Improving bottom lines is the need of the hour for many online retailers. Flipkart cut costs to attract funding which it received this month in the form of cash and an acquisition. The etailer plans to use its new funds to turn profitable by experimenting. Snapdeal, on the other hand, is conserving cash and eyeing revenue from its ad platform.
One may think Amazon is doing far better with its phenomenal first quarter sales that put it ahead of Flipkart. But the US-based online marketplace is resorting to seller commission hikes across categories to better its chances for profitability.
An Amazon seller shared with IOS details about the fee revisions on the platform. According to a summary sent by the marketplace, from 3rd May 2017, the following fees will change –
- Selling on Amazon Closing Fee (for all categories)
- FBA weight handling fees
- Cancellation Charges (up to 8.5% instead of 2.5%)
From 18th May 2017, fee revisions will include –
- Delivery Service Fee (1.25% on all FBA and Easy Ship shipments to discontinued)
- Selling on Amazon Referral Fees (revised for multiple categories)
Fees per product category
The maximum spike in commissions is across categories like:
- Headsets, headphones, earphones
- Keyboards, mouse
In case of these products, the commission has been raised by 6-9 percentage points. The mobile phone category will see an increase in commission from 3.5% to 5%. Sleepwear will be charged 19.5% from the earlier fee of 13%. Fees on products like pet food will be 12% from 7%.
With regard to the commission revision, an Amazon spokesperson mentioned that this is part of a regular process. However, Amazon doesn’t change its fees very often.
So, to offer sellers a sense of predictability in their earnings the spokesperson stated, “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.”
Seller response to the impending revisions
In contradiction to the statement Amazon’s spokesperson made, All India Vendors Association or AIOVA said the marketplace has been raising seller fees time and again.
A spokesperson for lobby group of 1,500 sellers mentioned, “This is making selling uncompetitive against their own sister company, Cloudtail, and private labels like AmazonBasics, Symbol and Solimo. We are taking this up with the Competition Commission of India as the commerce ministry is not ready to intervene.”
The spokesperson also said with regard to the 8.5% cancellation charge, “This charge will be applicable if the order is cancelled by seller for any reason other than buyer request, or if the seller has not shipped and confirmed the order within 48 hours of the estimated ship date.”
Sellers at E-commerce Sellers Association of India or ECSAI are also not happy with this change.
The group’s spokesperson said, “This is not a good practice from marketplaces like Amazon, Flipkart … They increase the rates at will and sellers often are forced to pass on this increased cost to customers. GST had some definite advantages to sellers in terms of cost of selling online … These kinds of frequent fee hike from marketplaces just nullifies the benefit of GST.”
What do you think about this commission revision by Amazon? Is it completely uncalled for? Also, will it stir a seller uprising? Stay tuned to find out.