on the platform.

Amazon has also cut down its national shipping charges, for sellers using Amazon’s external fulfillment channels like Easy Ship and Seller Flex, by almost 16 percent from Rs 65 to Rs 77 per order.

While Easy Ship is a fulfillment channel where Amazon collects packages from the seller’s location and delivers them to customers, as part of Seller Flex, Amazon manages a portion of the seller’s warehouse as an Amazon fulfillment centre.

“The change in fee is very dramatic. For instance, earlier, a product like shorts priced at Rs 299 would attract Rs 130 in fees. With the reduced charges, the same product will attract a fee of Rs 70. Moreover, sellers selling more than one unit at a time will stand to see over 90 percent savings in selling fees on the second unit,” Amit Nanda, Director, Selling Partner Services, Amazon India, told Moneycontrol.

Additionally, the company has reduced the weight handling fees for lightweight items under 1 kg by up to Rs 17. The revised fees come into effect from April 7, 2025.

To be sure, other than the aforementioned fees, Amazon also charges its sellers a weight handling fee, and other fees based on additional Amazon services like pack and pick fee, and storage fee.

As of the festival season last year, Amazon had a seller base of 16 lakh in India, up from roughly 14 lakh in the year ago period.

It is not immediately clear whether the reduced fees will impact Amazon’s revenues in the Indian market. However, the company's management expects the move to spur growth in the long term.

“We are a long-term focused organisation. We are confident that this decision will be better for us in the long-run, including on our bottom line as well. We have achieved efficiency of scale and we are passing on the benefits to our sellers,” Nanda said.

Amazon Seller Services, the marketplace arm of the e-commerce giant in India, saw its operating revenue increase 14 percent to Rs 25,406 crore in FY24 from the previous year, financial data accessed by business intelligence platform Tofler showed. It also narrowed net loss by 29 percent to Rs 3,470 crore on improved operational efficiencies in an evolving e-commerce landscape.

This comes at a time when e-commerce and quick delivery players have been increasingly levying miscellaneous charges on buyers. While Amazon does not charge a platform fee like many of its competitors, it does charge its customers a Rs 49 offer processing fee for purchases which use bank discounts of Rs 500 or more.

Likewise, Amazon’s largest rival in India, Flipkart, has recently started charging users a ‘Protect Promise’ fee of Rs 49 on select products, to ensure product safety as it travels through multiple hubs in the process of being delivered to customers.

This is over and above other miscellaneous charges like a Rs 3 platform fee, Rs 49 offer handling fee, and Rs 59 packaging charges. In fact, Flipkart has, in the past, also charged customers a Rs 10 ‘sale fee’ on discounted products.

Such miscellaneous charges have become commonplace among e-commerce companies after food delivery platforms like Swiggy and Zomato started levying their contentious platform fees in 2023. Starting at Rs 2, both Swiggy and Zomato have now hiked this to as much as Rs 10.

Amazon’s reduction in seller fees is aimed at boosting the growth of its small sellers in India. More than 90 percent of Amazon sellers are small and medium businesses, and over 45-50 percent of them are located in tier 2, 3, and 4 cities, the company said.