Shopping from Amazon may get costlier as platform hikes seller commission

Beginning May 31, Amazon India will raise seller fees for a number of key categories such as apparel, beauty, groceries, and medicines, with experts saying that the hike will make products on the platform more expensive as sellers are likely to pass on the increase to customers, an Economic Times (ET) report said.

The platform's fees for handling product returns will also rise significantly, it added.

"Seller fee revisions are based on a variety of factors, including changes in market dynamics and various macro-economic factors. As part of our recent fee revision, we made changes to our fee rate card, including the addition of new fee categories and the reduction of fees in certain categories," said a company spokesperson.

What is seller fee?

Seller fee is the commission that Amazon charges from sellers for selling their products on its platform.

The move comes as the platform, like other tech companies, seeks to conserve cash and expand revenue channels in the midst of a global slowdown.

Amazon has fired a total of 27,000 employees since last year. Amazon India did not respond immediately to a request for comment on the reason for the price hike.

Price hikes in different categories

The commission for products less than Rs 300 in the beauty products vertical, which includes segments like haircare, bath, and shower, will be increased to 8.5 per cent. Previously, the platform charged a 7 per cent fee for items less than or equal to Rs 500.

Seller fees in the apparel category - for both men and women - have also been increased, from 19 per cent for products over Rs 1,000 to 22.50 per cent in some cases, the report said.

While platform fees for grocery items such as herbs and spices have been reduced for smaller ticket purchases (a 2.5 per cent reduction for items under Rs 500 compared to a 4.5 per cent fee previously), they have been increased for larger basket purchases. An item worth more than Rs 1,000 currently attracts an 8 per cent fee, which will be increased to 9 per cent.

In some cases, the fees charged by sellers for issuing refunds to customers will also be increased by up to 40 per cent.

While Amazon does not disclose the magnitude of overall returns on its platform globally, industry executives say it is typically a significant cost centre for marketplaces such as Amazon and Flipkart.