Amazon India scraps referral fees for products under Rs 300

Key Facts and Data Points

• 12.5 million+ products: Over 1.2 crore (12.5 million) products priced below Rs 300 across 135 categories.
• Referral fee elimination: Referral fees, starting at 2%, are being removed for these products.
• Effective date: Changes will be implemented from April 7, 2025.
• Number of sellers: Amazon India has over 16 lakh (1.6 million) sellers on its platform.
• Remaining fees: Sellers still incur closing fees, weight handling or shipping fees, and other charges based on fulfillment channels (e.g., Fulfillment by Amazon - FBA).

Market Implications

• Cost reduction for sellers: Eliminating referral fees and reducing shipping costs could lower operational expenses for small and medium-sized sellers.
• Increased seller incentives: The move may attract more sellers to the platform, especially those offering affordable products in categories like electronics, fashion, and daily essentials.
• Price competition: Lower fees could lead to price reductions on Amazon India, potentially increasing affordability for consumers.

Competitive Dynamics

• Pressure on competitors: This decision may prompt rival platforms like Flipkart to reconsider their fee structures to remain competitive.
• Focus on small businesses: Amazon India’s strategy aligns with its push to support small and medium-sized enterprises (SMEs) in India.

Strategic Considerations

• Long-term effects: The move could lead to increased product availability, higher seller retention rates, and stronger market share for Amazon India in the Indian e-commerce sector.
• Regulatory impacts: While not explicitly mentioned, such fee reductions may draw scrutiny from regulators regarding anticompetitive practices or market dominance.

Additional Fee Reductions

• Shipping costs: Flat shipping rates introduced for external fulfillment channels like Easy Ship and Seller Flex, with national shipping starting at Rs 65 (down from Rs 77).
• Weight handling fees: Reduced by up to Rs 17 for lightweight items under 1 kg.
• Multiple unit savings: Sellers shipping more than one product can save up to 90% on the second unit.

Historical Context

• Previous fee reductions: Amazon India had previously reduced seller fees (ranging from 3-12%) for 59 product categories in September 2024.