As e-commerce growth moderates in India’s biggest cities, major platforms are turning to zero-commission models for sub-Rs 1,000 products to widen their reach and deepen penetration in smaller towns. India’s top e-commerce players Amazon and Flipkart now charge zero referral fee on a vast range of products, hoping to bring more sellers online who cater to price-conscious consumers.
Analysts say the reduced commission could expand the pool of sellers offering affordable products, which in turn may deepen the value proposition of online marketplaces and attract new cohorts of buyers. “The zero-referral fee is not so much about competition among platforms as much as it is about increasing the total addressable market for e-commerce,” says Ankur Bisen, Senior Partner at Technopak Advisors.
“If you incentivise the supply chain to cater to that segment, then you can get those customers on board,” he adds. New-age e-commerce platforms like Meesho, which already runs on a no-commission model, has managed to bring online a large segment of consumers from smaller towns in India who were not effectively served by larger players.
This helped Meesho become the fastest growing e-commerce platform in 2024, while Flipkart remained the market leader with a 48% share, followed by Amazon India. In December, Meesho’s stock market debut put a public-market stamp of approval on this business model, when its stock more than doubled in one of the strongest listing in recent years.
However, over the last few years, broader e-commerce growth in the core urban markets has slowed. As per a Bain & Co report, e-retail growth in 2024 was around 10%-12%, compared to historical growth rates of over 20%. Even in 2025, the growth is expected to be around 12.5%.
“Whatever had to grow has already grown. Now it is about thinking about markets in a different manner, that is, getting new kinds of shoppers or new kinds of clusters activated,” Bisen says. Both Amazon India and Flipkart are still struggling with mounting losses, despite topline growth. Sources said during the last three major sales events at Amazon, the company lost ground to rival Flipkart in terms of traction and volumes.
Earlier this week, Amazon expanded its zero-referral fee policy to include products under `1,000, following a similar move by Flipkart in November. Under the revised structure, Amazon sellers of products priced between `300-1,000 will only have to pay the shipping cost for each product and not the commission that typically ranges between 8-15% of the selling price.
For instance, a seller offering a fashion jewellery set priced at `999 via Easy Ship would see total fees fall from `324 to `100 per unit, reflecting a 69% cut. Similarly, a `798 pair of earphones sold through Fulfilled by Amazon would see the fees drop from `248 to `109 per unit.
Analysts agree that lowering or eliminating referral fees reduces entry barriers for sellers and could encourage a larger assortment in affordable categories, particularly in home decor, apparel, fashion jewellery, accessories, toys, among others. For instance, Amazon India said it recorded a 50% year-on-year jump in new sellers on its platform after it cut referral fee for products under `300 to zero early last year.
Importantly, the “value” segment is no longer confined to lower-income consumers, says Bisen. “You are seeing value fashion discoveries even by the affluent segment,” he says, adding that economic uncertainty, high inflation and weak real wage growth have made consumers more price-conscious across the board.