Amazon India to revise seller fee from April 7, could lead to higher prices

As items get are bound to get costlier, there is also a risk that the same product may be available at a lower price either from other sellers on Amazon or on alternative platforms, leading to a decline in sales.

Amazon India, in a recent notification, informed that it is tweaking its seller fee for most categories and products from April 7, 2024. The revised structure is expected to result in price increases for several items sold on the platform.

A seller currently pays a fee to Amazon - including charges for inventory storage, technology, shipping, returns, and a seller fee - each time an item is sold on the e-commerce portal.

The company notification stated that the revised fee structure encompasses changes in several categories of items, long-term storage fees, and refund fees. It's important to note that these fee increases do not include the 18 percent Goods and Services Tax (GST) that will be levied on the seller fee.

Moneycontrol has seen a copy of the communication to sellers.

Home improvement (from 9 percent to 13.5 percent), luxury beauty (from a flat 5 percent to a tiered system that goes up to 10 percent), and sleepwear (from 11-15 percent to 13.5-19 percent) were among the categories that saw the steepest increase in seller fee. Musical instruments (from 7.5 percent to 10.5 percent) and flipflops (from 10-12.5 percent to 13-15 percent) are the other categories for which the seller fee has been marked up.

While certain categories saw fee increases, the e-commerce giant also reduced fees for categories such as inverter and batteries (from 5-5.5 percent to 4.5 percent), Apparel - Baby (from 11-21 percent to 11-20 percent), and a few others.

These revisions take into consideration various macroeconomic factors such as inflation, interest rates, operational costs etc, a spokesperson for Amazon India said in response to Moneycontrol's queries.

“We recognise seller fees and incentives as strong long-term levers that will help sustain a robust thriving marketplace, focused on digitising small and medium businesses in the country and enabling them to grow into strong national brands. These changes reflect our commitment to make Amazon (India) one of the most preferred marketplaces for selling in India and creating right choices for sellers to grow efficiently,” the spokesperson added.

Higher fee for Mamaearth

Amazon's move also means that large companies like Mamaearth, Boat and others, who get a bulk of their sales from e-commerce marketplaces like Amazon, will be subject to a higher seller fee.

For Mamaearth, the increase in seller fee will be considerable. For face washes, where Mamaearth is a key player, sellers until now paid a fee of 2.5-8 percent but from April 7, that will increase to 6-9 percent. Similarly, for moisturizer cream, the seller fee is 2.5-8 percent but that is set to increase to 6.5-9.5 percent in the coming weeks.

Even for sunscreens, one of Mamaearth's top products, the fee will be hiked from 2.5-8 percent to 6.5-9.5 percent, as per the revised policy. For other beauty products, the seller fee will be hiked from 2.5-8 percent to 6.5-9 percent.

It is unlikely that Mamaearth, despite selling in large volumes, is going to be treated differently and will be subject to the seller fee increases. In Februrary, while announcing the company's Q3FY24 results, Varun Alagh, co-founder and CEO of Mamaearth said he the company is treated at par with others.

"In fact, we would be the most commonly treated in terms of players because we operate as sellers on these websites. When you operate as sellers, you are basically operating with the same framework that Amazon has put out for any seller in the country. Of course, that framework has
slabs where as you increase in size, you can get better logistic costs," Alagh said in response to an analyst's question.

"But finally, we are going by that same framework that Amazon or Flipkart have created for any seller in the country. Most other companies operate in a B2B model where there is less transparency, but in our model, it is actually very transparent in terms of the costs that they apply," he added.

Honasa Consumer, which runs Mamaearth, did not immediately reply to Moneycontrol's queries.

As part of the latest update, Amazon has also removed Zero Fee fulfilment policy which essentially means a weight handling shipping fee will be charged for standard-sized shipments priced over Rs 20,000 effective from April 30, 2024.

The exercise is typically an annual exercise and the last revision came in May 2023.

The seller fee revision comes at a time when the Seattle-based tech titan is gearing up to launch Amazon Bazaar, a low-price segment that will cater to value customers. The launch will mean Amazon will take on SoftBank-backed Meesho which collects no commission from sellers and instead earns through ads and other services.

Analysts at Bernstein, in January, said that Meesho has been making gains and "Amazon India growth lags as Tier 2+ users drive 80 percent of e-commerce."