In a move that would raise its revenues, online marketplace Amazon India has decided to increase the commission it charges from its sellers for retailing their products to end consumers by between 50% and 100%. The new commission rates would come into effect from May 18. In the case of movie DVDs, the commission charged to sellers has been increased to 9% from the earlier 5%. Similarly, for health and personal care products, the increase is a steep 50%. To illustrate, if earlier Amazon charged a commission of 5% on the sale of personal care products, it will now charge 7.5%. Commissions have also been hiked for apparel and accessories to 20% from the earlier 13%.
Commission on mobile phones and tablets has been raised to 5% from 3.5%. On laptops, the commission has been increased to 5% from 3%. In the case of other electronic items such as scanners and printers, Amazon has raised its commission by 100% — from 4% to 8%.
“Amazon is increasing fees for marketplace sellers again and again. This is making selling uncompetitive against their own sister company Cloudtail and private labels like Amazon Basics, Symbol and Solimo. We are taking this up with the Competition Commission of India (CCI) as the commerce ministry is not ready to intervene,” a spokesperson of the All India Online Vendors’ Association (AIOVA) told FE.
Amazon has also increased the minimum amount it charges from sellers based on the weight of the product, which is over and above the commission on sale of products. Earlier it charged Rs 30 on products up to a weight of 500 gm, which has now been raised to Rs 43. The fixed handling charges have also been raised from Rs 10 to Rs 20.
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This is is the second time since May 2016 that Amazon India has raised its commission or referral rates. Last year, though, the maximum rate hike was at 9%.
When contacted, an Amazon India spokesperson said, “While we have increased fees in certain cases, we have also reduced fees in multiple categories such as gold coins, sports, personal care, appliances and others. We have also removed the delivery service fee charged on all orders, which will benefit sellers as they tap into consumers from different corners of the country. Also, Amazon is the only marketplace which continues to offer free Fulfillment by Amazon (FBA) for items over Rs 20,000 and free removals for the first three months for all new sellers joining FBA.”
Calling the fee revision a part of its regular process, the spokesperson, explained, “We do not change our fees frequently so as to give our sellers a sense of predictability in their earnings. We are confident that our sellers look at the aggregate cost of doing business on our platform, and compare that with the overall value they derive out of our platform. Best-in-class fulfillment services through 34 fulfillment centres across India and our world-renowned customer service are a few examples of benefits for sellers on Amazon.”
Amazon Seller Services — the marketplace arm of Amazon India — posted revenues of Rs 2,275 crore in FY16, up 122%. During the period, its losses increased to Rs 3,572 crore against 1,723 crore in FY 15.