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Amazon to not charge referral fee from sellers on products priced under ₹300

Amazon to not charge referral fee from sellers on products priced under ₹300

  • 23.03.2025 22:53
  • thehindu.com
  • Keywords: Success, Success

Amazon India eliminated referral fees for products priced below ₹300 and reduced shipping costs to support small businesses, aiming to boost seller growth on its platform.

Amazon Services

Estimated market influence

Amazon India

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Analyst rating: N/A

Amazon India is reducing referral fees and shipping costs to support small businesses and boost seller growth on their platform.

Sellers

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Analyst rating: N/A

The reduction in fees and shipping costs directly benefits sellers by increasing profitability and encouraging business expansion.

Context

Analysis of Amazon's Decision on Referral Fees

Key Facts and Figures

  • Referral Fee Waiver: Amazon India will not charge referral fees on over 12 million products priced under ₹300.
  • Effective Date: The initiative will take effect from April 7, 2025.
  • Product Categories: The waiver applies to 135 product categories, including apparel, grocery, home décor, and more.
  • Shipping Cost Reduction: Flat rate shipping has been reduced to ₹65 (down from ₹77) for national shipments.
  • Handling Fees: Handling fees for lightweight items under 1 kg have been lowered by up to ₹17.
  • Savings on Multiple Units: Sellers can save up to 90%+ on fees for the second unit when shipping multiple products.
  • Number of Sellers: Amazon India has over 1.6 million sellers on its platform.

Market Implications

  • Support for Small Businesses: The move aims to reduce costs for small businesses, making it easier for them to sell on Amazon.in and compete with larger retailers.
  • Increased Seller Attraction: By lowering fees and shipping costs, Amazon is likely to attract more sellers, particularly small and medium-sized enterprises (SMEs).
  • Wider Product Selection: Sellers can now offer a broader range of products at competitive prices, enhancing customer value.
  • Customer Impact: Lower fees may translate into better deals for consumers, driving demand for everyday low-value items.

Competitive Dynamics

  • Differentiation from Competitors: Amazon's fee waiver and cost-cutting measures could set it apart from competitors like Flipkart, which may need to respond with similar initiatives.
  • Focus on Seller Growth: The strategy reflects Amazon's long-term focus on seller satisfaction and growth, potentially increasing its market share in India's e-commerce sector.

Strategic Considerations

  • Operational Efficiency: Amazon is leveraging operational efficiencies to reduce costs for sellers, positioning itself as a more attractive platform for SMEs.
  • Market Expansion: By targeting small businesses, Amazon aims to tap into the growing demand for affordable products and expand its market reach.

Long-Term Effects

  • Seller Retention and Growth: The initiative could lead to higher seller retention rates and faster growth on the platform, benefiting Amazon's revenue in the long term.
  • Industry Impact: This move may influence other e-commerce platforms to adopt similar strategies, potentially reshaping pricing and fee structures across the industry.

Regulatory Considerations

  • While not explicitly mentioned, such measures align with broader economic policies aimed at supporting small businesses and fostering competition in India's e-commerce sector.