In a significant move, Amazon India has informed its sellers about changes to its fee structures effective April 7. Several categories are expected to see increased fees based on the product price.
According to a report by Moneycontrol, the company notification stated that the updated fee structure encompasses alterations across different item categories, long-term storage fees, and refund fees.
It’s important to highlight that these fee modifications do not incorporate the 18% Goods and Services Tax (GST), which will be levied separately on the seller fee.
At present, sellers pay Amazon a fee that covers inventory storage, technology, shipping, returns, and a seller fee for each product sold through the platform.
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Home improvement fees increased from 9% to 13.5%, luxury beauty shifted from a flat 5% to a tiered system reaching up to 10%, and sleepwear rose from 11-15% to 13.5-19%, marking some of the most significant hikes in seller fees. Additionally, fees for musical instruments rose from 7.5% to 10.5%, and for flipflops, they increased from 10-12.5% to 13-15%.
While some categories experienced fee hikes, the ecommerce giant also decreased fees for categories like inverters and batteries, dropping from 5-5.5% to 4.5%, as well as Baby Apparel, which went from 11-21% to 11-20%, among others.
Amazon’s changes to seller fees will impact major companies such as Mamaearth and BoAt, which depend heavily on e-commerce platforms for sales. Mamaearth, a leading brand in face washes and skincare, will experience a notable rise in seller fees. The costs for face washes will now be around 6-9% instead of 2.5-8%.
Likewise, fees for moisturizer creams, including those from Mamaearth, will rise from 2.5-8% to 6.5-9.5%. Even for sought-after items like sunscreens, fees will increase from 2.5-8% to 6.5-9.5%. This adjustment will also apply to other beauty products, with fees going up from 2.5-8% to 6.5-9%.
It is unlikely that Mamaearth, despite its large sales volume, will be treated differently and will be subject to the same seller fee increases.
In fact, we would be the most commonly treated in terms of players because we function as sellers on these platforms’, stated Varun Alagh, co-founder and CEO of Mamaearth, in February during the company’s Q3FY24 results announcement. As sellers, you function within the same framework that Amazon has established for all sellers in the nation.
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Ultimately, though, we are operating under the same guidelines that Flipkart or Amazon have developed for all sellers in the nation. In contrast to most other businesses, which use a B2B model with less transparency, ours is extremely transparent when it comes to the costs involved,” he continued.
Additionally, as part of the recent update, Amazon has discontinued its Zero Fee fulfillment policy. As a result, beginning from April 30, 2024, standard-sized goods costing more than INR 20,000 will be subject to a weight handling shipping tax.
Meanwhile, Amazon is reportedly preparing to launch its new vertical, Bazaar, which will feature budget-friendly, unbranded fashion and lifestyle products.
According to reports, Amazon Bazaar is currently onboarding sellers to list unbranded products, which include apparel, watches, shoes, jewellery, and luggage, all priced below INR 600.
The recent development closely follows Amazon’s foray into the logistics sector in India with the introduction of a new vertical called Amazon Shipping. The company is poised to enter this domain by managing non-Amazon orders. To kick off this new initiative, Amazon collaborated with logistics aggregators, other companies that receive orders directly from consumers, and direct-to-consumer (D2C) firms.
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