Amazon India to Raise Seller Fees in Key Categories, Potentially Leading to Higher Prices for Customers

Experts are predicting that Amazon India will raise seller fees for various important categories such as apparel, beauty, groceries, and medicines. This increase is expected to result in higher prices for products on the platform, as sellers are likely to transfer the additional costs to customers. Additionally, the fees associated with handling product returns on the platform will see a substantial increase.

“Seller fee revisions are based on various factors including changes in market dynamics and various macro-economic factors. As a part of our recent fee revision, we have made certain changes to our fee rate card, including the introduction of new fee categories and also reduction of fees in certain categories,” said a company spokesperson.

Seller fees refer to the commission charged by Amazon from sellers when they sell their products on the platform. This decision aligns with Amazon's strategy, similar to other technology companies, to find means of preserving cash and expanding revenue streams during a worldwide economic downturn.

Amazon has fired a total of 27,000 employees since last year. Amazon India did not respond to an immediate request for comment on what necessitated the hike.

In the beauty products vertical which includes segments like haircare, bath, and shower, the commission will be hiked to 8.5 percent for products less than Rs 300. Earlier, the platform was charging a 7 percent fee for items less than or equal to Rs 500. Seller fees in the apparel category – for both women and men – have also been hiked – from 19 percent for products over Rs 1,000 to 22.5 percent in some cases.

While platform fees for grocery items including herbs and spices have been reduced for smaller ticket purchases – a 2.5 percent cut for items under Rs 500 compared to a 4.5 percent fee earlier – it has been hiked in the case of a bigger basket. Currently, an item worth more than Rs 1,000 attracts an 8 percent fee which will be increased to 9 percent.

Prices charged by sellers for issuing refunds to customers will be hiked by as much as 40 percent in some cases. While Amazon does not disclose the quantum of overall returns on its platform globally, industry executives say that it is typically a big cost center for marketplaces like Amazon and Flipkart. In the US, a National Retail Federation survey in 2021 found that $761 billion of merchandise was returned to retailers in 2021.