Amazon may have thought raising seller commission is a good way to make some cash. But its online sellers certainly don’t. The American online retailer plans to hike seller fees in May. This will force its third-party online sellers to increase product prices to make a decent amount of profit.
To make their issues known and request that this new fee structure be revoked, these Amazon sellers set up an independent group and collectively reached out to the marketplace CEO Jeff Bezos.
Seller’s plea to Amazon
The group of third party sellers wrote to Bezos requesting him to have the company reconsider its 50-100% in commissions for multiple categories. They informed him of their concerns relating to the survival of their businesses after the new commission policy is in effect next month. The consecutive increase in seller fees within eight months was also highlighted by sellers.
The seller email to the Amazon Chief said, “Now, we are left with no option but to humbly tell you that the recent fee hike dated April 12, 2017 will be disastrous for the low average selling price (ASP) sellers on Amazon India….We cannot operate on such high costs.”
Online seller Shailendra informed Indian Online Seller that he is on the verge of shutting down his business on Amazon.
He said, “We cannot sell now as we would have to increase our price by Rs.50 to Rs.70. Then nobody will buy our products. Amazon is hiking fees as GST is coming. So, they want to keep their referral commissions equal to GST %. They will now be removing service tax as in GST all included tax will be paid by seller. Along with this hike, GST is coming with over 18 % tax. Plus, there is 2 % TCS.
Who will buy screen guards which are available for Rs.30 in offline market for Rs.300 (online)? By selling for Rs.300 we will not even earn Rs.20. Also, they want to reduce selling low-value products and concentrate on high-value products.”
Shailendra deals in the sale of tempered glass for electronics via Amazon. He has been selling with the marketplace for 4 years now but feels it’s time to go offline if Amazon’s new commissions come into play. Apart from the new commissions that will destroy his profits, Amazon is already slowly killing his business Prajwal informed us.
He claimed, “For 100 products they dispatch, they are not able to deliver 30 to 40 units. And, they charge us for their incomplete orders. In my reports it shows undeliverable unknown. And, we have to pay logistics cost for these incomplete orders, that is Rs.50 to Rs.60 for each order. We will have to pay 50 % more for their incomplete orders from May 3rd.”
“We had raised a strong protest with Amazon leadership,” He added, “but, they failed to do anything.”
Amazon’s response to concerns about its commission hike was, “Amazon India has the best interests of sellers in mind and constantly innovates on their behalf to help the community to profitably do business online on the marketplace. Seller success will continue to remain an important focus area for us.”
Flipkart pulled off a similar commission revision in 2016. This enraged online sellers who happened to participate in an online Dharna and make their inventory zero on the marketplace. Could new seller insecurities on Amazon lead to the same level of disobedience and protests?
Flipkart recently reduced its seller fees, which sellers appreciate. However, will Amazon give into merchant requests?