Amazon India Announces Removal of Referral Fee for Products Below Rs 300

• Key Decision: Amazon India has removed referral fees for sellers listing products priced below Rs 300.
• Affected Products: Over 15 million (1.5 crore) products across 135 categories are impacted by this change.
• Previous Referral Fees: Previously, Amazon levied a referral fee of 2-4% on each product sold.

Fee Reductions and Changes

• Shipping Charges: National shipping charges for sellers using external fulfillment channels (Easy Ship and Seller Flex) have been reduced by nearly 16%, now ranging from Rs 65 to Rs 77 per order.
• Weight Handling Fees: Weight handling fees for lightweight items under 1 kg have been slashed by up to Rs 17.

Effective Date

• The revised fee structures will be effective from April 7, 2025.

Seller Base and Growth

• Amazon India’s seller base stood at 16 lakh (1.6 million) during the last festive season, up from 13 lakh (1.3 million) in the previous year.
• Over 90% of Amazon’s sellers in India are small and medium-sized businesses, with nearly half based in tier 2, 3, and 4 cities.

Financial Impact

• Amazon Seller Services reported a 14% increase in operating revenue to Rs 25,406 crore in FY24.
• Net loss reduced by 29% to Rs 3,470 crore, driven by enhanced operational efficiencies.

Competitive Landscape

• Flipkart, Amazon’s key rival, has introduced a ‘Protect Promise’ fee of Rs 49 on select products, along with platform and packaging charges.
• E-commerce platforms like Swiggy and Zomato have also introduced platform fees (Rs 2 in 2023, later increased to Rs 10).

Strategic Considerations

• Amazon’s fee reductions aim to attract more sellers and strengthen its foothold in India’s competitive e-commerce market.
• The move is expected to support the growth of small and medium-sized businesses in India.

Long-Term Effects

• Amazon anticipates long-term growth from these changes, aligning with its strategy to expand its seller base and operational efficiency.
• The impact on revenue and market share will be closely monitored as other platforms introduce similar or additional charges.