Amazon cuts referral fees on 12 mn products to boost seller growth in India

Move aimed to boost seller growth by offering a wider selection and more competitive offers; revised fees to come into effect from April 7

In its highest-ever reduction in seller fees, e-commerce giant, Amazon India, has introduced zero referral charges on over 12 million products on its platform that are priced below ₹300.

 

The move is aimed at boosting seller growth on Amazon.in and supporting lakhs of small businesses across the country. The revised fees will come into effect from April 7.

 

Referral fees is a commission that sellers pay to Amazon for each product sold. The zero referral fees apply to more than 135 product categories on the platform.

 

“This is one of the largest reductions in seller fees in Amazon India’s history. This is a major step in our continued effort to lower the cost of doing business for our sellers,” said Amit Nanda, director, Selling Partner Services, Amazon India, in an interview to Business Standard.

 

“With 12 million products across 135 categories benefiting from this reduction, we expect this to provide a significant boost to existing sellers while also attracting new entrepreneurs to our marketplace. Since these reductions apply to everyday essential products, including apparel, beauty, home furnishings, and more, we expect sellers to reinvest these savings into expanding their offerings and reaching new customers,” said Nanda, when asked about the long-term impact of this initiative.

 

Amazon has also brought in a simplified flat rate for sellers using external fulfilment channels like Easy Ship and Seller Flex, with national shipping rates now starting at ₹65, down from ₹77.

 

While Easy Ship is a fulfilment channel where Amazon collects packages from a sellers’ location and delivers them to customers, as part of Seller Flex, Amazon manages a portion of the sellers’ warehouse as an Amazon fulfilment centre.

 

Additionally, the company has reduced the weight handling fees for lightweight items under 1 kg by up to ₹17, lowering the overall fees that sellers pay to Amazon.

 

Sellers shipping more than one product unit at a time stand to see up to over 90 per cent savings in selling fees on the second unit. These changes will enable sellers to offer a wider selection, competitive offers and grow their business.

 

India’s growing e-commerce market

 

Amazon is in a fierce battle with rivals such as Walmart-owned Flipkart, Reliance’s JioMart, Meesho and Tata-backed BigBasket for a big bite of India’s booming e-commerce market, which is expected to touch $350 billion by 2030. It is also facing competition from quick commerce platforms, such as Zomato-owned Blinkit, Swiggy Instamart, and Zepto, which deliver consumer items within 10 to 30 minutes.

 

When asked if the decision to lower seller fees was driven by a more competitive landscape, Amazon's Nanda emphasised that it aligns with the company's long-term commitment to reducing business costs for its selling partners.

 

“Our approach is based on a flywheel effect- when we lower the cost of doing business for sellers, it leads to greater selection and variety for customers. More selection attracts more customers, which in turn increases sales volume, driving efficiencies that allow us to pass on further savings to sellers. This is a strategic, long-term investment in our sellers’ growth,” Nanda said.

 

The combined effect of eliminating referral fees and reduced shipping costs translates to substantial savings for sellers. For instance, if a seller was previously paying ₹130 in fees on a ₹299 product, their new fee will be just ₹70 — allowing them to earn ₹60 more per sale. Similarly, for home products, like curtains priced at ₹299, sellers will now save ₹62 per unit.

 

According to a report by AllianceBernstein, a global investment management and research firm, Meesho has emerged as the fastest-growing e-commerce platform in India in terms of user base. The report attributes Meesho's market share growth to its strategic focus on Tier-2 and smaller cities, operating through a zero-commission model.

 

When asked about the competition from platforms like Meesho, which follow a zero-commission model, Nanda said Amazon’s focus remains on enabling seller success through a comprehensive suite of services and technologies.

 

“Meesho operates differently which is closer to Amazon Bazaar (for value customers) on Amazon.in,” said Nanda.

 

“But we offer multiple models catering to a wide range of sellers. Our fee reduction is aimed at making Amazon more attractive and cost-effective for businesses of all sizes,” he said.

 

In 2013, Amazon started its e-commerce business in India with just 100 sellers and a selection comprising mainly books, with deliveries in select cities.

 

Today, Amazon.in has over 1.6 million sellers on its marketplace selling a wide variety of products from smartphones to household items, from stationery to kitchen products and from gardening tools to musical instruments to customers across all serviceable pin-codes in India.

 

The company said it has been focused on digitising small businesses to enable the largest selection, using technology to remove inefficiencies and deliver value to customers. This aligns with Amazon's vision of transforming the way India buys and sells. More than 90 per cent of sellers on Amazon.in are small and medium businesses, and over 50 per cent of the seller base is located in Tier-2, 3, and 4 cities. The company said this reflects its commitment to empowering local entrepreneurs and businesses across India, contributing to the growth of India’s digital economy.