Amazon wants sellers to go all out as it reduces commission charges

Amazon has reduced its commission charges as it looks to shore up sales from independent sellers and increase the number of vendors on its platform in a quest to promote itself as a friendly marketplace. The commission has been cut by about 35% for prominent fashion sellers and by more than 50% on certain FMCG categories, according to three people aware of the development.

“We introduce limited-period fee promotions regularly for our sellers to motivate them to grow their business on the Amazon.in marketplace,” an Amazon India spokesperson said in an e-mail.

Amazon has started rating fashion sellers in a bid to boost sales from independent vendors and the best performers will pay about 35% less commission than they used to barely weeks ago, a person in the know said.


Sellers would be incentivised to move up the ratings scale and gain the maximum benefit in the form of reduced commissions, the person said.

Sellers said the changes in the commission structure followed amended FDI rules for ecommerce marketplaces in India, which came into effect on February 1.

Amazon and Flipkart — two of the largest ecommerce marketplaces in India — had been widely alleged to be flouting rules by directly or indirectly controlling sizeable portions of their inventories. The rules announced late December seek to plug loopholes by barring such marketplace operators from owing any stake in sellers on their platforms and controlling inventories.

The incentivised commissions came weeks before Cloudtail India, a unit of Amazon that was the biggest seller on the marketplace until January 31, staged a comeback on the platform. Amazon changed the ownership structure of Cloudtail so that it ceased to be a group company and could qualify as a seller as per the latest FDI rules. With the new ownership structure, Cloudtail has resumed sales on Amazon.in. Amazon had also been busy courting small vendors. “Their marketplace team has become very active,” one person told ET, days before Cloudtail came back to selling on Amazon.in.

Amazon charges about 50% less commission from sellers for FMCG products like certain personal care categories, the person said. Another person said commission rates have been slashed only for certain categories and not across the board. Following the new FDI rules, both Amazon and Flipkart have put out extensive newspaper ads highlighting how they are changing the lives of small sellers by providing them nationwide access to their products.