Amazon slashes seller fees in furniture & luggage to fight Flipkart's increased focus

BENGALURU: Amazon India has once again brought changes to its seller fees as it looks to take on Flipkart in several categories, also pointing to a trend of frequent changes in seller commissions by ecommerce companies. The global ecommerce company has lowered seller fees in categories such as furniture and luggage where Flipkart has sharpened its focus, as both look to get aggressive in these categories and want to push sellers to offer lower-priced products.

Amazon had earlier made changes to its seller fee structure in April, making it cheaper for sellers to ship locally so as to increase delivery speed and induce more customer buying.

In its latest rejig in seller fee structure, referral fees for several fashion products has been decreased, such as for apparel accessories to 15% from 20%, while in categories such as furniture, the fee has been reduced to 12% from 14%. The fee for luggage has also been reduced to 5.5% from 7%, while the fees for eyewear has been reduced drastically to 8.5% from 16.5%.


The move comes as Flipkart aims to make its furniture division the next big driver of growth and see it grow four-five times this year, according to an ET report last month. Luggage has also become an important category where Flipkart looks to beat Amazon.

Amazon has also reduced fulfillment fees and weight handling fees at its warehouses to promote sellers to ship locally and regionally, a strategy it had announced in April.

“In the recent fee change, we have reduced referral fee across 22 categories, have lowered fee across various components such as weight handling, pick and pack fee for oversized items to provide sellers the flexibility to reduce their costs of doing business on Amazon and serve the customers better,” an Amazon spokesperson said. The new fulfilment fees will come into effect from July 1. The new referral fees will be effective from July 15.

Flipkart also recently lowered fees for sellers in categories such as fashion and books, while it lowered the fixed fee for a sale below ?500, to ?5 from ?10, while logistics fees were also reduced for same city shipping. The change had come months after a similar fee restructuring in November when Flipkart had lowered commissions for items priced below ?300 across many categories, in a bid to encourage sellers to offer their products at lower prices.

“Whenever we see cost efficiencies from scale, we pass it on to sellers. These are usually internal calls where we also take inputs from sellers on their cost of doing business,” said Nishant Gupta, senior director for marketplace at Flipkart.

Industry experts believe these frequent changes could be the norm in the ecommerce industry.

“These companies will keep changing the rates to push certain categories by reducing commission and bringing more sellers and products online,” said Satish Meena, senior forecast analyst at Forrester.

“These commissions will change depending on sales events or a low period of consumer spending, so this is something we expect will keep changing quarterly of every six months,” Meena said.

Sellers however have lamented the frequent changes.

“Such frequent tariff changes done without consulting need to be regulated,” a spokesperson of seller association All India Online Vendors Association said.