1. Amazon India counters Flipkart, here’s how

Amazon India counters Flipkart, here’s how

Move seen as a strategy to counter rival Flipkart’s decision to increase seller commissions by 5-6% from June 20

By: | Bangalore | Published: June 17, 2016 6:11 AM
Flipkart, Flipkart CEO, Sachin Bansal, Binny Bansal, Snapdeal, Amazon, ecommerce, Flipkart consumers, snapdeal consumers, amazon consumers, flipkart revenue E-commerce giant Amazon India has decided to reduce commissions that are charged to sellers — for multiple categories like electronic goods, mobile phones and tablets — in a bid to help them sell at a lower cost. (Reuters)

E-commerce giant Amazon India has decided to reduce commissions that are charged to sellers — for multiple categories like electronic goods, mobile phones and tablets — in a bid to help them sell at a lower cost.

According to multiple sources in the seller ecosystem, commissions will be reduced by 2-7% with immediate effect.

This move is seen as a market strategy to counter its rival Flipkart’s decision to increase seller commissions by 5-6% from June 20 — a move that sellers are displeased about.

Amazon spokesperson said, “Yes, we lowered the rates for certain categories. We think these revised rates can significantly help sellers to perform even better and succeed in their business.

We started with 100 sellers 3 years ago and now we have over 85,000 sellers growing at 250% year-on-year and adding over 90K products/day. We hope that sellers take advantage of these revised rates and grow their business.”

According to sources, Amazon had decreased the commission rates for mobiles and tablets from 5% to 3.5%, laptops from 4% to 3%, non-education software products from 8% to 5% and educational products from 12% to 5%.

A spokesperson from All India Online Vendors Association (AIOVA) said, “This is an alternative to discounts that were offered to consumers by the marketplaces. This is a move not just by Amazon, but also by other players, just to get away with the new DIPP rules on discounting.”

In a move to benefit sellers and reduced the shipping costs, the company increased its fulfillment centers capacity by 3x over last year. The company has 21 fulfillment centres with a storage capacity of 5 million cubic feet across all fulfillment centres.

Amazon had also started a pilot though its subsidiary Junglee, allowing individuals to sell second-hand goods across different categories like mobile phones, tablets, pre-owned watches, books, among other such items.

To enable more and more sellers to benefit from the digital economy, Amazon introduced an innovative concept called Chai Cart to generate awareness among SMEs in Tier II cities. It also launched a structured education program for sellers called Seller University to teach sellers the various processes and way to sell and grow on the platform.

It is learnt that Flipkart had last week increased the commission by 4-6% across various categories upon which some sellers have been protesting against the move and are seeking a roll back.  Flipkart has about 75,000 sellers on its platform.

At a time when its competitors are struggling to raise funds, last week, Amazon founder Jeff Bezos has agreed to pump in another $3 billion, on top of the $2 billion already announced into the company’s India operations.

According to a recent Neilsen report, Amazon tops the chart as the most preferred e-commerce websites among the sellers. It is followed by Flipkart and Snapdeal.

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