One of the side-effects of GST is that Amazon has discontinued its Platinum Seller Program (PSP). The ecommerce biggie decided to temporarily suspend the program due to lack of clarity about GST implications on online selling and marketplace fees/margins.
A vendor confirmed,
“The company has conveyed to us that the renewals are on hold due to clarity on GST. There will be a single tax under GST, the benefits of which will be passed on to the merchant and to the buyer in terms of pricing. Hence, Amazon is trying to understand whether there is a need for differential standards. Even the sellers are confused and do not know what margins to quote as the impact of GST is still not clear.”
How FDI helped Amazon PSP to grow
Since Amazon’s own seller Cloudtail accounted for majority of sales, the etailer had to think of ways to reduce dependence on one seller to become FDI compliant. That’s when Amazon’s Platinum Seller Program gained momentum.
Amazon reviewed sellers’ inventory capacity, selling record, customer reviews, seller ratings and order volume. Those with a high score made it to the program and received direct invitation from the American ecommerce leader to join PSP.
The effect of GST, FDI and demonetisation on PSP
Amazon laid out strict rules and sales targets for PSP sellers, but it had many benefits such as:
- Low marketplace fees
- Low logistics cost
- Low overheads cost
- High sales volume
- Better seller support service
- Preferential treatment
“For a seller in the television and appliance category for example, the overhead on logistics and service tax comes up to Rs 3,000 for a TV set priced at Rs 25,000. The benefit of being a PSP member is that the marketplace absorbs the overhead to provide prices competitive to offline stores. By bringing down the margins, the benefits are passed on to the customer,” a vendor explained.
That’s why sellers under this program were a happy lot until the etailer decided to suspend it due to GST. Cloudtail is the only platinum seller of Amazon as of now.
The program was also affected by demonetisation drive that started late last year. Earlier, sellers of smartphones, fashion, large electronic, and consumables were part of this initiative. But post-demonetisation, Amazon reduced the count of its premium ‘Platinum Sellers’ of mobile phone sellers.
The online marketplace maintains that it is a temporary suspension. We’ll have to wait and see if other premium sellers would join Cloudtail anytime soon.